More than halfway through 2021 is a good time to take stock, look at the numbers, and reposition yourself to adjust to the current economic reawakening that is happening at the fastest rate since the early 1980s. This year will be a year of transition.
Barring any unexpected upheavals, we can look forward to shaping our futures rather than just grinding through the present. Companies are re-configuring their operations and inviting opportunities to transform their businesses.
SAP’s role in their business transformation was highlighted in our recently announced second quarter results, which clearly reflect the strong adoption of our cloud portfolio by our customers. But reevaluating your business goals halfway through the year also means analyzing your progress and making adjustments. Ongoing updates and new feature releases enable us to keep up with changing customer needs and help ensure the technology is running at maximum capacity.
With the launch of SAP S/4HANA Cloud release 2108, I’d like to reflect upon the innovation journey we’ve been on in recent years.
One area of innovation that we’ve been expanding upon since we introduced it one year ago is solution order management, in which sales and service functions merge seamlessly. Solution order management helps customers grow their margins by transitioning away from selling individual products and services to providing bundled business solutions consisting of products, one-time services, and recurring service subscriptions.
New in this release is the ability to include projects in a solution order, which is of particular relevance to customers in the professional services industry. When they create a solution order with a project, all relevant details such as project timeline, organizational data, and net project are included and the solution order can be used to track project progress while also notifying involved parties of changes.
With SAP S/4HANA Cloud we enable the subscription economy, allowing companies across all industries to establish subscription and usage-based models and helping to ensure that revenue recognition takes place to optimize the financial outcomes for the company. Today’s update in finance also brings event-based revenue recognition and margin analysis for solution orders, helping our customers across all industries to understand revenue and costs using individual sales and service documents, subscriptions as well as solution orders. Not only does this bring full transparency to the revenue recognition process, but it also enables compliance with the revenue accounting standard.
Also worthy of note from the area of finance are the purchase order deferrals services, which automate the calculation and posting of deferrals and accruals for purchase orders. With this, the customer can shorten and optimize the financial closing process even more and improve the accuracy of external reports. As in most instances where automation plays a role, customers can reduce the effort required for tedious manual work and are able to improve process reliability and compliance.
Automation also plays a key role in inter-company document matching, where this release introduces machine learning to optimize the matching process, in which transactions must be properly booked in both parties. Until now, this task was handled with the support of user-defined rules and accountants had the cumbersome and error-prone task of matching the remainder of documents manually.
In recent releases, sales operations organizations have seen improvements that simplify their task of sales order creation. This latest release can further boost sales efficiency for our customers by enabling the mass upload of data from a spreadsheet to create multiple sales orders, thereby reducing the administrative overhead and cost of sales.
Looking toward supply chain management and manufacturing, a key innovation in warehouse management will significantly change the way daily processes are handled. Workers can now use radio frequency devices for day-to-day tasks including putaway, picking, packing, and replenishment. They can scan bar codes to record and verify data, such as storage bins, products, and handling unit numbers or just to enter picked quantities. This enhancement to warehouse management with SAP S/4HANA Cloud 2108 provides ready-to-use mobile user interfaces, meaning there is no need for additional technology or homegrown apps. This will support users in making quick decisions and increasine productivity, all with the information in the palm of their hand.
Further to this, customers using both SAP S/4HANA Cloud and SAP Ariba software will benefit from improved communication with suppliers. The new capability supplier collaboration with material requirements planning (MRP) change request enables a highly automated exchange between the material planner and the supplier, helping ensure the planner is informed as soon as supply issues are anticipated. This exchange enables our customers to take advantage of the integration scenario with an external procurement system to directly inform their suppliers about exceptions that occurred in a planning run.
Two-tier ERP, where a company implements different enterprise resource planning (ERP) systems for different parts of the organization, often in the headquarters and a subsidiary, remains a valid and agile deployment approach for many customers. For a two-tier deployment approach with SAP S/4HANA Cloud, we continue to grow our dedicated scenarios. In financials, inter-company reconciliation automation for multiple connected SAP S/4HANA Cloud or non-SAP systems will help our customers to reduce operational costs through machine learning and will enable them to significantly limit the need for costly manual matching efforts. This new efficiency will enable our customers to accelerate month-end closing and increase the accuracy of the matching process. This will also give greater transparency into inter-company relationships.
In manufacturing, two-tier-based predictive material and resource planning (pMRP) and scheduling agreement integration allows businesses to create planning simulations at both headquarters and subsidiary levels, taking into consideration various types of flexible constraints and allowing effective planning with resource-based simulations. The integration also enables joint planning between headquarters and the subsidiary, leading to a consensus plan for the final product and sub-assembly.
Furthermore, SAP S/4HANA Cloud is continuing to embrace the Intelligent Enterprise by offering standard integrations into the new industry cloud solutions. For example, a full set of out-of-the-box integrations are available in SAP S/4HANA Cloud for SAP Intelligent Trade Claims Management, and in productive use with pilot customers. The interfaces to additional business objects such as customer master, residual items, clearing items, and others were expanded, so that it enables an easy and fast integration during an implementation process. In addition, all interfaces on SAP API Business Hub are made available so that independent systems integration projects can be planned and executed. Other industry cloud products, including SAP Intelligent Returns Management, will follow suit from September onward.
Last — but by no means least — we are continuously innovating to enable the intelligent sustainable enterprise. Sustainability is increasingly becoming a critical factor for staying ahead of the competition and increasing profitability. Governments require more transparency on sustainability metrics. Consumers and job seekers turn toward companies with a clear purpose, while investors shift their portfolios toward greener companies and circular economy business models grow in popularity.
As a part of our growing sustainability management portfolio, we just added new capabilities for indirect greenhouse gas emissions management and added integrations related to product compliance. As with all other updates, watch out for more product announcements relating to social responsibility, climate action, and circular economy, as well as holistic steering and reporting in the coming months.
As always, this is just a small subset of what SAP S/4HANA 2108 holds in store for our customers. Be sure to check out the videos showcasing more of the innovations in this release and for more details, read the release blog on the SAP S/4HANA Cloud are of the SAP Community.
Rolling out new product updates and features to customers is exciting because it signifies how our products are growing and expanding to better meet our customers’ evolving needs. While it often begins with listening to customer feedback and collecting their feature requests and goes through our internal evaluation and development phase, it is always important to us to close the loop by sharing these updates with our customers.
To me, every SAP S/4HANA Cloud release cycle highlights the relationship we share with them and the role we play in the transformation of their business. Because customer success is a continuous process and enabling it is at the core of our business culture at SAP.
Jan Gilg is president of SAP S/4HANA.