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Enterprise resource planning (ERP) is, of course, central to ensuring integrated, coordinated and organized business processes. SAP ERP is the leading software in the field, with a portfolio of tools and systems suited for various industries and companies.
The question is how to ensure that your SAP ERP system is up-to-date and optimized to meet your needs – and will stay that way into the future. In this blog, we’ll explore some key strategies, tech trends and best practices for long-term success.
The Importance of SAP ERP for Business
According to analysis by the G2 business research organization, “The global ERP software market is projected to reach US$78.40 billion by 2026, growing at a CAGR of 10.2% from 2019 to 2026.”
That growth makes perfect sense as automation, integration, and intelligence tools for efficiently running modern-day business operations become a necessity and, in parallel, increasingly accessible across various industries. SAP’s highly integrated ERP suite brings system modules, business data and company departments together for seamless workflows, enhanced accuracy, and consistency.
Companies can customize many elements of their SAP ERP system to suit their specific requirements and further optimize their operations. And with the solution’s built-in business intelligence and visualization tools, they can leverage their business data for more informed strategic decision-making.
What Are the Key Components of SAP ERP Systems?
Each company uses its SAP ERP system as needed, integrating various modules, business applications, and common databases. Some of the most popular modules, which are key to many organizations, include:
- Finance and accounting – The Financial Accounting (FI) module is at the heart of SAP ERP, covering essential aspects of running any business.
- Human resources – This kind of module generally focuses on personnel administration, time management, payroll, and the like.
- Sales – From pricing and managing orders to delivery and invoicing, this is an essential component as well.
- Procurement – In SAP ERP, this is part of the Materials Management module, which also covers inventory management functions.
- Logistics and supply chain – These functions are necessary across the organization, for procurement, production, warehousing, delivery, and more.
- Quality assurance – Every business needs quality control if they want to maintain their reputation and meet their commitments. SAP ERP’s QM module provides the necessary tools and workflows.
Best Practices: Keeping Up with ERP Trends
If you are already using a SAP ERP system, then you know the value it brings to your business. Naturally, you want it to continue to do so long into the future. The first step is knowing where the ERP industry is going and what technologies will be involved in getting there.
Cloud ERP
According to SAP, the global cloud ERP market is expected to reach $130 billion by 2027. There are many reasons for the shift, but they center on adjusting to dynamic digital environments and new sources of revenue, while standardizing day-to-day core activities and lowering costs. Cloud ERPs also facilitate seamless collaboration among operations, partners and networks around the world, including remote and hybrid workforces.
Industry clouds
Another development related to the proliferation of cloud-based technologies is the industry cloud. It combines infrastructure, platform and software (including cloud ERP solutions) in a single unified cloud-based solution for a specific vertical.
Composable ERP
Composable ERP takes the idea of creating tailored solutions down to the level of individual software elements in the ERP suite. Companies can rapidly assemble or increase use of whatever elements of the ERP system are needed to respond to opportunities, challenges, and demands as they occur.
Two-tier ERP
A two-tier approach to ERP allows the company to maintain coherence and gain insight across the organization, while allowing branches to efficiently respond to local conditions. For two-tier ERP to work well, integration and seamless data exchange between the two tiers are necessary.
Collaboration
More integration of almost any kind within a company gives you a valuable advantage. Therefore, many ERP solution providers are developing tools and partnerships (SAP and Microsoft, for example) to make it easier for employees to share data, collaborate and serve customers without switching between applications.
Personalization
ERP solution designs are evolving to cater to specific user needs and behaviors, including providing tailored guidance and custom dashboards for greater efficiency. Low-code platforms make it easy for users to configure and personalize the software independently, without relying on an IT developer.
Automation
Companies are spending a lot of time and resources on incorporating more automation into their ERP workflows. The benefits are clear, as automated processes are faster, consume less time and resources, and eliminate human inaccuracies. Robotic process automation (RPA) based on AI and machine learning is introducing new efficiencies that were not previously possible, freeing employees to focus on more value-added activities.
Sustainability
Government regulations and environmental concerns are driving many companies to optimize their businesses for sustainability. An ERP system can give this operational shape by incorporating into its reporting and analytics metrics that track emissions, supply chain optimization, water and electricity use, regulatory compliance, and other eco-friendly goals.
Best Practices: Integrating Emerging Technologies into ERP Systems
Alongside market trends, emerging technologies are having a major impact on the future of ERP systems and how they are used.
Social media
Technological advances in both ERP systems and social media platforms will make it increasingly easy to connect the two, generating a growing wealth of data and business intelligence.
Mobile and multi-device ERP
ERP solutions are being designed as a matter of course to provide mobile access to employees. The latest developments in the field have taken this approach to the next level, with seamless ERP support that preserves full data and functionality across multiple devices.
Artificial intelligence (AI)
Built-in AI and machine learning modules are progressively contributing to the capabilities and development of ERP systems. Advanced AI technology can provide more valuable insights from larger amounts of data than ever before, enabling targeted personalization, intelligent automation, and thorough optimization.
The internet-of-things (IoT)
When ERP meets the internet-of-things, you can confidently leverage field data from sensors, machines, and any interconnected device to optimize your operational efficiency.
Blockchain
Integration of distributed ledger technology (blockchain) into ERP systems can enhance accountability in business activities such as supply chain management, procurement, and financial transactions.
Best Practices: Leveraging the Power of Data Analytics in SAP ERP
Gartner research indicates that 90% of global organizations see data as one of their most important assets. The real challenge today is identifying and correctly assessing the business value of the information available, making data analytics an absolute necessity for success in a heavily digital business landscape.
All ERP analytics technologies include tools for distinct processes in collecting, analyzing and sharing the data arising from business operations:
- Data preparation – combining data from multiple sources, eliminating discrepancies and duplications, and preparing it for analysis.
- Data mining – finding trends, patterns, correlations and anomalies within large datasets.
- Data querying – asking questions to extract specific information from given datasets.
- Performance assessment – tracking performance against predefined goals.
- Descriptive and statistical analysis – using historical data to identify trends and patterns, as well as what led to them.
- Reporting and data visualization – charts, graphs and other visual representations of data and analysis, presenting a single source of truth and valuable analytics insights.
A SAP ERP system enriched with data analytics facilitates informed decision-making, optimizes operations, and drives business growth. For the individual user, it can also provide context-rich insights and guidance or, in some cases, autonomously take action as needed. AI-powered predictive analytics takes actionable intelligence to the next level, with forward-looking data-driven recommendations regarding how to prepare for likely future events.
Data analytics in the SAP ERP system has clear high-level benefits in several areas, including:
- Forecasting – By identifying patterns in ERP data, you can predict fluctuations in demand and prepare accordingly.
- Customer experience – Insights drawn from historical consumer data reveal their preferences, segmentation and typical behaviors, so you can improve customer experience and your marketing or sales initiatives. Real-time insights, on the other hand, help you identify opportunities, provide immediate remedies, and drive responsive decision-making.
- Business growth – Predictive, comprehensive analytics provides the insights necessary to identify strategic business opportunities, and the ERP tools to quickly take advantage of them.
Paul Saunders, head of product strategy for SAP S/4HANA, sees data analytics in ERP systems as “human intelligence and artificial intelligence coming together.” He expects users to begin interacting with ERP in entirely new ways, molding it to their needs and adapting to new technologies.
Best Practices: Transitioning Your SAP ERP Solutions
SAP S/4HANA is a complete, modular cloud ERP system and application suite, providing you with several key advantages that help future-proof your ERP system:
- More comprehensive information, including data that was either never collected or previously unused.
- Complete visibility and detailed reporting to track service lifecycles, reduce security risks and improve compliance.
- Real-time data and customized advanced analytics, with logs, reports and actionable insights.
- Personalized customer experiences that are coherent across their omnichannel journey and responsive to changing expectations.
- Automated intelligent processes that mitigate the risk of human error, save time and conserve resources.
- Cloud-based solutions that reduce total cost of ownership.
Upgrading your SAP ERP will likely require the migration of your legacy data into a more suitable format, as well as a holistic rethinking of your business processes. But it is well worth it, as it creates the conditions for streamlined integration of new innovations and future growth strategies.
Evaluating Changes to Your Current SAP ERP Infrastructure
The first step in your journey is carrying out a comprehensive analysis of your current ERP landscape, including size, complexity, standard and custom code, how your current system is used – distribution of object types, modules, origin and package. Done correctly, this will ensure you can optimize efficiently, safely and quickly, whether moving to S/4HANA, upgrading, cleaning your ECC system, or any other ERP improvements.
Certain changes or adaptations to your infrastructure over time may have complicated your ERP system in practice, which should be taken into account as you plan a broad SAP ERP modernization:
- Expanded operations in multiple locations, incorporating new business activity into the existing SAP system or in a separate instance.
- A company code rollout project undertaken when another, separate entity was acquired or established for new business. The data and operations may be duplicated, but there may have been certain localizations and company-specific SAP configurations.
- Business units with heavily customized, diverse ERP-based activities can be difficult to transition to standardized, centralized processes.
You will need to review your organization’s business requirements and processes to determine what SAP ERP modules are needed and how they are to be integrated into your workflows. This will require a thorough understanding of your operations, processes, the business case, and the impact of a successful modernization on different departments. By seeing the business impact of changes before you make them, you can confidently execute every step of your SAP ERP upgrade project.
Panaya provides assessment reports that detail your projected savings, estimated timelines, sizing recommendations, identify requirements, and more. Unlike any other solution, however, Panaya’s SAP solution covers one of the most significant expenses of system conversion and upgrade projects – testing. With this all-in-one approach, you gain insights for optimizing each testing cycle.
Best Practices: Long-Term SAP ERP System Maintenance and Support
With rapid technological developments and scalability options, ERP platforms and software need to be continually updated to meet evolving needs. SAP’s latest technologies for future-proofed cloud ERP tools include regular automatic updates, fixes and enhancements.
However, your own needs and requirements will change over time as well. Best practice for long-term SAP ERP maintenance is regular assessment of system performance, user satisfaction and customer experience. Make sure you can provide updates, enhancements, and follow-up coaching as needed to get the most out of both your ERP solution and your workforce.
Conclusion
If your SAP ERP system up-to-date and optimized to meet your needs, it will serve you well long into the future. But it requires staying on top of developments in the field and an ongoing careful analysis of what your organization needs to thrive.
Best practices for future-proofing your SAP ERP, begin with understanding emerging trends and technologies impacting ERP development. A major element is learning how data analytics can be leveraged in your SAP ERP.
With that in mind, the next logical step is transitioning to the most advanced, flexible cloud-based SAP ERP system available – S/4HANA. It will require addressing any accrued complications in your current infrastructure, understanding exactly how the change will impact your business, and what SAP testing will be necessary to ensure the best outcome.
And the best outcome for your business from an advanced SAP ERP is also the best outcome for your customers and your employees.
Click here to see how Panaya can help take your SAP ERP solution into the future.