There is no digital without the core

Nov 23, 2020
SAP | 2 min READ
Are the days of ERP gone? This is a question that keeps coming up every few years in various forms.
In the current context, one keeps hearing about moving towards digital transformation, and claims of ERP being stone-age. Time and again, it has been proven that ERP systems are here to stay, and if I must admit – flourish. Why?
Vijay Mishra
Vijay Mishra

Former Senior Vice President and Global Head

SAP Unit


This is the age of digitalization and digital transformation of businesses. A solid reason that ERP systems will become even more critical. ERP systems as large monoliths will need to adapt and become nimbler in the digital world, but the backbone strength provided by ERP systems cannot be replaced. As a McKinsey report defines in one of its dated publications, when we speak of digital transformation, there are five facets on the same:
  • Digitalization of Channels
  • Digitalization of Products and Services
  • Digitalization of Processes and Workforces
  • Digitalization of Supply Chain
  • Digitalization of Ecosystems
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As you peel through the layers on each of the above, one quickly realizes that to bring any meaningful impact to business through Digital Transformation, one must embed digital into the entire value chain, supporting these areas and a big part of that runs in the ERP systems. One can launch as many new digital interactions points with customers/consumers/partners, but if these points are not integrated with back-end systems, the information provided will not be accurate and will end up causing more harm than good. Similarly, digitalization of supply chains cannot be complete unless it hits the core planning, procurement/production and distribution processes within the ERP systems
Premier ERP Solution providers like SAP have quickly adopted their product stacks to address this need for integrated digitalization across the value chain. The solution architecture is more open than ever, enabling solution extensions and allowing embedding of AI/ML-based intelligent solutions across value chain. Cloud-based deployment options and SaaS (Software as a Service) offerings provide the necessary agility required, combined with string integration capabilities. An in-memory database like S/4HANA enables the real-time segment of digital process enablement and many more such important aspects.
In conclusion, if somebody is looking at digital transformation in external facing processes/systems only, they are missing the opportunity to bring real impact of digitization to their business. Look at digitization across the value chain and bring the interventions at the right points, including the ERP systems. In order to enable that, the ERP systems need to be more open and nimbler, like SAP S/4HANA, to allow for accelerated adoption of digital technologies.
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