Analyzing the Benefits of Clean Core for IT

Now that we have explored the benefits of a clean core for the users of a company, we turn our attention to the IT department. As we did with users, we use the example of The Gritty Pixel to illustrate the significant advantages and improvements that a clean core with SAP S/4HANA Cloud can bring.

In most respects, the same challenges that existed for the users that we explored in the previous lesson apply equally to IT. The perspective changes, but the challenge does not. To recap, the challenges faced by the company were:

• Data silos and inefficient communication: Different departments within the company operated in silos, resulting in a lack of coordination and poor communication. This led to delays, errors, and duplicated efforts.
• Manual and time-consuming processes: The company relied heavily on manual processes, such as data entry, inventory management, and order fulfillment. These processes were prone to errors, consumed valuable time, and hindered scalability.
• Lack of real-time insights: Without a centralized system, decision-makers lacked access to real-time data and had to rely on outdated reports. This drawback hindered their ability to make informed, data-driven decisions promptly.

IT's responsibilities are far more expansive than the users. While the user's interaction with the system is about performing their daily tasks, IT is responsible for providing the technological capability to implement the company strategy. In practice, this implementation can be difficult to achieve. For The Gritty Pixel (as with many other organizations), the specific needs of the business needed large amounts of custom code. Moreover, data needed to be stored in disparate systems, which required IT to develop and maintain large numbers of interfaces. As we mentioned earlier, this leads to significant technical debt.

This situation is difficult enough in a world with slow change. In a world with constant changes in customer preferences, unpredictable disruptions in supply chains, and constant technological innovation, the IT department realized that a new approach was necessary.

Legacy complexity prevents organizations from fully realizing the benefits of transformation.

Watch the video to explore the challenges from IT perspective.

The catalyst for change happened ironically from some good news. The Gritty Pixel was profiled in a favorable news article and as a result sales growth increased. In response to this increased demand, management decided that in addition to the "Make To Order" model, which up to that point was the only model used, an additional model, "Make To Stock", would be used for the production line. In addition, a financing model would be used for orders to accommodate smaller companies that needed a more flexible payment model. They asked IT to implement the necessary changes in the IT infrastructure. Klaus then indicated to his superiors that there would be some challenges.

Due to the extensive (and uneven) documentation of modifications, the testing cycle for the new processes would take up to one year. Moreover, two of the systems (sales and production) are to be upgraded in the next year. The upgrade requires a separate workstream of testing on the current business process structure, not even considering the two new models being contemplated. Finally, Klaus was already dealing with a backlog based on numerous requests from department and division heads on user interface changes. These requests ranged from adding more fields on UIs to full blown mobile deployment scenarios.

Fortunately, management was receptive to implementing a solution. As mentioned in the previous lesson, they chose SAP S/4HANA Cloud along with SAP BTP as a comprehensive solution to the challenges that they were facing. A clean core was enabled immediately thanks to a greenfield implementation, and Klaus immediately started to reap the benefits. The first benefit was the elimination of all technical debt due to the retirement of all legacy systems.

SAP S/4HANA Cloud along with clean core make it possible to enable business value without contributing to technical debt.

For both SAP S/4HANA Cloud and SAP Business Technology Platform, Klaus no longer had to worry about the core software stack. It was always at the latest release and Klaus never needed to implement upgrades or maintenance packs himself. SAP S/4HANA Cloud as a cloud-based solution received updates automatically and Karl simply received a notification. Klaus also had a large variety of partner solutions that were clean core compliant. He could always consider these solutions and the option of building side-by-side extensions on SAP Business Technology Platform, if necessary.

All stakeholders, including management, agreed to use SAP Best Practices content with SAP S/4HANA Cloud. Therefore, The Gritty Pixel's sales, production, procurement, and inventory management processes were clean core compliant from the beginning. Meetings to revalidate business processes based on upgrades, which were required previously, were no longer necessary.

A few paragraphs ago we mentioned extensions. As with most organizations, The Gritty Pixel, while using SAP Best Practices nevertheless needed to extend the functionality of SAP applications from time to time. Klaus's experience with the legacy systems was uneven to say the least. However, this time Klaus was supported by an end-to-end cloud-native development model (ABAP Cloud Development Model) along with an end-to-end extensibility model (SAP S/4HANA Cloud Extensibility Model). This way Klaus could create extensions while simultaneously maintaining a clean core. Modifications were a thing of the past. The upgrades did not break the extensions, and the extensions did not break the upgrades.

By embracing clean core principles and implementing SAP S/4HANA, The Gritty Pixel witnessed a significant transformation within its IT department. The clean core ERP system streamlined processes, helped employees, and facilitated data-driven decision-making. The IT department increased efficiency, reduced costs, and "future proofed" its technology. The department fulfilled its core mission: to provide the infrastructure to enable The Gritty Pixel to fulfill their mission. Embracing clean core principles in ERP systems serves as a guiding light for organizations seeking sustainable growth and operational excellence.

A clean core improves IT strategy and execution now and sets the foundation for the future.