By
Sam Sliman
President,
Optimal Solutions Integration, Inc.
The
premise of this three-part article -- a premise that flies in the face of
prevailing economic pessimism -- is that businesses will recover from today's
economic crisis quicker than expected and markedly faster than past recoveries
as a direct result of investments made over the past several years in SAP
software.
SAP's
expansive global reach, deep penetration across multiple industries and proven
capabilities comprise the foundation of my argument, and in Part
One of this article I explored the breadth, scope and role of SAP in
today's global economy.
Part
Two of this article highlights the unprecedented accessibility and accuracy of
real-time, business-critical information enabled by SAP systems, and how this
relatively new information access and flow facilitates the early detection,
rapid response and creative adaptability to adverse economic forces.
Ultimately, it is information that expedites a business' return to sustainable
growth.
Information Wanted: Early Detection,
Rapid Response and Creative Adaptability
The
seemingly endless string of negative news makes clear the acute business pain
caused by today's economic downturn. Job cuts, plant and store closings, cut
backs, missed or reduced forecasts and falling stock prices attest to the grim
realities of a troubled economy.
Another
more positive, yet equally valid, perspective on the current spate of negative
announcements is that they attest to the unprecedented speed, efficiency and
effectiveness with which many businesses today are responding to a rapid and
unexpected economic contraction.
For
many companies around the world, SAP ERP and integrated SAP Business Suite
applications provide the enterprise-wide visibility and accurate real-time
reporting needed to make fast operational adjustments and strategic
business-process innovations -- capabilities vital to surviving a tough
economy.
For
these companies, core SAP systems play a central role in providing the
information needed to quickly adjust cost structures to volume fluctuations,
identify and eliminate bloat and inefficiencies, and make operational
adaptations that bolster their ability to weather today's economic storm.
In
the past, businesses had only point solutions and fragmented approaches for
gathering the real-time intelligence needed to align corporate strategy and
execution with business goals and dynamic market conditions. Their reactions
lagged the downturn in key indicators because information did not flow quickly
from end-customer to vendor to supplier. SAP has been a large factor in streamlining
that flow — on a global basis.
Today,
in addition to SAP ERP and other core enterprise applications, a large number
of companies are reaping the information benefits of SAP's integrated portfolio
of performance optimization applications — Enterprise Performance Management
(EPM), Financial Performance Management (FPM), and Governance Risk and
Compliance (GRC), as well as other information–driven performance management
solutions.
My
premise that many businesses today will recover more quickly from the economic
downturn than was possible for companies in the past rests heavily on the
observation that downturns of previous decades were protracted by a lack of
information.
In
the past only a relatively small number of companies had access to the information
needed to quickly adjust to a sudden economic downturn; the vast majority of
companies made gradual adjustments over a long period of time as data
signifying deteriorating conditions slowly trickled in; and another relatively
small percentage of companies didn't make adjustments until very late in the
game, often too late to ensure their survival, because of a scarcity or
unavailability of reliable, real-time information.
Looking
at this in terms of a bell curve, the bell elongates when information is
unavailable or slow to come by or doesn't flow freely. In the historical
scenario above, the bell curve stretches wide, indicating a tortuously slow
recovery.
Conversely,
when accurate information is readily available and flows freely, as is the case
for today's companies with SAP deployed, the bell curve condenses, signifying a
more rapid response to negative conditions and, subsequently a faster recovery.
To
be sure, the sharp peak of today's condensed bell curve is drawing a fair
measure of blood, as today's news headlines bear out. But if our bell-curve
information analysis holds true, the pain may be shorter than many expect.
During
his address at the recent Business Suite 7 launch in New York, SAP co-CEO Leo Apotheker made the
following comment on technology and information as it relates to the recent
meltdown in the financial services sector:
"If
banks had information systems as good as many of the companies that work with
SAP have, we might not be in the situation we are in today."
Monday-morning
quarterbacking? Perhaps. Or maybe just the flat-out, unmitigated truth.
The
third and final installment of “SAP's Role in an Economic Upturn” will examine
how SAP helps companies quickly get right-sized for rapid return to sustainable
growth.
Optimal
Solutions Integration Inc. is a premier SAP consulting firm and authorised SAP
channel partner. Article first published March 2009. http://optimalsol.com/
