Complex, evolved ERP infrastructures are becoming noticeable cost burdens for companies. With SAP RISE, there is now an opportunity to streamline the ERP core again in order to regain efficiency and the ability to innovate. However, if companies want to realize such a clean core, this will hardly be possible without application management services.
NTT DATA Business Solutions
The future of ERP: SAP's “Clean Core” approach makes Application Management Services a success factor
What is the “clean core” approach?
SAP ERP systems have always mapped standard processes with their modules. As good as the configuration options are, customer-specific individual development is usually unavoidable in order to optimally implement business requirements.
Over the years, enhancements and new functions are added and the ERP system moves further and further away from the standard – at the expense of maintainability and performance. At some point, even new SAP functions cannot be easily integrated.
To ensure that your own IT infrastructure remains flexible and cost-efficient in the long term, it is desirable to leave the core of the ERP system unchanged (clean). This is known as a “clean core”. Changes and enhancements are then not implemented directly in the ERP system but are outsourced to extension points or connected systems that are independent of the core.
Why should companies in the SAP ecosystem embrace the “clean core” concept?
With the end of mainstream support approaching, the move to SAP S/4HANA is inevitable. While the transformation project may appear challenging, it presents companies with a valuable opportunity to future-proof their ERP architecture – moving it to the cloud and organizing it in a more modular and flexible way. The clean core plays a pivotal role in this transformation.
With its “RISE with SAP” service package, SAP supports companies in implementing the “clean core” philosophy. RISE bundles all the tools, best practices and services that companies need to build a decentralized digital infrastructure in the cloud. An infrastructure that enables them to integrate technological innovations more quickly and keep up with the rapid pace of market change.
Which tools can be used to implement a clean core?
Most companies continue to operate with on-premise ERP systems or have developed hybrid structures over time. If you are pursuing the goal of “clean core”, there are two approaches available for customizing and extending the standard:
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ABAP cloud
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Under the term ABAP cloud, SAP summarizes various programming techniques that can be used to carry out implementations directly on an SAP system without modifying the system core. This enables companies to extend standard SAP functionality and implement system-related applications.
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Business Technology Platform (BTP)
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Companies can use SAP BTP to deliver applications and functions that enhance the functionality of their ERP system. Whether third-party services, in-house developments or new SAP services (such as AI), the platform serves as the central location in the S/4HANA cloud architecture. It enables functions to be implemented in a way that seamlessly interacts with core systems, without the disadvantages of deep integration.
The limits of SAP S/4HANA and “clean core” transformation projects
The switch to SAP S/4HANA can be realized in different scenarios. While the brownfield approach is less suited for restructuring toward a clean core, other alternatives are possible. At NTT DATA Business Solutions, we closely follow the best practices recommended by SAP, further optimizing them based on our extensive project experience.
Your options for switching to SAP S/4HANA
No matter which migration method you choose: What begins as a transformation project is de facto not a completed project. Although the ERP system can be migrated to the cloud in a manageable period of time, companies will not achieve a complete clean core. This is because SAP has not yet provided many enhancement points across all areas.
The migration is therefore more of a trigger for continuous IT development. Successful companies have always adapted their digital systems dynamically to changes in the market and technology. However, the framework conditions have changed in recent years.
Given the increasing complexity and pace of digital innovation, internal IT can no longer manage the continuous infrastructure development alongside day-to-day operations and project work. However, this is crucial for value creation and competitive strength. Companies are therefore increasingly looking for external support that goes beyond individual transformation projects. This is where strategic Application Management Services (AMS) play a crucial role.
Discover how to drive your transformation forward with the right partner in our Application Management Trend Report 2024.
Application Management Services: From efficiency to transformation driver
Traditionally, application management services take over the maintenance and optimization of applications and act as a support partner during ongoing operations. This service is now well established. By outsourcing, companies improve the cost and operational efficiency of their IT and free up internal resources for more important activities. However, given the constant pressure to transform, basic services are no longer enough to provide meaningful relief or a competitive edge.
This is why more and more service providers such as NTT DATA Business Solutions are offering Application Management 2.0. With strategic AMS, service providers also take on an advisory role. They combine strategy, technology and process consulting.
In the context of SAP S/4HANA and the clean core approach, a strategic AMS partner would not only develop new applications on SAP BTP as requested but also manage their operations. It would provide IT management with comprehensive and regular advice and gradually develop the SAP system in the direction of clean core. This effectively provides companies with transformation as a service.
Conclusion: Strategic AMS are conquering the SAP world
According to our trend study, over 80 percent of companies with SAP systems are supported by external partners when moving to the cloud, and the majority are already relying on application management services to drive their transformation forward.
Given the increasing complexity of IT, rapid market dynamics and the shortage of skilled workers, holistic AMS are more important than ever. In our trend study, companies that leverage application management services for more than just operational security report extremely positive outcomes. 86 percent of them are convinced that those who do without extended AMS will find themselves at a competitive disadvantage in the future.
If you would like to find out more about current trends in Application Management Services and want to see how far the SAP transformation has progressed in other companies, read our trend study.
Interested to learn more about how new technologies are reshaping the landscape of SAP Application Management?
Read our SAP Application Management Trend Report 2024 to find out:
- The challenges companies face in operating and evolving their software applications in the future
- How these challenges are related to SAP S/4HANA
- How companies are overcoming these challenges and preparing for SAP BTP, Cloud, and AI