SAP’s acquisition of Signavio goes to the core of its digital business strategy

SAP’s acquisition of Signavio, a provider of tools for analyzing existing business processes, will fill a critical gap in the company’s digital business transformation strategy. The deal was announced yesterday, along with a managed Rise with SAP service through which the company will manage digital business transformation initiatives on behalf of customers. The Signavio acquisition gives SAP an intelligence platform that identifies inefficient business processes SAP could then make a case to modernize on behalf of a customer. Terms of the Signavio deal, expected to close in the first quarter, were not disclosed.

At the core of SAP’s revamped approach to digital business transformation is the SAP S/4 enterprise resource planning (ERP) software. The company regularly adds processes and updates to address use cases spanning multiple vertical industries. However, convincing organizations to embrace a business process defined for them by SAP requires the company to first prove existing business processes are inefficient.

Most senior business executives tend to assume that processes defined by senior management are closely followed. In reality, there is often a lot of drift from those prescribed processes because of simple inertia or the need to make exceptions, SAP GM for business process intelligence Rouven Morato said.

The tools from Signavio first create a model of those processes. The model can then be compared to the way processes are actually being executed, using data collected from the customer, Morato said. A free version of Signavio will be included with the Rise with SAP service, with an option to upgrade to a more expansive and expensive option.

Armed with that data, SAP can then make a better case for employing SAP S/4 to replace a custom business process, like invoice processing.

Under the terms of a Rise with SAP services engagement, the transition to the business process defined by SAP will be managed under a single contract, including all the integration work provided by third-party IT services providers. The providers will act as subcontractors to SAP. The goal is to reduce the level of friction organizations encounter when they decide to modernize a business process.

The business intelligence platform will also continue to play a significant role after the process is modernized, Morato added. There’s often a lot of resistance to new processes, in the form of organizational inertia. But the SAP platform will enable organizations to identify when employees are either relying on a legacy process that has been rendered obsolete or not correctly following proper procedures, Morato said.

SAP will also be using the data collected via the Signavio platform to further refine the processes embedded within S/4 to create a more symbiotic relationship between software and processes, he noted. That data will also be employed to train the machine learning algorithms SAP is embedding within its applications and databases. “We’ll be able to create business process profiles,” Morato said.

He said the decision to acquire Signavio partially stems from the fact that SAP has been using the software to help optimize its internal processes for more than six years.

While organizations are embracing digital business transformation initiatives at varying rates, most of them are moving away from batch-oriented applications that were typically updated overnight in favor of processes that occur in near real time. That shift results in an improved digital experience because all the data residing in multiple applications is better synchronized across a range of processes.

SAP is hardly the only provider of these kinds of enterprise applications. The challenge most organizations face today is that they currently rely on a wide range of applications from multiple vendors to drive their processes. It’s not clear to what degree organizations may be willing to abandon those applications, but SAP is trying to make it a lot more attractive.