Modular, flexible and composable SAP

Every organization must invent new business models to avoid disruption, increase efficiency, fund innovation and transform mission-critical systems without business risk. What are reasons for that?

• 50% of human tasks will be automated by 2025 (World Economic Forum - Future of Jobs 2020?)
• 20% of revenue growth will come from "white space" offerings by 2025 (IDC FutureScape - Doc # US45599219)
• 90% of data and analytics innovation will be driven by public cloud services by 2022 (Gartner Data Analytics 2020)

That leads to important strategic priorities for your business:

• Automate Human Tasks (e.g. dopt intelligent bid management to increase predictability and decrease risk)
• Find New Opportunities (monetization of data, innovative partnerships or efficient order fulfillment and delivery)
• Use Data To Drive Revenue (find the right services to the right business cases, capture customer requirements and enable mass customization or provide solutions that fit the needs of a single customer)

SAP started with a Mainframe solution R/2 in 1981 for the main business functions of a company. The next steps were a Client-Server version of the standard application software (R/3) and special demand systems (e.g. CRM or TM) for specific process requirements. The target architecture of todays ERP landscapes is a S/4HANA instance for the core processes complemented by extensions in the BTP. These solutions still have a monolithic approach with?highly integrated processes to garantee an efficient way of working. The integration e.g. of financial and sales data or documents is sometimes "hard coded" and incorporated in a specific End2End process. This direct coupling can lead to high costs for small process changes, huge efforts for integration tests and a longer time to market of new capabilities or changes on a central components.?

A Modular (Cloud) ERP brings the necessary core functions across your lines of business in a comprehensive suite with the qualities in a modular way. There will be a Cloud ERP with flexible scope to streamline operations across organizational units in the future.?

The business challenges and loosly coupled processes require a modular, composable and flexible ERP solution in the future with a smaller but clean core (e.g. for Finance) and an intelligent combination of (micro)services for other processes (e.g. Lead-to-Cash). This approach has some challenges, like a consistent document flow or an End2End monitoring of processes, but it seems to be the best option for organisations in a more complex and highly changing world. With a modular ERP there are still End2End processes for your end user. They should have the best possible UX (user experience) e.g. with a Central Fiori Launchpad (CFLP), but the processes will be supported by a set of different services.

All services must be built and operated on a stable and open platform e.g. the Business Technology Platform (BTP). Important platform capabilities are:

• a seamless user experience (Fiori, Central Fiori Launchpad)
• One central Inbox (Taskcenter)
• End-to-End business blueprints (EML, Best Practises)
• An Aligned Domain Model (Graph)
• Consistent Security and Identity Management (IAS, IDP, IAG)
• Cross Product Analytics (SAC & Data Warehouse)
• Open Integration based on Standard Content, flexible Governance, APIs, Events etc.

Gartner had the idea of a hybrid integration platform (HIP) in 2018 and described in different articles a solution for an integration architecture in the future. The solution of SAP in that space is called SAP Integration Suite.

With this solution, the way of doing integration is different from previous ones (e.g. SAP XI, PI, PO etc.):

• Instead of point to point interfaces from system A to system B, we provide a generic API that can be used by several systems
• Data, that is generated in SAP processes will by pushed in realtime by events so that it can be used by other systems instead of hiding the data in a SAP monolith
• Open industry standards (e.g. OpenAPI) are used instead or proprietary SAP formats
• Integration is an enabler of new processes and process improvements and not only a data pusher of files

In a Modern ERP, the job of integration is to build intelligent solutions, e.g. the automated creation of sales orders from unstructured data.

A significant amount of sales orders are still captured from email, fax, PDF or other unstructured format. To generate the sales order, internal sales representatives have to enter this data manually in the structured format as required by the system. Automated creation of Sales Orders from unstructured Data leverages a machine learning based recognition engine based on SAP’s Document Information Extraction service to extract content from an?unstructured source format (email, pdf, fax, etc.) and creates a draft sales order autonomously.?

Business Benefits

• Cost savings by reducing manual effort to create sales orders
• Improvement of data quality by sales order process automation
• Automation shifts effort towards better service quality

To be able to support such use cases, your SAP team should perform some tasks, like:

• Build an Integration Strategy, e.g. based on ISA-M?
• Gain Knowledge in Integration Pattern, Cloud- and BTP capabilities, security strategy and available SaaS solutions on the market
• Create a Cloud-Ready mindset in your teams
• Keep talking to other people in and outside your organisation?
• Try out new technologies and implement what helps for your use cases

These topics and ideas may be a big change compared to your way of working today? It may sound like "fancy stuff" when you have a stable On Premise ERP architecture running in production? But keep in mind, that there will be a lot of challenges in the future with new market players, disruptive technologies or solving the climate crisis. For these and more challenges you will be happy to have a Modern ERP with a modular, composable and flexible integration architecture. So I propose to start today: Perhaps with your S/4 HANA Transformation, RISE with SAP implementation or by building a modern integration platform to improve and secure your business.

Three Take-Aways

• a modular, composable and flexible Cloud ERP is a way to address the challenges of your business in the future
• Take a step-by-step approach with an inspect and adapt mindset to implement your S/4 and integration project. Learn and use new technologies in the best way for your company, rather the a big bang project with a one step of huge changes.
• Integration is a key capability and backbone for your ERP architecture in the future. Build a modern integration platform in your transformation projects and look on integration not only for data transfer but to enable new business processes and valuable services.

There will be some more content around S/4HANA Transformation, Integration Architecture, BTP, and Cloud Integration use cases by my colleagues Jens and Martin. All of us would be very happy to start a conversion around these topics and discuss together what would could be a sustainable and resilient integration solution and modern architecture for the ERP landscape of the future!

In case you are looking for support in this area, please check out our website.

Sources:

• SAP TechEd, DT105: "Explore the Modern, Modular, and Flexible Architecture of SAP S/4HANA", Stefan Batzdorf
• DSAG Technologietage: "SAP S/4HANA Architekturstrategie – Modern, Modular, Flexibel", Stefan Batzdorf
• SAP: Modular Cloud ERP - A New Way of Working
• SAP: RISE with SAP for Modular Cloud ERP- SAP S/4HANA Cloud