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How will digitization impact Enterprise Resource Planning?

Is Enterprise Resource Planning (ERP) still relevant?

Yes, ERP will absolutely continue to be important, and you would be hard pressed to find an experienced professional who would doubt its continued significance.

Quite simply, business is all about making money, which boils down to answering simple questions like:

  • “Am I making or losing money?”
  • “What do I need to do to grow my business?”

To operate a sustainably profitable and growing industrial manufacturing enterprise, one needs to know exactly what is going on in the various areas of their business and always know the answers to questions like:

  • How much money is coming in?
  • How much money is going out?
  • How much inventory do we have?
  • How much inventory do we need?
  • What makes our customers happy?
  • How successful are we in executing customer orders?
  • How successful are our existing products?
  • What changes need to be made to our existing products?
  • What new products, services, and solutions should we offer?
  • How satisfied are our customers and how loyal are they to us?
  • Are we meeting or exceeding our customers’ expectations on quality, price, and delivery?

To answer these types of fundamental questions, industrial companies must effectively and efficiently manage all of the different resources they use to serve its customers, which is essentially what classical Enterprise Resource Planning (ERP) was designed to do.

We all know that the digitization is changing the world. However, do we really know how these new technologies will impact our business systems and operations moving forward?

What are the requirements for the next generation business systems?

In the following section, I would like to point out a few of the business system requirements that often come up when and industrial manufacturer is confronting emerging technologies like Mobility, Internet of Things, Visual Analytics, and Big Data.

Be fast!

One thing is for sure:  the speed of data generation has increased tremendously, as everyone involved in executing business processes are perpetually connected, sending out enormous amounts of data 24 hours a day, 7 days a week.  “The sun never sets” on today’s truly global enterprises.

And the next wave of speed and connectivity is already rolling in as more and more devices and “things” are sending and receiving even more information, faster than ever before, at finer and finer levels of granularity.

As a result, business systems like ERP need to cope with unprecedented data volumes, connectivity speeds, mobile devices, and levels of detail.

Be absolutely reliable and absolutely flexible where needed!

As discussed earlier, managing resources and financial accounting must follow well-defined rules and practices.   The foundational structure of the underlying business system must be absolutely rock-solid and allow for no compromises in regard to the reliability and flexibility of business processes.

At the same time, as your business changes and reacts to new market needs, business systems must be open and flexible enough to cater to all the new concepts, structures, and ideas generated from all of the recent technological innovations.  In the end, business systems must still convert the transactional outcomes of business processes into the exact and reliable accounting figures and data needed to be computed. For example, when testing and implementing new business models, it is critical to always know whether or not they will meet the profitability goals of the enterprise.

Be integrated!

An integrated, single taxonomy should be used across the enterprise, so that there is no ambiguity on what certain terms mean or how to interpret the outcome of activities.   This type of tight integration is an absolute requirement for the business to operate as a holistic entity.

Simple and straight-forward integration of business systems and processes while simultaneously eliminating manual process steps not only improves overall productivity, but ultimately reduces operational costs.  Reduced risk and increased speed are also common benefits associated with an integrated, automated system.

Manage added complexity and scale!

In a digitized world, data is not only created quickly, but also with much more complexity and scale.  Connected humans and “things” create much more data, faster than ever before, especially in new information categories that can be extremely relmailto:johannes.papst@sap.comevant for business.

The next wave of transformation is already rolling in, as more and more devices and “things” are sending out more and more information at faster and faster speeds at greater and greater volumes.

Data streams from machines and devices are predicted to be magnitudes higher than the data streams created by humans.  These machine-driven data streams will not only by higher in regard to quantity, but also to quality.  Totally new and fine granular data can be made available and used to report on situations that are critical enough to trigger immediate business decisions.

Business systems must be able to manage the added complexity and quantity that comes in through the higher quality and greater quantity of data automatically generated by the tremendous proliferation of these types of data-churning devices.

Follow best practices and be compliant.

As there is a constant pressure on all businesses to drive operational efficiency, setting up business processes is becoming more and more of a commodity endeavor, rather than being a source of true competitive differentiation.  Ultimately, the best-case scenario is making use of existing industry best practices for business processes that have already been developed as industry standards.

Best practices can be used to catch up with industry peers and simultaneously save cost and time.  Being compliant to financial, environmental, health, safety, and global trade regulations should be a no brainer for industrial companies today, but the effort to get there will be much easier if an IT system is in place that produces the needed reports and is designed specifically to support general, industry-specific, or geographically-based regulations.

The SAP offer

As an SAP customer, you can meet all of the above mentioned requirements to seamlessly the traditional and digital worlds by making use of our 40+ years of creating business process support systems in the industrial machinery and components (IM&C) industry.  These systems are made available by SAP and partners as ready-made, “boxed” or “off-the-shelf” pre-configured systems.

We look forward to hearing from you, and be sure to ask for more information on the SAP “IM&C in a Box” offering.

As a Solution Manager for SAP, Johannes Papst´s main focus is to align SAP solutions with today´s business needs especially in the Industrial Machinery and Components Industry. Johannes has over 20 years of experience with software for the discrete manufacturing industry. His main area of focus is manufacturing processes and working will small and medium businesses.

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  • Hello team,

    What exactly Digitization will be through or in SAP ?
    What SAP plan for digitization ?
    will be the digitization for SAP itself or digitization for SAP customer ?

    Thank You,