The mining and metals sector is making some headway when it comes technology modernization, but hasn’t completely shaken its long-held reputation as a laggard in the adoption of leading enterprise resource planned (ERP)-enabled business practices.
The sector’s track record shows a series of missed value creation opportunities inherent in large-scale technology-enabled transformations – due, in large part, to capital constraints driving a view of SAP investments as a necessary burden or technology currency-based expenditure rather than a strategic investment in capability development.
That mentality is only just beginning to shift as more companies embrace digital transformation and ERP currency. Adopting the next generation of SAP products presents a unique opportunity for executives to steer their organization down the path of a value-driven adoption of SAP S/4 HANA.
A critical mass of companies around the world still need to initiate the migration of their legacy ERP Central Component (ECC) environments to S/4 by 2025 – when SAP ends its maintenance on its pre-HANA platforms. Most companies haven’t even begun to contemplate this transition – even though many of these projects will ultimately be re-implementations versus migrations. Depending on the scope of the project, preferred implementation strategy and deployment approach, the path to S/4 could take several years.
The good news is that there’s still time, and the opportunity is immense for mining and metals companies that want to get a head start now. Adopting S/4 is a chance for companies to simplify their business processes and transform their enterprise platform, by taking advantage of new capabilities that can drive real business value through improved scalability, better analytics and increased efficiency and accuracy through process automation.
If it sounds extremely complicated, it can be. But harvesting some of these sources of value requires organizations to look at their capabilities through a completely different lens. S/4 is not just an ERP upgrade – it’s a new way of running your business, a philosophical shift towards becoming an agile and intelligent enterprise. And while there is no one-size-fits-all approach to navigating this journey successfully, there are several guiding principles to help secure the right outcomes for any organization:
1. Stratify the process. Identify unique processes and focus solution design discussions accordingly. Companies must be prepared to change and adopt leading practices in cases where S/4 can drive an equally acceptable, albeit different outcome from the legacy solution.
2. Automate your enterprise. Process automation is central to any value creation plan. It can drive efficiency, protect total cost of ownership and keep the new S/4 platform on the latest release by minimizing the need for system customization.
3. Build the right competency. Invest in an organizational capability to sustain the new enterprise platform. Unlocking the value of S/4 is a journey that won’t be completed during your initial deployment. Companies must be ready to undertake a continuous improvement program to ensure their solution evolves in lockstep with the business.
MICHAEL GILBERT is the EY Canada Agile Business Transformation Leader and leads SAP implementation projects for companies across sectors. He is based in Toronto.