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What Is the SAP Innovation and Optimization Pathfinder?

The SAP Innovation and Optimization Pathfinder report was first made available to SAP customers and partners in 2017 to identify relevant innovations, improve business processes, and highlight IT optimization potential.

 

In 2018, the report was expanded to include a line-of-business edition that added further process performance insights and optimization potential for specific business areas. While the report was initially only available to SAP ERP customers, it was also made available to SAP S/4HANA customers in 2019. With the introduction of SAP Innovation and Optimization Pathfinder 2.0 in 2023, SAP started to provide a unified report combining the previous versions and thus representing a holistic approach with concrete results for both business units and IT. The availability to generate new reports was sunset in February 2024 when SAP Signavio Process Insights, discovery edition became generally available.

 

This figure shows an overview page from SAP Innovation and Optimization Pathfinder.

 

SAP Innovation and Optimization Pathfinder (Source: SAP)

 

The following topics are highlighted.

  • Recommendations by line of business: Based on the usage of your ERP system, system-specific recommendations are shown, differentiated by six business units: finance, sourcing and procurement, sales, supply chain, manufacturing, and asset management.
  • End-to-end process improvement opportunities: Based on 83 PPIs and benchmarking data, industry-specific recommendations are compiled for process improvements in the following areas: record-to-report, procure-to-pay, order-to-cash, complaints and returns management, inventory management, plan-to-produce, and operate-to-maintain.
  • Optimize IT and accelerate innovations: This area highlights recommendations for automating and improving the IT landscape. These cover the areas of security, usability, change management, data management, system stability and performance, customer-specific developments, and preparation for digital transformation. 

Recommendations by Line of Business

Exemplary results for the financial area of a company from the consumer goods industry are shown in this figure.

 

Recommendations in the Area of Finance

 

In the section on innovations (Recommended Finance Innovations), a distinction is made between four areas:

  • Simplified user experience: The availability of SAP Fiori as a new user interface (UI) for business applications is the foundation of SAP S/4HANA. Now, there are some SAP Fiori apps that can already be enabled in SAP ERP at any time. Other SAP Fiori apps require an SAP HANA database as a minimum requirement. With SAP S/4HANA, SAP provides SAP Fiori apps in almost all areas, so working with the classic SAP GUI is no longer necessary. Based on various usage parameters in your ERP system, here is a reference to the SAP Fiori apps that could be relevant for you.
  • Functional enhancements: Also based on usage data from your ERP system, functional enhancements that could generate added value, as shown here. A concrete list of the identified transactions as well as an evaluation of how frequently the corresponding functionality is used in your industry can be found in the detailed view. Many of the suggested enhancements can usually already be implemented with existing software licensing. However, the installation of an enhancement package and/or the activation of a business function is then required here.
  • SAP S/4HANA enhancements: The Next-Generation Digital Business section provides an overview of relevant SAP S/4HANA innovations that may be relevant to you. Again, relevance is assessed based on usage parameters from your system as well as penetration in your chosen industry.
  • Enhancements through SAP cloud solutions: In addition to SAP Fiori apps, functional enhancements in the existing system, and SAP S/4HANA innovations, SAP Innovation and Optimization Pathfinder also highlights opportunities for process improvement through SAP cloud solutions. The report lists potentially interesting applications and refers to further online information. Note that recommendations are derived from actual ERP usage on one hand, but general best practice suggestions are also added on the other.

In addition to the section on innovations, the overview also includes a reference per business unit to indicate process improvement potential (shown above in the Improve Finance Processes section). This topic area is examined in more detail next.

 

End-to-End Process Improvement Opportunities

In this section of the report, selected KPIs are used to identify potential for improvement regarding the following categories (see next figure):

  • Reduction of lead times
  • Improvement of automation rates
  • Error reduction
  • Minimization of backlogs

The report identifies specific metrics, compares how you stand relative to other companies in your industry, describes possible reasons for poor process performance, and identifies potential impacts on business operations. The values identified are averages measured in the system. Some metrics are broken down by the five largest company codes, the five largest plants, or the age distribution of documents. Each of the key figures is highlighted in color. A red highlight indicates that the result is in the worst 25% compared to other customers in the selected industry. If the key figures are highlighted in green, the result is in the best 25%. All values in between are displayed in yellow.

 

Improving End-to-End Processes

 

It’s important to interpret the benchmarking results correctly. Even though the distinction between 29 different industries is already very granular, absolute figures aren’t normalized, resulting in the risk of misinterpreting the color coding. For example, a large company is expected to have higher document volumes compared to a smaller company. So, based on this fact alone, large companies are expected to have more red PPIs compared to small companies. The reverse is also true—smaller companies are more likely to have many green PPIs. However, as just mentioned, this only applies to absolute PPIs. For relative PPIs (e.g., percentage of degree of automation), the number of documents involved doesn’t play a role.

 

The PPIs typically provide initial indications regarding the underlying potential for process improvement in your system. However, individual filtering according to multiple criteria, drill down to the document level, or evaluation according to different criteria isn’t possible. For more in-depth analyses, an SAP Signavio Process Insights analysis is required.

 

Optimize IT and Accelerate Innovations

The last area in SAP Innovation and Optimization Pathfinder no longer focuses on process optimizations, but on technical IT optimization opportunities (see the last figure). With the implementation of the measures outlined, various added values can be leveraged:

  • Ensure business continuity and increase innovation agility
  • Reduce operational cost
  • Ensure compliance and security 

Technical Optimization Options

 

Editor’s note: This post has been adapted from a section of the book SAP Signavio: Business Process Transformation by Johannes Strasser, Michael Sokollek, Manuel Sänger, Maike Spierling, and Marvin Schönwälder.

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