Can SAP S/4 HANA customer monetise their data to get incremental value?

Why is data often not seen as a company asset, because and let’s face it, it can be difficult to quantify its value and most importantly many organisations do not have a strategy in place for managing and monetising it.

Equally, data can’t be put on the balance sheet because it does not meet the criteria as a financial asset. According to Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), an asset must meet the following criteria:

·?????It is owned by the company.

·?????The asset must have a measurable value.

·???? Does it have the ability to provide future economic benefits.

While many organisations would like data to be recognised as an asset, it typically does not meet all these criteria. As data is not a physical asset, it is not something that a company can own in the traditional sense. Therefore, it can be difficult to assign a specific monetary value to data as it is not a tangible item. And, as of today, it's also hard to predict the future economic benefits that data will bring to your organisation.

Another reason is that data is an intangible asset, it is not seen or is seen as difficult as an economic resource that generates future economic benefits. Intangible assets such as patents, trademarks, and copyrights are also not included on the balance sheet, however, I do suspect that this is being challenged and will change in the coming years.

It is worth noting that some companies may be able to put certain types of data on the balance sheet, such as data that is protected by patents or trademarks. However, this is the exception rather than the rule

So lets first look at why is data not always seen as an asset, well I believe it is because of some of the following:

·?????Data is often seen as a by-product of business operations; this is specifically the case in many SAP S/4HANA projects and other similar application-based projects. This means that organisations may not prioritise collecting and managing data and may not have a clear understanding of its potential current or future value.

·?????Data can be difficult to quantify in terms of its value. For example, it can be challenging to determine how much a company should charge, whether customers will pay for access to its data or how much a company could save by using data to improve its operations.

·?????Many do not have a strategy in place for managing and monetising data. There is no clear understanding of what data they have, how it is being used, and who has access to it.

·?????Data Governance is a key aspect when it comes to data being seen as an asset, many customers that I speak with lack the right governance structure to ensure data is accurate, reliable, and secure. In many customers, it is left to be done by a specific department or business division.

·?????Data privacy concerns, does your organisation want to share the data with other parties? This can be down to concerns about how it will be used, and the potential for it to be misused. Some customers tell me that they will not share data because even though they do not know how to get the best from it they do not wish to give competitors or even customers an advantage.

To overcome these challenges, you should focus on developing a data strategy. Start by identifying the data that has the most value to you and your wider ecosystem, develop a plan for collecting and analysing it, and then have a strategy in place for monetising it. Additionally, investing in data governance and data privacy tools can ensure that data is managed and shared in an ethical and legal way.

So how could you monetise your data, I believe there are in fact several ways you can do this:

·?????Selling data: You can sell your data to other companies or individuals who are willing to pay for it. This can include data on customer behaviour, market trends, and other valuable information.

·?????Creating new products and services: Companies can use data to develop new products or services that they can then sell to customers. For example, a company that sells weather forecasting services can use data on temperature, precipitation, and other weather patterns to create more accurate forecasts. This can help both in the service industry as well as helping already congested supply chains.

·?????Advertising: Companies can use data to target ads to specific groups of people, increasing the effectiveness of their advertising campaigns. An example, a company that sells clothing can use data on customers' purchasing behaviour to target ads to people who are likely to be interested in their products.

·?????Cost savings: Data can also be used to reduce costs. Look to use the use of data on customer behaviour to identify areas where they can improve your operations and reduce expenses.

·?????Predictive Analysis: Companies can use data to predict future trends and behaviours of the customer, This could be used to create new products or services, target the right customers which in turn creates better customer satisfaction, and increase the effectiveness of your advertising campaigns.

As mentioned above to monetise data, you must first identify the data that has the most value to you, your suppliers, and your customers. This can be done by analysing many of the areas above. Next, you must develop a plan for collecting, storing, and analysing this data. This could include investing in new technology, and ways of working, hiring data scientists and analysts, and creating partnerships with other companies such as Capgemini.

Finally, you must have a strategy in place for monetising the data, this aspect is often forgotten and overlooked. It may involve creating a new business model, partnering with other companies, or developing new products and services. It is also important to keep in mind the ethical and legal considerations surrounding data monetisation, such as data privacy laws and regulations, this is not always simple.

So, for SAP customers we often get asked what the business case is and how can they use S/4 HANA to modernise, and digitalise their business, this blog is not to cover the aspects of the S/4 HANA business case, that has been covered in a previous set of blogs, but let's consider that by implementing the platform it can help you monetise your data in several ways:

·?????Improved data visibility: You can't measure what you can't see, SAP S/4 HANA provides real-time data visibility, which can help you make more informed and timely decisions based on accurate and up-to-date information. This can be especially valuable for those organisations that need to make quick, data-driven decisions, is that not all?

·?????Advanced analytics: SAP S/4 HANA includes advanced analytics capabilities, such as predictive analytics and machine learning. This can help you identify patterns and trends in your data and can be used to create new products and services, improve operations, and increase revenue. All of this real-time and with little or no human interaction.

·?????Data-driven automation, i have spoken about this many times in my intelligent enterprise blogs: SAP S/4 HANA can automate business processes based on data, which can help you reduce costs and improve efficiency. For example, it can automatically trigger a reordering process when inventory levels fall below a certain threshold or based upon other specific events.

·?????Improved data governance: SAP S/4 HANA includes data governance features, such as data lineage tracking and data auditing, this will help ensure that your data is accurate, reliable, and secure.

·?????Better data management: SAP S/4 HANA allows you to store and manage large amounts of data in memory, this will improve the performance of data-intensive operations and enable real-time analysis.

Many business cases for SAP S/4 HANA are built by highlighting the potential cost savings and revenue generation opportunities that can be achieved by leveraging the advanced data management and analytics capabilities of the platform. Additionally, it can show how implementing SAP S/4 HANA can help you comply with ever-increasing data privacy regulations and improve data governance.

So, let’s dive into an organisation that is successful in this space and therefore what it means for Mercedes-Benz which is I believe to be a leader in data monetisation, by leveraging its vast collection of data to maximize returns and drive strategic decisions. As we know the automotive industry is rapidly evolving, and the ability to generate and capitalise on data is increasingly important. By monetising its data, Mercedes-Benz can gain insights into customer behaviour, product usage, and market trends, while also increasing efficiency and reducing costs.

Mercedes-Benz has developed a comprehensive data monetisation strategy to maximize the value of its data. This strategy includes the use of predictive analytics to determine the most profitable target markets, as well as leveraging its data to create customised products and services. In addition, the company has implemented a data-driven approach to advertising and marketing, leveraging its data to better understand customer preferences and target its campaigns.

Data monetisation also allows Mercedes-Benz to gain insights into the performance of its vehicles and make necessary changes to improve customer satisfaction. By leveraging data from vehicles in the field, they can identify performance issues and develop solutions to address them. The data from the field can be used to optimise the design and engineering of new vehicles, leading to improved performance, lower emissions and in turn increased customer satisfaction.

By collecting data from customers and cars and then analysing it, they can identify potential new products and services to meet customer needs. This data-driven approach to product development will help the company remain competitive and capitalise on emerging trends such as the driverless car or new car leasing schemes, will we own cars in the future (i feel another blog coming on)?

In conclusion, SAP S/4 HANA can help organisations monetise their data by providing advanced analytics and automation capabilities, improved data visibility, and better data governance. By highlighting the potential benefits of SAP S/4 HANA, you can build a strong business case for implementing the platform and turning data into a financial asset.

This is a daunting task for many customers and often something that is put to one side when looking at the journey to SAP S/4 HANA. We believe that this is not something that should be ignored or put to one side until your migration to SAP S/4 HANA is complete, in fact, it is something that should be addressed immediately, not only to help with the success of your migration but prepare your organisation for the future.