Digital Strategy: Why Compromise?

In the first of four posts about how to accelerate your enterprise’s digital journey, we discuss how to meet the demands of your digital business through rapid provisioning of SAP resources.

Organizations must continuously capitalize on market opportunities and adjust to market disruptors with new solutions, business models and revenue streams. Time to market is increasingly important, not just as a competitive differentiator but for business survival. Now is the right time to migrate your ERP solution to cloud by e.g. transforming your SAP core to become more flexible and agile while supporting your digital business.

There are four major advantages to gain from a cloud-based SAP solution:

  • Accelerate time to value
  • Achieve continuous improvement
  • Reduce TCO
  • Become always-on and resilient
Major advantages of SAP on demand.
Figure 1: Major advantages of SAP on demand.

Each of these major advantages will be discussed in more detail in a series of blogs. In this post, we will focus on accelerating time-to-value.

Now, imagine which of the following scenarios would best describe your current situation or plans regarding your SAP environment?

Do you plan to migrate your SAP landscape to the current release in the near term? Many SAP customers are still on older releases (in many cases even far from current ones). By 2025 at the latest, the maintenance for the actual SAP ERP product will be terminated, and the product will be replaced by SAP S/4HANA. What do you think about a significant reduction of effort and time for such a migration? Migration to cloud-based SAP releases could take 6 months or even less, while a migration of traditional SAP releases typically takes 18-20 months (or even longer depending on the degree of customization). We can help you to deploy such a migration up to 25 percent faster and will save you up to 40 percent of the respective cost.

Do you plan to implement new features extending your SAP application to support new functionality enabled by new technologies such as Internet of Things (IoT), mobility or analytics? Having an SAP environment in place, provided as Application Platform as a Service (APaaS) with respective DevOps capabilities (see Figure 2), gets you into a very competitive position by saving up to 25 percent in cost and time to develop and deploy new features.

The following figure visualizes the APaaS solution stack (we call it Enterprise Solutions On Demand for SAP). It is important to understand that rapid provisioning with this solution does not mean provisioning just a server. It means provisioning a fully functional SAP resource (i.e. an SAP instance including the full stack consisting of server hardware/OS, database and SAP application). So these examples result in a fully functional SAP environment.

SAP on demand solution stack (aPaaS).
Figure 2: SAP on demand solution stack (aPaaS).

Do you envisage a merger or acquisition transaction, where both parties have SAP landscapes to be merged, or one party’s ERP has to be replaced by a common SAP landscape for the NewCo? Having an SAP environment in place, provided as an APaaS solution, helps to significantly reduce effort and time for an SAP landscape transformation. Overall, you could save up to 25 percent in cost and time.

Does your IT organization already support some kind of digital business with familiarity for the respective IT constraints vs. business demand paradigm, i.e. “time is money”  (see Figure 3)? Then you know that every period of time, when applications are not up and running, you’re losing a significant amount of revenue. In supporting a digital business, your overall objective is to avoid any disruption. So in cases where you need to, for example, conduct any maintenance or proof-of-concept activities in your SAP landscape, you first need to apply a copy or clone of your production environment. With a cloud-based SAP solution, you can easily provision required SAP resources much more quickly — in minutes or hours, instead of days or weeks.

 IT constraints vs. business demands.
Figure 3: IT constraints vs. business demands.

Do you want your business users to directly manage SAP resources on demand with, in fact, no IT involvement — simply by requesting a catalog item be executed in minutes/hours instead of days/weeks? Let those business users perform SAP copies, clones and refreshes whenever needed.

For example, your project teams can provision SAP resources for patches, security assessments or other requirements on schedule or ad hoc. And further, if for whatever reason the provisioned SAP resources are not required on that scheduled date, project teams can suspend/stop these SAP resources to avoid charges and resume SAP resources on a new date, whenever they are ready to execute the project. (The following demos give you an idea how this rapid provisioning of SAP resources would work: ESO for SAP copyESO for SAP suspend/resumeESO for SAP elasticity.)

Rapid provisioning and scaling of SAP resources enables your business users or project teams to adopt the digital business platform whenever the business requires it, according to peak or decreasing demand (see Figure 4).

Outperform your competition by SAP on demand.
Figure 4: Outperform your competition by SAP on demand.

We mentioned above how businesses can implement new features to extend SAP functionality for technologies such as Internet of Things (IoT), mobility and analytics. Let’s now look at some examples and the advantages such new features can have for your digital business.

Embracing emerging technologies

Real-time analysis: By integrating cloud and application key performance indicator (KPI) monitoring, organizations can enable detect-to-correction capabilities. Real-time analysis can track infrastructure and application performance on business and technology KPIs, determine when specific issues might impact the business, and engage automated mitigation methods to resolve them before they become an issue. Such resolutions can take minutes, too, instead of the days it takes to manually mitigate problems after they arise.

Real-time analysis to reduce Days Payment Outstanding: Cloud ERP-based accounts-receivable operations can analyze customer payment patterns in real time. Analysis also makes recommendations on which customers to target in bill collection efforts, to be initiated immediately.

IoTWith IoT and cloud ERP finance asset valuations, organizations can improve asset utilization. Typically, assets are put on a balance sheet and depreciated over time. By putting sensors on the assets, valuation can be based on use, enabling businesses to write off underused assets.

These examples can be much more easily implemented with cloud-based ERP than with traditional ERP solutions. And more and more of these new capabilities will be available as embedded features with the latest cloud-based ERP releases.

Cloud-based ERP relies on configuration, since the vendor must maintain consistent system code for all customers. That consistency enables benefits beyond the elimination of upgrades. APIs can be standardized, systems work more reliably and they’re easier to keep up to date. ERP vendors can build richer API libraries, which broadens the scope of data available for analysis and reporting in the ERP system.

Supporting an agile digital business

Let’s now look at the business perspective, and how a cloud-based SAP solution can better support an agile digital business by supporting new business models, generating additional revenue and reaching new markets and customers.

Aberdeen Group (sources at bottom) has researched how much better cloud-based ERP supports various business outcomes (KPIs) over traditional ERP. We consolidated the results of several Aberdeen studies (see Figures 5 and 6) with a focus on KPIs that contribute accelerated time-to-value.

With the use of cloud ERP, Professional Services reports better than factor 2 improvements across all metrics (complete on-time delivery, internal schedule compliance, cycle time of business processes), while for “data available in time to decision” improvement was above factor 3.

Manufacturing shows better than factor 2 improvements for “time to decision” and the “cycle time of business processes”, while Midmarket is near to factor 2 improvements for these same metrics, and Wholesale & Distribution gains better than factor 2 for improvement of “data available in time to decision.”

And don’t forget, even improvements above factor 1 are significant, as, for example, a factor 1.1 stands for an improvement of 10%. So overall cloud ERP provides solid if not outstanding improvements for a couple of “agility” KPIs across selected industries. (We will discuss other KPIs, such as cost and customer satisfaction, in the following blogs.)

KPI improvements from cloud ERP across industries.
Figure 5: KPI improvements from cloud ERP across industries.
KPI improvements from cloud ERP for Accelerate Time-to-Value.
Figure 6: KPI improvements from cloud ERP for Accelerate Time-to-Value.

 

Stay tuned for more blogs in the coming months on the specific values you can gain from our on-demand SAP solution. We’ll explore:

Part 2: Continuous improvement

Part 3: Reduce TCO

Part 4: Always-on and resilient business

Learn more about our offering.

We are interested in hearing your thoughts on this subject. What reasons have you identified to move your SAP environment into the cloud? Let us know in the comments below!

Joachim Mayer

Author: Joachim Mayer

Joachim Mayer is the DXC global marketing manager for continuity services and Enterprise Solutions On Demand for SAP. With prior experience in product management, sales enablement, sales, and consulting he provides insight from this diverse experience in this blog.