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Companies across the world have invested in SAP technologies for decades but many are at a crossroad. What can be learned from the Roman Empire now that they have tough strategic decisions to consider?

By Duncan Prior

The romans dealt with many crisis because they carried out reforms and drew on the strength of their underlying fundamentals. It is a similar story when considering how your SAP solution can empower a sustainable long-term future.

And we are in a major health crisis “all were shuddering, fleeing, shunning the contagion …”

Several organisations too have been affected. Perhaps you are one of those IT managers who have seen a drastic alteration in your budget and perhaps you have had to redefine your IT strategy and delivery model. Perhaps you are even questioning whether your ERP system will be a facilitator of recovery or a millstone.

This is not the first time the world has been afflicted in this fashion – those words were written by St Cyprian during the pandemic that raged across Europe for 13 years in the mid 3rd century AD. It may have been Ebola or a form of influenza, maybe something that passed to humans from animals. The impact was similar: trade collapsed, people fled from places of work, tax revenue could no longer match expenditure and political systems were placed under great strain.

The dominant political system in Europe, the Middle East and North Africa was, of course, the Roman Empire. Integrated, complex, standardised and widespread, it not only survived but became stronger because Emperor Diocletian carried out a series of ambitious reforms (more on that later).  This was one more test for the longest lasting empire in Europe.

Now your SAP platform is similar – just as integrated and widespread. Like the Roman Empire it has developed and changed, from the early (republican) days of R2, through to R3 (Empire), facilitating your business’ expansion, and is about to embark on similar reforms perhaps through the suite of solutions on offer, SAP Cloud Platform and SAP Analytics Cloud.

Apart from the sanitation, medicine, education … What have the Romans ever done for us?

It is fascinating to consider that West and Central Europe needed over 1,000 years to claw back what the Romans had built up.  Communications, civil engineering, legal systems, secular philosophy, trade and urban development disappeared only to re-emerge gradually and in painstaking fashion across a continent which had broken down into separate fiefdoms; split by language, power structures, mutual suspicion and even core values. Worth holding on to, as its equivalents today are.

So, what about your SAP system now?

As you survey your own SAP landscape and weigh up the impact of the IT equivalent of some of the challenges the Romans faced from AD 250 – rival empires, smaller and mobile groups just beyond the borders, alternatives to the existing infrastructure and greater demand for devolution  – it is worth reminding yourself of the virtues in which you have invested so much over the years.  Then you can work out a way to preserve the core and its strengths while embracing the new. Just as Romans did themselves repeatedly, and as it is possible to do on your SAP estate. After all, that is far more productive than having to repeat the history of the Dark Ages!

A core strength not to lose: internal integration

The Romans built a road network of 400,000 km – dependable, built to be standard, everlasting and transformative. It enabled rapid flows of all sorts of goods including wheat from Sicily and North Africa, the ubiquitous fish paste from Catalunya and tin from Britain. That is what SAP has given your organisation for years and continues to do so. The complex flow of data from sales and demand forecasting to inventory to production lines to management accounting and then to statutory reporting is fundamental to your organisation. Imagine if the equivalent of the provinces were running on their own system, their own software, how long it would take to build up that network again to enable internal communication. It would take the equivalent of the centuries Europe took to recreate that. 

Invest to improve that core

A lesson to note is how the Romans improved and maintained the network. Distributers demanded heavier vehicles and shorter journey times and the engineers responded by cutting straight grooves for wheels in the road surfaces and bridges over valleys to straighten the carriageway. Surely, we should do a better job of including improvements in our basic SAP network. After all, the functionality is now available. They also hit upon ways of repairing the network without lengthy downtime – quickly pouring molten lead into eroded stones. Surely (again) we can do the same with frequent and shorter release windows.

Standard solutions provide the flexibility to deal with complex challenges

The Roman Empire ran on consistent standards – common language, civil engineering practices, calendar, weights and measures and legal system. Not regarded with affection (Latin has been never been viewed with the same levels of affection by people having to adopt it as Spanish, English and Urdu are) but starkly effective to enable generation of economic value and dissemination of information. 

SAP is at its best when it is standard and consistent across the domains. In response to COVID one new client told us how it responded quickly right across its European supply chain by simply making some changes in its standard and well-maintained SAP system overnight. They went on to say that both smaller competitors and those running on bespoke and incomprehensible systems had been less responsive and so lost market share.

Through rigorous application of these standards the Roman Europe thrived, but when they were dismantled, cities shrank to a tenth of the size and farming fell to subsistence levels. To this day information spread and impacted life positively. During the COVID lockdown, the British media (The Times, Guardian, Daily Telegraph et al) reported that people were finding consolation in the works of Roman Stoic philosophers. Whereas, parchments by Anglo-Saxons, Goths and Vandals have not stood the test of time.

It is not easy, nor popular to drive these standards. It requires an understanding of the fundamental principles and determinations. The lesson for you and your organisation is to adopt the standards, to keep them updated and to encourage all the domains to take advantage. Sometimes the results will be immediate, other times they will take longer. Either way your organisation will be strengthened.

Secure the sponsorship of local stakeholders

Rome absorbed many societies into their world: from as far away as England, Portugal and Egypt, people defined themselves as Roman and believed they had a stake in the system. The Romans achieved this by widely awarding citizenship, being fair and consistent, administering tax revenue equitably (most of the time), and a flair for circuses and celebration.

Integration with the outside world

Roman currency has turned up in excavations throughout the world – across the Silk Road in eastern Asia and down the Nile river systems proving the extent of their external trading networks.

As for SAP, a key part of the Intelligent Enterprise is access to a wide network of external suppliers and collaborators. The benefits available to this sort of solution are indeed impressive but perhaps the strongest integration is with the internet of things (IoT). Imagine what can be achieved if the data garnered in processes can be hooked together with that gained from scanners monitoring external activities. The Roman chroniclers tell us more about the world outside them than any other source, as they recorded what they saw for the benefit of policy makers. SAP’s Intelligent Enterprise has the potential to be the same: a deeper, data-based understanding of the wider environment which enables your organisation to act quickly and effectively.

Reform and revitalise, part 1 – tidy up the core

At the heart of Rome lay a model of executive power invested in one or two men (consuls then emperors) who were advised and watched by several wise citizens (the senate). This model had to be monitored, critiqued and reformed, otherwise it would become outdated and inefficient, which would cripple the entire Empire.

A similar picture exists for an SAP system. Its core is a set of relationships (not executive and legislative, state and army) but customer – sales order – demand – stock – product costing – batch. I am sorry to say that in many systems, the original design 20 years ago was not up to the mark and flawed. For example, too many company codes or incorrect mapping of sales order to production orders/project. Now you have to manage the high number of bespoke elements, but these are the symptoms of the underlying ‘mis-designs’. Now with good advice and the improved functionality of SAP (universal journal, etc) it is perfectly possible to sort this out. Just as the Romans did by following the wise counsel of writers such as Polybius (note: he was a Greek which proves the point it is better to listen to outside expertise).

Reform and revitalise, part 2 – shift from one core to multiple

What about Diocletian, who we mentioned earlier on? How did he reform Rome and why is that relevant?

Diocletian recognised he had to ensure his empire was ready to face up to new challenges which varied extensively across the Empire. The core strengths remained unassailable: sophisticated and reliable military and fast communications. He simply set up a system of local Emperors, each answerable to his own domains and accountable for his actions. 

This should be mirrored in today’s SAP environments – devolvement to localised solutions, either by function (planning, procurement, finance etc) or by market so long as all continue to adhere to common standards.

Ultimately the core shifted away from Rome to the East, from the Latin West Mediterranean to the Greek-speaking East. Perhaps over time you will see your SAP system shift its focus from manufacturing and supply chain to the customer. 

Conclusion

I think SAP’s contribution to the way businesses have developed has been one of the most significant trends in commerce in the past 25 years, comparable to how the internet has been for personal communication and expression in the same timelines. Sometimes we take both for granted and even grumble about them. And just like the internet, your SAP system will continue to be fundamental to your IT estate. It is just that your organisation needs to assess its current strengths as it goes forward and build on them (albeit with some reform). This is a complex question, with several options available, and it is best to take external advice to plan that way forward.