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continuous improvement SAP

With our last blog, Part 1: Accelerate Time-to-Value, we started a series discussing major advantages that can be achieved by replacing traditional ERP with cloud ERP solutions. In this blog, we will focus on Continuous Improvement.

As we consider the topic, note a number of questions to consider, including how to improve:

  • Quality of services for my IT and business processes
  • Key business process cycle times, schedule compliance and on-time delivery
  • Ease of use for the ERP solution
  • Collaboration of internal and external users of ERP solution

As you reflect on those questions, also consider which of the following scenarios would best describe your current situation or plans regarding your SAP environment?

Do you have a dispersed ERP landscape across multiple systems and business units or geographies? Are you  looking for the ability to standardize your ERP onto a single system across multiple entities? Leading organizations are choosing to transform their existing ERP landscapes to cloud ERP and, if appropriate, by multi-tier architectures. With a centralized cloud approach, you also benefit from regular updates to support new best practices, regulations and emerging technologies.

For example, retail customers could take advantage of new features related to online sales and food and beverage customers could look to ensure any emerging compliance regulations were supported.

Does your organization suffer from interoperability issues across multiple operating locations, and does it need better collaboration among increasing number of locations supporting the growth of your organization? Leading organizations are 14% more likely to choose cloud ERP to create the ability of real-time collaboration across departments and divisions (see figure 1).

 

Figure 1: Cloud solutions enable collaboration, decision-making and agility.

 

Does your organization need to respond with more agility to changing demand signals in your markets? Leading organizations are two more times likely to use cloud ERP to benefit from real-time visibility in the status of all processes and data. And they’re 7% more likely to establish the ability to share and integrate data with the extended enterprise. This enables communication across growing organizations, and ensures that employees can react in an agile manner in a competitive business environment. Cloud ERP can improve interactions internally, as well as with suppliers, customers and the regulatory environment (see figure 1).

For example, this could help wholesalers and distributors more effectively react to demand signals from customers and work with suppliers to receive products when they are needed. Similarly, services organizations can use this information to staff more effectively.

Last but not least, with cloud ERP organizations get embedded, online support and training, so they can benefit from best practices and make it easy for employees to utilize the ERP (see figure 1).

Now, let’s talk about the emerging technologies enabling new capabilities to work and do business in new ways (see figure 2).

Leading organizations are:

  • 2.4x more likely to have mobile access to ERP, enabling users across the organization to interact with data in more ways than ever before
  • 1.7x more likely to employ business analytics integrated in ERP, enable users to make more informed, predictive decisions based on data contained within ERP
  • 1.4x more likely to use eCommerce integrated into ERP/order management, to enable the organization to reach customers in new ways, expanding the potential customer base
  • 3.6x more likely to apply social business capabilities integrated into ERP in order to enable their users to interact with ERP in new ways similar to how they communicate in their lives outside of work.

 

Figure 2: Emerging technologies help your business stay competitive.

 

Let’s now look at the business perspective, and how a cloud-based SAP solution can better support an agile digital business by embracing new business models, generating additional revenue and reaching new markets and customers.

Aberdeen Group (sources at bottom) has researched how much better cloud-based ERP supports various business outcomes (KPIs) over traditional ERP. We consolidated the results from various Aberdeen studies into a single table and graph (see figures 4 and 5), focused only on KPIs which contribute to Continuous Improvement.

Across industries, the following business outcome improvements have been identified (see figure 3).

 

Figure 3: Improved business outcomes with Cloud ERP

 

Those with cloud solutions perform better in “complete and on-time shipments” and “internal schedule compliance”, meaning organizations operate more effectively and efficiently. With cloud solutions, enterprises have “more accurate data”, and they “receive data more often during the time in which they need it to make decisions”. This results in “improved employee effectiveness” and “customer satisfaction”.

These data points alone create a compelling argument for a cloud deployment model.

Other business outcome (KPI) improvements from the use of cloud ERP vary across industries (see figure 4 and 5):

Professional Services and Wholesale & Distribution adopt cloud ERP more successfully than the other assessed industries, Midmarket and Manufacturing.

Professional Services shows improvements in the range of factor 1.1, up to 2.2 for metrics such as complete and on-time delivery, internal schedule compliance, customer satisfaction and percentage of employees that exceed performance metrics.

Wholesale & Distribution gains a factor 3 for improvement of “complete on-time delivery” and “internal schedule compliance”, while factors of 1.1 are achieved for improvement of “complete on-time delivery” and of “inventory accuracy”.

Midmarket shows 1.3 up to 1.4 improvements for “complete and on-time delivery,” and for “internal schedule compliance,” while Manufacturing is behind with two observed KPIs improvements near factor 1.1 (improvement in “complete and on-time delivery” and “inventory accuracy”).

Figure 4: KPI improvements from cloud ERP vary across industries.

Figure 5: KPI improvements from Cloud ERP vary across industries.

Overall, it’s clear cloud ERP provides solid if not outstanding improvements for a couple of continuous improvement KPI examples across selected industries. We will discuss other KPIs, such as cost, efficiency and profitability, in the following blogs.

Stay tuned for more blogs in the coming month on the specific values you can gain from our on-demand SAP solution. We’ll explore:

Part 3: Reduced TCO

Part 4: Always-on and resilient business

Learn more about our offering.

We are interested in hearing your thoughts on this subject.  What reasons can you identify to move your SAP environment into the cloud?


Additional Sources

Cloud ERP’s Time has come! Nick Castellina, Aberdeen Group, July 2016

Cloud ERP in Wholesale and Distribution: Driving Success Across a Wide Network; Nick Castellina, Aberdeen Group, February 2017

Improve Your Midmarket Business Operations With Cloud Applications; Nick Castellina, Aberdeen Group, September 2014

Cloud ERP Provides The Upgrade Your Professional Services Firm Needs; Nick Castellina, Aberdeen Group, October 2015

ERP’s Role In The Modern Manufacturer: Supporting The Needs Of Industry 4.0; Nick Castellina, Aberdeen Group, February 2017

 

RELATED LINKS

Simplifying the path to business transformation with SAP

SAP Fiori implementation: 5 lessons learned

Digital strategy: Why compromise?

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  1. […] last blogs, Part 1: Accelerate Time-to-Value and Part 2: Continuous Improvement,  I discussed major advantages businesses can achieve by replacing traditional ERP with cloud […]

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