Future-Proofing Your Business: 5 SAP Trends to Watch
Sep 13, 2023
What SAP trends are shaping the enterprise landscape this year and beyond? And what are their strategic implications for your business?
In this post, we put the spotlight on five developments that every business leader should be aware of. From emerging functionalities in Cloud ERP to the transformative influence of Artificial Intelligence (AI), these trends are bound to touch nearly every aspect of global organizations.
Trend #1: Cloud ERP Adoption Is Taking Off
The adoption of cloud-based Enterprise Resource Planning (ERP) solutions has shown considerable growth in the past few years. According to industry statistics, the global market size for cloud ERP is expected to reach $130 billion by 2027, nearly doubling from its 2022 valuation of $64.7 billion. The year 2021 alone observed an 11% increase in the ERP software market, achieving $44.4 billion in total software revenue.
SaaS ERP vendors are consequently enhancing their cloud offerings. For example, SAP S/4HANA Cloud is a cloud ERP solution that provides multiple advantages like scalability, flexibility, and security.
So, what are the main factors driving SAP cloud adoption?
Need for Agility
While companies are naturally under pressure to remain profitable, the path to achieving that competitive edge has evolved post-pandemic. More than ever, the capacity for quick transformation is indispensable. Cloud ERP solutions, which touch upon almost all aspects of business operations, offer an efficient route for companies looking to evolve swiftly, adapt to new business models, and explore additional revenue streams.
The pandemic also shifted brewing workforce trends into high gear, including the so-called “Great Resignation” and the normalization of remote work. Employees increasingly expect the flexibility to work from remote locations securely and efficiently. Companies are recognizing these shifts as necessities rather than luxuries and are seeking cloud ERP solutions to automate processes and enhance productivity.
Companies have essential operational requirements, such as managing accounts receivable and tax obligations. Adopting cloud ERP allows you to standardize these core business processes, which in turn frees up organizational bandwidth to focus on unique value propositions and future differentiators.
Trend #2: AI Transforms Day-to-Day Work
AI and machine learning (ML) play a behind-the-scenes role in enhancing various elements within ERP systems, from data insights to user experience and automation. Rather than the third-party integrations of the past, many modern ERP systems now natively incorporate AI and ML functionalities into their technology stacks.
The adoption of AI solutions within the ERP space, particularly in SAP systems, is poised for growth in 2023. SAP Business AI builds AI into your core business processes — connecting finance, supply chain, procurement, sales, marketing, human resources, and IT.
The benefits are multifold. To take a few examples:
Repetitive Task Automation
Does your team currently have little choice but to manually process invoices, enter data, and handle customer service inquiries? AI can take such time-consuming tasks off their hands, enabling team members to focus on more strategic and creative work, such as developing new products or services, or expanding into new markets. Among upcoming innovations SAP cites, for instance, the automation of the processing of goods receipts and delivery notes in SAP Transportation Management with the help of generative AI.
AI introduces the ability to analyze vast amounts of data to identify patterns, trends, and anomalies. This can help you make better decisions about things like demand forecasting, inventory management, and pricing. For example, AI can be used to predict which products are likely to be in high demand, so that you can order the right amount of inventory.
Enhanced Recruiting and Employee Retention
In the realm of Human Resources, SAP Business AI is proving to be a game-changer. The intelligent capabilities of SAP Business AI facilitate optimized workforce planning by streamlining HR processes and significantly reducing the time to identify and hire qualified talent through smart resume analysis.
But the impact goes beyond just recruitment. The AI-driven system also plays a crucial role in employee retention and development by crafting personalized career paths based on individual skills, performance, and aspirations.
Ease of Compliance
The regulatory burden keeps growing and the price for non-compliance is often high. By leveraging AI that is trained on your industry, company data, and accompanying compliance requirements, you can identify and prevent compliance risks with ease.
Trend #3: Data Analytics Becomes Even More Critical
In 2023, businesses are expected to invest more in data analytics solutions, not just for the sake of collecting data but to make informed decisions. Tools like SAP Analytics Cloud are increasingly being used by organizations of various sizes to understand both their operations and their customer base better. The shift is not just from understanding “what happened?” but to predicting “what could happen?” and even prescribing “what actions should be taken?”
A few developments stand out:
Beyond Basic Analytics
While ERP systems have always been capable of collecting data, their analytics capabilities have evolved from mere data reporting to predictive and prescriptive analytics. Today’s ERP systems leverage AI to offer advanced analytics, data visualization, and even “what-if” analysis scenarios, far beyond the simple dashboards of the past.
Another development in this space is the rise of conversational analytics within ERP systems. Users can now interact with their data by asking straightforward questions, such as, “What’s the sales forecast for next month in North America?” or “How will the weather affect my supply chain in Asia?” The system can process these queries and provide immediate, context-rich insights.
Proactive and Contextual Insights
Modern ERP analytics tools do more than just display data; they guide users in their tasks, provide insights rich in context, and even send alerts when anomalies occur. In some advanced setups, the ERP system can act autonomously on behalf of the user, further highlighting the system’s evolved capabilities.
Trend #4: Sustainability Grows in Importance
Sustainability is gaining traction as a central issue for businesses in 2023, backed by government regulations and consumer demand. More than 80% of executives agree that environmental protection should be a priority for companies, according to Deloitte Global’s 2021 Climate Check Report.
SAP is set to release new features to assist businesses in reducing their environmental footprint, including SAP Sustainability Hub, a dedicated suite that enables companies to monitor their emissions, set sustainability objectives, and evaluate their progress.
Here’s how SAP can help your organization meet sustainability goals:
Designed for Operational Impact
ERP software, often considered the digital backbone of modern businesses, can provide real, actionable pathways for companies to meet their sustainability goals. Companies not only state their carbon-neutral goals but, with the help of ERP systems, are now better equipped to achieve them.
While Environment, Social, and Governance (ESG) software focuses on reporting emissions and other environmental data, the role of SAP in sustainability is more operational. ERP systems help you not only to track but also to act on this information in real time.
Consider a customer configuring a new car online, selecting various features like leather, color, and horsepower. Modern ERP systems can now calculate the carbon footprint of the product based on these configurations. More interestingly, there can be an option to “Optimize for Sustainability.” When clicked, the ERP system would automatically suggest modifications—ranging from part proximity to water and electricity consumption—to minimize the product’s environmental impact.
Trend #5: Security and Compliance Demands Turn Focus on Vulnerabilities
The increasing value of SAP infrastructure also brings security risks into sharper focus. In the face of new data protection laws and rising (and increasingly costly) ransomware attacks, securing SAP environments is a high-stakes undertaking.
The SAP Cloud Security suite aims to help businesses secure their data and comply with regulations. This suite is particularly designed to prevent data breaches and reflects the new cybersecurity strategy for SAP systems. Rather than focusing on ransomware and malware, SAPinsider reports in “Cybersecurity Threats to SAP Systems 2023” that unpatched systems have emerged as the No. 1 priority. By addressing system vulnerabilities that hackers can exploit to steal data or spread malicious software, SAP intends to boost its cybersecurity posture.
Is your business looking to capitalize on these trends? At oXya, we help companies get SAP right. With a full suite of managed cloud services and technical consulting for business critical applications, we take the complexity out of SAP while you enjoy the benefits. Contact us today to learn more.