By Jan Gilg, President SAP S/4HANA
The coronavirus pushed last year’s predictions way off track, becoming a critical driver behind unexpected IT trends in 2020. For 2021, COVID-19 continues to be a central story and a galvanizing force behind this year’s forecast.
Digital companies had clear advantages in 2020, and companies struggling with digitization were forced to push themselves to have a bigger online presence, share data and information, and automate process to speed responses. What felt like simple digital progress, like moving to online employee paycheck deposits, had the wonderful result of opening cultural and fiscal bottlenecks that had previously stalled digital, intelligent enterprises.
The exciting news is that the appetite for digitization is larger than ever before, and digital transformations are happening at rates faster than we have ever experienced. Watch for these changes within domestic and international organizations:
Supply chains stay local. Previously we’ve seen supply chains cross the globe in search of lower costs. As COVID-19 spread, these global supply chains were not resilient enough to reduced stock or workforce shortages. In 2021, supply chains will be more local with an increased emphasis on resilience and less focus on cost.
Cloud-based services overtake on-premise services. The cloud more than proved its value as businesses went virtual and employees began working at home. For the first time in history, cloud services will overtake on-premise services in 2021.
While increased cloud adoption has been happening for years, COVID-19 accelerated companies’ move to the cloud. Companies are looking to scale cost in line with their topline meaning up AND down – thus looking for commercial models like subscription and usage based services rather then upfront capital expenses for perpetual licenses.
From a technical perspective, improved accessibility of data is one of cloud data’s largest benefits, as it supports horizontally integrated solutions. Once in the cloud, organizations gain a simpler access route to content and information, a more consistent application with fewer operators, and greater transparency, improvements especially important in work-from-home environments. Some critical apps will demand edge services to maintain performance, but most will transition to cloud-based services to support virtual work, online commerce, and other pandemic-created facts of life.
Programs that show incremental value will receive the green light. Organizations will fast track short-term projects that show incremental value to the front of their roadmaps. The spotlight will be on data as more organizations begin treating it as an asset, exploiting it through analytics or ever maturing AI capabilities, and making it sharable across the enterprise.
2021 projects will start with a focus of bringing together internal data—but expanding to leverage external data by year close. As companies look at upcoming projects, they will focus on how to leverage their own data during the first six months of the year. These projects will be around process automation and customer insight enabled by AI. The end of 2021 will see companies tapping into the data shared by their network of partners, ecosystems, or supply chains. Decisions around privacy, consent, governance, and anonymity will have to be made before sharing their data, but the rewards will be well worth the work.
2021 is the year of the customer. If we thought customers were job 1 before the pandemic, we’ll see customers getting even more—and better—white glove treatments. Customer experience will drive all business decisions as companies push to make every portion of the customer journey seamless. The old distinction between front office and back office will go away. For the past decade, companies invested in the best possible e-commerce shopping experience. They focused on front-end, public-facing systems like eCommerce sites, customer relationship management, and customer support. Often, what happened in the backend, inventory management, logistics, and fulfillment, was ignored or left to chance. In 2021, companies will have to ensure a positive end-to-end experience from order to delivery.
Another customer-focused upgrade will be the addition of sentiment data based on social media. A big learning we’re all taking out of the pandemic is that when problems come up with customers, the first step is to acknowledge them. Taking the attitude of “We’re all in this together and we will try to make things right,” goes a long way. In 2021, companies that can tune in and respond to customer kudos and criticisms by integrating data from nontraditional sources into their business platforms will have major advantages. They are set up and ready for personal, positive engagements.
ERP systems will evolve to manage people, money, materials AND natural resources. Companies have viewed ERP as a path to cost containment. In 2021, modern, digital ERP platforms with built-in AI will be synonymous with growth. These systems will be less monolithic and more modular as companies pick the services they need for business.
A big difference in 2021 will be that more companies will rely on their ERP systems to help them make sustainable decisions. Sustainability will be critical for companies, and they will want better options for managing natural resources and understanding the environmental impact. Reducing CO2 emissions is a good example. Companies will choose partners and suppliers that align with their own sustainability values.
Every day will be a cash management day. As the COVID-19 cases surged and economic forecasts got more dire, cash management became a key priority for CFOs in 2020. Many organizations that thought they were headed for a downward spiral, found revenue arrive from unexpected places on the balance sheet. Considerable amounts of smaller single orders from consumers, for example, replaced purchases from major business partners. The public’s hunger for goods and services didn’t end, they created new buying patterns and alternate sources.
Consumers willingness to spend money is good news but CFOs won’t assume that economic tragedy isn’t on the horizon. Cash management will continue to take precedence as the vaccine rolls out to the public. With so many unknowns in our future, cash management will elbow out past priorities such as automation, optimization, and cost reduction. Those areas will remain critical but take a back seat to cash management, cash flow, and liquidity.
A Safe, Healthy 2021
This final prediction is the one I most fervently hope comes true: A return to safe, public activities by the end of 2021. This past year has been dreadfully difficult for everyone. In what feels like miraculously quick time, we have multiple vaccines available and ready for the public. We are all hoping that by the close of 2021 we can safely travel, dine, shop, visit friends and family, attend concerts, and all the wonderful activities that we’ve missed while COVID-19 has spread across the globe.
Our 2021 most definitely won’t be like our 2020. I’m hoping we can take the good that has come from the global pandemic and bring it with us into a more connected, more digital, more responsive, and customer-centric world.