As someone whose career has been heavily in step with the development of the SAP suite of Applications, I’ve been very interested recently in the evolution of the Intelligent Enterprise and the impact it has been having on the perception of SAP as a long-term business platform.
Don’t show me the SAP – show me the ROI
From a software perspective, SAP is comprehensive. Depending on whether you’re for or against it, SAP is either feature-rich or plain complex. However, when I speak with CIOs, the discussion is not in relation to the actual software, but what it can do for the organization, and how to establish an Application Service that gets the best return on investment over the long run. What they’re really seeking is a program that brings the right innovation and technologies into the core of their businesses to facilitate sustainable growth – something we call the Renewable Enterprise.
But the real question here is if the Renewable Enterprise is genuinely achievable – or are we talking about something completely unattainable? Personally, with the right advice and approach, I think it’s definitely achievable – so let’s have a look at how.
Where are we now? Everything’s moving faster, but we’re going nowhere
Our most recent research on the topic, undertaken with Everest Group as part of our paper, Applications Transformation for the Digital Age, shows that Applications Services – i.e., the capabilities and methods to implement and support software and technology – are not delivering what the business expects.
Whilst technological advances in areas such as Artificial Intelligence, Virtual Reality or Internet of Things offer possibilities to make great leaps forward, negative perceptions still exist, for example:
- Only 20% of enterprises believe that Applications Services are helping to access new sales and open up new channels
- Only 19% of these organizations believe that Applications Services help to create product or service differentiation or scalability
These findings are typical of the things I hear when I speak to CXOs in organizations using SAP – especially since the rate of development and evolution of the product suite seems to be outstripping the market’s ability to consume these changes. If this is in fact the case, then it’s hardly surprising that “Shadow IT” is a challenge for the CIO as smaller, more agile software competitors target the business directly, eroding the value of the bigger picture.
So, what’s the problem here?
A key question we need to ask ourselves is: Are Traditional Service Models still fit for purpose?
Dealing with large, global organizations, it’s obvious that the answer is “No!” but it’s also plain to see there is a clear dichotomy between the new expectations of “the customer” (which I’ll come to in my next blog) and what has been in place for many years.
The most common (SAP) applications issues:
From an SAP perspective, our sample size is very large since as a business-critical application, it’s widespread and there are a number of factors that contribute to a less-than-perfect current situation:
- Old applications and old technology – As a core business application, the tendency has been to minimize upgrades to avoid the risk of disruption. This leads to inflexibility, inherent complexity, and technical debt. I frequently hear the old adage “if it ain’t broke, don’t fix it” from many who hold the purse strings.
- Easy does it, don’t break it! – The change approach to SAP has not, in the main, moved on from ERP days due to the criticality of the applications. A conservative approach to risk mitigation frequently means there is only one way to change SAP – even though the different components satisfy different needs. The corollary is that Innovation happens outside – not inside SAP.
- Keep the lights on, cost effectively – With the reduction in desire to change, the approach often becomes to do more with less. As a core ERP application, the perception is that SAP adds no competitive advantage, so just keep the lights on and make changes based on as low of a cost base as possible.
But is this a reflection of SAP “the software” or just the way that the management of ERP applications has developed? Now something far more than ERP, has the SAP product suite been caught up in this drive to the lowest common denominator?
To fully answer these questions, I think we need to first take a step back and look at how IT expectations have developed.
In my next post, we’ll take a broad look at how these IT expectations have shifted, followed by a calculated strategy comprising four principles, which you can apply to get the most out of your SAP investments and become the Renewable Enterprise.