How should organizations deploy SAP Industry Cloud?

SAP announced its Industry Cloud capabilities at the virtual Sapphire conference in May, a move that augmented its vertical industry focus. Before understanding how to deploy an offering, it's important to look at what Industry Cloud is and how it's different from other vertical industry software.

In a nutshell, Industry Cloud equips customers with industry-specific best practices and an open platform so customers can more quickly modernize and adapt to changing conditions. Although SAP had already launched several of its industry-specific versions for the cloud, Industry Cloud portfolio, which is built on SAP Cloud Platform, encompasses all of those products, along with a roadmap for added functionality and increased industry coverage in SAP's cloud applications.

So, in many respects, SAP's announcement of Industry Cloud was a packaging and positioning strategy to bring its cloud industry accelerators under a single umbrella, from both a marketing perspective and from a product portfolio management perspective. Some of this strategy is technical, however, and Industry Cloud should make tapping into other SAP modules and technologies more easily available. As with industry-specific software product in the past, a lot of what SAP has done focuses on preconfiguration to make setup and configuration easier for the industry in question, but it also added additional industry-specific functionality, such as machine learning, analytics and targeted functions.

In the Consumer Products Industry Cloud, for example, SAP has added new functionality for trade claims management to support higher levels of process automation. In addition, SAP is strongly promoting third-party innovation around Industry Cloud. SAP is encouraging companies to develop their own apps to complement the SAP Industry Cloud offerings. Deloitte, for example, has made a strong commitment to developing new industry-specific products for SAP Cloud.

Industry Cloud augments the previous industry-specific choices that organizations using SAP and prospective customers already had. There are several potential approaches to deploying an industry-specific version of SAP:

• Previous on-premises industry-focused options. Organizations can deploy an existing SAP on-premises product as standalone software.
• Industry Cloud options. Organizations can deploy one of the new industry cloud offerings as standalone software.
• A mix of Industry Cloud and on-premises industry options. Organizations can deploy the old and the new products in a hybrid model, where the existing on-premises product provides core functionality and is integrated with new features deployed in the cloud.

The approach that a company's CIO decides to take will likely hinge on the organization's existing environment. If the organization already has an SAP industry product in place, then the hybrid approach will open the door to new capabilities while preserving existing technology investments. Most companies rolling out SAP for the first time, on the other hand, will presumably choose one of SAP's Industry Cloud offerings.

Industry Cloud offerings are not yet available for all verticals. SAP is starting with software targeted for automotive; consumer products; utilities; and engineering, construction and operations. The company has announced that the next Industry Cloud offerings will be banking, retail, professional services, and industrial machinery and components will be next. Those options still fall far short of the 25 verticals that SAP has historically served with its industry-specific software.