Last month, ASUG published the first part of our conversation with Alex Pierroutsakos, Chemicals and Process Industries Executive Advisor at SAP. In this second part of that conversation, Alex touches on the importance of data and analytics dashboards in this industry, as well as what the next few years will hold for chemicals organizations.
This is an edited version of our conversation.
Q: In recent ASUG research focused on the chemicals industry, we found that data and analytics were significant requirements for SAP customers. How is SAP working to meet this demand from your customers?
A: I’m speaking broadly here, but a lot of chemical companies have done a lot of acquisitions. Even though they may have bought these other organizations, they haven’t integrated them onto one platform. When chemical companies are looking at how to manage and drive improvements in their business, they’re getting a lot of this information from several different environments and systems, which do not allow them to see the full picture. What a lot of chemical companies are now doing is implementing central finance and group reporting. These solutions allow them to see their enterprise all in one shot as they begin making the transition onto a single instance of SAP S/4HANA, where they’re now able to standardize processes and drive consistency. At the end of the day, the value of SAP S/4HANA comes down to how to leverage standardized processes to get as much as you can to be automated. This enables employees to spend more time focused on doing high-value tasks, such as looking at information and being able to assess what the problem is.
Another demand is getting access to information quickly and getting insights so you can make real-time decisions. At the end of the day, this is why you have an ERP: to collect and look at data in real time. The problem with chemical companies is that they’re spending so much time trying to get their data homogenized and their processes connected; by the time they get access to what’s going on, the problem has changed.
The chemicals sector is the oldest SAP industry. So much of what these customers did was bleeding edge 30 to 40 years ago. A lot of it is also customized. Now, as they make these changes, like living in a house for 50 years, they need to do a lot of cleanup to ensure they are ready to move to a new home. Some of these companies have a lot of baggage they need to sort through. That’s where SAP can provide solutions. SAP is another big piece of the chemical boardroom. A lot of those technologies are helping customers gain access to those insights. Nonetheless, we all have to understand that the data must be clean and must be there. We know that that takes time.
Q: Are you seeing any interesting or creative ways that chemicals customers are leveraging data right now?
A: One of the cool things that a few of our customers are doing is leveraging data to drive track and trace—especially regarding raw material tracing and sustainability. They are using this data to drive toward a very tight long-term sustainability road map and sustainability goals.
Q: What do you think the next three to five years will hold for the chemicals industry?
A: What you’re going to have in the next three to five years is a gradual shift, with more and more companies getting onto SAP S/4HANA. All of them will have their own uniqueness and speeds. I see a very consistent and steady implementation of such moves. Quite frankly, a lot of our big companies still need to move onto SAP S/4HANA. And when I say SAP S/4HANA, it’s SAP S/4HANA and everything that comes with it, such as the open architecture and the SAP Business Technology Platform.
What I think is often missed and forgotten is understanding that with the implementation of SAP S/4HANA, you’ll be able to have the seamless ability to use our sustainability solutions. We often forget our partner applications, and we’re getting some cool partner applications on rail-car pricing strategy solutions that are now integrating with SAP Signavio. I think there will continue to be an acceleration of people moving onto that platform.
I do want to make one small point. I want to discuss what chemicals companies as a whole have realized after the COVID-19 outbreak. It’s all about operational efficiency and excellence. When you think about how decisions are made, think about how all changes need to be made along with a quick way to respond to the market. Before COVID-19, things were very slow and siloed. Customers know they have to be faster with their R&D and in meeting deliveries and supply chain expectations. Basically, the cycle of response has to be so much faster than before.
In my mind, that is a macro-level understanding of chemical companies having realized that they can’t be left behind. Think of it like a machine that has cogs. They need to work harder to make things faster and more responsive. We are in the disruption phase now. It’s more than just volatility and imbalance. We are no longer four or five supply chain cycles ahead of disruption. Things are moving so much faster than they did 30 years ago. With that comes the ability for the traditional siloed parts of B2B industries to be buffered. While we may no longer be buffered like we were before, we must be just as responsive as consumer industries, such as the automotive industry.