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June 2015
SAP S/4HANA: The Six Most Important Scenarios

Companies’ business departments – from finance through logistics and marketing – are benefiting most from the paradigm shift of SAP Business Suite to SAP S/4HANA. Here’s why.
Forget B2B or B2C – it’s about C2B, according to SAP CEO Bill McDermott at SAP’s business technology conference SAPPHIRE NOW, held in Orlando last month. McDermott believes that companies and entrepreneurs are no longer in the driving seat. The customer is. Consumer-to-business means business departments must react ever faster to new and individual customer demands. It’s therefore time to find solutions that drive digitalization in companies and help departments set up new business models or explore new avenues.
SAP S/4HANA can do more than SAP HANA
Unlike the SAP HANA platform on its own, SAP S/4HANA links up the digital processes from all of a company’s departments. This means, for example, that production, process control, and finance run hand-in-hand.
The next-generation business suite SAP S/4HANA draws business networks into the processes and sets the stage for today’s top three digital trends: first, the Internet of Things, the network of physical objects embedded with sensors and hooked up to IT systems; second, the approach known as segment of one – being able to identify, analyze, and serve individual customers; and third, the possibility of achieving a lot size of one and creating tailored products for the customer.
The following six application scenarios show how business departments can run simple and  profit from deploying SAP S/4HANA.
1. Finance: Constant insight into current figures
Currently, a company’s management is usually presented with a detailed interim report once a quarter, and it uses this report to decide on future investments. Last year, SAP transitioned to a “soft close” for the most complex of all reports, its year-end closing, and with the help of Simple Finance 1.0 completed the work within six rather than 12 days.
“A few iterative processes still remain despite the simplified data model,” says >Sven Denecken, who is responsible for co-innovation and strategy for SAP S/4HANA at SAP and who believes SAP Simple Finance 2.0 is moving closer to the goal of bringing companies the period-end close in real time.
With SAP Simple Finance 2.0:

  • For the first time there is a harmonized, common journal for the areas of finance and controlling
  • All posting procedures are consolidated in real time
  • Finance is centralized, and the solution can also gather and analyze data from third-party systems

Benefits for the business departments
Current figures are not only made available to the company’s CFO, but also to the head of logistics, the operations director, and the CMO.
“This transparency raises the discussion about investment to a completely new level,” Denecken says. This means, in the future, sales staff will be able to use real-time data to decide whether an offer makes economic sense and whether there’s scope for discount – while actually negotiating with the customer. The supremacy of finance has to some extent been delegated, replaced by a new freedom of decision.

  • SAP saves 400 working hours for each quarterly closing.
  • Reports are compiled 86% faster compared with SAP Business Suite.
  • Market leaders complete their year-end closing 26% faster than other similar companies, with a cost reduction of up to 61% (benchmark by SAP Value Engineering).

2. Business & financial planning: Simulate the risks of new strategies and processes
Operations and finance are now connected. As a result, organizations can now, for the first time, build models to simulate the effects of new strategies and processes in real time. If a company chooses to invest in a new project, it can calculate the impact the project will have on the company’s overall liquidity, even at the decision-making stage. All that’s needed are a few parameters and estimates, such as revenue growth and the profit margin.
“Particularly the more conservative industries that typically operated in the B2B environment are now discovering the end consumer more and more,” says Denecken. “These companies often require new processes that are geared to strong growth.”
In such cases especially, it is essential for companies to be informed about changes in new business immediately, so that they can react to trends as early as possible. Companies must adapt as much as they possibly can to cope with, for example, the switch from direct sales to a service approach, new key figures, and new contracts.
Benefits for the business departments
Finance departments are inherently suspicious of new business models and need convincing arguments. Winning them over becomes even more difficult if the business models are disruptive and function according to completely new rules. Clear simulations of potential new business show the effects on the company’s overall financial situation. Hard facts and analyses provide more convincing arguments for finance departments than the most polished of presentations. Ultimately, SAP S/4HANA empowers companies to generate new business and establish new business models more easily.
3. Segment of one: View the end consumer as an individual
The consumer products industry is the pioneer, and other sectors are following suit – with the segment of one strategy, which puts the consumer in the spotlight. Companies concentrate on finding out as much about their customers as possible, so they can provide them with tailored offerings. They can also approach customers in a “context-based” way. If a customer enters a shop with a smartphone or views the same product on the Internet for the third time, real-time marketing kicks in, for example, with promotion campaigns and couponing. Structured data such as purchase history and unstructured data from social networks and shared Internet content bring the system together.
What’s special about SAP S/4HANA is that customers’ sales histories, for example, are not just available to marketing but to any department in the company.
“Everything happens on the same platform,” explains Denecken. “Previous versions of SAP Business Suite have different modules for finance, sales, and marketing. With SAP S/4HANA, we all join forces.”
Benefits for the business departments
As soon as customers want to buy a product, their history is displayed – but that’s not all. It’s also possible to display what effect their purchase will have on the performance of the whole company or business unit, and processes can be aligned accordingly. Previously, such associations could usually only be made once a quarter.
SAP Value Engineering has determined that an integrated view of the customer:

  • Enables revenue growth through new customer acquisition of 24%
  • Increases market share by 30%
  • Reduces human effort by 22%

4. MRP: Optimize material requirements planning
The challenge of material requirements planning (MRP) is always to order precisely the amount required for making the products and thus reduce storage costs to an absolute minimum. Purchasing, production, the warehouse, and sales must all be able to rely on each other. Employees are tasked with keeping track of production processes – such as planned purchase orders, purchase requisitions, actual purchase orders, and delivery times – while also keeping an eye on orders from the sales department, demand forecasts, and agreements with suppliers.
This logistic challenge requires a synchronization of processes in the warehouse as well as in valuation and planning. SAP S/4HANA enables organizations to harmonize warehouse inventories and demand planning, as well as to use all data and analyses companywide.
Benefits for the business departments
Material requirements planning no longer runs overnight, but in real time. This means bottlenecks can be identified faster and warehouse space can be reduced. additionally, planning is in a position to take all production locations and external supply chains into account.
A safety buffer in the warehouses is unavoidable. However, simulations and evaluations help manage capacities and quantities in a much more needs-based way than before – and, thanks to the simplified data model and real-time information from SAP S/4HANA, this happens across all departments and business processes in finance, sales and distribution, and retail sales.

  • Increased inventory turnover
  • Improved delivery performance
  • Production is accelerated by up to 50%
  • Speed of processes is increased by more than 90%

5. Logistics: Improve delivery performance
The supply chain stretches from planning and production through packaging and finally the delivery of the product, with various suppliers and service providers working hand-in-hand. According to Denecken, the key question that must be asked in order to intelligently allocate resources is: “What do I need to consider in the supply chain when I make a promise up front?”
If an important component isn’t delivered, being able to reschedule fast is a must – but it’s also crucial to keep everyone involved in the process up-to-date. Particularly because products will be sold increasingly as services in the future — for example, air instead of compressors, use instead of buy for devices — reacting fast to incidents plays a decisive role. It makes sense that the processes are tied to business networks so the entire supply chain can be kept in view.
Benefits for the business departments
Because SAP S/4HANA provides up-to-date information from supply partners in the business network and from internal departments, it simplifies the steps involved in identifying bottlenecks fast, receiving automated suggestions about how to fix a bottleneck, and rescheduling rapidly and therefore meeting the delivery date reliably.
6. Automotive industry: Order any time
A lot size of one is what the automotive industry, for example, has set its sights on. With this ultimate lot size, customers not only get the products of their choice but can also change the specifications themselves even seconds before production starts. This may seem like a great idea from a marketing perspective, but it is a huge challenge for production.
“We have to rethink the way production is controlled. To some extent, the end customer determines the type of production and manages supplier relations,” Denecken explains. This approach requires every single component to be posted in the system the very second it is removed from the warehouse and used for an order. This is the only way that a company can prevent another customer from choosing the exact same rare alloy wheel for his or her car. It’s not enough to wait until night to synchronize inventories.
Benefits for the business department
Warehouse data is always up-to-date, so safety stock in the warehouse can be reduced. But the really big benefit is to be able to plan and submit forecasts in real time. Only with such transparency can companies cater to customer wishes at very short notice. This improves delivery performance and makes customers all the more loyal.

 
 

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