Diverse Tech Ecosystems Deliver Higher Revenue and Margin Growth

The Data

1. 1

   SAP S/4HANA, an enterprise resource planning (ERP) software, is one of the most common solutions for supply chain orgs, used by nearly two-thirds of the companies in our data set.

2. 2

   Zero100 data and analysis reveal that companies using SAP in combination with other tech solutions see higher revenue growth, higher margin growth, and more accurate EPS estimates as compared to those who use SAP end-to-end.

3. 3

   The apparel and footwear, specialty retail, and food and drug retail industries have the greatest mix of ERP technology solutions.

One Size Doesn’t Fit All   

With AI augmenting or replacing processes across end-to-end supply chains, CSCOs evaluating their tech ecosystem have increasingly complex decisions to make. Many of the largest providers of traditional supply chain solutions, like SAP, Oracle, and Coupa, have integrated AI within their software. And so, companies are deciding whether to buy or build the solutions they need and, if buying, whether one comprehensive system is better than piecing together an ecosystem.   

Our research found that SAP S/4HANA is the most common ERP solution, used by 65% of the companies in our data set.  

We delved into how different tech solutions for ERP and procurement impact key performance metrics. Our data and analysis revealed that companies using SAP as a backbone ERP in combination with different sourcing execution solutions – the most common being Coupa (outside of SAP Ariba) – see higher revenue growth and margin growth as well as lower EPS deviation.   

Different Industries, Different Needs 

Our research and data reveal that B2B companies are more likely to rely on SAP for both ERP and sourcing, specifically companies in the energy, healthcare, and chemical industries. At the other end of the spectrum, we found that apparel and footwear (interestingly, also the industry leading the way on hiring more technical proficiency into supply chain), specialty retail, and food and drug retail have the greatest mix of ERP tech solutions.   

Though our data points to a correlation between greater tech diversity and business wins, other factors can impact this. For example, similarities across different functions within a business or the fact that SAP may be more well-suited to specific industries mean that, ultimately, a business’ uniqueness determines how much vendor diversification is required.  

The Takeaway  

Ultimately, the question is whether your current tech stack is delivering the best value. As different organizations and functions have varying priorities and needs, point solutions can offer a more tailored approach that can manifest in the form of tangible business wins. But the right solutions need to be paired with the right gaps – a scattergun approach for the sake of diversifying can do more harm than good.  

We recommend starting by evaluating your tech needs and gaps. Understanding your current state, which might involve learning more about other tech vendors and solutions, is key. Consider the options in the context of your priorities (for example, integration capabilities or scalability) and seek out use cases – our AI Hub could come in handy here. And in this digital era, where tech vendors and startups are many, the rise of smaller AI-enabled solutions could be helpful in solving specific or more niche problems.   

To see a different data cut or to dig deeper into this topic, reach out to our Head of Research Analytics, Cody Stack, at Cody.Stack@zero100.com. 

Methodology 

Zero100’s proprietary data and analytics are a combined effort between our data scientists and research analysts. We provide data-first insights matched with our own research-backed points of view and bring this analysis to life via real-world case examples being led by supply chain practitioners today.    

For this study, we used publicly available data sources to determine current vendor partnerships for 255 companies, including media mentions, analysis of ~100 vendor websites, and 1.4 million supply chain job posts. We combined vendor analysis with performance data from company financial documents.  

Further Reading  

• The Signal: How to Win the SAP Cloud Game  
• Research Report: Welcome to the Operations Metaverse 
• The Zero100 Podcast: New Tech Brings New Strategies: How Planning and Execution Are More Connected