When company managers make decisions, numbers are key. How are sales going for that new product? What does copper cost? The values of the dollar and ruble?
Highly paid employees labor for hours analyzing data so their management boards have the crucial information at hand. But how much of it is already outdated when the report appears on managers’ desks or smartphones? Often it takes days to collect and evaluate information from databanks.
The system makes finances comprehensible. matthias heiden, Chief Financial Officer, SAP Deutschland
German software company SAP wants to shorten this process ― and so revolutionize board meetings. On Tuesday, SAP presented a new system that the firm says will enable managers to evaluate data in real time, make forecasts and play if-then scenarios. It all takes place on large touch screens, without protracted research or calculation. The new product is named Boardroom Redefined.
For SAP, this is another way to present two of its most important products: the rapid databank HANA developed by co-founder Hasso Plattner, and the software package S4/HANA, which is considered the most important development in the firm's history. If things go well, it could have an immediate impact on management boards’ deliberations about budgets and other key issues.
At the company’s headquarters in Walldorf in southwest Germany, the product is on view. Three large screens with graphics and figures cover a wall behind the long boardroom table. The space looks like a combination of a power plant’s control room and the apparatus featured in the sci-fi film “Minority Report.”
Board members can summon up crucial stats such as sales, profit, number of employees and stock price. The managers can also use the system to make forecasts. What should be done, for example, when the marketing department is unable to visit all potential customers in a particular region? More employees mean more expenses, but also higher revenues. A prediction, based on numerical data that’s as current as possible, can help managers make the right decision.
“The system makes finances comprehensible,” said Matthias Heiden, chief financial officer at SAP Deutschland, which is testing the system as an internal client. He said he is convinced that “it will transform the dialogue on management boards.”
But the resplendent vision on the touch screen isn’t so easy to put into practice. Firms using the system need the most recent SAP technology, and the conversion costs time and money. The companies also have to revise their processes in order to make effective use of the data ― of the algorithms that enable predictions to be made and used at management board meetings.
“SAP has to show its customers what the advantage of S4/HANA is,” said Philip Carter, an analyst at market researcher firm IDC. He considers things such as the wall of monitors to be helpful. But that is not enough to sell the system: “The success of S4/HANA depends on companies' readiness to restructure their business models.”
SAP technology director Bernd Leukert said companies can develop new business ideas with the aid of digitization.
“For that purpose, there is the HANA cloud platform that all customers can use as an extension of S4. This allows them to extend their basic business quite easily with new business models and services, for example with apps,” he said.
Video: Changes at work through getting data faster.
Mr. Carter also feels the technology’s actual value only becomes apparent when dealing with large volumes of data.
The new software will simplify matters, Mr. Leukert said.
“We have removed complexity from the system. Up to now, we anticipated typical questions that a director of finances might have, for example, and always maintained the current data in readiness. We call that aggregates. With S4, it was possible to significantly reduce the number of aggregates, because with the database platform HANA, enormous amounts of information can be called up in real time without their having to be elaborately processed,” he said.
SAP is not the first company that wants to digitize the work of central committees such as management boards and supervisory councils. The German-American start-up Trufa has developed a tool that can simulate changes in a given parameter and the consequences for the balance sheet. The tool’s information ― on an iPad and with the aid of SAP database technology ― could also help at board meetings.
Trufa's idea got its start under the name Scoop at VMS AG in Heidelberg. That company's founder and director ― Ralph Treitz, a former SAP manager ― had specialized in evaluating the efficiency of SAP systems at particular firms. When he heard about HANA, he came up with the concept. Scoop allows a company's financial manager, for example, to simulate extremely quickly the various ways the company can reduce its operating capital.