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ERP: Identifying Potential for Innovation and Optimization

Feature Article | July 10, 2017 by Andreas Schmitz

How can your company improve its business and IT processes? Which innovations are relevant for your company?

With just a little input from your Basis administrator, your company can request a report that provides actionable answers to these burning questions.

The Three Biggest Challenges for CIOs

Today’s CIOs are under pressure on three fronts: For one, shrinking budgets are forcing IT managers to become experts at identifying opportunities for optimization. Next, individual lines of business are taking things more and more into their own hands, developing cloud-based solutions that IT only finds out about when called on to provide integration and end-to-end process monitoring. And thirdly, the digital transformation requires agility and the ability to find innovative solutions on the fly.

“CIOs must pinpoint potential for future added value and identify how they can help lines of business and improve their efficiency levels,” says Wassilos Lolas, global head of Customer Value Experience at SAP.

The SAP Innovation and Optimization Pathfinder for ERP is here to help.

What Does the SAP Innovation and Optimization Pathfinder for ERP Do?

SAP offers customers a constant stream of innovations  ̶  several thousand SAP Fiori apps, hundreds of different features in enhancement packages (EHP), and a wide variety of service and support offerings, including over 1,300 components for SAP Enterprise Support. Until now, customers had a choice of tools to help them figure out which innovations could improve their company’s performance. These tools, used more than 20,000 times by customers, include the business scenario recommendation for SAP S/4HANA, innovation discovery, the SAP Fiori Apps recommendations report, and the SAP Enterprise Support opportunity report.

The SAP Innovation and Optimization Pathfinder service represents all these tools rolled into one, creating a single report for customers that consolidates all the information available separately from each. According to Lolas, if a company is already using SAP Solution Manager 7.2 or the latest version of SAP Solution Manager 7.1, all the customer’s Basis administrator needs to do is  spend between half an hour and an hour transferring two files.

If the customer is using SAP Solution Manager 7.1 with service pack 11 or older, the system must first be upgraded to version 7.2, which includes many other benefits as well. The customer receives a detailed, roughly 50-page-long report from the SAP Innovation and Optimization Pathfinder within five working days. SAP has been supplying reports free of charge on request since April 2017, and more than 100 companies have already taken advantage of this offer.

How Does the Report Help Improve Business Processes?

A CIO from the automobile industry was astounded when he discovered that, according to the system, more than 186,000 orders had not been invoiced, 26,000 customer invoices were overdue, and more than 5,700 parts had not been shipped as scheduled. An even closer look at the SAP Innovation and Optimization Pathfinder report he had requested revealed that over two-thirds of the services not yet billed dated back more than a year. Regardless of the background to these figures, the report creates a ranking of goals that have the best potential for improvement in each given situation.

“It also gives customers a benchmark of where they stand compared to their competitors,” says Lolas. On this basis, the company can decide whether tailored guidance as part of SAP Enterprise Support will suffice to get an optimization process underway, or whether they require additional help from SAP Digital Business Services experts on site.

How Does the Report Help Improve IT?

The report for the automobile company also identified abnormalities in IT. For example, it found that most of the newly developed programs or extensions were uploaded to live systems in less than a day, even though they were supposed to be programmed in the development system and tried out in a test system before going live. “These kinds of results are a strong indication of emergency changes.”

A closer look at the report results for IT security showed that changes were also required in the authorization system: 132 users were able to change passwords and 68 employees had authorization to change files in the live system. “These are obvious security issues,” observes Lolas, whose chief aim is for the report to help companies engage in the right discussions about improvements.

Another clear sign of improvement potential is, for example, when databases are growing by more than one percent every month, while those of industry peers are growing far less quickly. “Here, the report also sets out the possibilities that customers already have for improvement under their SAP Enterprise Support agreements,” says Lolas.

Which Innovations Can Help Improve the Company?

Though many CIOs now recognize that driving innovation is essential to keeping up with the competition, it’s something that tends to get forgotten in the face of day-to-day business life. This is why the report lists innovations that are already available to companies into four different sections – enhancement packages, SAP Fiori apps, cloud technology, and SAP S/4HANA – and points to specific innovations that will potentially bring about the greatest improvements in each company’s individual situation.

The report also analyzes current ERP system usage and suggests relevant enhancement packages, SAP Fiori apps, cloud functions, and SAP S/4HANA solutions. For example, the report will inform a company that replacing its current database with SAP HANA will allow it to use 20 Fiori apps for finance instead of the previous five, and that with SAP S/4HANA, it could even use 163. In procurement, switching to SAP HANA will likewise allow the use of 21 SAP Fiori apps (previously 15), while acquiring SAP S/4HANA would allow the use of 70 SAP Fiori apps. Transactions can also be simplified, and the possibilities are listed, sorted by line of business.

“The report shows customers exactly what improvements they can achieve with certain innovations, and how to use them. This gives CIOs the information they need to make convincing proposals in favor of innovations that are relevant for the company,” says SAP expert Lolas.

Who Can Use Innovation and Optimization Pathfinder? What’s Next?

SAP Innovation and Optimization Pathfinder was launched by SAP Digital Business Services in April 2017 and presented at SAPPHIRE NOW. It is available to any company with SAP Solution Manager 7.1 and service pack 12 or higher. The tool is being continuously enhanced, with two projects running concurrently. Thus far, the tool is only available for direct customers. However, a version specifically for SAP partners is currently being piloted. And future plans for the tool include the ability to analyze individual end-to-end processes — such as order-to-cash and procure-to-pay — and suggest potential improvements.

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