ERP Transformation Presents Both Opportunities And Challenges

At SAPPHIRE NOW, held June 5-7 in Orlando, the overarching theme that came up over and over was the idea of the intelligent enterprise, and what it takes for an organization to start becoming one.

This move to the intelligent enterprise is driven by organizations on the journey of digital reinvention, and a key enabler is the underpinning application technology platform. Digital reinvention means many things to many organizations, and some of the common themes that were addressed at SAPPHIRE NOW as key drivers and enablers include:

Customer-centricity: C-suite executives across organizations recognize that they need to put the customer at the center of everything they do. As the emphasis on the total, integrated customer relationship continues to intensify, organizations are responding accordingly. The new generation of CRM and e-commerce solutions are fundamental to this.

Data drives differentiation: Organizations are also acutely aware that real-time data insights will be a differentiator, from embedding external data into transactional processes for informed decision-making to creating captivating experiences for customers based on a more individualized, digitalized engagement.

Digitalized processes: A fundamental element of the intelligent enterprise is the move from analog processes to digitalized process, including creating a first-class mobile user experience, processes enabled with real-time data insights, and cognitive processes empowered by automation and machine learning.

Cloud first: Most organizations are looking at a cloud-first approach for their technology platform, especially platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions.

Over the course of the event, we saw countless examples of how moving to a digital ERP platform can enable businesses to integrate a variety of groundbreaking technologies, drive new sources of business value, and capitalize on specific use cases. For instance:

Using blockchain, organizations can enable smarter, more trusted interactions with partner organizations and suppliers.

The Internet of Things (IoT) can be applied to bring unprecedented amounts of data into enterprise systems from new sources, setting up business leaders to draw higher levels of insight and make more informed decisions.

With robotic process automation (RPA), organizations can remove the need for employees to perform time-consuming, error-prone manual tasks. This, in turn, frees up those employees to focus on high-value tasks that drive greater business performance and higher customer satisfaction.

Taking advantage of ERP in the cloud can lead to cost savings and greater business agility. In particular, a private cloud allows organizations to make use of the massive amounts of data entering their systems while still meeting their responsibilities around data security and privacy.

Digitalizing the ERP platform is easier said than done

In the context of the use cases named above, a digital ERP core is a means to an end, setting businesses up to truly become intelligent enterprises. Based on my experience attending SAPPHIRE over the past several years, businesses are becoming increasingly aware of this fact.

When it comes to ERP platform migration readiness, I tend to separate organizations into four main groups when it comes to migration of current systems of record to next-generation ERP:

Those with no plans to migrate. They know they may be forced to make a move when their ERP provider stops supporting their existing solution, but they don’t see the need to start planning for that eventuality today. The risk is that they may not be able to react to new business requirements.

Those with no roadmap to migrate. They typically understand the benefits of migration, and may even have requirements from the business, but have difficulty knowing exactly how to get started.

Those with no business case to migrate. They may have heard some general discussion about the benefits of digital ERP transformation, but they lack a concrete use case that would provide a business justification for making such a move and what that would mean for the business.

Digital leaders who know that an ERP platform migration is a part of their overall transformation strategy. With everything else they have to do as part of that strategy, transforming their ERP platform comes into the overall digital reinvention program and will be planned accordingly.

In years past, the majority of organizations I came into contact with would have fallen squarely into Group #1. However, at this year’s event, there was a noticeable increase in the number of organizations falling into Groups #2 and #3. Group #4 remains the outlier.

With this in mind, it’s clear that a growing number of companies recognize the need to undertake an ERP platform transformation in order to pursue the benefits of advanced technological capabilities like blockchain, IoT, and RPA. These organizations are now less concerned with why they should be making this move and increasingly concerned with how.

Hybrid IT based around a digital ERP platform creates the opportunity to bring together diverse elements and capabilities into a single core that can drive a digital transformation initiative forward. However, it also creates new challenges: the organization must be able to create a backend architecture capable of properly integrating those hybrid elements, while also ensuring security and effective data management. This is the key reason that even organizations that are aware of the benefits of ERP platform migration may find it difficult to start pursuing those benefits.

While the digital ERP platform is a key enabler to the intelligent enterprise, the real business value and differentiation comes more from unlocking the capabilities of ERP, such as real-time integration of Big Data and optimized mobile UX. It will change how we work, how we run our business, and how information is consumed:

Real-time operations: This will change how you work, do business, and organize.

Insights: Integration of Big Data (such as Internet of Things and weather data) into transactional ERP processes will provide live insights like never before, and enable informed decision-making.

Power of prediction and simulation: Every employee can leverage real business insights to help make better decisions, improve productivity, and increase profitability.

Agility: This is required in the digital economy; it empowers organizations to rapidly enter new markets and onboard new companies, reflecting organizational changes in one-tenth of the time.

Deployment choice and lower total cost of ownership: Deploy on-premises or in the cloud; free up more funding for innovation initiatives.

Consumer-grade user experience: User experience drives adoption, engagement, and productivity.

Learn more

If your organization is among those that are considering a migration to a digital ERP platform such as SAP S/4HANA, but is unsure about how to get started, this year’s SAPPHIRE NOW conference clearly demonstrated that you aren’t alone. Working with an established SAP partner such as IBM could help you establish the migration roadmap or business case you need.

Start by checking out the Webinar “Building a Business Case for SAP S/4HANA.” You’ll learn the top factors contributing to ROI from your migration, and what you need to do to get started.

About Mark Dudgeon

Mark is a Distinguished Engineer with cross industry experience, with focus predominately on SAP Architecture. He has worked in the IT industry for almost 30 years, and 15 years of SAP Architecture experience from PwC and IBM.