There were many “firsts” during the pandemic, but from a business perspective, it was the first time that office workers were forced to work from home for months and global supply chains and buyers were brought to a near-total stop simultaneously.
Retrospectively, we learned important lessons about who survives and who thrives amidst great “shakings.” Companies tended to fall into three categories:
- The “flexible, agile” companies that thrived because they could adapt quickly and reinvent how they run and sell. Most were early adopters of cloud enterprise resource planning (ERP) systems, which gave them the agility to switch gears. They did this by switching to backup suppliers, stepping up production at factories with local sources of supply, bypassing distributors to sell directly to customers, and seamlessly handling all transactions and closing the books because finance was running in the cloud.
- The “clay feet” companies that went out of business either because they had no flexibility to adapt or were locked into a monolithic mindset that “we only do things this way.” Most were running rigid ERP solutions and processes that locked them into one way of working. Changing an ERP-driven process meant costly customization no one had time or budget for.
- The “blood, sweat, and tears” companies that barely survived but did so out of sheer will and excessive overwork. They had inflexible systems and processes that made change extraordinarily costly and difficult to keep going, but they did – and they don’t want to ever go through that again.
What Makes a Flexible and Agile Company?
Modern software-as-a-service (SaaS) ERP solutions are what enabled these flexible, agile companies the ability to respond, innovate swiftly, and ultimately win. SaaS ERP and cloud technologies, in general, are the great leveler. They enable businesses of all sizes and geographies to compete and win globally. I honestly believe that if the pandemic had happened before the cloud, we would have lost more businesses. Here’s why.
Traditional ERP products have helped companies integrate and automate processes and run more transparently and efficiently. But making changes to processes – for example, to go from a distributor-based sales model to direct sales (using the Web) and fulfillment – requires time-consuming, risky, and expensive customizations. The resulting hard-coded changes can just make your organization’s clay feet even bigger, especially when software updates are needed.
In contrast, modern cloud ERP systems are flexible and agile, and they impart these qualities to the businesses that run on them. Your ERP solution takes on a Minecraft-like quality, giving you standards-based, composable building blocks that you can use to make something new, integrate, adapt, and innovate. This cultivates an agile mindset because changing your infrastructure doesn’t mean risk and cost – it means unlocking opportunities, accelerating innovation, and realizing better outcomes and customer experiences.
So, when disruption comes – whether it manifests as a new competitor, uncontrolled inflation, supply chain disruptions, wars, climate change, and more – you know you can adapt ERP-driven processes quickly, safely, and cost-effectively. For example, during the pandemic, we saw our SAP S/4HANA Cloud customers navigate through supply chain disruptions, extended work-from-home orders, the launch of new business models and customer service requirements, and more with speed, confidence, and excellence. They could modify how they run in a standards-based way so regular, automatic software updates from SAP could continue smoothly.
Enterprise-Grade Running Shoes, Not Clay Feet, with SAP S/4HANA Cloud
What does your business need? What’s holding you back? Maybe you need to build and run a new warehouse today and are pivoting to sell to new customers. Tomorrow, you may need to create new cloud self-services to differentiate the customer experience. A year from now, you need to comply with new, complex, and cumbersome regulatory mandates and vastly expand your supplier ecosystem. The list goes on.
Modernizing your ERP system is all about flexibility. Flexibility in your mindset, flexibility in your business capabilities, and flexibility in your technology. And going forward, the more flexible your business is, the better off it will be. Your ERP system is the infrastructure of your business, and it needs to support and enable change in a safe, standards-based way in the cloud.
Want to learn more? Join a four-part Web seminar series on modernizing your ERP that starts on Wednesday April 5th. I’ll be moderating panels with top experts from SAP, analysts, and SAP customers. Register today!
Paul Saunders is chief evangelist and head of Product Strategy for SAP S/4HANA at SAP.