In the wake of the pandemic, a new IT culture has taken root that is driven by speed, efficiency and rapid growth. In this feature article, Thomas Rosinski, President and Managing Director of SNP North America, describes the challenges that companies are facing as a result and the trends they should keep an eye on when it comes to business transformation.
The global Corona pandemic forced a massive disruptive change in terms of the velocity of business operations. A sudden and widespread shift to digital services solidified an IT culture in which speed, efficiency and growth are top priorities. The way had been paved by trends that have been underway for years and which took on a recent urgency as a result of the changing environment: For example, the digital transformation and the migration of applications to the cloud have not only been continuing over the past year. Thanks to a paradigm shift triggered by remote work and isolation, these projects literally exploded. A recent digital lifestyle that touches all areas of life, from virtual working and learning to online shopping and socializing, suddenly became a new normal for everyone.
There is no turning back from this development: in fact, we will continue to see this IT culture change come to life in 2021. The following trends will be key drivers on corporate agendas:
Trend 1: Mergers, acquisitions and divestments increase
While the pandemic is taking its toll on the global economy, it is having an opposite effect on many large companies or corporations. The decline in spending and activity in these companies has led to a significant pent-up demand for growth and has provided many of these companies with recent cash holdings. In 2021, these two factors will coincide and lead to an increase in mergers, acquisitions and divestitures. Companies will increasingly divest business units to eliminate redundancies and improve operational efficiencies. At the same time, they will acquire other businesses in order to expand their own market presence.
To ensure that these mergers and divestments are executed seamlessly and promptly, and subsequently deliver the desired value, companies must ensure that they have the right technology and processes in place to make the transition.
Trend 2: Cloud to S/4HANA – internal transformation projects are prioritized
One of the side effects of the pandemic is the fact that companies have been forced to accelerate internal transformation projects that would otherwise have been on hold for years. Cloud migrations are just one example. A survey released in early 2021 found that 87 percent of IT decision makers worldwide believe the pandemic to be a catalyst for accelerating their organization's migration to the cloud.
Another transformation project that will be moving up the priority list is the transition to the S/4HANA platform. SAP's current deadline for the transition is the end of 2027: Hence, it's no surprise that this hasn't been a focus for many companies.
But just as the pandemic has caused companies to reconsider their "business as usual," the same is true for the adoption of S/4HANA. The reason is simple: SAP is integral to many businesses, and postponing S/4HANA migration would mean sacrificing significant efficiencies for many companies. With S/4HANA, companies can take advantage of the platform's advanced predictive analytics, machine learning and AI capabilities. From planning to delivery pace, they are able to get more done in real time - to operate and innovate at market speed.
Thus, with the prospect of being able to do more in less time, more companies will migrate to the recent SAP Business Suite in 2021, compressing the timing of transformation from years to months.
Trend 3: Business-critical importance of transformation pace is increasing
COVID-19 has caused a wave of company closures last year - and the situation remains critical for many companies still in existence. What will determine success or failure in the coming years is the speed of one's transformation. If companies need three years for digital transformation, the systems used will already outdated by the time of the final go-live. Hence, in order to be successful in 2021 and beyond, companies need to shorten the time span of their transformation projects from years to six to nine months. Alas, how can this be done?
- Taking a more selective approach to transformation: this may mean that decision-makers focus on changing only 30 to 40 percent of the business, rather than everything at once. In this way, they ensure that time and money are not spent on changes that are not priorities - in other words, focusing only on business-critical areas.
- Leveraging current investments for transformations rather than delaying or replacing them.
- Seeking partners with experience in transformation projects to help implement process redesign and ensure that the greatest value is gained from the bottom line.
The focus on digital transformation projects - including a migration to SAP S/4HANA - coupled with mergers and divestments will become the key focal point this year, defining which companies will successfully capitalize on the pandemic and which will be left behind.
About the Author
Thomas Rosinski is President and Managing Director of SNP North America, responsible for delivering world-class S/4HANA, Merger, Acquisition, Divestures, and Cloud migrations for SAP clients. Success stories realized in partnership with SNP North America include some of the world's largest SAP implementations and industry solutions.
The article was first published on dataversity.net.