By Shiraz Khota, Sales Director: S/4HANA Cloud at SAP Africa
Disruption is facing every industry and, in most cases, every job function. Today’s successful companies have no guarantee they will remain competitive without investment into the next generation of exponential technologies and the powerful cloud platforms that integrate and support them. And disruption may come in many forms: it’s not always as overt as the outlier examples of Uber or Airbnb. Often, disruption is a hidden process that quietly erodes competitiveness and reduces innovation capability.
Consider the changing role of the Chief Financial Officer and the impact technology has had on the functioning of their job. Traditionally, CFOs mostly conducted retrospective financial reporting and made decisions based on information that could take weeks – even months – to compile. Today, CFOs are expected to be able to track the financial performance of enterprise-wide assets and operations on a global scale in real time and make informed decisions that maximise profits and reduce unnecessary costs.
To do this, the underlying technology systems supporting enterprises have had to evolve. Traditional enterprise resource planning (ERP) systems often lack the real-time computing and predictive analytics capabilities of their more modern cloud-based peers, leaving many CFOs and other C-level decision-makers ill-equipped to deal with the demands of a highly complex and competitive modern business environment. And with the massive advancements of cloud-based systems like SAP’s S/4HANA Cloud over the past few years, many business leaders are re-evaluating the very nature of the enterprise planning software sitting at the core of their organisations.
The root of all (ERP) evil
Many business leaders running on-premise ERPs will attest to this: legacy systems with heavily customised ERPs makes administration and updating immensely challenging. The large ERP systems of yesteryear have left many organisations without the agility to meet modern market demands and have complicated the process of adding new functionality to fulfil modern challenges and rise to new opportunities. In the realm of the Chief Financial Officer, for example, this can take the form of extracting information from the ERP and importing it into Excel to prepare financial reports. A consequence of this is diminished accuracy in reporting, which no organisation can afford.
In the broader context of the cost-saving efforts most CFOs are undergoing, time-to-value has become paramount when choosing and implementing new technology solutions. Traditional on-premise ERP implementations are complex and may take months to complete – in some cases longer. With SAP’s Cloud ERP, the implementation is done in a matter of weeks. Total cost of ownership is also contained through functional savings, resource savings, IT equipment savings and reduced need for disaster recovery and backup solutions.
SAP’s cloud-based ERP solution further enable opportunities to incorporate new technologies such as machine learning, AI, predictive analytics and even blockchain. And while the use cases of these new technologies – in an enterprise context – may not have been entirely clear five or even three years ago, vendors have done an immense job with producing referenceable examples of new technologies delivering real business value. SAP, for example, has focused its efforts on incorporating AI and machine learning in a way that tangible outcomes can be realised which result in improved operational efficiencies, reduced manual work and lower costs.
Misplaced mistrust
While most business leaders understand that a change is needed, financial pressures in a challenging economic climate is holding them back from investing in new ERP solutions. Despite the value proposition and the work that many vendors have put in to make the process of adopting cloud-based ERP solutions as easy and non-friction as possible, there remains a prevailing fear factor around the changes needed internally to adopt such a cloud solution.
Since SAP S/4HANA Cloud incorporates technologies such as AI, some traditional job functions within the enterprise become automated. Aspects such as update management, integration, financial reporting, and back-ups and disaster recovery can be partly or fully automated and managed by the cloud provider, leaving uncertainty internally over whether there will be resultant job losses. However, forward-thinking business leaders will know that the true benefit of such solutions lies not in replacing human involvement, but in freeing up scarce human skill to take on more high-value tasks.
There remains also a mistrust of the cloud and where information is stored. Regulatory requirements regarding the POPI Act and the newly-introduced GDPR regulations in Europe add complexity to the storage and management of customer data, raising fears within organisations over their data policies and exposure to risk. SAP’s security policies for their data centres are built with the most stringent security principles in mind and to that end there is a feeling that customers need to be made aware of the security benefits of a SAP cloud solution rather than the incorrectly perceived pitfalls.
One (cloud-based) ERP to rule them all
Many vendors such as SAP have therefore invested huge amounts of time and effort into removing barriers to entry for cloud ERP adoption. SAP S/4HANA Cloud is the core of a fully integrated suite of enterprise products that include solutions for multiple lines of business, including human resources (SAP SuccessFactors), customer relationship management (SAP Hybris), procurement (SAP Ariba), travel and expense management (SAP Concur) and others.
Customers also gain access to expert skills that ensure the implementation project runs smoothly. For a traditional on-premise ERP implementation, the effort is considerable. But with SAP S/4HANA Cloud, most of the work goes into configuring the system to meet specific customer needs. Instead of developing and customising to the nth degree, customers get access to a library of global best-practices that free them up to focus on more profitable customer-facing aspects.
Extensibility is built-in to accommodate required changes however back-office functions are becoming commoditised, removing the need for further customisation, and through the SAP Cloud Platform partners can write apps with the software developer toolkit and integrate those apps to the digital core. Testing is simplified: quarterly updates with automated scripts for specific environments lessen the load on internal teams. And since updates are offered to customers two weeks in advance, they get a chance to thoroughly test the new version and ensure they are happy with the changes before a simple press of a button updates the system – with no or minimal downtime.
ERP systems are undergoing rapid and far-reaching changes that have massive positive implications for enterprises around the world. As business standardise processes and automate mundane tasks, they will increasingly unlock additional capacity and value in their workforce. With SAP S/4HANA Cloud, organisations can rapidly innovate and transform their business processes and business models to ride the wave of disruption and gain a healthy competitive edge over their peers.
