Part 2 in the 4-part Finance and IT Collaboration series
One of SAP’s aspirations is to grow to approximately €28 billion to €29 billion in revenue by 2020, with approximately 30% of revenue (€8.0 billion to €8.5 billion) generated by cloud subscriptions and support. That’s nearly double what it is today, with 16% of revenue generated by cloud.
For SAP to reach these goals, our entire enterprise must be in sync and pulling in the same direction. Our operations have to scale massively, and the only way we can do that is through technology. But we can’t just put a bunch of technology experts in a room and ask them to figure out how to scale. It requires collaboration.
I collaborate very closely with Richard McLean, CFO for SAP Asia Pacific Japan. Right now, we’re working together to answer a fundamental question: If we are to reach our 2020 growth aspirations with a cloud-based business model, how do we ensure that our overhead costs don’t grow linearly with revenue?
Problem-solving through brainstorming
To solve this problem, we brainstorm with our peers. One of the exciting things about brainstorming is that we never know how or when the best ideas will come forward. The more we facilitate open conversations, the greater our chances of having solved a problem or coming up with an idea that achieves a much higher purpose.
Every time we have a conversation with our peers in finance and the heads of business here in the APJ region, I get some insight into how we’re performing as a company. That insight is invaluable in terms of determining what we should focus on. It clarifies the hygiene factors that we should absolutely pursue to maintain our current business volume, and then identifies promising opportunities.
Growing to scale while keeping costs in check
To grow revenue and keep our overhead low, we need to automate as many business functions as possible. We are finding more efficient ways to work at the operations level. We’re not just automating the line-of-business function. We are doing a lot of automation on how IT operates through systems. The key point here is that we want to reduce the amount of administrative and repetitive work that our people are doing.
Processes in our shared services centers offer a lot of opportunities for automation. Some processes are still manual because the technology hadn’t advanced to the point where it could be automated. But now we have applications that are built on SAP Leonardo Machine Learning technology that enables us to automate more advanced tasks. That means when the additional workload comes into shared services, the simpler tasks can be automated, and our more experienced people can focus on more complex issues. That helps the business to keep growing without adding a lot more cost.
We’re following this same approach in other areas of the business such as human resources to more efficiently process the high volume of resumes we receive, and with business operations to automate and streamline the creation and signing of customer contracts.
It’s about making the most effective use of the bandwidth that we have as a company and then simplifying everything that can be simplified.
Read the next post in this series to see how IT is helping finance propel a new wave of automation.
To find out where your company is on its way to becoming an intelligent enterprise, please sign up for the complimentary IDC maturity model.
For more insights about why CFO leaders should focus on efficiency and automation, read the Oxford Economics research paper: “Efficiency Helps CFOs Stay Ahead of the Pack.”