In 2023, the aerospace and defense (A&D) industry saw an increase in demand that is expected to continue into 2024, according to Deloitte. To capitalize on the opportunity, many A&D manufacturers are redoubling their digital transformation efforts and modernizing their operations. In doing so, they stand to increase efficiency, accelerate production and delivery cycles, and better manage an unpredictable supply chain. We are seeing the downstream impacts of this manifest at Baer as substantial increases in demand for SAP S/4HANA expertise in highly specialized, manufacturing-focused roles.
The demand is greatest among a handful of A&D manufacturers that are already well down the transformation path. The competition for this narrow labor pool is significant in and of itself, but it’s likely to have long-ranging impacts on the broader A&D space, as well as other discrete manufacturing verticals that make use of these skills. The bigger picture is that all verticals experience similar innovation and investment cycles that drive competition for specific types of expertise and result in labor compression. In any S/4HANA or similar initiative, timely access to specialized expertise is critical, and the lack of it will negatively impact transformation cost, timelines, and outcomes.
The good news is that an enterprise performance partner that understands market dynamics and the technology at hand can help you navigate these headwinds.
The A&D industry’s previous SAP innovation cycle started roughly 20 years or more back. At the time, SAP’s discrete industry manufacturing process (DIMP) and A&D industry solutions (IS-A&D) functionality were leading edge in the industry. This time around, S/4HANA brings a host of net-new capabilities to help these enterprises tackle extremely complex engineering, supply chain, production, and delivery challenges.
For example, within the S/4HANA Cloud production planning and control solution, SAP offers new and expanded capabilities in critical areas including production engineering, production planning, and material requirements planning (MRP). These require a whole new set of skills, they’re in high demand, and the labor pool for them is small. While most adopters have already or are in the process of securing these critical resources, these innovation cycles are measured in years. That means these people will not be on the market again for some time.
Meanwhile, a broader set of A&D manufacturers are still in the exploratory or early stages of their S/4HANA initiatives. They’re already in a challenging position with the 2027 end of mainstream support for ECC fast approaching. If essential SAP manufacturing or other expertise isn’t available when they need it, and their initiative is delayed beyond that date, they may have to rethink the scope of their initial implementation to meet that timeline. Delayed innovation could put them behind the competition in any number of ways.
The impact doesn’t end there—this expertise already is or soon will be in demand across every vertical in the industrial manufacturing space that leverages this functionality. If the A&D industry moves first and secures the most qualified talent, other industries may be slower to innovate, and those impacts extend beyond the enterprise to consumers.
The lesson here is universal—every industry has innovation cycles, and what’s happening in your industry could affect the market for specialized S/4HANA expertise. And as we can see with the A&D industry’s impact on the broader manufacturing sector, it’s not enough to understand what’s happening in your own space. You need to be aware of labor market dynamics in adjacent industries, as well.
It's a lot to keep track of, but the good news is, you shouldn’t have to. That’s what an enterprise performance partner is for.
First, as an enterprise performance partner to both global enterprises and leading systems integrators, it’s our job here at Baer to stay on top of digital transformation trends. Better yet, we look down the innovation curve to see what’s coming next. When we see emerging trends in one industry, we understand the potential impact on adjacent industries that make use of similar technology architecture and anticipate that impact. Then, through our proprietary Opportunity EdgeTM network, we proactively identify and build relationships with proven talent so that we’re ready when you’re ready.
By partnering with Baer, you get a trusted, strategic partner that can deliver the right expertise, at the right time.
Recommended reading: The Public Sector Has an Emerging S/4HANA Expertise Capacity Challenge, and It’s Going to Impact the Commercial Market.
Unlike typical technology staffing companies, Baer is a true enterprise performance partner. We have a deep understanding of the scope of enterprise technology transformation initiatives and the highly specialized skillsets you will need at different stages of the process.
To learn more about how Baer can make a positive impact on your enterprise transformation, please reach out to btrout@baergroup.com, Executive Vice President, Sales, or John Wilson, Vice President of Strategic Accounts, at jwilson@baergroup.com.