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12.01.2021

Cloudization and Digitization in Medium-Sized Businesses

SAP’s Cloud Strategy – Current Challenges

In early 2020 SAP announced that they would be extending mainstream maintenance through the end of 2027. Consequently, existing SAP customers who have not yet switched to SAP S/4HANA can continue using their R/3 systems and be assured the appropriate support through 2027 and maybe even through 203. As a result of this announcement, many companies have adjusted their digitization strategies and postponed the matter of “S/4HANA transformation”.

For many, this postponement has proven to be a fatal mistake: owing to the COVID-19 pandemic, in particular mid-sized German companies have come to realize that digitized processes would have afforded them a considerable competitive edge and that in the future digitization should have priority.

How should I meet this challenge?

In general, implementation of the SAP S/4HANA cloud can be completed within a very short period. A full-fledged and future-proof implementation of a cloud-based ERP system is the less expensive alternative to the on-premise version of SAP S/4HANA. As a lease model, it entails lower Capex costs. Another advantage: cloud licensing enables companies to operate with greater flexibility and to respond to customers’ requirements more effectively.

How can I find a suitable way into the cloudified SAP world?

In introducing the new SAP software generation, companies need not entirely re-build their existing system constellations from scratch! The so-called Brownfield approach allows bringing business processes already optimized over many years to the latest level of digitization. For this upgrade most companies will require support from external consultants and IT service providers, however, since integration of the various solutions is hardly feasible without many years of experience.

SAP was already pursuing cloud computing well before the pandemic outbreak and has been continually expanding its portfolio and services in this regard.

In recent years, the cloud ERP system has broadened its functional scope, so that the S/4HANA cloud can now cover more corporate processes than ever before. In the beginning, SAP’s S/4HANA cloud strategy primarily enabled small and medium-sized businesses to shift to SAP. Today, many larger and prominent companies are also interested in cloud transformation. The SAP cloud portfolio comprises a broad and continually expanding range of further products.

For example, in taking over Emarsys, SAP has been able to further expand its customer experience (CX) division. SAP will be further rolling out the new strategy announced by CEO Christian Klein in the coming years, with the assistance of partners for conveying cloud expertise to customers.

Digitization – if not now, then when?

The importance of digitization has increased in 2020. The COVID-19 crisis has forced many companies to switch to remote measures and thereby reach the limits of their capacity.

Many technologies became essential for companies’ survival, such as remote access, communication tools and cloud computing. “Work anywhere” measures allow companies to perform their professional activities efficiently and independently of location. At the same time, this new type of work freedom has increased employees’ satisfaction.

The CIOs (chief information officers) manage the IT infrastructure in the companies, and thereby enable their target-oriented entry into digital transformation. Pursuit of this strategy is especially important for medium-sized businesses, given a global market presence.

The actual implementation of digitization strategies varies from industry to industry. Companies in the IT, automotive manufacture, chemical, pharmaceutical or mechanical engineering industries are forerunners in this respect. Here we find the positive trend of increasing importance due to the pandemic. I see a lot of catching up to do in terms of digitization – particularly in retail, tourism and the logistics sector.

Conclusion

Regardless of the size of a company or industry, pressing ahead with digitization measures has become urgent. Digitization is one of the most important drivers for a company’s resilience. It helps companies to survive unforeseeable challenges, such as the pandemic, or even to maintain a long-term market presence and competitiveness. Adapting and upgrading IT measures is possible in either small or large steps – generally it makes no difference. The important thing is to take the step into the future!