SAP is one of the largest and most well-established software companies in the world. That said, we still experience the same pressure as other organizations: We need to keep up in this era of digital transformation. Our customers and peers can learn from our progress and success, so we have a responsibility to share our story. For SAP, our digital transformation has meant a continual shift in processes and priorities to meet customer needs.
We do this with three key areas of emphasis that must come together in order to be successful. “Right Processes” refers to standardization and simplification of internal processes. “Right Data” means we analyze high-quality data to make informed decisions. We use the “Right Solutions,” our standard technology, to make our transformation real.
We face challenges in our finance department that you may experience, as well. Finance needs to support new business models and sales channels, deal with compliance and inflexible systems, and put pressure to deliver real-time visibility across the organization and efficiency within the finance organization. Our finance transformation story shows how our latest technology supports our transformation.
Life was simpler 15 years ago at SAP. We had a very straightforward, uniform business model, selling software with licenses, associate maintenance, and services. We had a consistent global go-to-market, pricing, and marketing approach that allowed us to decentralize our organizational structure.
Back then, local general managers basically ran integrated subsidiaries. They used a central ERP instance for core processes, and slim consolidation of corporate functions fostered process harmonization, but there were local variations and exceptions.
In 2007, we began a series of acquisitions that necessitated a more centralized model. Now, subscription, consumption, and pay-as-you-go transaction models require new processes and a simplified structure.
For go-to-market units and functions like finance, HR, and marketing, we sought standardization across global lines of business and transactional processes.
Now, local market units have two finance roles: macro steering support for general management and commercial deal support to serve customers. Accounting, IFRS reporting, high-volume business contracting, receivables management, and procure-to-pay are handled in shared service centers, enabling a “follow the sun” approach in our closing process.
The right solution for our internal operations is our own state-of-the-art, in-memory database. We are a frontrunner in implementation of our own tools, proving we can run an end-to-end enterprise at scale on this technology. We create an in-depth feedback loop that ensures that we know early on what is needed to build relevant, mature solutions.
In 2012, we began using the database for pipeline data. That year, general managers no longer needed paper reports. Mobile dashboards allowed real-time reporting, analyzing, and splicing and dicing capabilities.
In 2013, we moved our main systems over to the in-memory database (ERP, business warehouse, CRM, and so on). This was an intense effort because many of our systems were utilizing old setups. We dealt with issues that might sound familiar: Outdated pieces in our systems were interfering with migration.
Early in 2014, we migrated ERP finance and controlling. Cleanup for the previous go-live made this “brownfield” implementation possible.
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We are proud of our highly integrated system landscape with reporting from within the transactional system. We get a truly 360-degree view of the company for real-time decision-making, benefitting SAP in three key ways.
Flexibility: Our real-time finance platform is a global single source of truth, allowing aggregation, definition, and analysis of hundreds of granular attributes. Financial and managerial accounting are automatically in sync, and we get immediate, “on the fly” reporting on any device. No time-consuming reconciliations or expensive detours through a business warehouse; steering is now business-centric, not spreadsheet-centric. This is big.
Throughput: The closing process is one example of an improved system throughput. We can now close for the entire group in eight days. Our next forecast therefore starts even earlier. The result is better, quicker access to insights, making us a valuable business partner.
We develop products worldwide in 15 major R&D centers, with chargebacks for all categories and lots of allocations across costs and revenue sides – a huge process for intercompany reconciliation. Before migration, this took 26 hours; now, it takes about four.
Our people in financial planning and analysis spend less time producing reports, instead focusing on value-adding core tasks like data analysis, decision support, and performance improvements.
Productivity: Improved user interfaces provide productivity gains through efficient, simple analytical and transactional applications. When managing working capital, we generate real-time insight into cash collection patterns that may pose a risk, and account executives can use the insight to make alternate payment arrangements with customers. Think about what that means for doing business in volatile environments. We proactively detect risks and mitigate impact through the tightening of payment terms or revenue cycles. We collaborate in ways not possible before, when groups had been working in silos.
I strongly recommend taking a holistic view of data, system architecture, processes, and people when planning and implementing your full business process redesign and digital transformation. Determining what can be simplified and improved during this process maximizes your effort. Remember – your people will fuel the change, and their skills and experiences can be improved as well.
The cost savings from our software implementation, standardization, and centralization led to a tenfold increased investment in learning and training since 2013. We want to prepare our people and enable them for the success ahead. Automation, simulation, and predictive analytics across devices will continue to empower us.
Thanks to our collective efforts, we save time, money, and headaches – together as “One SAP.”
To learn more about leadership in finance, read the Oxford Economics study “How Finance Leadership Pays Off: Six Ways CFOs Stay Ahead of the Pack.” Oxford Economics recently surveyed 1,500 finance executives to understand the attitudes of finance professionals toward the function’s changing requirements and challenges. Listen to the Webinar “How Finance Leadership Pays Off” on demand.