(SAP’s Hagen Heubach talks Catena-X)

When I initially listened to rumblings about SAP’s “automotive alliance” additional than a calendar year ago, I was cautious: was this just a clever backdoor into a products-centric converse about Ariba?

But then, I grew to become intrigued. For the duration of a podcast with my retired colleague Den Howlett, SAP CEO Christian Klein spoke passionately about the initiative. Nevertheless I have experienced some testy back-and-forth with Klein at situations, he is an exec I fork out shut focus to.

Then, we have this mysterious March 2021 press release, Catena-X Automotive Network Picks Up Speed. I say “mysterious” since there is vagueness below, these types of as: “The Catena-X pilot tasks are targeted on five areas of application that have been jointly defined.” Why would I have interest in a mysterious press release? When was the previous time you observed these styles of companies banding jointly?

The founders of the spouse network include BMW AG, Deutsche Telekom AG, Robert Bosch GmbH, SAP SE, Siemens AG and ZF Friedrichshafen AG.

Added companies have joined the initiative, together with Mercedes-Benz AG, BASF SE, Henkel AG & Co. KGaA, Schaeffler AG, German Edge Cloud GmbH & Co. KG, ISTOS GmbH, SupplyOn AG, the German Aerospace Centre (DLR), Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V and ARENA2036, as effectively as various small and midsize enterprises (SMEs).

Indeed, this has a decidedly German flavor, at least in the early phases, but these forms of alliances are not normal. Then you see:

The Automotive Alliance will run under the title Catena-X Automotive Community (Catena-X). As an implementation-oriented network and to help guarantee openness and neutrality, Catena-X plans to organize alone as a registered affiliation in Germany..

Openness, neutrality, and… company program?

Openness and neutrality – not what you ordinarily see from enterprise computer software vendors. I believe that the potential of ERP is not again place of work, but vertical spine. That is why market consortiums crafted on open up standards genuinely catch my eye:

Catena-X sees by itself as an extensible ecosystem in which automotive companies and suppliers, dealer associations and machines suppliers, which includes the suppliers of purposes, platforms and infrastructure, can all take part equally. The intent of the affiliation is to create a uniform common for data and info-sharing in the course of the complete automotive value chain.

But in the summer time/tumble, the PR device close to Catena-X went quiet – nevertheless the Catena-X internet website does have information things (and a board of directors listing). Where by was the drop update Klein alluded to in the podcast? Was Catena-X getting momentum, or, probably, caught up in regulatory red tape, or pandemic provide chain distractions? I resolved to discover out.

Soon, I located myself on a video clip call with Hagen Heubach, Global VP, Marketplace Small business Unit Automotive at SAP, and Board Member of the Catena-X Automotive Community. As Heubach explained to me, pandemic offer chain pressures, such as the notorious chip scarcity, are the sparks that ignited Catena-X:

The automotive industry is totally underneath transition. There is a huge shakeup, with the semiconductor disaster – our chip lack and uncooked content shortage. These are critical points we’re trying to handle with the automotive alliance. 

Heubach sales opportunities SAP’s options for automotive and mobility globally. But this is not a seller-particular challenge to clear up. Nor is it a thing just one automotive company can handle, withholding cooperation from other heavyweights. Heubach:

I was included from working day a single in Catena-X. When we released it, we talked alongside one another with the important players of the business… We located out pretty plainly, ‘Hey, there is so much far more benefit together the price chain or source chain, that is nevertheless buried. And we have so a lot much more probable to enhance, if we all transfer this absent from a classical peer-to-peer connection, to a community-dependent solution.’

Of system, that means a protected, neutral, and interoperable data exchange. As Heubach set it, no one particular will share info if your network is not trusted – and you should usually be in management of your info. Then the use cases can be designed:

So, we’re addressing the true use conditions, like pieces, traceability, demand from customers capability, quality management, sustainability – and place them alongside one another with the knowledge sovereign cloud.

Catena-X, the group, was formally launched in May perhaps 2021, with an alliance of eight automotive companions.

At the coronary heart of this is a movement stating, ‘Hey, we all commit to this basic strategy of facts sovereignty, fostering the information trade and the transparency together the benefit chain for automotive.’

The plan is to grow that value chain membership, further than the first field adopters, into mobility assistance suppliers, IT suppliers, and OEMs:

If we all occur with each other and be a part of forces, developing this network in the appropriate use conditions for it, then we genuinely have a get-acquire problem.

The momentum is developing. As of our November communicate, Catena-X has 62 members, spanning perfectly further than Germany. The German governing administration is also supporting to fund Catena-X open supply is a major layout theory.

We are setting up major components within Catena-X as open up resource components… We have started an open Eclipse Basis task, exactly where various companies are building. SAP is creating in there now Siemens is developing in their two techniques, BMW, Porsche and so forth.

As often, the evidence is in the effects, not in the push releases. When can we be expecting tangible product or service?

The initially POCs and MVP is out there. We’re scheduling to be stay by Q1 2022. The first real use circumstances the 1st evidence factors are there. We are also addressing this from SAP’s aspect with our portfolio, the to start with desires and the use circumstances. Most of all, we are heading to make our customers in good shape for the long term, to be Catena-X all set.

Initially up? A traceability use circumstance, dubbed “Logistic company network substance traceability,” with a pair of include-ons on top rated of it, addressing parts tracking, and the re-use of components. “It is quite a compelling use circumstance,” says Heubach.

My choose – give me sector consortiums over proprietary platforms

For all those who you should not choose this effort significantly mainly because of its minimal profile, time to rethink. I hope SAP to advance the promotional facet of Catena-X in the new yr, as assignments go-reside.

I am not exactly an Ariba fanboy. If you continue to believe that this is a company-networks-marketing and advertising-Trojan-Horse, I can only notify you that Heubach failed to use the Ariba term at the time, and he only stated S/4HANA a several periods. In the previous 12 months, to force their enterprise network advancements, SAP has been making use of an epically cringe-worthy catchphrase, “the network of networks.” But: that would not suggest SAP is erroneous about the upcoming of market networks. Catena-X, with its drive for open up criteria, associates who could or may possibly not operate SAP application, and competition turning into cooperators as they tackle field stumbling blocks – that has the components of a marvelous story.

Of study course, there is a massive merchandise profit for SAP as properly. Heubach tells me SAP intends to tie S/4HANA into the Catena-X platform, so automotive clients can pull in people open up source components. It truly is instructive how significantly you can achieve for your individual consumers – when you established a broader mission. Heubach thinks this is our potential: anticipating one particular vendor’s system to carry an marketplace alongside one another is legacy wondering.

Along the way, ERP variations. The upcoming of ERP as a back again office method of report is a bleak commodity. The long term of ERP as an operational spine for your market – that’s where ERP receives intriguing.

Blockchain fans may protest I’m rubbing it in right here, but I think it is really essential to take note that Catena-X is not developed on blockchain. Blockchain krishnas would have us consider that in purchase to offer (supposedly) immutable rely on among sector worth chains, that blockchain would be a innovative power in this article, a tech no-brainer.

That misguided imagining has led to a preposterous, overextended buzz cycle. It really is distracted us from the true level: these field issues are not supposed to be solved with question-tech, but by people (and providers) working together in daring new techniques. The engineering utilised will be whichever resource matches ideal. It’s possible it can be blockchain (or other distributed ledgers), and possibly it really is not.

I won’t get into all the tech aspects right here, but Heubach suggests they needed a facts architecture that delivered all participants with a distinct stage of network belief and data manage:

The info is saved where it really should be, in the ERP units, in the details lakes. What you do is just give obtain legal rights to each individual other, to share and enable info throughout a company community.

A important component is Gaia-X, the Global Details Areas (IDS) regular. The present set up presents individuals granular regulate around info entry rights, controls they can frequently change. Heubach will not rule out the use of blockchain in the future, but it didn’t variable into this preliminary start.

Other industries could gain from this tactic – industries where by the stakes are substantial, and SAP’s footprint is important. Health and fitness treatment arrives to intellect, with the identical thorny issues of facts sovereignty and privateness, along with the backdrop of huge transformation. Heubach’s team has obtained inquiries from other verticals. He sees no motive why these similar strategies couldn’t at some point be tailored in other places. Now that would be a refreshing break from all the generic blather we hear from distributors about “sector clouds.” For now, Heubach is aware they have to verify this design out:

This is so substantially much more of a joint [partnership], what you can make if you happen to be following an ecosystem strategy, instead than likely on a single platform, locked-in solution. Which is not the form of fashion we are pursuing. Anything requirements to be open up to be interoperable. That’s the key.

Give me far more of that form of project whenever.

By Tara