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SAP S/4HANA: The Digital Core

June 2, 2016 by Andreas Schmitz

Following the trend toward digitalization requires a paradigm shift in data processing. SAP S/4HANA as a digital core can help companies in the cloud and on premise.

According to SAP’s Dr. Wieland Schreiner, executive vice president, SAP S/4HANA, agility and strength are what rock climbers need to get them to the top. “Useless equipment is a dead weight, but you’ll always need the indispensable essentials,” says the man responsible for SAP S/4HANA development projects globally. The more athletic you are and the better your technique, the more likely you are to succeed.

If we translate this idea into business software, the technical restrictions adherent to traditional databases are dead weight. Up until now, data silos, separate OLTP and OLAP systems, indexes, aggregates, and missing real-time insights and end-to-end processes have hindered the implementation of new business models and interdisciplinary solutions. Aggregates and programmed indexes are of no semantic value, merely enabling reasonably quick access to sums and data in traditional systems, yet they restrict scalability for applications due to the required database locks during aggregate updates. This means elements are retained “in the event that we might need them someday,” says Schreiner.

SAP HANA and Column-Based Data Tables: Backbone of Digital Core

The in-memory technology of SAP HANA follows a different approach: data is stored in columns, rendering indexes and aggregates superfluous. For goods movements, this means one can book only primary information with maximum scalability while avoiding database locks. Related secondary information such as aggregates and key performance indicators are determined on the fly. The in-memory technology is the most important feature of this system, “just like the brain is the most important muscle in climbing,” Schreiner observes. This principle forms the basis of the digital core SAP S/4HANA. This way, companies can achieve immediate added value in logistics, for instance, with optimized net working capital, reduced buffer inventories, and real-time information about inventory balance and material flow.

“SAP HANA brings a revolutionary and end-to-end IT infrastructure to our customers, as well as a paradigm shift in data processing,” Schreiner emphasizes. Individual departments profit from this, as they can take charge of the evaluation, simulation, and visualization of widely ramified information themselves directly on the digital core’s individual posting lines in real time. They can also adjust and implement new business models and processes quickly and flexibly with the new evaluation, simulation, and prediction features, enabling them to shape the transformation of their company themselves.

The key function of the digital core is to create a functioning digitalization-friendly IT environment. All its applications are interconnected, making it possible to access and use detailed data from anywhere within the company in real time without information loss. Together, digital core SAP S/4HANA and SAP HANA open the doors to sustainable end-to-end business transformations.

Customized Products Through Digital Core

SAP S/4HANA as a digital core is SAP’s technical and conceptual answer to the global digitalization trend. It began over twenty years ago with online banking, quickly followed by digitalized pictures and movies, a taxi company with no taxis, and a hotel supplier with no buildings. “All these offers have one thing in common,” Schreiner believes firmly. “They are fully built on the individual customer’s desires.” From sports shoes in the color of your choice to customized designs on your motorcycle, increasingly more customers desire and expect products that meet their individual wishes. “Business is distancing itself from B2B and B2B2C towards C2B – Consumer to Business,” observes Schreiner. “Customers with their preferences and demands are increasingly dominating the market.” And whoever can best meet the customer’s demands – the individual demands –, will come out on top. SAP S/4HANA as a digital core for business processes allows you to better tailor your products to individual customers. The resulting mass of data can be easily displayed, processed on the fly, and used for simulations and predictions to make informed decisions.

SAP S/4HANA: mi adidas

Adidas’ “mi adidas” is a real-life example of how our digital core can impact the economy. This is a new concept offered by the sportswear manufacturer whereby customers can freely choose the color of their shoes, the design they want printed on them, and even the type of inner and outer sole. adidas even uses social networks to find potential customers and provide them with information that will appeal to them right there. “This only works if all core processes are oriented towards the consumer,” says Schreiner.

New to SAP S/4HANA: Swiss Property and Airbus Defence and Space Optronics

The latest studies confirm that the implementation of SAP S/4HANA can take as little as a few months, depending on the starting conditions. Swiss Property, an architectural firm in Zurich with 83 employees and a revenue of €330 million, implemented the new software in just eight weeks. “They started off with the standard configuration and their existing best business practices,” explains Schreiner. “Swiss Property wasted no time in high-grade software adjustment; instead they opted to migrate their existing data into the new system.” This allowed the company to quickly resume their business of building customized luxury houses.

Airbus Defence and Space Optronics managed to operate the new software just five months after beginning the transformation. With 800 employees and an annual revenue of €200 million, this Airbus subsidiary can now generate quick sales forecasts and project cash flows for reports and presentations with SAP S/4HANA.

Top image via Shutterstock

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