SAP and Business Standards

1. SAP and Business Standards sample for a picture in the title slide Mark Crawford Standards Architect GEPG Standards Management and Strategy 21 October 2008

2. Agenda • SAP, Standards, and Ecosystem Communities • Common Methodologies – Eliminating the Noise • Standards Strategy – Alignment and Convergence • Tools – Modeling, Mapping, and Integrating Business Data • Next Generation – Integrating Business Processes, Business Data, and Business Information Exchanges

3. Manufacturing Networks as an Example Flow of Information PPM QUALITY REVENUE Flow of Materials VARIABILITY Enterprise Enterprise Scheduler/ Scheduler/ Material Material Planner Planner Supplier Supplier Manufacturing Manufacturing Ohio Canada HQ HQ Plant Plant Plant Supplier Manager Manager Manager HQ Supplier Supplier Supplier Warehouse Mexico Slovakia China Manufacturing Germany Extended Extended Enterprise Enterprise Need to Leverage the Synchronized Flow of Information with the Flow of Material, Goods, and Services Business Network Ecosystems Consist of a Collective Set of Operating Entities that Collaborate on Shared Processes VP Mfg HQ Scheduler/ Material Planner COO CIO Plant Assembly II Assembly II Manager Warehouse Assembly I Sub-Assembly BUT Regardless of the Industry – Standards support is fragmented, inconsistent, and conflicting

4. Desired Interoperability Environment Users Seamless integration with multiple processes and industries Eliminate need to learn, deploy and maintain different integration approaches Industry Communities Complete, interoperable specifications Eliminate endless reinvention Internal Applications Consistent Process and Data definitions across multiple business functional areas Consistent interface solutions with different databases and systems SAP and Others Easier, cheaper interoperability approaches to reduce TCO Common Methodologies and Processes across industry boundaries Mining Pharma Oil & Gas Higher Education& Research Insurance Healthcare Media HighTech FinancialService Provider Telco Banking Aerospace& Defense Chemicals Retail Automotive Mill Products Engineering &Construction ConsumerProducts Human Resources Agriculture

5. Key Elements of SAP Standards Strategy • SAP key initiatives to drive standards based business network interoperability • Holistic Standards Approach • Opening up SAP solutions (A2A and B2B) through Web services and SOA (W3C, OASIS, WS-I, OMG) • Define and Implement Business Standards Taxonomy • Create Community Ecosystems and Definition Groups • Drive Common Methodologies – • Drive development and adoption of common methodology standards for SAP, standards organizations and others • Foster Alignment and Convergence – • Drive convergence around selected standards organization in industry groups • Manufacturing – • Drive convergence of manufacturing business standards in OAGi addressing both discrete and process industries with one common library of messages • Drive alignment and community where convergence is not possible such as with EIDX, B2MML

6. SAP Holistic Approach to Standards SAP is using open standards as a key aspect of its SOA product offerings…

7. SAP Standards Taxonomy* SAP takes a holistic approach to standards by considering business, technologyand open source standards where customer value is the primary driver * An explanation of the SAP Standards Taxonomy is available on SDN see: https://www.sdn.sap.com/irj/sdn/standards

8. Aligning the Standards Taxonomy and SAP Architecture The Standards Taxonomy identifies relevant standards that play a key role in the SAP Architecture ‘

9. Focused on Customer Value • Orchestrates Access Beyond Any One Company’s Boundaries • Supports hybrid standards approach SAP Developer Network (SDN)Robust environment of blogs, wikis and forums with eLearning support SAP Collaborative Ecosystem Communities Communities of Innovation • Standards Management and Strategy (SMS) Work with standards organizations to fill gaps in end-to-end processes with the definition of standards that customers, partners and SAP can support Business Process ExpertCommunity (BPX)Process expert collaborative definition, modeling, composition, and sharing of best practices Business Objects Community (BOC)Collaborative, knowledge-sharing network around business intelligence (BI)& information management (IM) solutions. Community Development Groups Identify and definemodels and deployment mechanisms Industry Value Networks (IVN)Industry-specific groups of customers, partners and SAP to create preintegrated industry offerings Enterprise Services Community (ESC) Collaboratively create specifications for Enterprise Services Repository

10. 1 • SAP customers have been using standards for B2B for decades • For each vertical industry, SAP customers describe which standards are used in their business processes The mapping from standards to SAP defines precise requirements for Enterprise Services • SAP uses the requirements to develop Enterprise Services that are highly valuable in business-to-business integration • The new Enterprise Services are made available to the SAP community 2 3 4 Enterprise Services Definition In 2007, SAP released thousands of enterprise service definitions. It is one of the largest changes in the history of the company. Industry standards are incorporated into the core of the requirements process. BPX Community Defines ES Requirements SAP Customers Applying Standards 2 1 SAP Customers 4 3 Enterprise Service Development Standards Community

11. The IVN for High TechStrong industry-leading players coming together to drive value • Industry, implementation expertise • Composite development Technology Vendors Customers • High Tech Advisory Council • Innovation Leaders Supporting Technology & Solutions Industry Customer Needs SAP IVN lead & Enabler System Integrators Independent Software Vendors Industry Services & Solutions Complementary Solutions

12. Scope and focus • Component manufacturing to OEM/EMS/ODM relationship • Collaboration Processes – Forecast, Order, Inventory, Logistics and Fulfillment, Settlement • Software agnostic • Who and How • Mix of OEM, Comp/Semi MFG, EMS • 1-2 business and/or IT participants from each company • F2F Workshops and weekly virtual team meetings • Sub teams as necessary • Collaboration workspace (http://cw.sap.com) • Out of Scope • Relationships outside OEM and Component Supplier • Private processes within a company, including finance, risk management, price setting • Supplier selection and contract negotiation processes • Environmental and Responsibility compliance • Objective/Charter • HT collaborative fulfillment models – including differentiating characteristics/usage guidelines • End-to-end underlying collaboration processes/data exchange and choreography • Metrics and terms and conditions • Influence industry standards definitions CDG for Collaborative Fulfillment

13. Agenda • SAP, Standards, and Ecosystem Communities • Common Methodologies – Eliminating the Noise • Standards Strategy – Alignment and Convergence • Tools – Modeling, Mapping, and Integrating Business Data • Next Generation – Integrating Business Processes, Business Data, and Business Information Exchanges

14. ≠ ≠ OAGi Message Interface B2MML Message Interface RosettaNet Message Interface Equivalent content is designed unnecessarily different • Current Approach • Leads to unnecessarily incompatible representations of equivalent message and data types • Requires extensive integration efforts for expensive mappings • Requires broad business expert knowledge for implementation Developed and Elaborated Methodologies • Standardizing Design Rules • Protect investments of message interfaces by common message and design rules • Guarantees stability of message and data type design rules • Uniform Design Rules • Help to integrate with B2B standards • Reduce/eliminate interpretation issues • Reduce variance across industry standards Independently Developed and Elaborated Methodologies • Universal Methodology Standards • Drives down cost of integration • Better integration with B2B Standards • Leverages B2B integration in new markets (e.g. SMEs, public sector) Why Common Methodologies?

15. At the Core is an Implementation Layer of ISO 11179 ISO 15000-5 ISO 11179 PrinciplesSemantic, Syntactic, Lexical, Uniqueness PrinciplesSemantic, Syntactic, Lexical, Uniqueness Rules Normative & Informational Rules Normative Aggregation Concepts Normative Context Normative ISO 15000-5Conventions ISO 11179Conventions Implementation of the guidelines and principles of ISO 11179 Conceptual

16. Common Methodologies Standards Stack R e g i s t r y XSD XML Note: UML = Unified Modeling Language UMM = UN/CEFACT Modelling Methodology XSD = XML Schema Definition Language XML = Extensible Markup Language XMI = XML Metadata Interchange XCDT = XML Expressed Core Data Types BCSS = Business Collaboration Specification Schema UCM = Unified Context Methodology SBDH = Standard Business Document Header XML NDR EDIFACT EDIFACT Syntax XCDT UML Profile for CCTS UML XMI Message Assembly UCM SBDH Component Library Business Data Types Core Components Technical Specification Data Type Catalogue ISO 11179 Context Categories Business Processes UMM

17. Discrete Industries Joint Automotive Initiative (AIAG, STAR, VDA, Odette, JAMA) RosettaNet (high tech) OAGi (manufacturing) AIA (Aerospace & Defense) BoostAero (Aerospace & Defense) Process Industries CIDX (chemical) RAPID (chemical) PIDX (Oil and Gas) WBF (manufacturing) OPC (manufacturing) EUROFER (steel) papiNet (paper) Public Services EPC Global (RFID) IHE (healthcare) HL7 (healthcare) PESC (higher education) HRXML (human resources) US Dept of Navy US DCMA US DLA (DoD logistics) World Customs Org European Union Various Governments Australia, Canada, Germany Hong Kong, Korea, Sweden CCTS Engagement in Key Standards Organizations • Financial Services • SWIFT (banking) • UNIFI (ISO) (banking) • FinXML (banking) • ACORD (insurance) • XBRL (financial reporting) • Service Industries • TM Forum (Telecomm) • CIP4 (media) • ATA (travel) • OTA (travel) • Trade Industries • ARTS (retail) • GS1 (retail) • 1SYNC (CPG) • VICS (retail) Monitoring and evaluation Active use Active Use and contributing Full implementation No action

18. Applying the Common Methodology Standards at SAP … enterprise services definitionssimplified discovery and governance of composition-ready services … a composition environmentRapid modeling and deployment on enterprise SOA principles Flexibility, speed of change and lower TCO on a single integrated platform … process componentswith 30+ years of best practices from 26 industries built-in … an integration platformfor robust provisioning and integrationof heterogeneous applications … supported by a trusted ecosystem

19. Drilling Down – At the Core are ES Repository Objects Enterprise Services Repository Business Architecture Scenario Catalogue Integration Scenario Model Integration Scenario Models Process Component Models Process Component Model Executable Business Processes (BPEL) Global Data TypesCCTS-based Message Types Service Interfaces Mapping

20. ES Repository Objects in Detail – Global Data Types Global Data Types are SAP-wide defined data types with business content. They are defined in accordance with industry standards and offer customers a way to use one common data structure. : 1 Business Semantics Example: Price Global Data Type ( SAP/CCTS 1..* 1 ..* 1 NoBusiness Semantics Example: Amount Core Data Type ( CCTS ) 1 ..* 1 Characteristics: • Standards Based (CCTS Stack) • Defined in Enterprise Services Repository • SAP-wide approved with reference to the Governance Process • Semantic building blocks for interfaces (reuse) Example: string, date, binary Primitive Data Type (CCTS/XSD)

21. Agenda • SAP, Standards, and Ecosystem Communities • Common Methodologies – Eliminating the Noise • Standards Strategy – Alignment and Convergence • Tools – Modeling, Mapping, and Integrating Business Data • Next Generation – Integrating Business Processes, Business Data, and Business Information Exchanges

22. The Situation Today – Standards Divergence 1000s of Standards Development Organizations SAP Customer BusinessPartners Market- place Gartner: Only 5% of the interface is a function of the middleware choice 95% is a function of application semantics and logic Partner Gartner • 30-40% of average IT budget is spent on integration (Gartner, AMR) - $30b USD Costly, Inefficient Barriers to Cross-Industry Interoperability

23. Fragmented Value Chains & Implications • Products, manpower and services are sourced globally via business networks, creating significant challenges in business process collaboration • Low levels of semantic interoperability create enormous friction in business networks • Business networks cross many traditional vertical industries, each with their own set of standards, which exacerbates the interoperability challenge Fragmented Value Chains Large-scale business networks require B2B transaction automation with exception-based manual intervention. This in turn requires: • Common cross-industry semantics for collaborative B2B processes • Interoperability of the technology platform Totally reconstructing a B2B integration every time you want to set up or extend a business network is an approach that won't scale Implications Business Network Transformation is the conversion of fragmented value chains into a closed-loop collaborative ecosystem that delivers new levels of efficiency, innovation, and agility

24. Manufacturing Financial CP, Life Science, Trade Industries SWIFT OAGi In the discrete and process manufacturing spaces, We are driving a convergence of standards around the Open Applications Group (OAGi). HR-XML, AIAG, STAR are quite active and WBF, MIMOSA and ISA are also working with OAG. Banking IVN UNIFI In the financial industries, specifically banking there is a convergence of standards that is centering around UNIFI, which is the ISO 20022 group. SAP is leading the definition of services in a Banking IVN. GS1 In the retail and trade industries, there is alignment around GS1 specifications but not convergence yet. Solution – Drive Industry Centers of Convergence • The market is reacting somewhat to the rampant proliferation of vertical industry standards. SAP is focusing it’s efforts on grass roots efforts around standards convergence. The objective is to substantially increase the re-use of business standards and to promote cross-industry interoperability. Common Methodologies

25. Agenda • SAP, Standards, and Ecosystem Communities • Common Methodologies – Eliminating the Noise • Standards Strategy – Alignment and Convergence • Tools – Modeling, Mapping, and Integrating Business Data • Next Generation – Integrating Business Processes, Business Data, and Business Information Exchanges

26. Financial Services Financial Services Financial Services Suppliers Suppliers SAP Customer SAP Customer Transportation LSP SAP's Application DISTRIBUTOR OR WHOLESALER DISTRIBUTOR OR WHOLESALER Get / Reuse MANUFACTURING MANUFACTURING Other Application Other Application Other Application Other Application Other Application Other Application Other Application Other Application Other Application Other Application Map/Modify Integrate SAP's Application SAP's Application SAP's Application SAP's Application Customer RETAIL CUSTOMERS RETAIL CUSTOMERS RETAIL CUSTOMERS RETAIL CUSTOMERS Get / Reuse Map/Modify UN/CEFACT Integrate Get / Reuse Map/Modify Integrate PI PI Tool Based Community Approach Provide Adjusted Services Get users know-how and reuse it Commonly develop and modify Get / Reuse Map/Modify Integrate Integrate Community Platform Get / Reuse Map/Modify • Supported by automatic features • language processing • contextualization • mapping • consolidation and harmonization • governance • integration of interfaces/ transformation scripts Get / Reuse Map/Modify Integrate Get / Reuse Map/Modify BNT

27. Agenda • SAP, Standards, and Ecosystem Communities • Common Methodologies – Eliminating the Noise • Standards Strategy – Alignment and Convergence • Tools – Modeling, Mapping, and Integrating Business Data • Next Generation – Integrating Business Processes, Business Data, and Business Information Exchanges

28. SupplierRole CustomerRole Sales System Purchasing System Order Order Response Enterprise Services Enterprise Services Invoice Problem – Business Processes are not well defined, collaborative, or integrated Most business standards focus on specifying message definitions; reduces cost of mapping Business processes usually defined as simple swim lanes; exception handling rarely defined Standard service interface definitions for B2B processes even rarer ! Lack of a well defined set of compatible message definitions, business processes and interfaces, means the “private process” usually has to change

29. Solution – Business Process Definitions – within and across industries Source Procure Fulfill Manufacture Distribute Pay Sell Service • Standards convergence of business message definitions has started • Convergence of business process definitions also required Standard ways of defining processes will help Banking PIDX or CIDX? CIDX orSWIFT Oil Chemical RosettaNet, or SWIFT? Retail RosettaNet or GS1? RosettaNet or CIDX? Automotive High Tech RosettaNet or OAGi? OAGi or Spec 2000? ConsumerProducts High TechComponents Aerospace

30. Choreography • Defines the sequence of exchanging messages between independent services • Requires cooperation between services as no single organization in control Process Definition StandardsTwo use cases: Orchestration and Choreography • Orchestration … • Is like a conductor in charge of an orchestra – she tells each orchestra member what to do • Choreography … • Is like a dance troupe – each dancer operates independently – but they have to agree the choreography in advance for the dance to work Orchestration • Defines the sequence in which processes execute • A single organization or process is in control of what happens SupplierRole CustomerRole Composite App. Composite App. Enterprise Services Enterprise Services Service Interface

31. Process Definition Languages Different Standards Address Different Viewpoints • For the Business Process Expert’s Viewpoint • Business Process Modeling Notation (BPMN) – Business-oriented graphical language for defining sequence of activities and conditions that constitute a business process. • BPMN 2.0 - a work in process (SAP engaged). Improved capabilities for modeling choreographies, to add to BPMN 1’s strong support for modeling orchestrations • For the Execution Engine Viewpoint • For Orchestration • Business Process Execution Language (BPEL) Constructing business process definitions - can be executed by a process execution engine. Steps of a process may trigger service invocations. • BPEL4People – BPEL extension than enables the execution engine to integrate human interaction into the execution of a process, • For Choreography • Web Service Choreography Definition Language (WS-CDL) • Defines the sequence of message exchanges independent of the used service(s) • Defines the roles played by message senders and receivers • Supports complex or time-sensitive non-trivial collaborations when building business networks • Translating Between the two Viewpoints • BPMN to BPEL – the BPMN standard has a non-normative mapping • BPMN to BPEL transformations are typically semi-automated, meaning that they allow engineers who understand BPEL to configure how the translation is done. Because BPMN is at a higher level of abstraction than BPEL, a BPMN model can usually be translated to BPEL in more than one way. • For example, the BPEL that a BPM suite generates from a BPMN-based model may be different if the execution is highly distributed than it would be if the execution engine is highly centralized. The degree to which the execution engine is distributed is a technical concern that does not surface in the BPMN model, which describes the business process without regard to such matters. • BPMN to WS-CDL mappings have not been standardized

32. OAGI Business Process and Choreography Working Group Charter • Two goals • Develop standard for defining and documenting business processes – leverage EIC work • Develop and document selected business processes using the agreed approach • Community Approach • Partner with appropriate SDOs and others • Steps • Review and build on EIC work on defining business processes • Review standards for defining business processes – especially BPMN and UN/CEFACT Modeling Methodology (UMM) • Develop standard • Pilot business process definition(s) • Publish results for external review • Refine and finalize standard

33. SupplierRole CustomerRole Sales System Purchasing System Order Order Response Enterprise Services Enterprise Services Invoice Ultimate Goal – integration of applications, business processes, data models, and information exchanges • End-to end integration will be easier with standardized message, business process and service interface definitions • Process and message definitions must be context sensitive to handle industry and regional differences Most business standards focus on specifying message definitions; reduces cost of mapping Business processes usually defined as simple swim lanes; exception handling rarely defined Standard service interface definitions for B2B processes even rarer ! Without a well defined set of compatible message definitions, business processes and interfaces, then the “private process” usually has to change

34. Mark CrawfordStandards Architect GEPG Standards Management and Strategy T 703 670 0920/C 703 485 5232 E mark.crawford@sap.com Thank You!

35. Synergy Between Core Components, OWL, RDF and Semantic Web RDF is Semantic Web locator OWL is Semantic Web language XML is expression of information CCTS can be the heavy lifter at database level for easing burdens on XML/RDF/OWL Consistency to data structures, meaning and use Consistency in metadata Semantic Web Stack Semantic Based Data Courtesy W3C