Long before the COVID-19 crisis began and upturned the world we live in, instability was already the dominating force in the business environment. Globalization, rapid developments in technology, and an upheaval in customer expectations are all trends that have shaped how companies operate for decades and have led to a far greater volatility in their operating margins. Traditional indicators of business success lost their meaning, being replaced by the ability to disrupt or adapt swiftly to changing circumstances.
After lockdowns took hold around the world and people’s everyday behavior changed overnight, many companies found their revenues shrank to near zero. For some — including household names from all industries — this meant filing for bankruptcy and citing the pandemic as a key reason for their demise. Many will already have had less-than-healthy balance sheets even before the spread of the virus brought such sudden change to their operations.
While adaptability is by no means a magical remedy, many of the companies weathering the economic downturn best are those that have evolved and diversified their business model over the years, staying closest to the pulse of their customers and the market as a whole.
Keys to Success
What helps a company to stay ahead of change and to be more resilient to sudden changes in the market? Insight and understanding – of every aspect of a business, customers, partners, and in fact the entire network in which it operates – are key. State-of-the-art enterprise resource planning (ERP) software SAP S/4HANA is designed for this, providing unrivaled tools to manage a company’s finances along with its manufacturing, supply chain, procurement, sales, and service operations. As a system at the heart of the business, SAP S/4HANA enables users to:
- Deepen value chains and develop new business models
- Enhance and optimize existing business processes leveraging intelligent capabilities
- Transform business to become a sustainable and intelligent enterprise
ERP itself has adapted enormously since the early days: If you are still using tools that were cutting-edge a decade or two ago, you will struggle to keep up — let alone lead the way.
Introducing SAP S/4HANA Cloud Release 2008
SAP has just released the latest update to its flagship ERP solution. Offering functional and usability enhancements across all industries and lines of business, the August 2020 release of SAP S/4HANA Cloud (release 2008) focuses on increasing efficiency, and specifically on helping to evolve business models for the future.
As business models in all industries are transforming rapidly, companies look to augment their product portfolio and grow revenue streams with more sustainable billable services, subscriptions, and solutions. Solution order management, enhanced in this release, enables the management of such business scenarios that offer a hybrid combination of sales and (often higher-margin) services with products into a single order. This provides a single view of all items of a solution: physical products and one-time and recurring services. Orchestration and monitoring capabilities are provided to manage the processing of such solution orders and automated creation of a solution order is supported through an API. Similarly, the work of service teams working on in-house repairs is simplified by decision support capabilities, automatic notifications when exceptions occur, and the ability to verify and release items from repair to billing without navigation to a different app. New capabilities for service quotation will increase the use of service quotes, from which service orders can be generated leading to greater process efficiency.
In SAP S/4HANA Cloud release 2008, new innovations powered by intelligent technologies help increase the efficiency of core business processes. In finance, additions to event-based revenue recognition help ensure support for selling projects assigned to sales order items. This can significantly reduce manual effort by providing real-time automatic revenue recognition, margin analysis, and clear audit trails for each posting, with a link to the reference document. Intercompany matching and reconciliation now leverages automated postings to help reduce manual effort and improve compliance. It streamlines the real-time reconciliation-to-elimination process and provides richer insights into detailed results.
Intelligent situation automation for the physical inventory process automatically checks whether a recount should be triggered or if inventory discrepancies are tolerated. This helps increase both employee efficiency and inventory accuracy and transparency while enabling real-time reporting of warehouse stock.
Looking Beyond the Pandemic
Crisis is widely believed to be a catalyst for change. Across the world, COVID-19 forced us to change our ways immediately and to an extent that was previously unimaginable. As both individuals and entire industries adapt to their new realities, there is an opportunity to reset rather than resume old ways. Although global carbon emissions shrank as the pandemic took hold, this has only a minuscule impact on the more existential challenge of climate change. We have to fundamentally change our ways forever.
In June, SAP announced the first solution in its Climate 21 program to support enterprises trying to make their operations better prepared for the emerging business reality where sustainability is a strategic and economic imperative. Delivering product-specific carbon footprints and providing capabilities to optimize the carbon footprint based on real-time insights in industries such as consumer products, chemicals, and oil and gas can be very complex, involving analysis of multiple production sites and production steps. In doing so, SAP helps businesses to optimize not only their top and bottom line, but also their green line, enabling them to prepare for a change driven by consumer incentive and choice.
The 2020s are heralded as the decade of change and transformation. Let SAP help you to rise to the challenge and make the right changes.
Oliver Betz is senior vice president and head of Product Management for SAP S/4HANA at SAP SE.