The next big innovation for SAP with be #NetworkedERP: taking down the silos not within a company but between companies.

This is Jan Gilg and Muhammad Alam at #SAPSpendConnectLive, both Presidents and Chief Product Officers of Cloud ERP and Business Network respectively. It’s insightful because Cloud ERP offers a new way to optimise business processes within the four walls of the company, and this can then be extended to value chains byond with the built-in connection to SAP Business Network.

When SAP had its explosive growth in the 1990s with R/3, it revolution companies by linking together the different parts of the company together : sales, production, finance, procurement and personnel. It’s hard to remember, but most companies never integrated these parts of their business before, and a huge round of efficiencies were unleashed.

For most companies, Internal Integration of departments is mostly done.

But that’s not good enough for our hyper connected value chains. Outsourced manufacturing, subcontracted workforce, lean inventory, short product life cycles and well-educated consumers are all vectors which point to the next round of efficiencies. External Collaboration.

The next round of efficiencies will come from External Integration

All of the challenges that the pandemic exposed in the last few years, current crises in the papers today are exposing and new Black Swan Events will no doubt expose in the future can be put down to companies focusing too much on optimising processes within the four walls of their companies. All of the critical players in the supply chain don’t work for you, don’t live in your ERP. They are your suppliers (obviously) but also your transportation and logistics partners, firms who maintain your assets and provide other talent, your banks, your subcontracted manufacturing, and in some jurisdictions, government entities.

Simply stated, technology needs to be turned inside out, allowing all of the actors in the Value Chain to fully participate, by digitally connecting over a Business Network. Improved visibility across the supply chain is crucial for identifying potential risks and taking proactive measures. Procurement and Supply Chain teams should invest in technologies and systems that provide real-time data on supplier performance, inventory levels, and transportation routes.

Connecting digitally to external actors for resilience and efficiency is just as compelling as connecting your own Accounting, Production and Sales departments together in the ERP revolution of the 1990s, a whole generation ago.

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