Current crisis clarifies value of SAP intelligent enterprise

If customers were looking to justify a transition to the SAP intelligent enterprise, COVID-19 has delivered a compelling rationale, according to the Americas' SAP Users' Group.

ASUG, an independent user group based in Chicago, advocates for SAP customers, conducts research and provides education on SAP technology. ASUG traditionally hosts its annual conference in conjunction with SAP Sapphire Now in Orlando. This year, with SAP Sapphire Now going online, the SAP user group decided to conduct ASUG Forward virtually the week after.

In this interview, ASUG CEO Geoff Scott discusses some of the issues that SAP customers are faced with in the current economy and explains why agility and the SAP intelligent enterprise, a strategy rooted in digitization and data-driven decision-making, have been made concrete. As a part of ASUG Forward, Scott had lengthy talks with 11 CIOs and other executives of prominent SAP customers, including Ford Motor Company, Intel Corp. and Moderna Inc.

Scott has served as ASUG's CEO since 2014 after joining the organization as a board member in 2013. Prior to ASUG, Scott had a career in manufacturing that included stints as CIO for Toms Shoes and the U.S. division of JBS, a global meat processing firm. 

You talked to several SAP customers before your virtual event. What did you hear from those customers about SAP's messages from Sapphire Now Reimagined, particularly around the intelligent enterprise?

Geoff Scott

Geoff Scott: What we're hearing right now is that we have entered a phase where customers are really looking at their software investments, and they want a couple of things. One is that they need the value from them. They've always needed that, but that word has taken on a new meaning as they are looking much shorter-term in the things that they can do to manage their businesses. Business plans that made sense six months ago don't make sense today. Things around us are shifting so quickly, and it's become incredibly important for software investments to shift with that. For example, Hunter Douglas moved from making blinds to making masks, so how do you configure that in your SAP systems, and do it fast knowing that you may have to pivot in a different direction?

SAP has been talking about agility for a while. Is it resonating now because of what companies have faced with the crisis?

Scott: In some ways, the key philosophies that we've been talking about with SAP over the last few years -- simplicity, don't do customizations -- make more sense now. If you look at how some of these organizations have needed to turn on a dime, the ones that don't have all that baggage can move a lot quicker.

Does this mean that more customers are starting or accelerating S/4HANA projects?

Scott: We're seeing that the projects that were underway are continuing. Those that were close to starting may be pulling back just a little bit and taking a wait-and-see approach. Before [customers] commit to that level of spend, they want to make sure things are OK. At the moment, CFOs are looking to manage their cash very closely. For most CFOs, if you were to walk in tomorrow and say 'What do you think about that $20 or $30 million S/4HANA project that we thought was a really good idea on March 1?' Most would likely say they need a few more weeks or maybe months to understand where all this is going. So some of those projects might hold a little bit, but it also depends on how desperate the organization is for that project. For example, if you're in the middle of an M&A and you need S/4HANA to drive other things, you might say it's 'man the torpedoes' time.

Are organizations moving to the cloud and using this as an opportunity to move to S/4HANA at the same time?

Scott: Everyone's moving to the cloud, but they're breaking the move into component parts. Everyone is saying that if they weren't on the cloud by now, this is a major business reason to go, because trying to run their systems remotely is daunting. However, we were already seeing some of that anyway, because the skillsets needed to run your own internal data sets are becoming harder to find.

Do the customers you talk to understand what the SAP intelligent enterprise is and what they have to do to get there?

Scott: The answer to that is essentially yes. Ultimately, the intelligent enterprise equals digitization and the continuing forward progress of being able to do things through digital mechanisms that you couldn't do in the past. The intelligent enterprise is SAP's term for it, but if we were all to use more common language it would probably help everyone. But in talking to these CIOs and business leaders in automated production, supply chain automation [and] the ability to get real-time intelligence on devices is important.

What are some concrete examples of the value of the SAP intelligent enterprise?

Scott: When I think about the intelligent enterprise, because I come from a manufacturing background, I always think about plant floor automation. If you can know for sure that you have a failing part on a plant floor and you can go right to that part because the digital systems tell you that's the problem, that's much better for everyone. That's where the concept of the intelligent enterprise really starts to make sense to people and they really get it. If you can't access systems, the best thing is to have digital means so you can control things remotely. If you tell someone they can control a motor on a plant floor by walking out to it and clicking a dial, or you can control it from a computer anywhere in the world, that makes a lot of sense. For example, during the last few months, Ford stopped all its plants globally, because it's still a very labor-intensive business. However, Intel produced chips the entire time. That's the intelligent enterprise at its core.