Innovation potential

Mastering new challenges with technical innovation

For SAP's existing customers, the SAP Customer Evolution program builds the bridge between this transformation of processes and the necessary technological renewal of applications and provides support here in creating a results and value-oriented roadmap. With SAP S/4 Hana as the next-generation (cloud) ERP and the SAP Business Technology Platform as the technological foundation, SAP is transforming customers into sustainable and intelligent businesses. SAP helps companies move from application integration to integrated processes, from general system intelligence to intelligent processes, and from individual process customization to leveraging optimized industry best practices.

Evolution program

The SAP Customer Evolution program supports the transformation to an intelligent and sustainable enterprise: ERP systems are the backbone of companies' operational processes. The solutions implemented over the past years have often been in use for several years (or decades) and have been adapted and optimized accordingly. Therefore, the question arises as to why anything should be changed - especially in view of the costs and risks associated with such a step: Never Change a Running System.

This approach was certainly justifiable as long as the economic environment moved in a reasonably linear fashion. If we look at the past few years before the pandemic, we can observe exactly that. Of course, there was innovation and disruption, individual crises and the much-vaunted "digital transformation". But the crises were mostly singular, just as the real disruption was mostly limited to individual industries (finance, transportation, etc.) and the digital transformation, while on everyone's lips, was more of a gradual change than a revolution.

However, the events of the past few years (pandemic, energy crisis and inflation triggered by the war in Europe, advancing climate change, etc.) have changed this picture, highlighted the vulnerability of global supply chains, and forced many companies to act. The agile and resilient enterprise: Real sustainability in the value chain and increasing cost and optimization pressures due to inflation and recession are forcing companies to take another close look at ERP processes and systems. 

Intelligent and sustainable

SAP's answer is the intelligent and sustainable enterprise. The basis for this is intelligent business technology, provided by the SAP Business Technology Platform (BTP). Master data, processes and cross-system data flows are uniformly combined and controlled on this platform. It thus forms the basis of SAP's intelligent business applications, at the heart of which is S/4 Hana as an ERP system.

Starting from the core ERP processes, these applications provide the functionalities in individual LoBs and for industry-specific processes. Both are brought together in intelligent and integrated end-to-end processes (best practices). These are delivered together with the software and enable a fast and optimized implementation of the software.

The processes are integrated into a business process management (SAP Signavio), which allows continuous control, optimization and cross-company comparison of process efficiency. This system and process architecture allows sustainability to be natively built into the functionalities and business processes, making it an inherent part of the solution. This enables companies not only to look at the sustainability of a process in retrospect, but to design, optimize and operate it directly with sustainability in mind.

Thus, manufacturing companies can use the SAP solution to design and optimize their supply and production chain not only according to financial, operational and logistical criteria, but also from a sustainability perspective. A higher CO2 footprint of a certain manufacturing site can be identified there just as recycling and approval requirements of a product already in the development phase.

System landscape

After all, the networked enterprise makes it possible to carry out these optimizations not only in isolation for one's own company, but also in the network of interconnected and operationally linked companies. This idea of the sustainable and intelligent networked enterprise sounds promising, but customers naturally ask themselves how they are to get from today's complex and highly individualized system landscape to this "new world".

The challenge, after all, is that not just a single system has to be touched and updated along the way, but that we are talking about a system landscape that may consist of numerous ERP systems and "peripheral systems" to which the data and processes are distributed today. This system landscape then also includes various systems and applications from SAP - in addition to the classic SAP ERP, these can be various systems from the SAP Business Suite portfolio (BW, PI/PO, CRM, APO, etc.) or connected applications (e.g., SAP Business Objects). 

In the past, SAP had a separate program for each of these applications to help customers switch to the new architecture. These individual programs, however, precisely ignored the fact that the customer's business process does not stop at this application, and thus helped our customers only to a limited extent. In the worst case, the individual interests of these programs actually ended up confusing the customer more than anything else, since they no longer knew where to start.

Evolution Kit

This is exactly where the SAP Customer Evolution program comes in. Instead of talking about individual applications and their replacement, the discussion with customers starts here with the business process. In a standardized procedure known as the Customer Evolution Kit, the business processes supported by the customer with SAP software are analyzed and examined for potential for improvement and optimization. From this analysis, the necessary applications are derived and a technical architecture and roadmap are drawn up. This then also determines a plan for handling and migrating the master and transaction data (including regulatory data retention), a facet of technical migration that is often underestimated and given little attention.

Business Transformation Suite. A methodology and tool chain, a process hierarchy, best practices, E2E traceability and proactive support. This is the current state of planning and may be changed by SAP at any time. Source: SAP 2022.

SAP standard programs such as the readiness checks are used for the technical analysis. The added value of the migration to the new system landscape is shown based on the initially analyzed business processes. Due to appropriate preparation on the part of SAP and the standardization of the necessary steps, we can provide such a plan about ten days after the initial project kick-off and thus provide the customer with a good framework for the next steps. This can then serve as the basis for detailed planning and a concrete business case.

S/4 Hana

How can SAP S/4 Hana specifically help in this context now? SAP launched S/4 Hana in 2015 as the next-generation ERP system that leverages the Hana in-memory platform and modern AI (Artificial Intelligence) to run standard business processes in a new, intelligent and simplified way, enabling real-time data analytics directly on transactional data and delivering this in a new user experience for the end user. The more than 20,000 customers already using S/4 Hana today can attest to this with simplified, highly automated and optimized business processes.

In addition, the system was also developed to enable completely new business processes. For example, the concept of the so-called solution order in S/4 Hana can actively support the change from pure product sales to the sale of services. The product, together with internal and external services, is offered to the customer on a uniform order and, if desired, invoiced simply and clearly for the customer in consumption-based billing. The complex processes of the overarching planning of the provision of the various products and services, the internal and external billing of these components, and finally the itemized revenue recognition of the individual components are completely automated by S/4 Hana.

Another example that demonstrates the innovative power of S/4 Hana is the handling of internal company processes for the distributed production, provision and distribution of services and products. Coordination between the individual business units and sub-companies, while at the same time presenting a uniform and at all times transparent process to the end customer, is achieved through highly integrated processes in areas such as ATP (Available to Promise), material requirements planning (MRP) and revenue recognition (also in accordance with IFRS15, including COGS). End-to-end transparency is ensured as well as predictive problem solving with AI.

All these new functions are made available to users in a new user interface enriched with real-time analytical data. Users are supported in their daily activities in a targeted manner by machine learning and AI, thus increasing efficiency and productivity, but also individual user satisfaction. Working with the SAP software is so intuitive that training efforts can be minimized when switching to the new software. The uniform user guidance across all applications also ensures synergies of the various implementation projects in connection with the intelligent enterprise.

Cloud ALM

Application Lifecycle Management (ALM) and the path to the hybrid cloud: Regardless of whether the core ERP processes continue to be operated in-house (on-premises) or are consumed from the cloud - the overall landscape of ERP applications will be at least partially consumed from the cloud and thus be hybrid. Compared to the monolith of the past, these hybrid and distributed cloud solutions offer a high degree of flexibility, dynamism and agility, but must also be managed in their entirety and with a view to the entire business process.

To accomplish this, SAP offers Cloud ALM, the unified platform for managing data transformation, innovation, services, and ultimately cross-system business continuity, as part of Cloud Enterprise Support.

SAP Cloud ALM is thus the logical further development of SAP Solution Manager (SolMan) for the new reality of hybrid cloud landscapes and is itself consumed entirely from the cloud. It supports customers in the transformation of business processes and data and is integrated for this purpose with SAP Signavio for process transformation and the SAP Business Transformation Center for data migration. SAP Cloud ALM is an open platform that also integrates and unifies external systems for telemetry, data integration and development control. As a cloud solution, it can not only be easily deployed and scaled, but can also guide and optimize system implementation and usage in a goal-oriented manner via integrated best practices and overarching analysis of system usage in a data lake (powered by AI). This also includes the connection and inclusion of the Tricentis test system, with the help of which the implemented business processes can be initially and continuously tested and validated in an automated manner.