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Driving Growth in Today’s Economy

by Richard Campione | SAPinsider

July 1, 2010

To help customers innovate and grow while keeping costs in check, SAP is rolling out a series of robust SAP Business Suite enhancements in 2010. SAP’s Richard Campione introduces these enhancements, discussing the four business strategies that they address, as well as the underlying principle that makes it all possible.
 

Richard Campione
Executive Vice President and General Manager
Line of Business Solutions
SAP AG

Now that the economy is trending upward, SAP customers are looking to grow. Business innovation has always been top-of-mind for our customers. But it’s even more important now, in a time of recovery, when industries are re-shaped, leaders solidify their positions, and new players emerge.

A year ago, customers were inwardly focused on securing cash flow, shedding costs, and reducing payroll. Today, everywhere we look, we are seeing signs of optimism and recovery. But we are emerging from the recession into a totally new market landscape — the “New Normal,” if you will.

SAP’s challenge is to determine how to help our customers navigate through this new environment, in both the short term and the long term, to help them run, grow, and transform their business better so they can achieve their strategic goals.

Companies that make the right choices and the right changes now are poised to solidify their positions or become the next market leaders. (In fact, half of the Fortune 500 were founded in recessionary times.) To shore up their return to growth, customers are looking to their investment strategies in business processes, in IT, in business models, and in the optimization of all of their assets.

Accordingly, SAP is poised to help customers grow through a series of enhance­ments that we are calling Innovations 2010 (see sidebar).

A Focus on 4 Business Strategies

We’ve grouped the enhancements to address four major business strategies that our customers can use to grow in the New Normal:

  1. Manage a lean enterprise
  2. Transform business models for growth
  3. Harness the power of social communities
  4. Apply management science

Let’s dive into each of these strategies. (Figure 1 presents a summary.)

 

4 major business strategies

Related enhancements delivered by SAP in 2010

1. Manage a lean enterprise
Companies need strategies that make the most efficient use of all of their assets, investments, people, and processes. These strategies are marked by the terms standardization, consolidation, transparency, and simplicity. Saving money via lean initiatives frees up money for growth investments.

  • An updated shared services framework that helps organizations reduce costs by centralizing administrative functions
  • Master data management capabilities for financials that support  reporting requirements as a result of business change
  • Streamlined compensation planning for rewarding top talent
  • Services procurement enhancements to help reduce the costs of third-party services
  • Enhancements to the disbursement of marketing funds that allow organizations to get a better hold on marketing spend

2. Transform business models for growth
Businesses cannot continue to operate in isolation. They must learn to leverage their entire business network to adapt to the increasing speed of change, progressive talent shortages, and consumer demands for mass customization. Businesses can also borrow best practices from adjacent industries and use those processes to enter new markets and acquire new customers.

  • Integrated and coordinated manufacturing with outsourced manufacturing partners
  • Collaborative management and loyalty management for indirect selling partners
  • Increased supplier collaboration to bring service suppliers closer to requests, which decreases overall cost
  • Convergent charging, rating, and invoicing that improves monetization of new products and services and streamlines invoice collections
  • Extensible business processes leveraging more than 3,000 flex points (enterprise services) across the SAP Business Suite, together with advanced integration and orchestration capabilities

3. Harness the power of social communities
Social communities can be a source of collective knowledge. Each customer interaction — be it online, through customer service centers, or on mobile devices — should be enriched with an insight-directed, engaging experience enabled by the relevant mix of targeted customer data, integrated processes, and interactive community content.

  • SAP Idea Management within product development for open innovation
  • SAP StreamWork for collaborative decision support
  • Advanced integration of Smart Meters for individualized utility services
  • Improved real-time offer management to give compelling offers to prospects at the right time
  • Extended integration capabilities to ensure connectivity into your business network and your customers

4. Apply management science
Companies need to make sound decisions based on real-time, relevant business insight to drive the business forward. Insight matters most for the things you need to deal with right now.

  • Insightful product data on quality and orders available to product developers
  • Closed-loop financial performance data, cost and profit analyses, and profit center management
  • Unified asset performance management across the plant and enterprise
  • Advanced analytical capabilities of the underlying technology platform to improve existing SAP reporting and SAP NetWeaver Business Warehouse (SAP NetWeaver BW) content

The underlying principle that makes these enhancements possible

Flexibility without disruption
Whatever new technology a company implements, it must be done in consumable increments and without disruption to your mission-critical processes or long-term plans. You can’t afford to have your operations disrupted, even though you selected an innovation that was tried and true.

  • Enhancement package strategy, coupled with rapid upgrade services, enabling you to take advantage of the most recent innovations quickly and without disruption — in 6-12 weeks, in most cases
  • Pre-packaged solutions and services that enable the rapid implementation of key capabilities in implementable steps as part of end-to-end processes, empowering you to get up and running quickly for rapid ROI
  • A common platform that enables you to consume SAP solutions in any combination you need while ensuring data consistency and interoperability and implementing your own practices on top of standard best practices
Figure 1 The four key business strategies driving Innovations 2010 — and the underlying "flexibility without disruption" principle that makes these enhancements possible

Manage a Lean Enterprise

In the New Normal, the business environment has fundamentally changed: Financial markets have been overhauled and government is playing a different role. The truisms adhered to during the recent economic crisis are still in play: Conserve cash, cut costs, and make process improvements for quick returns today, but do so in a way that ensures lasting growth for tomorrow.

SAP customers are looking to grow their business by making focused, incremental investments to take advantage of high-impact opportunities. They don’t want new IT systems and technology that increase the current support burdens. These focused investments should unwind complexity and free up resources and talent. In short, companies are looking to shed complexity to regain agility.

One of the best ways to achieve this is by either centralizing administrative functions or outsourcing them. That’s why, within the portfolio of enhancements delivered in 2010, there are tools to help our customers support a shared services framework2 or roll out real-time offer management. Saving money through these lean initiatives frees up capital that companies can then invest to yield growth.

Transform Business Models for Growth

The days of companies operating in isolation are gone. More and more businesses leverage their entire business network to adapt, grow, and respond to the increasing speed of change. What many SAP customers are coming to realize is that they should be looking outside their organization for help with their supply chain. For example, why can’t some of the best practices in high tech be applied to the oil and gas industry?

The biggest obstacle to sharing one industry’s best practices with another industry is simply lack of access and knowledge. The touch points between high tech and oil and gas, for example, are limited. But one of the advantages we have at SAP is that we are continuously exposed to our customers’ best practices — and, in turn, we adapt those best practices to our products in other verticals to arm our customers with resources and knowledge to help them transform and grow.

Harness the Power of Social Communities

To some extent, this isn’t a new strategy — it’s just a twist on an old formula for business success. Companies have always wanted to get closer to their customers, and over the last decade, the trend has been to put more emphasis on achieving customer intimacy and multi-channel interaction. What is new is the vehicle of online-based social communities as a means to yield business growth. Companies have really begun to see that by more closely interacting with customers, their relationship with those customers becomes more dramatic and dynamic.

Customers, on the other hand, are demanding an experience that is highly customized to their needs. So, smart companies are aiming to deliver a differentiated customer experience that engenders customer loyalty, resulting in both top-line revenue growth and bottom-line efficiencies. Each customer interaction needs to be enriched with an insight-directed, engaging experience enabled by the relevant mix of targeted customer data, integrated processes, and interactive community content.

And that means that customers need new technology to support these points of customer contact. SAP’s enhancements in 2010 will provide that technology.3 For example, SAP now offers SAP StreamWork, an on-demand application that allows your people and your customers to collaborate, brainstorm, and strategize for better decision making. Go to www.sapstreamwork.com to test-drive this innovation.

Apply Management Science

In a nutshell, don’t guess. In a downturn economy or, as we have now, an emerging economy, the margin of error is narrowed and decisions have greater consequences. Unfortunately, too much of management today is conducted by very busy people who only have enough time to get a sound byte to guide them in making important business decisions.

We’re firm believers in shifting this to a more scientific approach. But to make sound, fact-based, business decisions, you really must have the right information available at the right time so you can take the right action. Within Innovations 2010, for example, we’ll provide tools for closed-loop financial performance data, cost and profit analyses, and profit center management. That way, customers get the right information at the right time to make the right decision to drive growth in today’s emerging economy.

Flexibility Without Disruption

The enhancements delivered by SAP in 2010 represent consumable increments of SAP technology that can be implemented quickly, without disrupting mission-critical processes.

Most of these enhancements can be up and running in 6-12 weeks. And this isn’t just theory; we have some 300 customers every month who implement these types of enhancements.

SAP provides the flexibility for you to consume the focused innovations you need when you need them — all while ensuring the continuity of your business processes.

Innovation When and Where You Need It

In this New Normal economy, SAP is supporting its customers by continuing to drive more value into its solutions and making business processes easier to implement, deploy, and use. By implementing these enhancements in smaller increments, customers can address business problems and attack business opportunities while still maintaining the consistency, compliance, and integrity of the larger business processes.           

To learn more about the new functionality delivered by SAP in 2010, go to www.sap.com/solutions/business-suite/innovations2010 or www.sapphirenow.com.

 


 

Source: McKinsey on Business Technology, Autumn 2009. [back]

2 To learn more about the shared services framework and other core financials and HR enhancements, see the article by Philip Say and Dawn Crew in this issue of SAPinsider. [back]

3 See the article by Volker Hildebrand in this issue of SAPinsider to learn more about innovations related to the CRM space. [back]

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