Grow or disappear – bring your SAP to the digital age
By Timo Pyykönen, Manager Solution Design
Digitalization is revolutionizing the market in all industries, and success-seeking companies need agile Enterprise Resource Planning more than ever before. SAP has invested strongly in solutions promoting digitalization and after 2025, it will only support S/4 HANA, based on in-memory technology.
SAP is no longer developing current ERP versions. Therefore, companies are facing an important transformation project with a price tag of millions of euros. Companies using SAP are now considering what the right steps and schedules on their SAP transformation paths are.
What benefits does a transition to S/4 HANA bring and where does the payback come from?
The benefits can be associated with improvements in the production or logistics, for example. A company whose production, sales and logistics work a few percent more efficiently than its competition has a significant competitive advantage. A competitor who is unable to do the same will eventually disappear from the market.
The challenges are there to be solved
According to my experience, only a few companies have a clear digital strategy. Companies do not know how digitalization can be utilized and how processes and practices should be redesigned to serve the growth of businesses. Some companies do have a digital strategy, but not the platform needed for implementing new services, nor the up to date ERP digital core.
Numerous companies use SAP systems that are more than 10 years old, and there are also lots of customer specific, tailored functionalities. Managing change brings challenges and takes too much time.
Accordingly, many companies have an environment for which it is onerous and expensive to build the capabilities required for digitalization. In-memory based S/4 HANA enables simplification of the ERP structure and increased automation. S/4 HANA also brings better user experience together with real time responsiveness.
Get started with the help of mapping and analyzing
In the case of a massive project like this, it is necessary to start with a professionally conducted mapping and analysis. I claim that an internal project without appropriate tooling would take too much time. Initially, we evaluate the usage of the ERP system and go through the main processes by utilizing performer tools and methodology, as well as benchmarking modules and processes to corresponding ones. At the same time, we identify the pain points and bottlenecks of these processes. How can the challenges be solved and would it bring new business?
The roadmap built on the results of the analysis explains what actions and investments the company needs at what stage. I also recommend evaluating what the competitors are doing and how startups, which start off from a clean slate, operate. Additionally, one should consider what kinds of capabilities a company needs, for example after a few years, to succeed in the competition that is getting increasingly tougher.
Enhancing the productivity in the manufacturing industry may require greater efficiency in main production and logistics processes. Disadvantages and losses are big if, for example, a cargo ship cannot move in line with the planned timetable because of a bottleneck in the ERP.
Don’t make ‘blind’ decisions
SAP systems are the backbone of numerous Finnish businesses. A manufacturer producing consumer goods, or a steel manufacturing group, must be able to operate in an increasingly connected environment. Managing the whole supply chain is more challenging than before, and requires new kinds of capabilities also from the operational management. Who can recognize silent signals and implement new operational approaches?
SAP Cloud Platform can be integrated to SAP’s digital core, allowing IoT devices and consumer applications to be combined with ERP systems. For example, a maintenance worker on the field can easily get access to up-to-date CAD images and make time bookings with a tablet through the cloud directly to the ERP system.
Big decisions should not be made ‘blindly’. Require a proper cost-volume-profit analysis and modelling of new business opportunities through real examples.