Brexit: Business Impact and Why SAP is More Relevant than Ever

Transcription

1 SAP Point of View 2016 Brexit: Business Impact and Why SAP is More Relevant than Ever July 2016 Brexit: Business Impact and Why SAP is More Relevant than Ever 2016 SAP SE or an SAP affiliate company. All rights reserved. 1

2 Rob Enslin President Global Customer Operations and Executive Board Member SAP SE The UK GDP is $4 trillion 1 (~25% of the EU GDP) 50 60% of UK consumption is imported foreign banks are based in London 3 The pound sterling is at a 30 year low against the U.S. dollar FALLOUT FROM THE BREXIT: HOW WILL IT IMPACT YOU? The outcome of the Brexit referendum took the whole world by surprise. It was clear that the financial markets were not prepared. The global markets were pummeled, wiping out around US$4 trillion in two days. The bounce back was equally impressive, with more than 75% of the losses in the financial markets recovered within the next three days. One thing is clear: financial markets, political leaders, and CEOs are all uncertain as to what lies ahead as fallout from the Brexit. It is possible that it will take 2-5 years to renegotiate the trade and security agreements between the United Kingdom, the European Union, and other countries. There are various reasons for these lengthy negotiations, which will drive a prolonged phase of uncertainty: The United Kingdom, Germany, and France are the key economic pillars of the European Union economy. While the EU is the second-largest market in terms of gross domestic product (GDP), just behind the United States, a sudden withdrawal of the United Kingdom from the EU could have a devastating effect on the structural stability of the union. London is the financial hub of Europe, with an enviable level of global reach and influence. The United Kingdom, France, and Italy are the strongest military powers in the EU. The Brexit could have implications for the military balance in the region. Security threats faced across the EU require more collaboration among its members to protect against increasing levels of terrorism and cyber-crime. Pound sterling potential weakness could have a massive impact on every UK citizen. Already, some electronic manufacturers have increased their prices by 5 15%. A lot of research was published prior to and after the Brexit vote, but the truth is that no one knows the real implications of the Brexit. Best-case scenarios may be a reversal of the Brexit decision or very friendly separation terms, with possible worst-case scenarios of separation of Scotland and Northern Ireland from the United Kingdom and a shrinking of the European Union. It is clear that the next 2-5 years will be a period of great uncertainty, and companies need the agility to adapt to any potential scenario. In this short document we present SAP s point of view on the situation and what we believe companies should do to prepare for a digital economy where disruption is just part of the new landscape SAP SE or an SAP affiliate company. All rights reserved. 2

3 BUSINESS LEADERS ACROSS THE GLOBE HAVE SOME KEY QUESTIONS TO CONSIDER To help companies start to evaluate the potential implications of the changes ahead, we have compiled a short list of issues that need to be addressed to prepare for the Brexit transition. CEOs and Corporate Strategy Leaders In the digital economy, we are undergoing one of the biggest business transformations ever. Companies need to continue reimagining their business models and operational efficiencies. Is your business ready to address challenges and exploit opportunities resulting from the Brexit? If the United Kingdom continues to provide a corporate tax haven, how do you take advantage of it? Is your value chain resilient enough to cope up with large fluctuations in demand and supply? How do you recalibrate your level of investment in the UK (manufacturing, logistics, etc.)? How do you address EU citizens data privacy held in UK data centers? Chief Financial Officers It is almost certain that, with the Brexit, labor and tax laws will change, tariff agreements will be renegotiated, and corporate structures will be reassessed, driving significant, new complexity. How do you minimize the cost of the additional complexity? How do you optimize corporate taxes? How do you hedge against increased volatility in the currency market? Do you have agile business processes and technology to help you adapt fast and at low cost? Manufacturing and Supply Chain Executives This section is very relevant for companies with significant investments in manufacturing and logistics and a large customer base in the United Kingdom. Do you have the simulation tools to optimize your manufacturing and logistics blueprint? Can you optimize your manufacturing network to balance profitability and customer demand? How do you mitigate the increased risk level in your supplier network? How do you manage administrative complexity with minimum cost and customer service impact? How do you reduce cycle time between demand signals and delivery of products and services? Sales and Marketing Leaders No matter how the Brexit impacts your business, the one thing every company needs to keep in mind is its customer experience. How do you strengthen your go-to-market capability with new partnerships and innovative ways to access the entire European market? Can you minimize currency fluctuation impact through more dynamic pricing? Can you sense real-time changes in customer buying behavior or demand patterns? What changes do you need to make to your disruption channel to secure customers and prospects? What will be the impact of new tariffs and taxes on your sales and profitability? 2016 SAP SE or an SAP affiliate company. All rights reserved. 3

4 Human Resources Officers Labor law changes will definitely impact workforce planning, talent management, and organizational structures. Can you quickly align your HR planning to the new corporate strategy? Are you able to evaluate the impact of new immigration and labor laws on your workforce? What is the talent acquisition impact once the United Kingdom exits the EU? Can you quickly design and implement the right compensation and incentive programs that will neutralize the impact of external, non-controllable factors? Are you prepared to change the setup of your European social partner bodies after the Brexit? Do you have the right tools to test the robustness of your organizational model in the new EU setup? WHY SAP IS MORE RELEVANT THAN EVER Every company today needs to take advantage of digital technologies to adapt, thrive and manage uncertainty. SAP has diligently invested in the 21 st century digital business platform of choice through disruptive innovation (SAP HANA ) and strategic M&A investments. Here are ways SAP products and services can help customers turn uncertainty into opportunity: Corporate strategy SAP s strong analytics solutions across 25 industries help CEOs run the business with real-time insights and enable companies to take advantage of new market opportunities. Adapt to new business models and leverage best practices from other industries Gain real-time visibility into the business through the interactive SAP Digital Boardroom Accelerate the cycle time between decision-making and execution Finance SAP s next generation finance solution and our globalization services provide CFOs peace of mind that all new regulatory tax changes and reporting are delivered as part of the standard solution. Adjust business models on the fly (corporate setup, tax optimization, M&A integration) Support your business leaders with dynamic business simulation to optimize decision-making Manage treasury and cash flow better through real-time visibility and currency hedging Drive next-generation shared services through cloud solutions and learning machines to reduce cost Manage your risk and compliance with real-time visibility into business operations Leverage supply chain financing to strengthen your supplier base 1,000+ regulatory changes delivered globally in regulatory changes delivered in the UK alone in ,000+ total number of local partners globally 400+ total number of local partners in the UK 2016 SAP SE or an SAP affiliate company. All rights reserved. 4

5 Manufacturing and supply chain Reducing the cycle time between sensing and responding to market demand is becoming paramount to managing costs and delivering on the full customer experience. SAP s new real-time supply chain and cloud-based supplier networks improve companies ability to meet market demands. Optimize value chain through advanced cloud-based planning and supplier collaboration solutions Optimize manufacturing schedule with real-time demand signals Reduce inventory through live inventory data and accelerated material requirements planning Improve order fulfillment with advanced available-to-promise and back-order processing capability Optimize asset utilization through predictive and Internet-of-Things-driven capabilities Sales and marketing End-to-end customer experience is at the center of every digital business model innovation. This requires a unified buying experience across all channels. It also requires speed and agility to deal with pricing, trade, tariffs, and tax changes. Adapt marketing strategy to the segment of one, leveraging the power of analytics and learning machines to identify buying patterns (structured and unstructured data) Align sales and services to deliver on business outcome for customers Drive revenue growth through an omnichannel strategy with strong integration to operations Human resources Attracting, developing, and retaining talent will remain a key pillar for success. Technology can play a big role in optimizing the total workforce, regardless of regulatory and labor law changes. SAP s advanced cloud solutions are well-positioned meet today s and tomorrow s needs. Comply with any changes in labor laws and taxation in a timely fashion Accelerate the execution of organizational changes Align workforce planning to corporate strategy and evolving business needs Leverage advanced learning machine technology to optimize shared services and align talent to the business needs In a connected world, disruption in any market has global and immediate repercussions. Yesterday it was the European debt crisis, today it is the Brexit. One thing is for sure: consumers are increasingly digitally engaged, better informed, and their expectations are higher than ever. Companies that continue to focus on delivering the total experience and brand promise and leverage technology to manage the increased level of complexity driven by market instability will redefine their industries and markets. It is time for companies to truly simplify their business processes and IT landscape, thereby re-platforming their companies for the new digital economy. Sources: SAP SE or an SAP affiliate company. All rights reserved. 5

6 No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE s or its affiliated companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions SAP SE or an SAP affiliate company. All rights reserved. 6