SAP

The Limitations and Shortfall of Information Technology

As each Industry had its own way of working compared to others, ERP packages needed to be tailored to the needs of a particular Industry.  To address this, ERP vendors started coming up with improvements and amendments best suited for a particular Industry segment. In parallel, they also started making their software solution more open & flexible to interact and adapt to varied IT environments. However, although improved products were introduced in market, there was a dearth of efficient system administrators and maintenance teams to manage these new versions offered by IT and ERP vendors. With the IT entering into all areas of business operations, starting from hiring in HR to complaint handling in CRM, all processing and data was now interconnected and interrelated. This increased the business dependence on IT to a very large extent. With heavy financial and administrative investments going in, but without much of apparent benefits realisation, IT setup started becoming a burden rather than a facilitator. However this was a stage where there was no going-back on computerization and so, after having been adopted it, the organizations now aimed at exploiting the IT setup to the fullest. They needed support from the product vendors as well as service vendors who could clearly understand their business requirements and aspirations and further enable those through the IT systems.

IT & Business Hand-In-Hand Today For Efficient Tomorrow

This demanding thrust from organisations led to concentrated focus and efforts to provide Industry specific solutions as against "off-the-shelf" generic solutions. The facilitating functions of an organisation, like the IT setup, are expected to help run the business smoothly, sustain and grow and so deliver what is specifically needed by the industry, rather than generic solutions. This prompted vendors like SAP to come up with different Industry Solutions to support business process improvement. They also introduced NetWeaver platform to make the SAP setup more adaptive to the overall IT setup in any organisation.

The overall IT structure of an industry needs to be efficient enough to supports the business on its niche requirements. The needs of the organisation are largely driven by the Industry type, like, a Manufacturing Industry would have different business needs as against a Pharma industry or a Retail. The requirements (needs & wants) are in line with how a particular industry typically functions, what are its basic market demands and the emerging trends in that industry. E.g. efficient JIT setup would be very close to an Auto industry while for a Pharma industry the main focus would be FDA compliance as well as Track & Trace capability. For a Retail & CPG industry effective DSD setup, traceability, efficient Transportation are of prime importance. Each Industry segment is different and so are their needs. These specific business needs must be ably translated into the supporting IT landscape as well. The team that manages the IT function therefore, has a responsibility to support, maintain & enhance the system in line with the needs of the organisation.

Now the market is offering products for better efficiency, better results but there is a gap in terms of efficient brains and hands to deploy these products most effectively. To effectively utilise the Industry specific features offered by an ERP package, the person managing the solution has to first know what the typical industry requirements are. Only after appreciating the industry needs, he can translate those into the system configuration. So the teams that manage the IT landscape with respect to business process mapping, process enhancements, integration as well as uninterrupted availability and hardware planning need to be aware of the business norms, along with IT / software requirements. Business awareness helps the teams to plan, devise & suggest new solutions which support business aspirations, leading to overall enhanced efficiency. The business understanding also helps one talk "business language" rather than technical language. A consultant who understands the importance & dynamics of "Product Promotion" would only be in a position to design an efficient IT system for successful Promotion Planning & Execution, in a Retail / CPG Industry scenario. As such, it adds a great value if the IT consultants are exposed to and trained on the Industry business knowledge (apart from the core IT system / ERP package).

SAP started with a single, integrated solution and continued initially with 'one ERP for all' approach, however, over the last few years they have launched 21 industry specific solutions.  This is because, as stated above, each Industry segment is different and so are their needs.  But now, to exploit these newly added features for a specific industry, the consultant configuring the system must first know the business. For this, the Service Providers who maintain these IT and ERP systems need to have specially trained consultants who can understand "the particular" industry business well. This not only helps exploit available ERP features but also promotes sharing and implementation of Best Industry Practices.

In recent times, new license sales for traditional products have been declining, while there is a significant increase in Industry specific products license sale. This clearly shows that Industries are now more concerned about and interested in what suits them best, rather than what's available in market. So, an "ERP Expert having specific Industry knowledge", along with his IT expertise, is an asset to the industry.

In the next concluding Part-III of this blog, I will share my thoughts on how IT Service providers and Industries can address this need of the time.