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InsideNow

Finance leaders: lead your way to a Kinetic Enterprise™

In the past, when companies took major decisions to change the way they operated, the key rule was “built to last”. Indeed, decisions like implementing a new enterprise resource planning (ERP) system require sizeable investments that need to be amortized over a long period of time.

Authors

Authors

Christophe Vallet - Director - Enterprise Applications - Deloitte

Fethi Sadouki - Senior Manager - Enterprise Applications - Deloitte

André-Louis Jadot - Senior Manager - Enterprise Applications - Deloitte

Published on 26 November 2020

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Yesterday’s reality may not be tomorrow’s due to various factors, such as technology shifts, economic volatility, changes in the business environment or evolving global dynamics. The current pandemic is only one example of a factor that businesses could not have predicted but to which they have been forced to adapt.

As a result, leaders may view this ever-changing environment as a risk and a threat to the way they operate and cannot afford to massively invest every time a new factor comes into the picture. The good old days where investments were safe in the long term has passed; today, companies must evolve to thrive or risk getting stuck with unwieldy solutions like Sisyphus and his rock.

Instead of playing catch up with every new change to extend the lifecycle of an existing ERP solution, the Kinetic Enterprise concept allows organizations to “build to evolve”.

WHICH DIGITAL TRANSFORMATION PATH SHOULD FINANCE LEADERS FOLLOW?

Many finance leaders are grappling with how they should adapt their ERP system architecture before it becomes obsolete—and, in the current pandemic, how they can reset their objectives to embrace the digital transformation journey.

The Kinetic Enterprise is a new concept that applies and supports a digital core ERP solution that is tailored to an organization’s requirements. It is based on four pillars:

  • Clean: foster fast evolution by lowering technical debt—either by removing the complexity of bespoke customization or by leveraging the use of industry-leading practices for core processes.
  • Intelligent: harness the latest technologies such as robotic process automation (RPA), machine learning, SAP® BO Data Services (BODS) and artificial intelligence (AI) by leveraging assets that are already available.
  • Responsive: adjust quickly to changes, including the ability to scale the solution at any time according to current needs.
  • Inclusive: a design that interacts seamlessly with an ecosystem of applications or services to provide the best end-to-end solution.

As there is no one path in this digital journey, becoming kinetic requires a willingness to adopt a tailored model that can evolve. With this in mind, let us take a look at some scenarios of how the Kinetic Enterprise concept can be applied to different organizations, depending on their requirements.

SAP® S/4HANA CENTRAL FINANCE EXAMPLE

One option to allow finance leaders to embrace this digital journey is through SAP Central Finance, as this solution already incorporates the “built to evolve” concept. This scenario is useful for large companies to harmonize their financial transactions across multiple applications (whether SAP or non-SAP) into one single place, allowing them to quickly respond to changes in their business landscape. For example, if an organization acquires another company, this setup will not require a resource-heavy project to incorporate the new entity’s financial figures into the acquiring company’s existing reports or even implement the group ERP into the new entity.

As SAP Central Finance harmonizes finance data at the group level, organizations can also use this platform to centrally execute financial processes like payments. This centralized platform makes it easier to leverage the “Intelligent” pillar of the Kinetic Enterprise. Instead of deploying intelligent apps in the source ERP, finance can implement them directly on the SAP Central Finance platform. These intelligent apps do not need to be developed from scratch; instead, organizations can select ones in an existing catalog and thus follow the kinetic philosophy.

The “Intelligent” principle is not just applied at the journey’s end; it can also be activated during the implementation. Deloitte’s Kinetic Finance Startup solution can accelerate an SAP Central Finance implementation by leveraging cloud machine learning and RPA functionalities enabled by Amazon Web Services (AWS), BODS and AI.

This solution analyzes the data used across various source systems and then proposes new target structures (e.g., chart of accounts, profit center, etc.). This allows organizations’ workforces to spend less time on value-poor activities and focus on the end goal instead.

CLOUD ERP INDUSTRY-SPECIFIC SOLUTIONS

Another cutting-edge way to adopt a Kinetic Enterprise model is to implement a Cloud ERP solution like SAP® S/4HANA Cloud Essentials, which provides organizations with a clean ERP core that is constantly upgraded. For example, SAP Essentials offers a release version that delivers a batch of new functionalities four times a year. These can include operational functionalities or reporting functionalities, such as the ability to view your accounting with T-accounts. Developing these extra functionalities internally would normally take many man-days of development, testing, bug-fixing, etc.

The decision to adopt a Cloud ERP solution may seem bold; however, some companies are already adopting these solutions and reaping the benefits.

For example, Deloitte recently finalized a design to implement an SAP Essential solution for Professional Services at a financial services company. Even though this company operates globally in highly dynamic and complex environments, Deloitte was able to adopt a standard solution to their core processes to tackle their specific challenges, such as intercompany management of employees and expenses, revenue recognition that fulfilled the latest IFRS requirements, etc.

Regarding strategic processes that allow companies to differentiate and thrive in highly competitive environments, cloud extensions can be used to fully support business operations.

The “Inclusive” pillar of the Kinetic Enterprise is also a key part of the SAP™ Essentials solution. Instead of trying to extend the digital core, organizations can use best-of-breed solutions that are already part of the design, such as SAP™ Analysis Cloud, SAP™ Planning and Forecasting, SAP™ Concur, SAP™ Successfactors, the SAP™ Cloud Platform SAP™ Ariba, SAP™ Intelligent Spend Management and even an SAP™ Cloud Data Warehouse.

Conclusion

The COVID-19 pandemic is forcing us to address challenges that we never imagined we would ever have to consider. The Kinetic Enterprise™ can support your organization to embrace the global challenges of today and tomorrow. And, as preparing your enterprise’s core finance function for this digital transformation is key, SAP solutions offer a new era of intelligent enterprise and digital core to ready organizations for the future way of working.

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