If you're in the supply chain business world, you know SAP has been around for decades and is used by some of the world's largest organizations. However, despite its widespread use, many businesses fail to unlock the full potential of SAP. In fact, studies show that up to 40% of SAP functionality goes unused. This underutilization can lead to missed opportunities for increased efficiency, productivity, and profitability. But fear not, there are strategies you can implement to unlock the full potential of SAP. Let’s dive in and take your SAP utilization to the next level.
Understanding SAP Utilization and Its Impact on Business Performance
SAP utilization refers to the extent to which a company effectively leverages its SAP to boost business operations and drive value. How do you know if you are fully leveraging your investment in SAP? Business Maturity®, a benchmark developed by Reveal, measures organizational ability to meet or exceed business goals through its SAP investment.
A supply chain organization with a high maturity rating is one that has proven its ability to use and leverage SAP’s integrated capability to drive change and ongoing transformation. High SAP utilization means an organization is using its features and capabilities to streamline processes, reduce costs, and achieve outcomes – positioning it to be a very agile organization and responsive supply chain. A lower Business Maturity® score indicates that a company is not fully capitalizing on the potential of SAP, resulting in missed opportunities and suboptimal performance. Typically, that company is very dependent on spreadsheets and other tools to run its business at a significantly higher cost.
It’s imperative to recognize where you are on the Business Maturity® continuum, by participating in the benchmark survey a tool that will provide you with insights into your own journey.
The impact of SAP utilization on business performance cannot be understated. Properly utilized SAP systems have the potential to transform a company's operations, enabling better decision-making, improved efficiency, and ultimately, higher profitability. In contrast, underutilized SAP systems can lead to wasteful spending on unused features, disjointed processes, and an inability to adapt to changing market conditions.
Unlocking the full potential of SAP requires an understanding of the factors that contribute to underutilization and work to address them. This process begins with identifying the common challenges that companies face and finding effective ways to surmount them.
Common Challenges in SAP Utilization and How to Overcome Them
Organizations today are facing enormous pressure to improve service levels – and to do so with shorter lead times and less inventory. Simultaneously, pressures are mounting on them to embrace digital transformation as a means of achieving improved supply chain outcomes.
All this leads to faulty thinking: not understanding that additional software, usually at significant cost, is not going to fix poor data and processes. When organizations are willing to put in focused effort, an organization’s current SAP solution, coupled with better utilization and improved processes will actually achieve improved business value. And it will do so more rapidly and with less cost. But too often, companies don’t see the forest for the trees.
Lack of understanding of SAP's capabilities, resistance to change within the organization, and inadequate training for employees can lead to:
- Perpetuating offline processes and spreadsheets to fill process and analytic gaps. Many companies continue to rely on offline processes and spreadsheets to manage their supply chain operations, even after they have invested in SAP. This can lead to fragmented workflows, inefficiencies, and a lack of visibility into critical data. To overcome this challenge, organizations should work to transition their offline processes and spreadsheets into SAP, leveraging the software's capabilities to create a more integrated and efficient supply chain.
- Often investing in new software at significant cost. To address the issues created by underutilization, some companies may invest in additional software or customizations. However, this can be costly and may not deliver the desired results if the underlying process and data issues aren't addressed. Instead, organizations should focus on optimizing their existing SAP system to achieve better outcomes.
- If the underlying process and data issues aren’t addressed, no software implementation will be successful. It's essential to recognize that simply implementing new software or customizations won't automatically lead to improved performance. Organizations must address the root cause of their underutilization, which often includes issues related to process inefficiencies, data management, and employee training.
Strategies for Driving Value Creation With SAP
To fully leverage SAP data for business insights and decision-making, organizations must invest in developing the necessary skills and capabilities within their workforce. They will want to provide employees with training on data analysis, visualization, and interpretation, as well as ensure that they have access to the tools and resources needed to effectively analyze and utilize SAP data.
In addition, to formal training programs, organizations should also consider implementing ongoing learning and development initiatives to help employees stay up to date with the latest SAP features, best practices, and industry trends. These efforts could include offering access to online resources, organizing regular workshops or webinars, and encouraging employees to participate in relevant industry events and conferences.
Here are some strategies that can help achieve these goals:
Educating people on how to properly collaborate in an integrated supply chain: One of the keys to unlocking the full potential of SAP is fostering a culture of collaboration within the organization. Employees at all levels must understand the importance of working together in an integrated supply chain and be equipped with the skills and knowledge necessary to collaborate effectively. This can be achieved through targeted training programs, team-building initiatives, and ongoing communication about the benefits of a collaborative approach.
Educating people on the proper use of SAP within the supply chain: SAP training should be tailored to the specific needs of the organization and its employees, with a focus on the most relevant features and functionalities for each role. Ensuring that employees have a thorough understanding of how to use SAP within the context of the supply chain may include training on key supply chain processes, data analysis techniques, and collaboration tools, as well as more comprehensive and specialized training for specific roles or departments and guidance on how to apply these tools in specific supply chain processes. By empowering employees with the knowledge and skills they need to use SAP effectively, organizations can drive better outcomes and improve overall performance.
Employing currently under-utilized features and functionality to drive better supply chain outcomes: Many organizations are unaware of the full range of features and functionalities available within their SAP systems. By identifying and leveraging these under-utilized tools, companies can unlock new opportunities for efficiency, cost savings, and value creation. This may involve conducting an audit of the organization's existing SAP system to identify under-utilized features, and then implementing targeted initiatives to increase their usage.
Typical Outcomes of a Well-Executed Transformation Include Leveraging SAP Data for Business Insights and Decision-Making
Properly utilizing the existing SAP system within integrated supply chain processes improves the return on investment of SAP and drives significant, tangible supply chain improvements. Typical outcomes include:
- 15% inventory reduction
- 17% improvement in inventory turns
- 20% service level improvement
- 20% improvement in overall supply chain process efficiency
- 10% reduction in operating cost
- Improved capacity utilization and overall throughput
One of the reasons for these outcomes is that optimized SAP utilization and processes open up access to a wealth of valuable data. That data can be used to inform strategic decisions, identify opportunities for improvement, and drive continuous innovation. This data-driven approach to decision-making can help organizations become more agile and responsive to changing market conditions, empowering them to stay ahead of the competition and capitalize on new opportunities.Additionally, using data to inform decision-making can lead to more accurate forecasting, improved resource allocation, and better overall performance.
As mentioned throughout this article, employee training and development are crucial components of increasing SAP utilization and driving value creation. By investing in comprehensive SAP training programs, organizations can equip their workforce with the skills and knowledge needed to use the software effectively and efficiently.
To recap, increasing SAP utilization and driving value creation involves:
- UnderstandingSAP utilization and its impact on business performance
- Identifying and overcoming common challenges in SAP utilization
- Implementing strategies for driving value creation with SAP, including educating employees on collaboration and proper SAP use, and leveraging under-utilized features and functionality
- Leveraging SAP data for business insights and decision-making
- Investing in SAP training and development for employees
By addressing the common challenges in SAP utilization, implementing targeted strategies for improvement, and investing in employee training and development, organizations can transform their supply chain operations and achieve better outcomes. From increased efficiency and productivity to better decision-making and higher profitability, the benefits of increased SAP utilization are clear: the unlocking of the full potential of your SAP system to achieve world-class supply chain performance.