Those who have no history put the future at risk

Home office, e-commerce, the accelerated digitization of public authorities, the school system, but also production and logistics - due to the pandemic, Germany has experienced a fast-paced surge in modernization. And yet the discussion about it falls short of the mark.

Devices and tools for digital collaboration are important. But the all-important question is: Can companies translate the increased speed of adaptation, born out of necessity, into significantly increased adaptability? This requires three things: resilience, flexibility and individuality.

Resilience

Companies that were able to address and retain their customers not only in person but also via virtual channels even before the crisis have had an easier time of it in recent months.

Likewise, those companies that did not have to start from scratch when switching to the home office, or those that had a diversified supplier network and were thus able to redirect their supply flows regionally and nationally.

The pandemic has reinforced tendencies and convergent technology trends and helped them finally break through. This is most easily understood in the area of customer relations. The main connection to the customer has long since ceased to be stationary retail or the postal service.

On the contrary, customer relationships have been shifting to the Internet for several years. Those who had already made this shift came through the crisis best. The success of the e-commerce giants is no coincidence. The lesson to be learned from this is that resilient companies are able to evade in the short term and, where this is not possible, redirect the impact energy or even incorporate it into their own movements to their own advantage.

Resilient companies are therefore characterized by a higher degree of flexibility. All measures and investments aimed at greater resilience in the short term must therefore also increase flexibility, at least in the medium term. This is the only way managers in Germany can escape the dilemma between managing costs and promoting innovation.

Flexibility

At management level, increased flexibility is already a reality. The automotive industry in particular, which is subject to enormous pressure to adapt and innovate, can sing a song about this. However, IT, which should be the driving force behind these adjustments and innovations, sometimes seems to lag behind.

One example: Buying and selling companies and parts of companies are now part of managers' agile toolbox. But what is already a challenge at the level of contracts and processes is a real problem for IT. After all, it inherits the purchased IT landscape and has to integrate it. And it must ensure that intellectual property is preserved in the event of a sale or spin-off.

The biggest challenge is that the inherited IT landscape has grown historically. As a rule, it consists of a large number of different systems and applications from a wide variety of manufacturers and in different release statuses, the number of which quickly runs into the hundreds. The resulting complexity is enormous and must be reduced as quickly and as far as possible. As a rule, this is achieved rather badly than well.

The data required for day-to-day business is transformed and migrated at short notice, and the legacy systems are frozen for the duration of the legally prescribed retention periods. As a result, access to valuable historical information is severely restricted and out of reach for day-to-day business. This is not what a good solution looks like.

Behind all these practical challenges lies a fundamental problem: that of binding data and documents that are no longer required operationally to their original systems. If, on the other hand, the levels of systems and information are consistently separated from one another, the aforementioned challenges can be mastered much more easily and quickly than before. This is a direct starting point for companies to become not only more resilient, but also more flexible.

Separate to merge

By separating the data level from the application level, companies can create a central platform for information and store and retain it there in an audit-proof manner. It also enables them to manage its entire lifecycle up to targeted deletion at the level of the individual data record. This is required in particular by the European General Data Protection Regulation, the EU GDPR.

In this way, they achieve two central goals: Legal certainty and massive cost savings, even in the short term. Once the historical information has been transferred to the platform, companies can completely decommission and dispose of their legacy systems - whether from SAP or other manufacturers. This usually saves 80 percent of the running costs compared to continued operation.

Incidentally, such a central platform not only increases legal security, but also makes an important contribution to greater IT security. Hackers know that companies have trouble updating their systems at short intervals, especially after the release of a security patch. This is even more true for legacy systems, for some of which no patches are available at all. A central platform for enterprise information solves this problem.

It also creates an easy way to correct the errors typical of historical information assets and enrich them with additional information. Only with the help of correct and comprehensive information can companies obtain the 360-degree view of customers, suppliers, partners, products, etc. that is required for digital business models. The key to this is a harmonized master data structure that ensures that, for example, the master data for a customer or supplier can be queried and displayed in an enterprise application such as S/4 Hana as if it had been generated there, even if it actually originates from legacy systems.

This also means that, with the help of such a platform, the historical information on order fields that are no longer needed can also be displayed in the new system without the need for mapping. This massively reduces the transformation and thus project effort when introducing new software generations.

At the same time, an optimally maintained database on a separate platform for information management creates the prerequisite for keeping new software generations, such as SAP S/4 Hana, permanently lean and for making migration to this new software world easier, faster and more cost-effective.

While the migration effort can be halved, the total cost of ownership is realistically reduced by a quarter. In this way, the separate levels of data and applications also enter into a perfect symbiosis in terms of business management.

However, this symbiosis does not represent a closed system; on the contrary, openness is its hallmark, a basic condition for the data-driven enterprise. This means that not only the operational but also the historical information must be included in this control and the accompanying analysis.

However, this requires a far greater number and frequency of data accesses on the one hand and openness to third-party solutions on the other. This requirement is also best met with a separate platform for information management.

Individuality

This is necessary simply because the range of third-party functionalities for this processing and analysis of data is increasing. Companies are happy to accept it, especially in industries that are subject to enormous technological transformation pressure, such as the automotive industry. They have to act quickly and will use what the market offers them and solves their problems.

And they will also develop more themselves again. Because in the future, they will be increasingly differentiated by digital services. The demand will be so great that not everything can be bought in. IT is thus definitely moving into the core area of value creation and is developing its role in traditional industries from that of an extra to that of a leading actor.

The vast majority of these developments will not be large application packages, but functions and functionalities that can be flexibly reused depending on the context. In this way, flexibility merges seamlessly with individuality, the strongest differentiator in the digital platform economy.