How can users come up for air in a permacrisis?

image of goldfish floating above its water bowl | permacrisis

Manufacturers and supply chains are feeling the permacrisis pressure. EY’s global consulting head of SAP, Dr. Tom Janoshalmi, shares how users can resurface from the slump.

 

There’s been a word making the rounds of the utmost pessimism – amongst the global conflicts, environmental crises, pandemics, inflated cost of living, (and honestly, we could go on) – the “permacrisis” is said to be flourishing.

It’s arguably very fitting for the current global mood; reflecting the extended period of instability and insecurity, coming from a series of catastrophic events. It no doubt is making for a difficult time to ensure profitable, secure businesses.

So, to discover a more positive take, ERP Today speaks with Dr. Tom Janoshalmi, global head of SAP consulting at EY, and hears how some SAP users are not only making the best of this troublesome era, but actually finding opportunities to be gained, hidden in their tumultuous lot.

 

Seeking opportunity in a crisis

Of course, SAP has an extended planning and analysis solution set to help customers stay ahead of most curves. Utilizing Analytics Cloud and integrating all SAP applications, the xP&A solution enables users to run a host of scenario planning sessions to cover all the eventualities you could think of.

The challenge with crises is usually related to whether you can predict them or not, and therein you can have the preparation ready to go, waiting in the wings. But what about the scenarios that take businesses completely by surprise? These are surely the most disruptive, but is there something to be gained during these times too?

For Janoshalmi there’s a positive opportunity to be had, seeing crisis as a time for progression and for enterprises to embrace change: “The way we accelerated through COVID, some analysts or some experts say that that particular crisis accelerated the use of advanced digital technologies by 25 times.”

“For me, that’s the opportunity. If we didn’t have that disruption from the global pandemic, then our ways of working, our digitally interconnected business network, would not be at the level of sophistication that we have today. So, I would look at these, as you call them – series of disruptions or series of crisis situations – as an accelerator for change. And it seems that all of it is heading towards more digitalization.”

 

A strong SAP core makes for business integrity

In Janoshalmi’s mind, preparing for any crisis starts with fortifying the core of your technology stack to create a firm data and process foundation. That way, he says, businesses will have the ability to make better-informed decisions in any given crisis moment.

But, as ERP Today asks of Janoshalmi, with users wondering what to do, the options tend to volley between fronting up a large and expensive investment in technology, hoping that it will help businesses manage these crises, or holding tight and spending a little to just weather the storm. Worried about the risk of technology debt, many businesses are instead looking at changing a few elements of their technology stack for smaller, yet cheaper gains, instead of ripping and replacing the whole core at an already precarious time.

Janoshalmi is upfront in saying that it’s a common question for SAP customers to ask: “Will this be another long and potentially expensive SAP deployment?” But, he’s keen to share that there is light at the end of the tunnel, with the message that: “EY, through the use of intelligent industry templates, tools and accelerators and industrialized processes, can completely change this paradigm.”

“We’re bringing in significant acceleration because of the use of next-generation technologies. We have design coach capabilities that can help using GenAI [meaning] SAP customers can co-create or pre-create the design in a way that can significantly reduce the time required to design the target architecture so humans can validate. That same is true for how the actual build phase of an SAP project is managed and equally true for the deploy and the run phases.”

With these EY tools and templates, SAP customers can then, the exec says: “limit the need for customization,” thereby maintaining that agility and flexibility further down the line, and avoiding much of the immovable technical debt you’d otherwise have to regularly work to maintain.

Janoshalmi is clear, however, that “no one size fits all” for SAP customers. “It varies so much by industry. For a bank, it’s a very different proposition compared to a retail company or a manufacturer,” he says.

“But ultimately, what I’ve seen is that it comes down to, at the moment, data integrity and process integrity. And if you can establish both, then even if you can predict certain changes, the way your organization is prepared to manage change or to manage disruption is significantly enhanced or better than those who don’t have that.”

He splits data integrity for the enterprise into four main categories – master records of suppliers, customers, employees and assets.

Just one side of managing those, Janoshalmi explains, is improving how they relate to each other, how value gets created from supplier to customer, what the employee contribution is to that, and how users can optimize assets in that process.

On the other side, for process integrity, and what Janoshalmi terms “the way forward in a crisis”, is the interconnected enterprise. “When all parts of an enterprise or an organization know what the other parts do and how they become interdependent or integrated, I think these two things are technology-driven mostly.

“If a company can have them at a high sophistication level, then they’re in a much better position than the rest.”

It follows that with all things connected, verified and working cohesively, your operations can turn into a trusted environment, even when the external one is not. In theory, it can become easier to maintain factors such as data security and protect from cyber attacks. Businesses can more quickly see weaknesses in their supply chains and act to adjust their operations on reports of a geopolitical conflict or climate disaster. And manufacturers can detect which parts and raw materials may be in short supply before customers are left unhappy with unfulfilled orders.

 

Managing manufacturing risk with emerging technologies

Creating the “lean and clean core” which is critical in Dr. Janoshalmi’s view is also a key way to ready operations for expedited time-to-value from emerging technologies too. This not only helps companies to avoid risk in a crisis, but also disrupts and creates new opportunities in operations.

For one SAP customer, a large natural resources and oil and gas company, utilizing digital twin technology is enabling it to avoid a high number of high-risk scenarios for its time and resources. With deep sea exploration involved, traveling to locations is long, performing the required processes can be complex and parts are expensive to replace.

“They really want to create a digital twin for their offshore operations exploration business,” explains Janoshalmi. “So that the maintenance process can be a lot more predictable, [as well as] the maintenance costs of having these offshore assets.

“Having digital twins and being able to simulate the eventualities of a potential malfunction or break is making a significant impact and changes the way the company can operate.”

Businesses using IoT technology are also seeing benefits here, says Janoshalmi, for increasing real-time visibility in the supply chain. “We’ve seen customers who have really taken this to new levels in terms of collecting data from the first point of entry of that raw material into the supply chain all the way to the end. With that, you get insights that will make you a better decision-maker. So, not only do you have flexibility and resilience, but as a supporting capability, your ability to make decisions faster and with better, more predictable outcomes is superior.”

It also applies to the end-user experience, with the story of a sports and fashion retailer using digital interconnectivity amongst its consumers to improve its product development. The digital technologies allowed the designers and the product engineers to have instant feedback and data collection from runners.

Having tested the SAP solution himself, Janoshalmi shares that: “The moment I finished my run, I was able to provide some feedback on the cushioning or on the actual feel of the shoe and my performance relative to that and, again, that was a great example of leveraging big data computing and digital interconnectivity with the concept of crowdsourcing and pattern recognition.”

The same rings true for rethinking processes in the automotive industry, working with an original equipment manufacturer (OEM). “Here we are talking a complete shift towards everything digital: Designing your own car, ordering that car and then receiving it without having to go to any physical locations,” Janoshalmi says.

“The question is, how can we rethink the retail path, so the actual selling cars to customers part, and how we can move away from the concept of showrooms and dealerships to completely digitize the experience?”

For EY’s SAP consulting branch, it’s a demand that is steadily increasing, with sights set on more modern, event-driven data architectures to allow data to flow across the enterprise and its diverse technology landscapes. To achieve this, it’s something that needs multiple technologies on hand and Janoshalmi advocates that this is best bolstered by that ever “lean and clean” core system, whether on-premise, cloud or hybrid.

Despite the permacrisis looming around us, it would seem the old saying of finding a diamond in the rough perhaps rings true. What SAP and other technologies can’t do is predict when the next unknown will hit, but having a well-armed stack at the helm of your business can help avoid shipwreck and find a faster, less risky route to profits and growth on the other side.