Spotlight SAP 2017 Trend One: Focus on operating income
Time For Technology Investments to Deliver Results
The past five years have seen unprecedented levels of technology investment as companies across the spectrum have poured money into cloud technology, digitization, and automation. Boardrooms are becoming impatient to see those investments translate into returns.
Cloud technologies promised to make companies more productive, more innovative, and to reduce their costs. Cloud adopters have undoubtedly accomplished the first two. Many organizations can show how they’ve focused investments on making business operations swift and lean to improve productivity. Others will have examples of how they’re able to speed-up the time it takes to prototype and bring innovations to market.
Cost reduction and its impact on operating income are now under the microscope.
Some interesting success stories are coming to light that help substantiate the cost case for technology investments.
Using the Internet of Things (IoT), a manufacturing company has been able to resolve a persistent issue of cutting machine failures. While machine breakdowns are always costly, frequent breakdowns increase costs and downtime. To counter this, the company adopted the IoT to predict maintenance cycles so that machine repairs can be carried out without disrupting manufacturing operations. Because repairs were tackled in advance, the business eliminated downtime, increased productivity, and reduced costs.
A leading radiopharmaceutical, using a legacy system, struggled with operational inefficiencies. Functioning under a traditional system, it was unable to track orders and payments effectively. Radiopharmaceuticals production, unlike conventional pharmaceuticals production, is difficult and expensive, thus amplifying the cost impact of operational inefficiencies. The company modernized its operations by employing a real-time pharmacy system to track orders and vendor payments in real time. The cumulative result was reduced production waste that significantly stripped out costs.
Cloud-centered Software as a Service (SaaS) delivered an apt solution for a Saudi petrochemicals company that revamped its HR processes, deploying a system driven performance evaluation process to enforce evaluation cycle timelines. It was able to identify skills requirements, create learning paths, and monitor training compliance online. This halved the annual performance evaluation cycle. By integrating compensation results with payroll processing, it reduced the compensation planning cycle time from one month to two weeks. Using cloud-based recruitment, the HR department’s manpower costs came down by almost 20 percent.
Cloud technology adoption with its near- and medium-term cost benefits will continue to rise. That isn’t the complete picture though.
This year, smart companies are focused less on making new technology investments even though. Focus will be firmly on financial returns.
Where technology investments are on the table, the finance team will have a growing role in assessing their viability. Technology leaders will need to articulate a strong business case and be prepared to answer more ‘show me the money’ questions. Technological investments will continue only so long as companies enjoy returns.
Join us at SAPPHIRE NOW in 2017 to gain insights into how global companies are making the most of their existing technology investments even as they gear up to embrace emerging tech trends.