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Importance of Digital Transformation For Agriculture Enterprises

Introduction: Aiming For Digital Agriculture

Until mid-century, the world’s population will be expected to rise to 10 billion people. That’s why food production needs to double. Annual meat production will also need to increase by over 200 million tons to reach 470 million tons by 2050.

By 2030, global water demand will increase by more than 50%, whereas the amount of arable land to feed the world’s population is shrinking. In 2005, 2,300 square metres of farmland were available per person, but by 2030, there will only be 1,800 square metres.

These issues, combined with environmental and regulatory problems, shall present a bigger challenge for the agriculture sector. That’s why we need to find a better way to feed the world for decades.

The potential of agriculture enterprises armed with newfound digital transformation will be vital in managing these challenges. Digital agriculture is the answer.

Digital agriculture uses new and advanced technologies integrated into one system, enabling farmers and other stakeholders within the agriculture value chain to improve food production.

Traditionally, farmers make decisions based on rough measurements, experience, and recommendations. In digital agriculture, data is used as one source of absolute truth, which shall help with assisted decision-making. Any information is taken into account, such as weather information, soil condition, etc. In turn, farmers can get real-time feedback on the impact of their actions.

This drastic movement will also need the right tools and platforms to make it happen. We believe a robust cloud solution like SAP HANA with S/4HANA as its digital core shall serve its purpose in leading agriculture enterprises towards a successful digital transformation and acquiring better ways to feed the world.

 

Challenges and Barriers To Digital Transformation in Agriculture

Before diving further into the solution framework, we must address the challenges and barriers in the preexisting agriculture atmosphere. Overcoming these challenges will be critical, especially in implementing solutions which minimise the negative impact on the farmers, consumers, and other stakeholders.

A. Employment Impacts

If you haven’t already known, agriculture has remained one of the world’s largest sources of employment. Improvement in digital technologies can reduce labour intensity and generate labour savings on farms. However, it can also cause economic disruption to many workers who rely on the industry.

B. Development Costs

Even though the initial outlay costs for digital transformation technology kept getting more affordable, the development and adoption of large digital agricultural settings might be prohibitively high. This area is not yet widely understood or proven. Thus, this could lead to the discouragement of usage and innovation.

C. Data and Intellectual Property

Data sharing and collaborative movements between farmers and other stakeholders are a few vital factors in making digital agriculture a success. However, there aren’t any clear solutions yet on how to protect data or IP rights. Moreover, fewer incentives exist for those already successful parties that might help their competitors.

These access to data might evolve to reinforce inequalities rather than drive collaboration. Stakeholders’ challenge will be to ensure that the information being shared is used positively and appropriately.

D. Security

Security challenges are becoming increasingly vital, especially with the plan for data sharing. If, in the end, agricultural systems rely on minimally secure technology, an opportunity for agricultural cyber warfare could arise. For example, they are hacking control systems to damage crop growth, concealing or manipulating data, etc. This could damage yields and threaten the ability of people to feed themselves.

E. Case for Change

Digital approaches to crop workflow are still uncommon—even though they have an immense potential for long-term benefits. This makes it harder to encourage farmers to embrace the new technology since it cannot show constant benefits from the initial outlay.

In the short term, farmers’ willingness to deploy technologies might be inhibited, and the ability of individuals to secure investment might be restricted.

 

The Need For Transformation For Agriculture Enterprises

The world’s population and food demand rise is not the only driver pushing agriculture’s digital transformation. Digitisation itself has become the drive itself, where agribusiness is transforming rapidly. The need for transformation is as follows:

  • Increase farming efficiency to produce more high-quality food while consumers’ demand is growing coupled with the scarcity of resources. This includes efforts such as autonomous vehicles and AI, IoT in irrigation and livestock management, and leveraging drones for field monitoring.
  • Create transparent and sustainable food supply chains in response to consumers’ growing interest. This requires the ability to track and trace ingredients and processes. The endgame is to create the need for a connected, efficient supply chain that helps reduce food waste.
  • Manage supply and price volatility so that companies can react immediately to real-time supply and demand shortages and market price changes.

Complexity in Agribusiness and Its Solution

Agribusiness is getting more and more complex. Customers are more eager to pressure food companies to track, trace, and label their products. Regulations from governments require endless efforts to achieve compliance. Agribusiness players are dealing with a diverse group of suppliers and customers

The question is, how do agriculture enterprises pull themselves out of this complexity? Well, to get the most out of this new digital world is to drive business innovation. Business model reimaginations need to run based on insights, not trends. Technology needs to work for us, not the other way around.

Part of the digital agriculture transformation is to reimagine new business models and processes that shall take place onward. The reimagining processes’ main idea in the agriculture business is about connecting digital farmers and digital consumers.

These digital farmers must act as farming entrepreneurs who run a profitable business in a volatile natural market environment. At the same time, digital consumers are people who need healthy, tasty, fair, and affordable food.

The simplest solution is SAP HANA, which is a basis of digital business, offering a flexible, secure, and real-time innovation platform. SAP HANA is the foundation for the digitised agricultural reality where business networks are forming and connecting, and all ecosystem members collaborate closely.

SAP HANA enables simplification with a unified platform, bringing together transactions and analytics for a variety of data sources and integrating all types of data:

  • Geospatial data
  • IoT, machine, and sensor data
  • Weather data
  • Aerial imagery
  • Real-time data streams (market data)
  • Unstructured text (processing of rules and regulations)
  • Genomics data (for R&D applications)
  • Social media data (for sentiment analysis)
  • Third-party data sources and databases

However, data would be meaningless without the structured framework to build strategy upon it. And that’s why we need to have a digital business framework for digital agriculture transformation.

 

Five Key Pillars of Agriculture Enterprises’ Digital Transformation

Now let’s talk about the digital business framework, which comprises five key pillars. With this framework, the entire agriculture value chain will be digitised, including the core, which serves as the platform for innovation and business process optimisation.

1. Customer Experience

An optimised customer experience is vital to market products and services in the different stages of the agricultural supply chain. 86% of customers are willing to pay more for a better customer experience.

SAP helps to digitise your end-to-end customer experience. This single platform combines marketing, sales, services, and commerce to ensure seamless digitisation of the entire customer experience.

2. Workforce Engagement

A more intelligent and engaged workforce across all employees and contractors will help bring more innovation and optimisation toward digital agriculture.

You can digitise your workforce with the help of SAP S/4HANA, SAP SuccessFactors solutions, and SAP Fiori. These tools provide total workforce engagement and advanced analytics, mainly focusing on three key points:

  1. Attracting the best workforce
  2. Managing the entire workforce lifecycle
  3. Using more intelligent apps with greater user experience

3. Business Networks and Supplier Collaboration

The agricultural industry needs a solution to simplify its networked business. Collaborating across entire vertical markets is key to value creation, from sharing data securely and in real time, to providing personalised and contextual insights, to changing how companies exchange and offer products and services.

4. Assets and The Internet of Things (IoT)

Stakeholders must harness assets and the IoT to drive real-time insights and new business models. Agribusiness companies must also understand the full potential of the interconnection between physical and digital assets and the IoT, such as:

  • Digital sensors and IoT
  • Big Data and cloud platform
  • Mobile technology
  • Intelligent machinery, robots, and drones
  • Machinery assets

With the SAP HANA IoT edition, agriculture enterprises can now take embedded device data and analyse it into information in real-time.

5. Digital Core

SAP S/4HANA serves as the digital core to re-platform core business processes and combine transactions and analytics in real-time to be smarter, faster, and more straightforward. This digital core equips farmers and other stakeholders with advanced in-memory computing where they can run and unleash the full power of the digital business.

Moreover, based on contracts, food companies and agricultural traders or originators can procure agricultural products from cooperatives and farmers.

SAP S4/HANA is the only end-to-end solution that covers all business processes in the agriculture business and runs in memory.

How To Start Your Agriculture Digital Journey Right Away

Now you know how significant digital transformation is for the agricultural sector. To say that the fate of humanity lies in this sector is not an understatement.

But the question remains: how do you start transforming?

Well, there are many ways to go about it. Some would say that bringing in an expert or a consultant to guide you through the frameworks would be effective and efficient. You can also opt to migrate through a third-party software provider.

Both of these options are made available by cbs Consulting. cbs Consulting has presented the software-based Selective Data Transition (SDT) approach as the global standard for S/4HANA migration. This approach is a part of the S/4 Move program.

SDT approach enables the customised migration of business processes and data, which comes as a new fresh alternative.

Hopefully, with these new tools and technologies, the agriculture industry will strive and overcome many challenges in the years to come.

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