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The insideEdge (SAPinsider Vol. 9, Iss. 3)

by Lori Mitchell-Keller | SAPinsider

July 1, 2008

Companies can no longer think of their business functions in silos. In this executive address, SAP Senior Vice President Lori Mitchell-Keller explains why a process-based approach to technology is the panacea for smoothly orchestrated business networks.

Lori Mitchell-Keller
Senior Vice President
Suite Solution Management, SCM, PLM, and Manufacturing

Of all SAP customers, those in supply chains probably have the easiest time understanding the concept of a business process platform. Unlike finance or HR, which are not only self-contained functions but siloed departments, the supply chain represents a string of business processes — groups of departments that work together to manufacture products and get them out the door.

Despite this, supply chain customers still find it easier to perceive themselves as silos rather than as links in business processes. Most of them don't yet think or work in a beautifully choreographed value chain that spans across design, manufacturing, distribution, finance, HR, or more importantly, other companies. When business challenges arise, the tendency is still to buy software with a three-letter acronym that covers the gamut, rather than to uncover the root of the pain point and then seek the solution or outside partner that will solve it.

A manufacturer, for example, whose inventory turns trend too low may decide that he or she needs a supply chain management (SCM) solution. While this may be true, it is the wrong way to approach the situation. The first thought should be not of an application, but of the business process that you want to enable. Falling inventory turns is a metric, but it is not the issue — no more than a symptom is the disease.

If inventory turns are too low, the first question should be: What is the business process that contributes to that issue? Perhaps what you manufacture does not correspond to the demand from customers, which may be an indication of a flawed forecasting process. Or maybe you are not fulfilling orders in a timely enough fashion because you lack an effective order tracking process. Once you identify the correct business process and understand exactly where that process is broken, only then is it easier to understand what capabilities you need to fix it.

Over time, every company is going to have to make this leap. They are going to realize — if they haven't already — that they are part of a broader business network. They are not a standalone company. They can no longer think in silos.

This change is coming, and SAP is ready. Over the next 18 months, SAP will be delivering process-oriented capabilities in which we will map business processes to the capabilities that SAP already offers, as well as some new industry-specific functions and collaboration technologies. And because all these capabilities are integrated and based on the same underlying technology platform and architecture, you can customize as you need.

Armed with SAP's process-focused capabilities, you'll be best equipped to launch your very own business transformation.


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