ERP Transformation: Why You Should Digitalize Your Data Stack Too

The pressure on companies to transform is real. However, the answer is not as simple as implementing a modern enterprise resource planning (ERP). Businesses must clearly understand their outcomes to reimagine processes and products based on a strategy focused on delivering and using connected, clean, and consistent data.

Closets. Every living space has one housing a mix of everything from the frequently used, the untouched, and the forgotten. And the only time they are thoroughly cleaned out and reorganized is when the owner decides to move to a new home.

In many ways, businesses are doing the same by storing more than 200 million new DVDs worth of data each day in their ERP systems that no one will ever see. The technology may provide more tools — such as machine learning-enabled image and pattern recognition — to make sense out of all this information. But the business process layer is also evolving to the point where the entire data stack must be well-coordinated and connected.

The minute businesses realize that their ERP must be transformed and modernized, their attention turns to the latest applications, capabilities, and processes enabled by intelligent ERP such as SAP S/4HANA. But very few of them assess their stack to determine which data should be removed or kept. Instead, the great majority fall victim to what I call the data dump syndrome – the wholesale migration of every piece of information into the new ERP environments.

Protecting ERP Transformation with a Proper Data Strategy

In any economic condition, the key to staying competitive is the ability to capture, analyze, understand, and act upon information in real time. According to 451 Research, this includes recognizing patterns; comprehending ideas; planning, predicting, and problem-solving; identifying actions, and making decisions.

With the explosion of intelligent devices and digital interfaces creating interconnected ecosystems of people, processes, and systems, businesses have endless possibilities to convert data into insights and experiences augmented by context and machine-enabled intelligence. Despite all this opportunity, 69% of companies still fail to realize such an edge to become truly data-driven.

Before transforming data silos and inefficient processes into a landscape of consistent data management and standardized operations, businesses need a dedicated data strategy to cover three fundamental principles:

1. Rethink the value of front- and back-office data

Over half of the companies reported in a study conducted by 451 Research have more than 11 separate repositories of customer data alone dispersed across various applications and organizational groups. And many more structured and unstructured data sources are often linking to that intelligence across both the back and front office.

Understanding the benefits of consolidating data into a single source usually compels executives to commit to transitioning their legacy ERP to a modern ERP. But such a move does not fix the fact that most of their information may still be left unused or forgotten.

Evaluating the usefulness of data – individually, by category, and in aggregate – is critical to ensure optimal modern ERP performance. Doing so can amplify the effectiveness of algorithms used to automate processes, executive dashboards that assist decision-making, and collaborative interactions that drive new business opportunities and revenues.

2. Help ensure the right data is in the right places

As the volume of available data increases, human-driven analytics becomes ineffective, sluggish, and error-prone. And in response, the ability to map the right data to the right functions in a modern ERP becomes even more essential.

The critical nature of this part of the data strategy further increases when intelligent technologies – such as machine learning, natural language processing, contextual artificial intelligence – are integrated into the ERP. Adding automated reasoning to dashboards, workflows, processed, and predictive forecasts allows users to make accurate inferences and enrich their analytics profile. It also enables line-of-business users to predict business outcomes such as financial turnover and profit, a customer’s propensity to buy, emerging skill gaps, and supply alternatives.

3. Build a secure and trustworthy business system

Unquestionably, effective use of data is an intrinsic part of business success. However, data strategies must also consider how data privacy and protection impacts the trust of people who provide their information willingly and the decision-makers who use it.

Facing emerging compliance regulations, consumer concerns over the safety of their personal information, and employee expectations for accuracy, the pressure to handle it all is only increasing. Companies that address data privacy and protection during their move to a modern ERP are well-positioned to deliver consumer and employee experiences that are transparent, controlled, and responsive.

Achieving the Full Potential of Modern Digital Investments

Remember, data is at the core of every customer interaction, organizational process, and employee decision – especially when running based on a modern ERP. And with a comprehensive strategy that addresses the principles of connected, clean, and consistent data, businesses can avoid the data dump syndrome to realize their digital transformation’s full potential.


Learn more about the importance of data management during an ERP transformation. Read our white paper “The Strategic Value of Data Management to an SAP S/4HANA Implementation and Beyond“ and explore SAP Data and Database Management solutions.


Engelbert Quack is a strategic customer advisor for SAP Advisory Services.

This article first appeared on the SAP Global News Center.