Our latest edition of the Digital Procurement Club focussed on "Real Talk SAP" and this article goes over some of the main takeaways and insights! Together with our special guest Nam Hoang Dong (Director Digitalization & IT at Thalia) we had the opportunity to discuss the topic of SAP with focus on ProcureTech implementations.
Digitalization is omnipresent
Nowadays, the topic of digitalization is omnipresent. Almost without exception, all companies on the market crave innovative procurement tools and automation. But how do you choose the best tools for your business and why is the market so dominated by a ‘One-SAP’ strategy?
Nam Hoang Dong shares the three most common reasons why IT managers tend to stick to a ‘One-SAP’ strategy: 1) convenience, 2) simplicity, and 3) market presence of SAP.
Advantages of a ‘One-SAP’ strategy are that all products are made available under one roof and thus interfaces and connections between products already exist. In addition, SAP offers certain 'add-on goodies' to purchase for free. For example, as soon as customers start looking at cloud services and want to make a switch to S4/HANA, SAP offers their Ariba product for free. This creates an image of simplicity for the buyer because with products from the same source, no new interfaces are needed to set up. So why should buyers go the extra mile and look for an alternative solution when SAP already has a solution that works with their current ERP system?
The problem with a 'One-SAP' strategy
A common problem is that not all the SAP products were developed by SAP itself, but were instead purchased from external partners, as in the example of Ariba. This means that interfaces also have to be added subsequently and thus the original advantage of seamless transitions and interfaces no longer necessarily exists.
It is therefore important to find out whether SAP is really the best solution for your own company. Because of its popularity and market presence, many customers assume that it is. Not only that but ERP replacement is an enormously expensive affair. Companies therefore think very carefully about whether they really want to take this step or whether they can arrange to stay with their existing SAP ERP system.
But that shouldn't stop business owners from changing things. Technology is moving fast.
Test drive your software
Consequently, how can businesses find out whether such a costly step is relevant to them and if the software is even a good fit for their business?
Often this is a never-ending discussion, because departments must define in advance exactly what they need and which use cases are to be solved with the requested tool.
For example, if someone decides to buy a new car, it goes without saying that they first do research, inspect the car, and do a test drive. Nam Hoang Dong recommends a similar approach for software purchases. Because here it is just as important to do a test drive!
One way to do this is to do a hackathon to bring together as many creative minds as possible in a short amount of time and to work together on innovative solutions. It is important to invite different ERP providers and not only to look at the final results of the providers, but to observe how the teams deal with change proposals or how they communicate. Of course, a hackathon is a comparatively large effort, but the end result is an insightful and exciting process even for large vendors, such as SAP.
Learn to know and optimize your system
Should you then end up with an SAP strategy, what does a so-called Clean Core SAP ERP mean?
The bottom line is that every IT department wants to make their teams happy. However, end-user requirements and expectations, as well as the market overall, have evolved dramatically over the last 10-15 years. As a result, many SAP executives note that changes are difficult to implement because the original standards have been 'played out'. If a standard exists but has been modified, you will inevitably end up with a system that is difficult to maintain. It could be that the SAP expert who maintains it is stuck in another project, or maybe certain requirements can no longer be incorporated, since you have started to rebuild the system yourself. But the result is usually a rather inflexible system.
In addition, SAP is a large landscape and not all departments have the competence to differentiate which standards can really be mapped out and which ones start to build up an own ‘non-standard’ through adaptations.
The easiest way to avoid these convoluted systems is to rebuild the SAP solution to its origin. This means to let it focus again on its original responsibilities such as merchandise management, finance, accounting, logistics, etc. and everything that goes beyond that is mapped by other software or so-called business layers. Business layers mean that an additional layer is used to map out a desired function but is not located in the SAP system itself. In this way, personalized adjustments can be made in companies' systems, but the basic standards remain.
SAP has also found that this is a useful idea and itself offers a BTB (Business Technology Platform) that works with intermediate layers and allows teams to freely play around and make adjustments without changing the basic core of their system
Utilize the right workforce
An issue with these projects is the skilled workforce. As already mentioned, digitalization is omnipresent and all companies currently want to move in this direction and hire specialists for their system. As a result, it frequently happens that SAP specialists are explicitly brought in for every project in which SAP is even mentioned to some extent. This makes the market extremely tight. Thus it happens that SAP specialists are often tasked with conceptual design and system training, for example, and are no longer able to focus on their actual technical expertise.
Instead, in many cases it is sufficient to integrate a core focus group in the company to take care of complex topics such as system maintenance or the development of a clean core system. Anything beyond that can be often much more easily and quickly handed over to business consultants, Java specialists or professionals with an understanding of the processes involved. This way, the entire market breadth of talent can be utilized and the SAP skills shortage can be actively addressed.
The Digital Procurement Club team is already working on the next event. Register here to stay up to date!