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By Umar Khan, Regional Head of Grow with SAP  – North EMEA Region, SAP

 

The lifecycle of a high-growth company (or scaleup) is full of extreme highs and lows and everything in between – leaving absolutely zero time for outdated data, uninformed decisions, unproductive innovations, surprising risks, and missed opportunities.

Scaleups that do not take this warning seriously will be left in limbo as venture capital dealmaking moves slowly and becomes more competitive. The good old days of abundant, fast-growing unicorns are quickly being replaced by technology companies cutting costs and regulatory antitrust crackdowns. More importantly, merger and acquisition (M&A) opportunities are becoming rare – blocking off a critical exit ramp for many scaleups.

So when will scaleups fly high in hypergrowth again? Only time will tell. Until then, entrepreneurs, founders, and even venture capitalists need to take a more deliberate look at their technology purchases to find providers that will become their partners for the long run – from early and later stages to the initial public offering phase and ahead.

 

The risk of a narrow adoption of technology

When entering Series A or Series B early-stage growth, scaleup decision-makers begin to invest beyond their top-line growth. They also want to attract and retain the best talent and build a strong and reliable supplier network, demonstrating to investors their ability to expand massively and bring in new customers.

Yet, there’s one area that scaleups don’t necessarily have the time and resources to fine-tune and optimize effectively: back-office processes including finance, HR, supply chain, and compliance management.

Most improvements in back-office functions are not addressed through a lens of scale over a three- or five-year horizon. Instead, unintegrated technologies, narrow workflows, and niche processes are often chosen to fulfill the need of the moment – without any consideration for the investment’s ability to grow with the business and meet future requirements.

This behavior may be a question of choosing simplicity over complexity. But ultimately, such decision-making can catch scaleups off guard when preparing for an exit by M&A or initial public offering (IPO) because they lack operational rigor and financial compliance.

 

A relationship of trust and high-growth outcomes

Throughout the life of a scaleup, nothing can go to waste – time, money, talent, and data. And the same can be said for technology.

Every dollar spent today should be an investment in the future – and that’s certainly the case for technology. This bit of wisdom is particularly important as scaleups face mounting pressure from high inflation, rising costs, talent shortages, supply shortfalls, and a dwindling pool of investor funding.

This perspective inspired a new offering at SAP two years ago – the GROW with SAP for scaleups program. Focused on providing growth opportunities to achieve maximum growth potential, the program delivers cloud-native solutions, including enterprise resource planning, for up to six months free. Scaleups can also access adoption and acceleration services, community engagement, and tailored learning – as well as partnership perks.

Rather than adopting technology that works for now or feels too big and overly complex, scaleups can test-drive and adopt applications that scale to their current needs and evolve with them as their priorities change.

With SAP as a partner committed to every step of their lifecycle from early stage to exit and beyond, scaleups can start forming a relationship of trust and high-growth outcomes. This includes collaborating and co-innovating with a software provider with a proven track record of maximizing growth sustainably and flexibly with intelligent analytics, process automation, operational efficiency, and business agility.

More important, GROW with SAP kick-starts a path toward a strong digital foundation for sustainable growth with lessons learned from more than 400,000 organizations from rising scaleups, growth-focused midsize companies, and leading enterprises. As a result, scaleups have achieved lower financial and logistics costs, fewer days in inventory, improvement in days payable outstanding, and savings in their direct and indirect spend.1

Moreover, scaleups benefit from billions spent annually on the innovation of cloud solutions. This added benefit not only drives higher operational efficiency and business valuations, but also builds shareholder value and accelerates return on invested capital. In fact, scaleups that are SAP customers have realized, on average, 12% more annual revenue growth, 13% added market valuation, and 30% employee growth within the first year.2 Other benefits include 30% boost in manufacturing effectiveness, 15% more finance efficiency, 24% greater productivity, and 12% margin improvement.3

 

Continuous growth with a buildable foundation

Any failure to quickly modernize an outdated business model, capture emerging opportunities, mitigate risk early, comply with new regulations, or scale to meet demand indicates mismanagement of talent, organizational culture, or the operating model. And for new investors, venture partners, and acquirers, that message can make them incredibly – and justifiably – uneasy.

Scaleups can avoid that threat altogether with the GROW program. By establishing a long-standing partnership with technology and business experts, they are well-positioned to achieve their hypergrowth ambitions on their terms.

Scaleups worldwide are establishing and nurturing trusted, scalable, and outcome-oriented partnership through the GROW with SAP for scaleups program. Explore our cloud-native cloud ERP, SAP S/4HANA Cloud, public edition, and how the GROW with SAP for scaleups program can help guide every step of your transformation journey.

 

 

Sources

1.,2. SAP Performance Benchmarking

  1. “Midmarket Private Equity and Venture-Backed Companies Realize Enhanced Growth, Profitability, and Cash Flow When Employing SAP Solutions,” IDC, sponsored by SAP, 2021.