The importance of business agility is becoming more apparent as the pace of change impacting businesses increases at an alarming rate. Technological developments such as cloud, mobility, social media, and big data are primary focus areas for organizations that are looking to gain an edge. In the instant-information age, organizations increasingly must be able to make decisions based on real-time information or concede the competitive advantage to their competitors. The limitations of traditional technology, such as batch-oriented processing, can no longer keep pace with this rapidly changing business landscape. As such, there is widespread recognition that an agile technological infrastructure that supports innovation is necessary to stay ahead of the competition.
Organizations worry that their current technological landscapes are not equipped to respond to the influx of structured and unstructured data.
PwC recently polled CEOs for the 2014 edition of our Global CEO Survey.1 Asked which trends would most transform their business over the next five years, 86% of US executives polled cited disruptive technologies as the most likely transformational engine.
Why technology? The concern is clear: Organizations worry that their current technological landscapes are not equipped to respond to the influx of structured and unstructured data that the emerging technologies of cloud, mobility, social media, and big data bring to the table. Their technology must be agile enough to keep up with these trends, and to produce meaningful data and functionality to benefit users across their businesses.
Functional groups supporting the organization are also unsure that they can meet these needs. More than 72% of business and IT leaders reported that they were extremely or somewhat concerned over their present inability to gather, understand, and act on all the data about their customers, products, or company. Of those, 44% are currently investing in business analytics to ease this concern.2
This challenge is true across all lines of business, but it is one of particular focus for finance because of its impact on strategic decisions. If data volumes are such that they impact the organization’s direction, then the finance department needs to be able to make sense of that data in a timely fashion to perform its fiduciary responsibilities or serve as a trusted advisor to its business stakeholders. A clear window into the company’s future profitability is at stake.
Adding massive data volumes to already high volumes of complex transactions strains transaction efficiency. Critical finance processes can slow, causing delays in accumulating, summarizing, or reporting data. As a result, profitability analysis can be clouded, and the company’s performance can suffer through missed opportunities, an inability to respond, or inappropriate interpretation of information. And because transaction efficiency is a foundational driver, anything that contributes to a bottleneck must be negated in order to maintain optimal performance.
Unlocking New Opportunity with SAP HANA
This context helps explain why organizations are turning to SAP HANA as one such enabling technology that addresses companies’ growing concern over their ability to analyze and respond to signals or trigger anomalies that are captured by data in a timely manner. SAP HANA’s in-memory computing, parallel processing, and analytics capabilities help deliver the real-time data capture, which allows for the insights that businesses crave. If applied appropriately, SAP HANA can help companies develop more accurate views of their organization more quickly.
Instead of the data latencies that are native to a traditional relational database, SAP HANA delivers speed and performance that in turn help spur innovation, or create possibilities where none existed before because of technology limitations. SAP HANA attacks latencies by providing in-memory technologies, enhanced compression from a columnar database structure, and improved multi-core processing. Consider profitability analysis. For many of our clients, maintaining unimpeded visibility into profit margins is the crux of the business. Understanding the underlying profits of individual transactions can become extremely challenging as data sets increase, and prior to SAP HANA there really was no way to capture, aggregate, or make sense of that amount of data — at least within the time frame required to make intelligent decisions to drive business results.
With SAP HANA, there is now an opportunity to analyze a host of scenarios in real time, including a snapshot of a profit model, with insight into what precisely is contributing to or detracting from it. With in-memory computing able to offer different dimensions on the same data set, and pivot from one view to another in real time, SAP HANA is helping to put an end to guesswork.
This is transformative in two main regards. First, transaction efficiency is improved simply because all the variables and permutations of a particular transaction can be calculated in a timely fashion. More importantly, however, is the business insight that is vastly improved by this speed, which gives finance organizations more time to analyze historical data and model data to arm the business with various potential outcomes.
Sticking with the example of profitability analysis, an organization can isolate specific margin leakage, or determine whether it is making a profit from a particular product that it might not have previously recognized. Ultimately, the results are clear. More transparency into margin that might be higher or lower than anticipated can take the guesswork out of critical decisions and provide more confidence to drive the business in a strategic manner. Whatever the case, SAP HANA can provide insight on up-to-the-second information. Armed with this knowledge, finance organizations can break out of their reputation as strictly a bookkeeper function, and become a unit that offers true business value.
A Predictive Model for More Accurate Insights
SAP HANA also has drawn interest from many PwC clients because of its advanced analytics capabilities, with a built-in analytics engine in the appliance. Traditionally, PwC has assisted customers with building what-if modeling scenarios, in which they could change a variable or assumption and run the new model through financial figures to explore a list of hypotheticals.
More recently, organizations are demanding more sophisticated predictive analytics, which falls into the realm of SAP HANA because of its ability to conduct parallel transactional and analytical processing in memory. This, along with native predictive algorithms, means that with SAP HANA an organization can supplement hypothetical what-if modeling with predictive models that deliver more accurate insights.
PwC clients are exploring using SAP HANA to reshape their business processes, move toward a predictive model, and overcome the delays of batch processing.
This is a tremendous value-add for SAP HANA, because speed in and of itself usually will not be enough for organizations to explore new technologies. If SAP HANA were only about accumulating more data and processing and analyzing it more quickly, adoption would not have approached today’s levels of over 3,300 customers in the three years since the platform became generally available.
With SAP HANA, however, PwC clients are exploring using the technology to reshape their business processes, move toward more of a predictive model, and overcome the expected delays characteristic of batch processing. See the sidebar, “How an Airline Gained Visibility into Changing Costs,” for one such example.
What the Future Holds: New Opportunities and Better Performance
Many PwC clients are currently taking a crawl, walk, run approach as it concerns SAP HANA, seeking to familiarize themselves with it incrementally. But we expect a steady rise in adoption as more organizations realize the transformational potential of SAP HANA. The barriers to adoption that we are currently seeing are mainly in three areas:
- Cost of technology innovation
- A hesitation to be an early adopter
- A concern over post-implementation support
Cost, especially, is an interesting dynamic with SAP HANA because many of the standard metrics for calculating a return on investment (ROI) can be challenging to quantify because SAP HANA is a foundational transformation enabler for a wide variety of complex business challenges. How do you calculate ROI for a solution that has the potential to reshape the entire business and create opportunity that an organization might never have dreamed possible? This can be especially difficult to calculate when initiating the first project that becomes the enabler for a number of additional use cases across different business units. One perspective is targeting a specific problematic area, such as improving a processing bottleneck in the financial close.
SAP HANA can be applied appropriately to take days out of the financial close, and then the finance organization can shift toward more value-added, strategic areas such as performing business analysis that looks into the future, rather than into the past. Here, SAP HANA can be applied to look into the future with certain assumptions and equip the business with insight.
Through our work with clients developing proofs of concept, as well as our own lab comparison studies on SAP HANA, we have found that SAP HANA can provide the high performance that the right business partner can help an organization unlock to address complex business problems.
Innovation Presents Growth Opportunities
As shown earlier, C-level executives see disruptive technology as having a significant impact on their businesses in the coming years and helping them understand and act on the growing influx of data. This is a recipe for business transformation.
For our Global CEO Survey, we asked CEOs in the four largest economies where they saw the most opportunity for growth over the next 12 months. Presented with a list of potential growth opportunities including mergers and acquisitions, new markets, increased market share, or new strategic alliances, CEOs across the globe instead all ranked innovation as the top growth opportunity.
Innovation, disruptive technology, and understanding and acting on an increase in structured and unstructured data are forefront in the minds of CEOs and CFOs around the world, and SAP HANA addresses all three areas.
1 PwC, “Global CEO Survey” (January 2014; www.pwc.com/gx/en/ceo-survey/). [back]
2 PwC, “Digital IQ 2014: 10 Technology Trends for Business” (January 2014; www.pwc.com/us/en/advisory/assets/pwc10technologytrends2014.pdf). [back]
To find out more about how PwC can help you in your business transformation goals with SAP HANA, visit www.pwc.com.
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