On 22 February 2013, SAP announced that it plans to acquire SmartOps, a provider of a multiechelon inventory optimization (MEIO) solution, and an additional demand-sensing solution, for an undisclosed amount. The deal is expected to close in 1Q13.
Although SAP has been late in acquiring or developing MEIO capabilities compared to its rivals, this planned acquisition is good news for SAP supply chain management (SCM) users. MEIO capabilities can help SAP SCM users and other organizations to design their supply chains to better mitigate demand and supply variability, which continues to increase.
Even though SmartOps has been a SAP solution extension in SCM since 2008, SAP has been the only large vendor of supply chain planning software that has neither acquired nor developed a MEIO capability. SAP's main rivals in this market, including Oracle, JDA Software and Logility, have MEIO capabilities. Some of them have had these capabilities for several years.
By acquiring SmartOps, SAP can use its supply chain modeling capability to support trade-off optimization and analysis in operational planning as well as sales and operations planning (S&OP). The recently launched SAP S&OP solution powered by Hana lacks capable supply chain modelling to support complex what-if analysis (which is common in S&OP solutions). SmartOps modeling engines can partially fill this gap and help to connect plans and scenarios developed in S&OP to operations and execution.
After the acquisition, SAP will be able to continue to take advantage of the Hana platform to eventually enable organizations to analyze much larger planning models much faster than before. Gartner estimates that SAP will put SmartOps onto Hana by the end of 2013. This will enable SAP to offer advanced inventory optimization for much larger datasets. Because SAP has already used Hana successfully for a few areas in SCM — S&OP and demand signal management — it should be successful in getting SmartOps onto Hana.
S&OP, MEIO and demand sensing are examples of solutions supporting more advanced planning processes, which Gartner calls planning systems of differentiation (SODs). These SODs need to work seamlessly with the underlying planning system of record (SOR), such as SAP’s Advanced Planning and Optimization, across an integrated data, process and analytical framework.
SAP would be able to move further toward this ideal by leveraging Hana and owning key modeling and analytical assets. Gartner expects that SAP will integrate SmartOps quickly. It will then need to focus on effective development to move away from offering mainly native planning SOR capabilities to offering SAP users SAP SODs that generate strong business value.
Current SAP SCM and SmartOps customers:
Prospective SAP SCM and SmartOps customers:
Prospective SmartOps customers:
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