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Yahoo
25-04-2025
- Business
- Yahoo
SAP banks on cloud's stability to navigate tariff turbulence
This story was originally published on CIO Dive. To receive daily news and insights, subscribe to our free daily CIO Dive newsletter. SAP is leaning on its hyperscaler partnerships to help keep customer costs down amid tariff-inflamed economic turbulence, company executives said Tuesday, during a Q1 2025 earnings call. 'We have four hyperscalers plus our own converged cloud,' CEO Christian Klein said, pointing to the cost stability of multiyear vendor contracts. 'We are not purchasing hardware directly — we are consuming it oftentimes via the hyperscalers where we have some kind of price security.' The company saw revenues on its cloud-based enterprise software portfolio jump 27% year over year to nearly 5 billion euros ($5.7 billion) with its cloud ERP suite accounting for 85% of the segment, CFO Dominik Asam said. Despite tariff-driven uncertainty, SAP remained steadfast in its commitment to wind down support for on-prem ERP systems over the next several years as it coaxes customers to invest in its cloud-based offerings. 'If you are sitting on an outdated ERP, the value of moving now is so big that the business case should really actually make sense even if the macro gets worse,' Klein said Tuesday. SAP kicked off a massive restructuring at the start of last year, spending more than $2 billion to expand its cloud business and accelerate ERP migrations. While the company showed some flexibility earlier this year, promising to extend business continuity services for some customers through 2033, the broader timeline remains unchanged: Mainstream maintenance support for legacy SAP ERP Central Component systems will end in 2027. The specter of supply chain disruptions, mounting inflation and a global trade war triggered by President Donald Trump's punitive tariffs has already taken a toll on IT budgets. Organizations looking at a costly ERP modernization may hit pause on their plans if uncertainty surrounding U.S. trade policy persists, analysts told CIO Dive shortly after the levies were announced earlier this month. This may be a difficult time for businesses to embark on multimillion-dollar modernization projects without seeing immediate value, Klein acknowledged. SAP is banking on real-time trade management, financial modeling and cross-functional budgeting capabilities built into the cloud-based ERP suite to overcome headwinds and deliver tangible short-term gains. The company has updated its RISE with SAP migration package, adding a business transformation management toolkit and making it easier for customers to move from private to public cloud within their existing contracts, Klein said. SAP rolled out an expanded S/4HANA private cloud bundle through the RISE program and added the SAP Build low-code developer toolkit to the private and public cloud suites Tuesday. 'We are updating our RISE offering with enhanced packages,' Klein said. 'We can't change external uncertainty, but we can help our customers … manage those challenges.' Sign in to access your portfolio
Forbes
08-04-2025
- Business
- Forbes
Learn How STIHL Unifies Sales And Production Planning Across Subsidiaries
With the introduction of new product lines with integrated batteries, STIHL found itself in a new business, selling to end customers. By Karin Fent, Senior Director of Global Customer Success, Digital Supply Chain, SAP Grown from a one-man business into a global leader, STIHL Group develops, manufactures, and distributes power tools for professional forestry and agriculture, garden and landscape maintenance, the construction sector, and private garden owners. The product range is complemented by digital solutions and services. Products are distributed through authorized dealers and STIHL's own online shops – which will be expanded internationally over the next few years – including 43 sales and marketing subsidiaries, about 120 importers, and more than 55,000 servicing dealers in over 160 countries. Founded in 1926 and with headquarters in southern Germany, STIHL has been the world's top-selling chain saw brand since 1971. With a workforce of almost 20,000 employees, the family-owned business generated 5.3 billion euros in revenue in 2023. In the past, STIHL's subsidiaries and production companies relied on their own SAP ERP Central Component (SAP ECC) systems, deployed on premise, with a heterogenous landscape for supply chain planning processes across 35 sales and eight production companies that were tailored to the needs of each subsidiary. 'We lacked an end-to-end, consolidated view and overall transparency to improve decision-making for the company as a whole and not only for one subsidiary,' said Lena Domhan, global process owner for Integrated Planning at STIHL. 'Previously, we spent a lot of time analyzing and verifying data and had no single source of truth. In addition, disconnected planning systems hindered collaboration and coordination between subsidiaries.' With the introduction of new product lines with integrated batteries, STIHL found itself in a new business, selling to end customers. 'This VUCA world required us to react even faster to volatility and changing demand,' explained Axel Erhard, senior vice president, global ONE STIHL program lead. 'To optimize planning, we needed a better overview of the different production and sales companies.' The company established the ONE STIHL program with the goal to consolidate all subsystems across all sales and production companies into one integrated SAP S/4HANA system. Moreover, STIHL aims to bring several solutions into one hybrid ecosystem, such as the SAP Integrated Business Planning for Supply Chain solution (SAP IBP) with the applications for sales and operations and response and supply, the SAP S/4HANA Manufacturing solution for planning and scheduling, and SAP Transportation Management. 'One goal of the ONE STIHL project is to reduce fixed capital and get more transparency on different management levels. SAP IBP with SAP S/4HANA Manufacturing for planning and scheduling play crucial roles in this process, serving as the starting point for planning,' Erhard said. 'We were one of the first customers to introduce SAP IBP in combination with SAP S/4HANA Manufacturing for planning and scheduling and SAP Transportation Management,' explained Fabio Fender, interim global process owner for Integrated Planning at STIHL. 'With real-time integration, our planners can quickly react. For example, when tackling issues on the planning or production side, they immediately see the impact on the distribution side and vice versa. That provides confidence and trust.' Georg Fuchs, director of Integrated Planning and global solution architect, ONE STIHL project, added: 'Order-based planning and real-time integration are the heartbeat of our production. For instance, in Austria, finished goods are produced and then shipped to distribution centers in Germany or the Czech Republic. The order-based planning process in SAP IBP is used to allocate, prioritize, and schedule the delivery of these goods. We are decoupling this from our production plan in SAP S/4HANA Manufacturing for planning and scheduling.' With this synchronized planning approach, STIHL consolidates supply planning, distribution planning, and production planning into one seamless process, enabling a holistic workspace for planners. Detailed scheduling results from SAP S/4HANA Manufacturing for planning and scheduling are visible in SAP IBP in real time, helping to ensure maximum transparency. In addition, the integration of SAP Transportation Management allows for the creation of freight orders to ship STIHL's finished products. 'STIHL's vertically integrated supply chain gives us the potential for end-to-end control,' Erhard said. SAP IBP is live at two production sites in Austria and Switzerland and is used by several planners and others utilizing its reporting capabilities. 'The integration with SAP S/4HANA Manufacturing for planning and scheduling and SAP Transportation Management was the most effective solution to meet our business needs,' Fuchs said. STIHL already recognizes and anticipates a range of immediate and long-term benefits, including: 'We have four to five rollouts ahead of us on our journey. Over the next few years, we will integrate about 43 global subsidiaries into one network planning solution,' Domhan said. In relation to the utilization of artificial intelligence (AI), Erhard said, 'STIHL will invest in AI in the future. That is a clear focus of our owners.' 'We are starting to explore potential opportunities to determine what would benefit us. However, regarding SAP IBP, we are already fit for the future,' Fender concluded. SAP Integrated Business Planning for Supply Chain is the cornerstone of a risk-resilient supply chain. Get a product tour HERE.
