Crisis and business continuity

Previously unimaginable disruptive events now happen across the globe with alarming regularity. To help ensure business continuity in this volatile environment, business leaders must embrace new enterprise resource planning (ERP) strategies that position their organizations to thrive across a wider range of unpleasant, foreseeable, geopolitical possibilities.

New trading models, heightened political sensitivities, and shifting data privacy regulations are just a few of the additional factors forcing organizations to reconsider how—or whether—they operate across some borders.

Just 55% of leaders say their organization’s ERP solution is configured in a way that will allow them to act quickly in the face of change.

Disruption is forcing a rethink of ERP and business strategy

To keep the ERP strategy aligned as disruptive forces influence business strategy, executives should take a business component modelling view of company operations. This should reflect where they do business, how goods will move across the supply chain, how they will drive business and financial accountability for the goals of the organization, and where they will perform core and non-core functions. There are many options available to companies as they address these challenges. Typically, the net result is the creation of more logical instances, but that isn’t always the best choice.

From two-tier ERP approaches that take advantage of some of the more modern cloud-based ERP solutions, to system landscape optimization (SLO) solutions from ERP companies, companies have a host of options from which to choose.

Political conflict is making it harder to provide integrated connectivity

Geopolitical challenges, such as emerging data sovereignty legislation, are compelling companies to consider security controls aimed at protecting their assets.

Before any work is initiated, companies should undertake a security assessment looking at all the various aspects of security considerations for ERP. They should work with experts to define the security posture and remediation work necessary to protect the organization’s assets. This remediation work can help companies adopt higher levels of security controls, going well beyond the traditional roles and authorizations often associated with ERP implementations. It can also extend ERP considerations to include a broader set of security activities, such as penetration testing and intrusion detection, to mitigate any unethical actions taking place inside or outside of the organization.

Global fissures are further isolating data silos

The more disaggregated businesses become in response to new business models or threat mitigation strategies, the more instances a business might have. This can increase the need for a single-pane-of-glass view of financial performance and insights. Using targeted ERP solutions, such as SAP Central Finance (cFIN), can both enable compliance reporting and provide the insights the business needs. cFIN is well suited for companies with many instances, especially if they are different product versions or software solutions.

Shifting regulations make flexible data structures absolutely essential

As risks stack up, ERP solutions must be flexible enough to withstand continuous business model shifts, whether these are driven by strategy or demanded by geopolitical challenges. Many companies are adapting by taking a page from the public sector playbook. Public organizations classify data subject to its value and risk, reflecting the sensitivity and confidentiality of the information. Their rules are designed to manage change, not to maintain the status quo. As private industries embrace these practices, they’re putting a premium on data flexibility. They’re adopting open standards and shared definitions that make it easier to identify, classify, and report on data quickly, as needs change.

Destabilization demands decentralization

There have always been parts of each business that are “different.” Their local practices are so complex that it would seem illogical to build them into the common backbone. Likewise, process differentiation often abounds across the business. This is how many leaders justify more local systems, with some companies having upward of 100 ERP instances. Businesses applying a more mature technology capability have the potential to simplify their instances while still staying nimble at the local level (download the paper to learn how a global consumer packaged goods company is doing it).

A slight majority agree that diversifying their supplier base (53%), increasing business flexibility (52%), and improving supply chain buffers (53%) would be positive potential changes.

Putting ERP through its paces

In an uncertain geopolitical environment, businesses need ERP structures that support the business strategy rather than constrain it. Keeping the ERP solution as the common backbone and moving local differentiation toward more cloud-native (custom or standard) applications provides a new basis for assessing both how companies implement ERP solutions and how they can reduce the number of logical systems that are needed.

Many companies are also turning classical or manual processes into digitized operations. Creating a digital twin of a business process, also known as an intelligent workflow, allows them to separate the process from the underlying ERP system.

Leveraging next-gen technologies lets leaders determine how and where to create solutions that can meet the business requirements and create local variations, rules, and solutions as needed. Rather than rendering a monolithic application, they are using ERP standardization, differentiation at the edge, and an adaptive architecture that is unconstrained by classical engineering practice to stay agile in the face of change.

Download the report to learn about the major decision points and action points leaders can consider as they create stronger, more resilient ERP systems in an era of uncertainty.