During our ongoing conversations with our Discrete Manufacturing customers, we see many of the same drivers as in the 1990’s such as:
- Lean Manufacturing
- Supply Chain Optimization
- Business Intelligence
- Customer Relationship Management
One big area, that is now relevant and trending among customers, is Cloud - in particular, how and whether it will develop and support the requirement of Discrete Manufacturers. This blog is the first of a series where I will be commenting on and expanding upon SAP’s Cloud offering to the Discrete Manufacturers starting with the highlights from 1805.
The rapid growth in globalization has had a major impact on Discrete Manufacturers, both in terms of potential customer reach and competitive forces. Successful businesses have sought flexibility around the physical locations of their design, build, assemble, distribution and support functions of their products and services; however, taking a decentralized approach to Cloud Technologies as a way of supporting operations across different markets has presented new challenges from the perspective of the breadth of regulatory and tax pressures.
The challenge and cost burden of delivering IT services in different geographies, cultures and of course time zones, results in IT resources being deployed in a decentralized way. Cloud solutions provide a compelling option to avoid costly and lengthy application installations. They offer flexibility across locations. Potentially, it can also mean that services don’t need to be provided in areas that are non-core to a discrete manufacturing business.
In response to this shift in market trends, SAP has invested in their S/4HANA Cloud offering, focusing heavily on the core Discrete Manufacturing processes. This provides significant business agility, faster implementations, and a release of working capital, as a result of moving to predictable Operational Expenditures.
For those Manufacturers who have previously worked with an on-premise ERP offering, they recognize that aside from the initial capital outlay of license and project, there is also the continual need to maintain and upgrade their solution to keep their asset current. Having recently upgraded a small on-premise SAP S/4HANA customer from 1610 to 1709 (see earlier blog relating to our on-premise S/4 upgrade), we found many of the same challenges and costs that ERP customers have been experiencing since the 1990s in terms of an upgrade project.
Flexibility is King
A perceived misconception for a Discrete Manufacturer moving to S/4HANA Cloud from an existing on-premise ERP is that there is less flexibility within the solution to configure and extend the SAP standard delivered S/4HANA Cloud processes addressing specific needs of the business. However, SAP is continuing to invest in their comprehensive toolset to allow flexibility for extensions and developments to meet specific business needs. With each subsequent release, more Fiori tiles are being made available that exploit machine learning logic. It is important for an SAP customer to keep current so they can capitalize on the latest functionality.
My colleague Mohamed Gharbi demonstrates in his excellent blog how the use of SAP Cloud Platform can open up a new world of opportunities for SAP customers especially those in Discrete Manufacturing.
Quarterly Upgrades Included in S/4HANA Cloud Subscription
When taking the decision to go SAP S/4HANA Cloud vs On-Premise, a significant consideration should be the quarterly cycle of software upgrades. The frequency of the upgrades will necessitate an efficient means of regression testing, which SAP has anticipated, by providing some excellent tools to allow repeated testing to be carried out alongside other routine operational periodic processes (e.g. month-end / quarter-end processes). More to follow on the 1805 upgrade in my future blogs.
Please keep tuned and look out for the next installment in this cloud blog series, when I will explain in more detail the critical functions made available in SAP’s cloud offering: -
- Highlights in 1805
- Variant Configuration
- Demand Driven Manufacturing
- Extending to the Shop floor