Which paths are Enterprises taking for Digital Transformation?
When it comes to Digital Transformation initiatives, there’s a lot of discussion right now in terms of strategy and execution. Developing the right approach and finding the right balance between strategy, execution and outcome is very essential. SAP has also geared its solution portfolio to prepare for an innovative and flexible business model. Here, we’ll discuss the two standard approaches for Digital Transformation- Core-to-Edge Digitization and Edge-to-Core Digitization.
When Kaar Tech started this journey a couple of years ago, there was a lot of discussion about digitizing the core first. Core includes the vital business processes such as Finance, Logistics, Human Capital Management etc. Traditionally, ERP systems form the Digital Core and are the backbone of any organization. SAP provides the Digital Core with its next-generation intelligent business suite, SAP S/4HANA. However, this methodology was quite effort intensive. People started realizing that core-to-edge was more difficult and smaller enterprises always have the option of going over to ERP’s on the cloud. But, that is really not an option for the larger enterprises.
But then, the concept of Edge-to-Core started evolving and it made rapid strides within the SAP ecosystem itself. In this method, the Edge started getting digitized first, that is, the processes such as Customer Relationship Management (CRM), Recruitment, Performance Management, Learning, Consolidation was digitized first, before touching the core. In addition, the effort required to digitize the edge first was lesser compared to the core-to-edge methodology. Connecting back to the core was a bit complicated in the beginning, but with several enhancement packages coming in, things became easier.
But still, we were far away from a digitized core and only a Digitized Core could provide the benefits of a micro-services architecture. It was not possible with an SAP ECC system. ECC still has a lot of limitations with respect to a micro-services architecture and only so much could be done when it came to connecting SAP SuccessFactors, for example, to ECC on-prem, or connecting a C4C system or any part of the SAP Hybris to an ECC system. There were several customers who were using Workday, the Cloud ERP for Finance and HR or Blackline, the Accounting and Finance platform and things were becoming increasingly difficult.
Hence, the point was that the Edge started getting digitized much faster and core started taking a backseat. But currently, that is where most of the enterprises are, in their respective Digital Transformation journeys. And that is also the path most of the enterprises are taking these days including the ones who are just embarking on their transformations. They are looking at the edge first, because they are much quicker areas to digitize.