Why should retail companies consider SAP S/4 HANA?

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Why should we migrate to S/4 (and Hana) for retail core processes? How should we go about it?

These questions come up regularly in my meetings and conversations with retail organizations across Scandinavia. Many ECC customers have already adopted the HANA in-memory database technology and are already experiencing the improved performance this technology enables. But infrastructure is often the easy path to improved business performance. Going through a software update – especially with SAP’s reputation for complexity – has made many retailers hesitant and uncertain about the business drivers and justifications.

Let there be no doubt on the SAP ambition, SAP’s new ERP is far more than a standard version upgrade! SAP S/4Hana is an entirely new business suite, not to be perceived as yet another transactional master data system but the actual digital core of the retail enterprise.

For the past decade retailers across the world has been hard at work in creating digital extensions to the traditional ERP platforms. Thousands of fragmented and homemade digital pilot projects has been conducted, some successful, many trashed as business benefits could not be achieved! Many projects closed as they added just another layer of complexity and operational cost could not be justified by the outcomes.

SAP S/4 answers to this call – digital is not a patchwork of edge solutions but the necessary core foundation and DNA of a retail company.

Retail is by far the most exposed industry when it comes to digital transformation, but also the industry where digital leadership easiest creates business differentiators and market share. The overarching challenge for all retailers is to be responsive to their clients, their preferences and characteristics.

The main transformation among the customers is a massive move into stronger individualization, fueled by fast changing digital capabilities and social interactions from across the world of commerce. To achieve success in this landscape retailers needs to build all processes based on agility and insights – to be able to react and adopt to new realities ahead of competition to remain relevant for an ever more disloyal customer.

This reality is the DNA of SAP S/4HANA for Retail – it merges all aspects of a digital economy, from manufacturing, wholesale, retail, and e-commerce – onto a single digital core, giving retailers who adopts to its technology  platform the flexibility and agility needed to deliver true multichannel customer experiences in real-time.

It is in this context a S/4 journey should be evaluated, what is my capability to adjust to changing requirements over new channels, function, location, categories, and product?

When asked for priorities my position is always the same – for a digital transformation you should focusing on three things: firstly, digitizing the customer experience; secondly, digitizing your operations; and thirdly, new business models – but how does this relate to a S/4 journey?

By far the most powerful enabler of digital core capabilities for a retail operation is the features of SAP’s Customer Activity Repository (CAR). In a simplified description CAR holds details to all inventory transactions and customer activities across all channels in a real-time HANA database. With full inventory visibility and history of all customer movements, enhanced by a real-time data processing and analytics demand forecasting engine the limits to what business values that could be achieved is almost endless. From customer profiling and personalized promotions, over replenishment and supply chain optimization – to a massive improvement in planning, execution, prediction, and simulation capabilities – SAP CAR pretty well follows the three priorities I listed before, customer experience, digital operations and new business models.

Of course, CAR does not stand on its own feet. It is simply one of the more influential genomes in the digital DNA that SAP S/4 enables,

The full value from SAP S/4HANA is delivered through the simplification of architecture and business processes to better analyze trends, predict the outcomes of strategic options.  Once selected, it optimizes both the planning and execution over all channels, giving retail companies the ability to create unique opportunities to reinvent business models and drive new revenues and profits.

There’s a brilliant research document available from Capgemini Research, that take a multifaceted view on digital transformation approaches and experiences well worth the reading, you can download it from here.

I’ll continue looking at S/4 through the retail glasses in coming editions, so stay tuned.

You are more than welcome to comment or start a conversation with me.

Hansa Andersson,
Retail Principal Capgemini Scandinavia
+46 76 611 2015

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