In digitally-enabled industries, business processes dovetail information systems and technology. A co-dependent relationship is formed between physical operations and the digital infrastructure that enables and models them. In fact, they are not separate at all. As both constitute modern business processes, they are two sides of the same coin.
Thus, a simple change in physical operations may require drastic changes in digital architecture and vice versa. So business process transformation, in this day and age, should be agile. However, this seems to be a tall order for established enterprises with rigid SAP-centric software architecture. But this is not impossible.
This article will discuss important considerations in achieving quick and efficient accelerated business process transformation (BPT) for large enterprises with SAP-centric environments. These include the inevitability of BPT and the common causes for inefficiency.
The Need for Agile Business Process Transformation
One problem that large enterprises encounter is their sheer size. Ground visibility is low when you are way up high. Compounded by continuous business growth, and increase complexity, operations may feel too large to monitor as business processes seem too spread out. Real-time visibility is only one of the many challenges that big businesses face in managing their business processes and supply chain. Others include localized compliance, process modernization, remote collaboration, and managing unpredictable supply chain disruptions.
Because of their size and scale, large companies may find optimizing their business processes a difficult undertaking. However, it is inevitable and critical. This is because dynamic markets exert evolutionary pressures on individual firms. To survive and thrive, companies need to adapt. This entails self-regulatory changes that can only be done by optimizing and creating new business processes to make the whole firm more robust against untoward market forces—and to cement its significance to the market. As computer scientist Vladimir Zwass said, “By transforming business processes toward higher performance levels, we can transform the firm.”
Of course, BPT occurs within the different components in different hierarchical levels of an organization. Many times, they exist in siloes, which is not ideal. This is because it is the way that BPT efforts get put together that determines the outcome. This is why, for large established enterprises, BPT efforts always involve updating or improving their digital command center like their ERP backbone.
However, there is one problem. These centralized command centers, usually SAP-centric software environments, are quite rigid. Sure, they can handle interrelated processes with complex co-dependencies. But they are not agile enough to cater to new business needs. Customizability is not as simple and requires specific expertise and often long periods of time.
In a 2022 report, only 3.6% of organizations found a strong out-of-the-box functional match with their ERP platforms. This just shows that generic deployment can’t cover the level of customization needed by businesses. In fact, 64.3% made process modifications. A good 48.6% stated that they did moderate custom modifications, while 15.7% revealed that they heavily customized their software to fit their processes.
This is why large companies are looking for ways to highly customize their digital infrastructure. They do this in three main ways (1) migration, (2) stacking, and (3) modernization. There are many successful business process transformation examples for each strategy. However, for large companies with irreplaceable SAP-centric environments, only the last two are viable in achieving a proactive business process transformation.
This is because total migration or the replacement of the whole software architecture is not an option for large establishments. It is like burning down the house just for a few broken windows. The cost for migration alone would be extremely expensive. The organization will also experience the birthing pains of a drastic change. Extensive training would be required and this will not only cost money but also valuable time. This does little to accelerate BPT for large enterprises. In contrast, replacing the core architecture might just bog the whole operation down. So, they are left with choosing between (2) stacking and (3) modernization as their main process transformation methodology.
Specialized Software Stack: Acceleration at a Cost
As total replacement is not an option, some companies opt to integrate specialized software into their core ERP infrastructure. Most specialized standalone software products today do not seamlessly work together with ERP platforms and more specifically SAP, but they can be tailor-made for particular business needs. The best of them are highly flexible enough to be configured quickly. This makes specialized software adoption a highly viable option to accelerate business process transformation.
However, it might also introduce another cause for overall business inefficiency in terms of finances. Let’s analyze this through an example. For instance, a large corporation that needs to consolidate inventories across factories in different geographies may adopt a highly-customizable platform for inventory management. While many examples of inventory management system solutions can be integrated with an ERP core while also being highly flexible, they introduce new costs, thus increasing the total cost of ownership or the estimated direct and indirect cost of acquiring and operating a software product or system.
Accelerating BPT by Modernizing SAP
In many cases, the best way to go about accelerating the transformation of business processes is by modernizing core SAP by using only one extra solution—a BPT software. These platforms provide users with no-code to low-code tools to create business applications that connect with and hold sway over various core legacy software modules. Basically, it allows users to continuously create and update applications for new business processes on top of their core architecture while removing customization from their core system - leaving it cleaner and easier to upgrade and maintain.
The main benefit of embracing this modernization strategy is that organizations will be able to create their own applications to support new business processes typically a lot quicker than traditional methods while keeping their legacy infrastructure intact. This is also done for at least three specific reasons: (1) to modernize the look and feel of applications also to modernize the process itself that often relies on workstations, specific devices, or even paper trail, (2) to consolidate relevant data and processes for new business functions, and (3) to provide customized applications for emerging business processes across departments.
These platforms provide flexibility and agility. Organizations will be able to optimize these applications as they move forward. Thirdly, by being no-code to low-code, there is a lower need for highly specialized technical skills to create and optimize business process software. In fact, the best BPT platforms have drag-and-drop functionalities for creating custom logic, rules, application interfaces, and back-end integrations and require little to no coding at all. They allow users to create both web and mobile applications that work both online and offline.
As this implementation only requires one solution, the cost of ownership is significantly lower than adopting specialized platforms for multiple functions. Moreover, because it modernizes and optimizes the already-able core ERP infrastructure, it can also lower the cost of ownership by reducing waste and inefficiencies.
Stacking or Modernization?
As discussed, there are two viable options on how to do business process transformation: stacking multiple specialized software solutions and modernizing SAP environments using business process transformation tools regardless of the core transformation. Both allow companies to keep their SAP core while providing highly-customizable solutions for various business functions.
By putting an emphasis on customizability, these strategies can help companies avoid the technical debt trap and reduce customization in the core. This, of course, is if continuous software customization is aligned with changing market and business dynamics.
However, the stacking strategy, as discussed, can lead a company to an integration spree—by stacking software over the other to cover for different various functions. This leads to an increase in the total cost of ownership as these platforms are usually offered via monthly or yearly subscription. This might be okay for businesses that are heavy in just several core functions. This could be viable for SMEs and those that do not already have an ERP core.
For larger companies, however, legacy software modernization could be the optimal choice. This is especially true for big organizations that have established ERP cores; in fact, in a SAP report, 99 of the biggest 100 companies have SAP-centric ERP environments that are irreplaceable. Hence, using the modernization strategy through business process transformation tools would not only help them avoid technical debt but also lower their cost of ownership.
Choosing between the two really depends on your current software architecture. But if you have a strong SAP core already in place and established business processes, you can accelerate your business process transformation initiative more efficiently by using SAP-centric BPT solutions.