Monday, April 5, 2010

Operational Goals, EDI and SAP Information Interchange

This economic recovery looks to be a slow grind that will test management's capacity to increase production without adding significantly to headcount.  This will force companies to seek greater efficiencies in order to increase production.  Reducing paper processing and administration costs is one way to reduce costs.   Expanding EDI and B2B data exchanges with trading partners is an effective way to reduce costs, but not if it requires an increased headcount of expensive EDI professionals and consultants or more software and hardware.

Management today is wary of adding FTEs when the economy is still relatively unstable.  It is difficult to predict the speed and size of the recovery.  As a result, many recent studies have shown that business process outsourcing and hiring temporary workers seems to be the preferred first steps to increasing production.  Today, expanding EDI and B2B data exchanges can also fit into this category.

The SAP Information Interchange (SII) is a managed EDI service for SAP customers.  It is an EDI service sold and supported by SAP.  If a company determines that expanding EDI and B2B data exchanges with trading partners will enable greater efficiencies and cost reductions, then subscribing to the SII service for EDI/B2B is a very low risk and cost effective step.

SII requires a simple one time set-up for each SAP business process and then a low monthly subscription fee.  There is no requirement for more EDI consultants, staff, software or hardware.  All integration, implementation, operation and support is provided in the SII service.

Forrester's recent report stated that 85% of all companies (that participated in the survey) already use some sort of managed EDI services.  I believe that the number of companies using managed EDI services will rapidly increase for the following reasons:

  • Companies must keep operational costs down but increase production now.
  • The strongest survivors are now looking to gain through acquisitions of the weakerwhich will require more system consolidations.
  • Companies are wary of hiring new FTEs (full time equivalents) until they are more comfortable with their sales forecasts and the state of the economy.
  • Companies are adjusting to new economic models and views that they must be more flexible and be prepared to respond more quickly to changes around them.
  • Companies must standardize more systems and processes to reduce complexity which causes higher TCO (total cost of ownership).
  • Companies must shed non-core operations to reduce costs and increase staffing flexibility.
  • Companies must focus their brightest minds on core value and competitive advantage processes and projects.  With fewer FTEs brain power must be focused on what will enable the company to survive and prosper, not on mundane and routine, non-core operational issues.
  • Companies must focus on improving cash management - reducing DSO, recognizing early payment discounts from suppliers, reducing inventory, reducing transportation costs through better management visibility, etc.
SAP sales teams can answer your specific questions on how SII works with your current environment.

Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.

No comments:

Post a Comment