Is your enterprise chugging along in the slow lane or taking a fast track to the future?

I've recently had interesting conversations with SAP customers about whether they should move to the SAP Digital Core, SAP S4/HANA and, if so, when? Maintenance on SAP ECC 6.0 ends on 31st of December 2025; in the digital economy that’s enough time to firmly establish a global unicorn so the question is less about when should you move off the older generation ERP and rather how long before you become noncompetitive in terms of your processes and ability to attract talent?

Some see it merely as a technical upgrade and aren’t sure whether there is real strategic impact and business value. Others, who may feel their organisations have a significant market advantage or less competition, or, who may not yet fully comprehend the disruption of the Fourth Industrial Revolution, often say something like “my SAP ECC system is ticking along nicely, it’s stable, I have hardly any support calls, so why do I need a new ERP?”.

A prescient cohort (over 2,000 companies) those in highly competitive industries with a need to accelerate processes and to innovate for better customer experiences or those with board pressure to cut costs while improving usability, productivity and agility absolutely “get it” and have already started the journey towards an intelligent enterprise where data is the fuel and the digital core the engine for better business outcomes.

So, what is the deal with the digital core? Is it “old wine in new bottles”, a technically updated ERP system, or, does it represent a genuinely new set of digital capabilities designed for the tempo, dynamics and demographics of the 4th Industrial Revolution? The answer is that S/4HANA is a complete reimagining of what it takes to be successful in the digital economy; it is revolutionary rather than evolutionary and extends well beyond technical updates. 

In the balance of this article I’ll show, by way of analogy, how the SAP Digital Core, is the next generation of ERP, designed for a rapidly emerging future where insight, flawless execution and agility demand new levels of engagement, automation, integration and performance.

Reflect, for a moment, on one of modernity’s most pervasive artifacts, the motor car. Chances are you own one. It’s an expensive asset, one that uses a large chunk of disposable income and that requires ongoing maintenance and peripheral services like insurance and licensing, while consuming non-renewable resources and creating harmful emissions. Ironically, it spends more time parked, taking up space, than being used. Despite this, the car has been fundamental to our need for mobility, has facilitated much of human progress and has irrevocably shaped the modern urban landscape. 

Today, we know that we cannot carry on the same way when it comes to the car – society and our planet pay too heavy a price. Even though cars have become more fuel efficient two facts are inescapable and increasingly untenable; they are fueled by a diminishing non-renewable resource and they emit greenhouse gases.

The internal combustion engine, single-occupancy, ownership model is no longer fit for purpose in a world growing to 11 billion people living largely in urban areas. A new paradigm is needed, and we are starting to see that emerge in the form of “CASE” vehicles (connected, autonomous, shared, electric). There are parallels here with the systems we use to run our enterprises – a step-change is needed to ensure the enterprise will be future fit.

We know that the CASE vision may take a while to be fully realised but that doesn’t mean we are happy to drive an old clunker until then. If we can afford it most us prefer to drive a late model car. Why – when our 1992 model will still get us from A to B?

The answer is simple. While an old vehicle might get us where we need to go when road conditions are favourable will it take us where we need to go when the road gets steep or will it overheat and seize? Will it break down because of some unseen wear and tear? Will people want to ride with us if they feel it’s too risky with no airbags? And what about our fuel bill and taxes on emissions? And, how about handling in an emergency – will I be able to avoid a hazard and, if not, survive a collision?

We upgrade our cars because today’s engines are far more fuel-efficient and inherently less polluting than those from 25 years ago – in many cases tapping renewable energy. They are more reliable and safer, incorporating technologies like ABS, traction control, safety-belt pre-tensioning, electronic stability control, blind spot warning and other driver aids. They offer a better experience for us and our passengers with sophisticated connectivity, entertainment systems and more informative dashboards and head-up displays all embedded, often as standard, in the vehicle.

In short, we upgrade our cars because we want to take advantage of technology advances that deliver a better driving experience, greater economy and more safety. Crucially, these technologies need to be designed in from the beginning – they cannot be effectively tacked on afterwards.

And it’s a lot like that in business today. Your 1992-era ERP system may well do the job when conditions are static. But will your organisation survive the coming collision with disruptive business models, dynamic market forces, demanding customers, nimble competitors, hungry investors and a changing workforce?

On the face of it ERP requirements haven’t changed. Organisations must still account for the resources entrusted to them by shareholders and taxpayers. Double-entry bookkeeping, billing customers, filling orders, production and inventory management and regulatory reporting are not about to disappear. Everything an organisation does still needs to reflect in a cash flow, a P&L and a Balance Sheet. So, in much the same way that our need for a car hasn’t changed, neither has the need for an ERP system. 

But, how many things are you tacking on around the edges to make up for deficiencies of legacy technology all the while increasing your risk, complexity and cost?

Just as our notion of the car is changing today, so too with ERP. As the Fourth Industrial Revolution accelerates and digital disruption becomes the “new normal” incumbent organisations will need to question every assumption, practice and legacy system that got them to where they are today – even those that appear to still serve them well today.

Business must happen faster, more accurately and transparently so that companies can become more agile. It needs to happen with much higher levels of automation so that companies improve productivity and profitability and so they can unleash their people for higher value activities. Nobody is immune to the tsunami of change sweeping the world and at times it may seem that the competition coming from digital start-ups is like death by a thousand cuts.

Responding requires levels of throughput, automation, collaboration and insight that are simply not possible with ERP systems built on concepts such as the 6-decades-old hard-disk drive and 50-year-old relational databases where batch updates, complicated indexes and aggregates and complex IT landscapes are the norm.

As the Internet of Things accelerates and business models change, the volume and velocity of transactions flowing into the ERP realm will grow exponentially. For example, imagine you transform from selling a piece of equipment (a “one off” transaction) to billing for the services it provides on a continual basis. The data volumes and billing complexity in your business will grow rapidly. A new approach to ERP is necessary to cater for these aspects of digital transformation.

The SAP S/4HANA Digital Core has been designed, from the ground up to exploit state-of-art digital technologies that help you compete and thrive in this new world.. It is free of the constraints and deficiencies of industrial-era ERP systems. It brings business capabilities that enable your organisation to be more responsive, adaptive and productive.

The SAP HANA in-memory computing platform which underpins the Digital Core dramatically simplifies the underlying architecture of the system. It becomes faster, simpler and cheaper to operate. Because it’s so much more efficient, IT runs leaner and greener. On their own these changes are valuable but it’s the new capabilities they enable that make S/4 HANA a truly transformational value proposition.

Firstly, the ability to combine transaction processing and analytics on a single platform, on one set of data, transforms how work gets done. There’s no latency, instant insight and the workforce is truly empowered. As leading analysts Forrester succinctly put it in their 2017 Translytical Data Platforms report; “SAP crushes translytical workloads”.

Embedded machine learning applications enable processes to be hyper-automated – improving productivity and freeing your talent to do more valuable work like relationship building, complex problem solving, and innovating. Conversational digital assistants unlock value through more engaging user experiences and collaborative, context-aware ways of working.

In a world where Artificial Intelligence, in all its guises, enables hyper-automation, new ways of interacting (e.g. voice) and new business models, only SAP offers a post-modern ERP system built with one intent – to help organisations run better in the fast-changing digital economy.

So, in reply to the questions should you move? And when? If you are looking for relevance, productivity and profits in the disruptive digital economy the answer is Yes. If you recognise that the pace of change is accelerating and that exponential organisations can disrupt your business at breath-taking speed the answer is Now. Anything less and later will leave you trailing in the dust of those who move faster.