Stability vs Agility with SAP S/4HANA – The perfect balance
ERP systems have been experiencing a revival in the last few years. Years ago, discussions about ERP systems were seen as outdated because so many organisations worldwide already had an ERP system in use and could only see little potential for further improvements. But today, in times of digital transformation with SAP S/4HANA, the ERP system is back in the spotlight as a “digital backbone”. That is exactly what it is – and it will remain so in future. It achieves vertical integration between strategy and operative business. For example, this happens in the process of strategic planning, which provides specific targets for operative sales and production planning. However, it also links an organisation’s business departments to each other. This is ensured through processes, where sales, production, procurement and controlling are combined.
The greatest ERP challenge, but also a great deal of potential for further improvements lies in the selection of the right and correct process types in SAP ERP (e.g. make to stock production, batch manufacturing, pre-planning on a component level, configurable products, individual and project manufacturing) and the appropriate customising. However, at the same time, many CIOs ask themselves:
Should I migrate to S/4HANA? If yes, when is the right time and what is the right scenario?
How S/4HANA makes your business processes and reporting significantly faster
Basically, SAP S/4HANA offers great advantages and opportunities for the reorganisation and redesign of structures in accounting. Thanks to the conversion from the two-circuit to the one-circuit system and thanks to the new central table “Universal Ledger”, the need for coordination at month-end closing has been reduced drastically (e.g. in future, the search for differences between CO-PA and FI is dispensed with (the component for the market and sector profit and loss account)). This is one concrete example of how SAP S/4HANA makes financial processes significantly faster.
SAP S/4HANA Embedded Analytics integrates operative reporting into the business process. On the basis of a SAP S/4HANA virtual data model (Core Data Services), key figures will be easier to define and to calculate in future. However, the most important benefit for the users is that they are now shown the necessary key figures when processing a transaction. This happens with the SAP FIORI Apps, which set a new standard for both the user friendliness and user experience of an ERP system.
For instance, in the procurement process the selection of suppliers is always playing a big role. In future, thanks to S/4HANA, buyers can be provided with all relevant KPIs on suppliers (deadline adherence, quality grades, conditions, utilisation of framework contracts etc.) directly in the purchasing process.
New ways to design your logistics processes with SAP S/4HANA Embedded Analytics
Although SAP S/4HANA has not changed much to the way how the ERP logistics modules work, Embedded Analytics offers new possibilities to design your logistics processes in SAP S/4HANA. With Embedded Analytics, data (KPIs) and business processes grow together. This is also a big step towards data based automation of business processes.
We are often asked by our customers whether SAP S/4HANA makes their own Business Warehouse architecture redundant. Our opinion on this is clear and concise: NO, please keep it! Especially for inter-system reporting, for the analysis of unstructured data and for strategic reporting, whereas the majority of operative reporting is carried out directly in S/4HANA through Embedded Analytics.
The following image shows this architecture. It forms a stable framework for the illustration and analysis of processes and data.
Design Thinking as a strategy for innovation
Aside from having a stable digital framework, a big challenge for organisations is also to continuously improve their processes and develop new ideas through process innovation. Because of that, a big trend nowadays, is to install a so-called process laboratory. We believe that this goes hand in hand with the Design Thinking approach, a concept allowing ideas and innovations to be developed and tested quickly.
The following image illustrates the different phases of innovating business processes with Design Thinking:
Design Thinking is a creative process using empathy and experimentation to arrive at innovative solutions for improving your business processes, developing new applications and solutions, etc. By using Design Thinking, you make decisions based on what your target group (stakeholders, key users, …) really want instead of relying on historical data or making risky bets based on instinct instead of evidence.
Design Thinking starts with understanding and empathising with the current situation of the target group in the first step. Then, it is important to ask what the user really needs, what will help them, what their greatest pain point and requirement is. On this basis, as many ideas as possible are collected during the Ideating phase. Then, a prototype is built for one or more ideas. Initially, this is only the visualisation of the idea in the form of sketches and drawings. Eventually, the first contours of an innovation emerge. This can be for instance a new business process or a new software application.
Agile software development in the SAP Cloud Platform
I recommend to initially develop these applications outside of your digital backbone (e.g. your central ERP system). Instead, this can be done, for example within the SAP Cloud Platform. In doing so, data and features of S/4HANA (e.g. as BAPI’s) can be used. New functions can be developed to automate, simplify or complete processes within SAP S/4HANA. Step by step, this initiative results in new integrated SAP S/4HANA Apps.
For one of our customers, we have recently developed an integration solution within the SAP Cloud Platform Integration. This solution allows non-SAP-systems to communicate with SAP ERP for the calculation of services. Together with our customer, we have presented this solution and a demo at the DSAG annual SAP user congress in Bremen, Germany. Please contact us to learn more about this solution and to get a demo.
Thanks to the rapid ERP evolutions with SAP S/4HANA but also thanks to the SAP Cloud environment, SAP now offers the right means to achieve the perfect balance between agility and stability. Whether ERP basic processes in S/4HANA, via Embedded Analytics and BW/4HANA or innovation applications in the SAP Cloud Platform, all of these tools form the basis to move away from the old water fall model and become more agile without disturbing the stability of an ERP as a digital backbone.