Supply Chain Management

Your ERP system is too important to leave in the hands of the IT department!

No disrespect is meant to the folks in IT… what I’m hoping to communicate is the fact that your company’s ERP system is critical to the success of your business, and enough things have changed in the last few years that you need to pay attention to it. Here’s what has happened:

 

  1. SAP – which is used by the majority of large electronics companies – has announced that they will discontinue support for ECC (their older ERP product) in 2025. Even though that is more than half a decade away, companies that wait until just before the deadline will be competing for scarce consulting resources – so it’s far better to get started now.
  2. SAP’s latest ERP product, S/4HANA, not only runs entirely in memory, but has been completely redesigned and upgraded. Not only do users no longer have to memorize an arcane set of “T-codes” to do their jobs: they can use a set of apps that resemble the interface on their cell phone or tablet computer.
  3. SAP has also expanded and improved the functionality of their product, reducing the number of keystrokes needed to perform critical functions and creating modules that cover more of the enterprise.

 

So far, this may still seem like it’s mostly something for the guys in IT – like the latest upgrade to Microsoft Office. Why should the migration to S/4 matter to people in operations, finance, and product management? There are five good reasons:

 

  1. Alignment: Your business has changed – in most cases, a lot – since the last time your company did a major ERP installation. When you installed ECC, your company may have been in the business of manufacturing and selling things; many companies now have added selling services, and some don’t manufacture their own things at all any more.
  2. Flexibility: Many businesses now exist in a state of constant flux. If the market isn’t shifting, then tariffs are; if tariffs are stable, customers suddenly issue a new set of demands. It’s crucial that your system of record be able to keep up with those changes.
  3. Cost savings: You can almost certainly realize some very significant cost reductions as part of your company’s upgrade and migration to S/4HANA. Some of these will come directly from new capabilities in S/4. Others may be enabled using other tools – but it usually makes more sense to install them as part of your new system, instead of installing on your old system and then migrating them.
  4. Time savings: You can start managing your business in real time. The combination of the HANA database with better tools within S/4 means that you can detect problems and make course adjustments within a reporting period, instead of waiting for reports at the end of that period.
  5. Performance: Better and more timely data, combined with better and more timely analysis, means that you can detect and respond to issues (or detect and capitalize on opportunities) faster than ever before. This means improved performance, both from a financial standpoint and in terms of customer service. Of course, some improvements could be made independent of S/4 – but it will generally be easier and less complicated to achieve those improvements as part of your upgrade program.

By all means, you should rely on the experts in IT to ensure that your migration project is a success. But the migration to S/4HANA is a rare opportunity for the teams in Operations and Finance to get the capabilities that they need to do their jobs more effectively — make sure you stay engaged!

Sr. Managing Consultant, Electronics Center of Competence at IBM

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