The discontinuation of support for SAP APO (Advanced Planning and Optimization) is right around the corner. As we’ve discussed in previous blogs, thousands of companies are facing this looming decision. Stay with SAP and upgrade to SAP IBP, or look to a new generation of supply chain management platforms that provide a different user experience, granular insight of operational performance, and elevate competitive differentiation.
Old cell phone technology provides a framework for the future of supply chain planning
A good analogy is cell phones. In the ‘90s and early 2000’s, cell phones became mainstream and the technology at the time was state of the art. Customers purchased flip phones with no apps, low quality black and white screens, and text functionality that required strength training for your hands due to the number of keystrokes required to type a message. We’re looking at you Motorola StarTAC.
Today, cell phones can do myriad things with power, speed, connectivity and simplicity. They are voice-enabled to make things easier, they have apps that are constantly being rolled out that not only handle a specific task, but can integrate with other apps to provide deeper insights into a “bigger picture,” and not only run on the network, but also on the internet. In short, they are flexible, scalable, and more holistically connected.
Now think about what it would look like to migrate from that 1996 StarTac to an iPhone 13 today. This is where the IBP and the o9 Digital Brain story comes in.
Three Things to Keep In Mind
When evaluating solutions to replace the supply chain planning equivalent of the 1996 StarTac the big takeaway is don’t be lulled into a false sense of security thinking that this will be a fast, easy, seamless transition. IBP is not a simple one-to-one swap, even if it’s being marketed that way. The biggest issue to consider is that not all APO functionality is part of IBP, such as PP/DS (production planning/detailed scheduling). Decision makers should realize when evaluating options that SAP is forcing customers who have SAP APO PPDS to wait for an S/4 implementation to get that functionality back into their stack. Furthermore, as mentioned earlier, moving to S/4 to regain this functionality will be tricky, particularly if there is heavy customization of the legacy platform, and will require further consideration of the upgrade team. But at a fundamental level, there are three main reasons to understand why it’s more complicated than you may have been told.
As mentioned earlier, upgrading to SAP IBP is not a simple 1:1 swap from APO. IBP is a stand alone solution separate from SAP ERP S/4 HANA and requires integration to other SAP applications, as well as other best of breed applications. So even if you’ve been using APO for years, there are going to be growing pains and struggles to migrate onto IBP. For example, an IBP scenario doesn’t automatically feed into and update financial planning scenarios, creating an information divide between the two systems. This gap prevents efficient decision making because two plans are being created with two different sets of assumptions at varying planning levels. This will cost your organization time, money and accuracy throughout your supply chain planning efforts.
2.It’s not cloud native
We’d like to separate the hype of being cloud native from the reality of being cloud native. Ultimately, being cloud native means greater adaptability in your IT environment. That’s because the architecture is able to scale without restrictions, has greater cost benefits, and allows for easier ingestion of internal and external data sources. This ability to ingest external data is critical in demand planning, as these external data sets are often a better predictor of demand than historical data.
3.It’s not flexible
Like being cloud-native, flexibility is a buzz word that isn’t well defined yet, which has significant implications. Flexibility in a supply chain planning platform is referring to the ability of the solution to bend and mold to the workflows and existing process, as opposed to the workflows getting manhandled to fit software capabilities. Even though it is less rigid than APO, SAP IBP can’t be customized easily to fit customer needs, solve their problems, and grow with the organization. It can be customized with a great deal of cost and effort, which is a trade off. More importantly, the upgrade revolves around the data model that IBP uses as a jumping off point. The two most common states of which are that it’s either too detailed or not detailed enough, and you cannot change it for the main dimensions, and add external data, which holds a significant amount of market intelligence, into the original model. This prevents companies from unlocking insights that they aren’t aware of given the current limitations of IBP.
We all look back on the technology from yesteryear with rose-colored glasses. There is nostalgia for the earlier products, whether cell phones or supply chain planning software. When they first came out, they did the best job they could at the time, but our needs and businesses evolve and with that comes a need for new solutions. If your organization is ready for the next generation of supply chain planning that integrates well, is cloud-native and is designed with flexibility at its core, then download our latest white paper, Beyond APO Selecting a new planning platform.
About the author
o9 SolutionsThe Digital Brain Platform
o9 offers a leading AI-powered Planning, Analytics & Data platform called the Digital Brain that helps companies across industry verticals transform traditionally slow and siloed planning into smart, integrated and intelligent planning and decision making across the core supply chain, commercial and P&L functions. With o9’s Digital Brain platform, companies are able to achieve game-changing improvements in quality of data, ability to detect demand and supply risks and opportunities earlier, forecast demand more accurately, evaluate what-if scenarios in real time, match demand and supply intelligently and drive alignment and collaboration across customers, internal stakeholders and suppliers around the integrated supply chain and commercial plans and decisions. Supported by a global ecosystem of partners, o9’s innovative delivery methodology helps companies achieve quick impact in customer service, inventory levels, resource utilization, as well as ESG and financial KPIs—while enabling a long-term, sustainable transformation of their end-to-end planning and decision-making capabilities.