CIMdata PLM Industry Summary Online Archive

9 March 2005

Company News

SAP CEO Sees IT Sector as Duty-Bound Business Innovator

The innovation driver and core enabler of business growth in the 21st century will be information technology embedded in communication devices, consumer products and business processes, according to Henning Kagermann, chairman and CEO of SAP AG. In his industry keynote at the official opening ceremony of CeBIT 2005, Kagermann paints a positive picture for the future of the IT industry, provided its players step up to the task of helping companies to develop and adapt new business models that distinguish their products and services from the competition. Kagermann's address kicks off the world's largest IT trade fair, expected to draw more than 500,000 visitors to Hanover, Germany, March 10-16.

Highlights of the Keynote Speech:

Embedded and invisible . Today, information and communication technology is already ubiquitous in business, in science and in our daily lives to the extent that it is taken for granted, becomes invisible. Thus, it might have lost some of its fascination, but has by no means lost its relevance. On the contrary, IT will become more important than ever before. Consumers are prepared to spend money on technology that touches their emotions-through sleek design, as status symbols, for lifestyle. The convergence of communication, IT and entertainment is a driving force for consumers and manufacturers. However, there are a number of technological innovations that have not yet been fully exploited, such as IP networks, voice-over IP, grid computing and UMTS.

Business catalyst . In the business world, IT automates, accelerates and integrates business processes. The worldwide flow of goods, capital and information depends on what started out simply as an automation tool. Today, IT is the catalyst, the enabler, for successful global business. Many manufacturers now attribute more than 50 percent of the competitive benefits of their products to embedded software systems.

Process innovation outranks product innovation . Global competition and lower market entry barriers are forcing companies to find new ways to stand out against their competitors. Companies see their future business success more dependent on adapting their business models-or the way their organization operates-than what their organization does. Business model innovation is displacing product innovation as a primary driver of competitiveness. Managers all over the world see IT as the central element to enable the flexibility for business process innovations. There is a new awareness for the transformational, strategic importance of IT, and the industry must answer to the call.

Wake-up call for the IT industry. Kagermann speaks of the IT sector's newfound responsibility to drive innovation in other industries: for the first time in history, IT can and must make a central contribution to granting companies the flexibility they need to execute innovate business models. It is up to the IT sector to carry this weight as no other industry holds as much potential for innovation, disposes of as many resources, creates as much value and touches as many other industries.

A true industry. The IT industry has "grown up" with all the accompanying traits: consolidation, price pressures, and customers that do not jump at any new technology straightaway, but rather wait for it to mature and for prices to fall. To fulfill its potential, the IT industry must deliver on performance requirements through open, standards-based solutions that offer ease-of-use, ease-of-integration and security. These aspects, according to Kagermann, will be imperative to the future role of IT as an enabler of flexibility and innovation.

Crossroads of business and technology. Following the advances of the mainframe computer, client-server architecture and the Internet, the fourth wave of the Information Age is upon us, marked by a merging of business and technology. But whereas other segments of the information and communication technology industry have seen extremely high productivity gains-doubling on average every two years-it takes the software industry six years to achieve the same. Kagermann notes that with the introduction of service-oriented architectures and Web services, the industry is taking a great leap forward. Development of these technologies and infrastructures parallels the foreseeable demand among companies for achieving flexible business models that enable them to set themselves apart from competitors.

Room for growth. Kagermann sees a great opportunity for "embedded software," not only in traditional industrial applications but also in innovative consumer products. Already today, the heads of research at automotive manufacturers attribute 80 percent of their innovations to information and communication technology, the majority of which enabled by software. These embedded systems become more and more intelligent and attractive as they operate invisibly, without forcing users to learn things about technology they do not really need to know. Embedded systems require interdisciplinary thinking and development-and according to Kagermann, these types of projects, complex by nature, are where Europeans can leverage their strengths. Just as advances in cellular phone networks have opened up new opportunities in Europe's communications industry, "in-product" software represents great potential for stimulating national economies and boosting exports with enhanced products.

Global is a given. Globalization, in Kagermann's view, is a given in today's world and people should make the best of it. SAP's CEO sees a wealth of opportunities as IT opens doors to new markets, providing access to people, knowledge and products that otherwise would remain unknown. IT enables unlimited access to information, know-how and markets. Offices in countries such as Bulgaria, India and China enable SAP, for example, to tap local talent, while granting local workforces access to the global marketplace of knowledge. In this way, IT can help create jobs, products and services to boost local economies and bridge the digital divide.

Gaining visibility. The IT industry recovered in 2004, and this upward trend is set to continue in 2005. But the industry has to break out of its "technology cocoon." The more invisible IT becomes, the more essential it is for science and business to make their coexistence visible to society. In the future, IT companies will continue to need the overview of the industry that CeBIT provides, but will also need to demonstrate IT's contribution to business at industry events of all kinds-from IAA automotive fair, to the Frankfurt Book Fair, to National Manufacturing Week.

Invest past gains into future innovation. Countries such as Germany are dropping efforts to attain a 35-hour working week as they struggle to compete with economies that sleep 35 hours a week. In Kagermann's opinion, such countries have just one choice: to invest the gains from past innovations into tomorrow's innovations, otherwise the economy and society will grind to a halt. A competitive IT industry and cross-discipline efforts among the worlds of science, education and business are thus key. With the Lisbon Agenda 2010, Europe has set itself an ambitious task that has not yet taken hold. Kagermann calls for a focused effort that concentrates on the areas that have the most impact on economic and social development. He sees IT-as the industry with the most innovative potential, resources and ability to generate added value impacting on all other industries-at the center of these efforts.

  For the complete transcript of Henning Kagermann's CeBIT keynote speech, please visit: http://www.sap.com/company/press/pdf/CeBIT_keynote_HK_ENG_FINAL_2_.pdf .

SAP at CeBIT 2005

SAP's main booth at CeBIT is in hall 4, D12/D28; SAP for Public Sector and SAP for Healthcare: hall 9, booth E37; SAP for Banking: hall 17, booth A01.1; SAP at the Linux Park: hall 6, booth H18/510.

 

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