A State of Flux: Rethinking Business Models with the SAP HANA Cloud Platform Part 1

#1: The Digital Cloud Transformation – Huge Potential for Economic Growth

Rapid Changes to Business Models and IT Landscapes

This two-part series shows how digital cloud transformation fundamentally changes business models. First of all, in a short overview of the situation today, we will illustrate how companies with several business units or subsidiaries are structured, how their IT infrastructure is built up, and how it supports their business processes.

The following scenario features a fictional company named DAIRY Group and represents the situation of many other companies in today’s world.

Introducing DAIRY Group – A Fictional Business Scenario

DAIRY Group is a medium-sized enterprise headquartered in Munich, Germany with subsidiaries in 22 countries. It produces and sells food and pharmaceuticals. With approximately 3,000 employees, the group generated a revenue of 380 million euros in 2015. DAIRY Group consists of three business units: Consumer Products, Pharmaceuticals, and Single Ingredients.

IT Landscape at DAIRY Group Today

DAIRY Group’s company structure has grown and developed gradually over the years. As a consequence, its IT landscape is heterogeneous and consists of several different IT ERP databases (figure 1).

Consumer Products
Located at the DAIRY Group headquarters, this business unit operates a fully-integrated SAP ERP system based on an on-premise database.

Pharmaceuticals
The Pharmaceuticals business unit works with customized add-ons that are only partially integrated.

Single Ingredients
This business unit uses customized add-ons that are not integrated with the ERP system at all. Data exchange must be performed manually, which is costly and time-consuming.

International Subsidiaries

DAIRY Group’s foreign subsidiaries, partly formed from previous mergers and acquisitions, are individually connected to the IT landscape at the German headquarters. Often, they do not require the same full functionality as the headquarters – smaller IT solutions are usually sufficient to support their less complex processes. In addition, process conformity cannot always be guaranteed. However, country-specific laws and regulations have to be respected and be taken into account in the IT systems.

Since DAIRY Group has ambitious growth targets, it plans to capture and expand into new market segments, increasing the complexity of processes that will have to be covered by IT. Experience has shown that the majority of its companies are more or less organized in this way.

Digital Cloud Transformation and Its Effects on Current Business Models

In times of the Internet of Things (IoT), rising globalization, highly volatile markets, and informed customers connected via social media, companies have to rethink their business strategies from scratch. Time to market and development cycles are significantly shorter. Responding to customer needs becomes more challenging than ever before. The trend is clear: enterprises are moving away from rigid supply chains to dynamic value-adding networks that allow real-time communication and flexible responses between all participants.

Rapidly Changing IT Landscapes

In light of the new challenges, the performance of conventional IT systems and processes is no longer sufficient to ensure competitiveness and business growth. Companies need to take their own new, flexible approaches. With SAP cloud solutions and SAP HANA Cloud Platform, all conceivable business scenarios can be mapped in a unified way – according to each company’s individual business needs.

How DAIRY Group Will Profit from the Digital Cloud Transformation

With the implementation of the high-performance in-memory SAP HANA Cloud Platform, DAIRY Group has laid the foundations for seamless integration of all IT applications and systems, both from SAP and third parties. In line with SAP’s “Run Simple” principle, all add-ons now run on a single platform: SAP HANA Cloud Platform.

How SAP HANA Cloud Platform Supports Digital Cloud Transformation

SAP HANA Cloud Platform is a platform-as-a-service solution for the integration of SAP and non-SAP systems, as well as a variety of cloud applications. It features over 1,000 ready-to-use apps that are also compatible with smartphones. The platform helps businesses to fill gaps in functionality, customize existing applications, integrate with on-premise systems, and interact with mobile devices. New innovative apps can be extended or built rapidly, thanks to an open software architecture. The SAP HANA Cloud Platform is built on real-time, in-memory technology, enabling customers to take advantage of rapid innovation cycles and digital opportunities to transform their business.

More to Come…

DAIRY Group also decided to replace its current SAP ERP system with the highly innovative SAP S/4HANA business suite, which can be deployed on-premise or in the cloud. Want to know more about DAIRY Group’s next steps on the road to digital cloud transformation? Stay tuned for the next installment in the series.

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