SAP 2016 – Business Process Transformation to Soar with SAP Digital Core

Blog /SAP-2016-Business-Process-Transformation-to-Soar-with-SAP-Digital-Core

Across the board, industry pundits predict spending on digital transformation will remain strong in the year ahead, and beyond:

  • IDC predicts digital transformation to be a key strategy for 67% of the Global 2000 by 2018 and that by 2017, over 50% of the IT budget will be spent on new technologies.
  • IDC expects cloud software will grow to surpass $112.8 billion by 2019 at a compound annual growth rate (CAGR) of 18.3%.
  • Gartner forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30% from 2015, and will reach 20.8 billion by 2020.
  • Gartner predicts that in 2016 5.5 million new things will get connected every day; and Internet of Things (IoT) will support total services spending of $235 billion in 2016, up 22% from 2015.
  • As reported in Fortune, Forrester reports that software-related spending will increase 5.7% over 2015 to reach $600 billion, with SaaS spending jumping 24% to $108 billion in 2016.

SAP S/4HANA Enterprise Management - What's in a name (change)?

No one in the know would ever give SAP high marks for its product naming conventions, which are characterized by frequent, often confusing, changes. In SAP's defense, we should acknowledge that the software giant's rapid and sustained product innovation (along with numerous, major acquisitions) necessitates frequent name changes. Nonetheless, at NTT DATA, we are regularly questioned by our customers about SAP product names, particularly in connection to how SAP's evolving product roadmap will impact their digital transformation plans.

Case in point: At SAP TechEd, held November 10–12 in Barcelona, SAP announced a massive wave of innovation for SAP S/4 HANA. In connection with this, SAP announced S/4HANA Enterprise Management, the new name for the product formerly known as Simple Logistics. Confused? You are not alone. But a closer look at S/4HANA Enterprise Management, specifically, the elevation of business processes over product modules in SAP's naming convention for this solution, brings clarity and direction to business and IT leaders struggling for guidance in their corporate digital transformation strategy.

S/4HANA Enterprise Management has features and functions similar to the scope of ECC 6.0, but in Enterprise Management, a significant part of the ECC body has been re-thought and re-imagined to take advantage of the capabilities of S/4HANA, most notably, eliminating the many restrictions and limitations imposed by traditional, disk-based database management systems (DBMS).

While ECC functionality has traditionally been thought of in terms of modules -- FI/CO, SD, MM, WM, LE, etc., S/4HANA Enterprise Management should be thought of in terms of core business processes, such as Order to Cash, Procure to Pay, Plan to Produce, Request to Service, as well as HR/HCM and Finance.

This shift should mark an 'aha' moment for SAP customers tasked with digitalizing core operations. After all, businesses are driven by process streams, not modules. Furthermore, business processes span lines of business, which underscores the importance of the integrated nature of SAP S/4HANA solutions.

Why digital transformation strategy must center on business-process redesign?

According to a recent, in-dept study conducted by Harvard Business, an overwhelming 86% of the 746 business managers surveyed feel their business processes and related decision making has become so complex as to hinder their ability to grow in a digital economy.

And, according to the Harvard Business study, the cost of this complexity is high:

  • Six out of ten survey respondents say complexity increased operational costs by at least 11%.
  • Nearly 50% say their IT systems cannot respond quickly enough to deliver innovative business 
models or processes.
  • 43% say complexity slows growth, impedes their ability to respond quickly to competitive threats, and interferes with effective decision-making.

To help our customers get a handle on ERP complexity, NTT DATA recently enlisted IDG and CIO Magazine to conduct a survey of IT and business leaders.

According to this survey, 73% of respondents agree that their ERP ecosystems -- which power all business processes -- have become more complex over the past 2 years.

(Click here for complete survey results, and to download “Tackling ERP Complexity” white paper.)

Too often we see companies fail in their digital transformation efforts because they either attempt to do too much -- a complete business model change -- all at once, or they do too little, paying what amounts to lip service to digital transformation by bolting digital technologies onto existing, rigid and inefficient business processes.

Clearly, eliminating complexity inherent in ERP systems and the core business processes they drive is key to a successful, corporate digital transformation strategy. This is precisely what NTT DATA preaches and practices for our SAP customers with our Enterprise-Grade Digital Business services and in-depth understanding of past and present SAP solutions.

SAP S/4HANA solutions for lines of business combine the digitized core capabilities included in SAP S/4HANA Enterprise Management with the on-premise and cloud solutions in the SAP portfolio for each line of business – such as SAP Cash Management application in finance; SAP SuccessFactors solutions in human resources; the Ariba Network in procurement, and SAP hybris solutions in marketing and commerce.

SAP partners such as NTT DATA currently manage more than 80% of all projects focused on SAP S/4HANA, according to SAP, and play a major role in selling the software and helping customers plan, run and optimize implementation and digital transformation projects.

For our part, NTT DATA’s Enterprise-Grade Digital Business focuses on the transformation of specific business processes through the lens of the customer’s experience, which in turn is anchored to specific business strategies to produce meaningful results that come faster, have greater impact, and create a solid foundation for further transformation.

Contact us today to learn more about Enterprise-Grade Digital Business from NTT DATA.

Post Date: 1/21/2016

Tim Clark - NTT DATA Tim Clark

About the author

Tim is a Vice-President with NTT DATA with responsibility for SAP Consulting and the global HANA COE. He has 20+ years of experience in the SAP space with a focus on leading large scale global transformation programs and outsourcing engagements. He has worked across 30+ countries and a variety of industries, including Wholesale Distribution, Semiconductors, Building Materials, Consumer Products and Oil Field Services. Previously, Tim was a Vice-President at Neoris/CEMEX and a Partner at Accenture.