Driving Growth in Space: How Cloud ERP Unlocks Resource

Every new business endeavor faces a conundrum; How can it gain the tools and expertise it needs to grow without unlimited resources?

The problem is nowhere more acute than in the space business where lengthy product-to-market timelines mix with engineering-to-manufacturing challenges and the need to maintain financial transparency while growing.

Managing these imperatives without diverting from a firm’s core mission is hard to do in the absence of a deep bench in-house. The space part simply can’t go forward without the business part.

But cloud enterprise resource planning (ERP) can help new and growing spacetech companies maintain their core focus while transitioning from R&D to product by unlocking access to broad, layered resources outside their own doors.

Demand for business management expertise and tools is at an all-time high within the space sector, making people and processes both hard to find and expensive. The pressure comes from the unprecedented growth of the global commercial space industry.

A report from the non-profit Space Foundation noted that the U.S. space workforce stood at 201,000 in 2022. It expanded by more than 21,000 in 2023. As 2024 opened, the space workforce totaled over 222,300. (https://www.spacefoundation.org/2024/04/09/the-space-report-2024-q1/)

In 2023, the United States saw a 33% increase in launch attempts over 2022 while global satellite deployment grew 23 percent year-over-year with more than 2,800 satellites deployed into orbit. In 2024, the global spacetech industry showed steady expansion with an annual trend growth rate of 0.44% despite an uptick in consolidation.

Space-focused enterprises, most small to midsize, stretch across approximately 20 business sectors from navigation and mapping to space medicine, on-orbit services and ground segments.

In each sector the need to manage contracting, price estimation, supply chains, employees, compliance and more, frequently overmatches the capabilities of both startups and established mid-size suppliers. As they look outward for help, cloud-based ERP offerings increasingly make economic and business sense.

Cloud ERP – Accessible & Scalable

SAP Cloud ERP, offered as a software-as-a-service (SaaS), is a product with built-in ready-to-run industry best practices, embedded collaboration features and AI capabilities.

“It’s really geared to standardizing a lot of the [business] processes across companies and industries,” SAP Aerospace and Defense Solution specialist, Eugene de Klerk, Ph.D. says.

ERP relieves users from the burden of designing their own business processes as they scale. Instead of plowing time and money into reinventing the wheel, firms can adopt standard practices across sectors like space, essentially taking a shortcut to effective management, administration, and operations, while their focus stays on their particular product or service.

SAP Cloud offerings can cover any size of business and easily scale as you grow; They don’t require dedicated on-premises servers and administrative infrastructure, routine system maintenance, security patches, energy supply and in-house staff. With Cloud ERP, a startup or an expanding firm simply requires a laptop with internet access.

“Once you move to a SaaS offering like Cloud ERP, it’s just an operational expenditure,” de Klerk observes. “We take care of all of the security pieces you’d have to administer yourself as well as most of the system administration.”

Many users within a company can simultaneously access Cloud ERP, managing the entire value chain from product design, planning, manufacturing, supply chain management, to sales and service as well as procurement, human resources, and financials. In fact, SAP’s Cloud ERP can accommodate even large-scale firms with 50,000 users or more, so it can easily grow with your business.   

The cost, time and mission-focus savings are considerable. So is the speed-to-adoption of innovations, new business processes, regulatory constructs and insights. With on-premise ERP, many firms are reluctant to integrate frequent updates for enterprise software they’ve painstakingly tailored to their needs, figuratively operating in a bubble de Klerk points out.

“As new functionalities and innovation become available for on-premise systems, companies are slow to roll them out. They basically have to do a whole system assessment and regression testing to ensure continuity when updates are made. With SaaS ERP, those innovations become available immediately.”   

SaaS ERP is regularly updated with new security, functionality and business process improvements automatically flowing into its core. The regular updates stretch to artificial intelligence capabilities. Indeed, a large part of SAP’s AI offering lives within its Cloud ERP.

“One of our approaches to AI is to embed it in the core of the product so that you get to use it and experience it without having to roll out your own models,” de Klerk stresses.   

Cloud ERP comes with an AI copilot called “Joule”. Joule has been trained on data and assessed business processes from thousands of companies. Users can readily consult with and query it, gaining insights based on these while segregating their firm’s own proprietary data.   

Users can also tailor SAP’s product to their needs via a menu of “bolt-on” applications that can be paired with the Cloud ERP core. Companies can enhance Cloud ERP with additional applications to differentiate key business processes. For example, supply chain, risk assessment and cost-estimation applications can be integrated to improve visibility and forecasts (demand/cost).

de Klerk points out that the space industry now favors fixed price contracts. Less complex than the cost-plus contracts that have traditionally been the preferred vehicles of the industry, they suit the more agile type of manufacturing models that firms that have emerged over the last decade employ. While fixed price contracts generally facilitate easier cost estimation, pricing is still a difficult task.

Firms can perform cost estimation using a large database of historical information, lending insight into how bidders have typically priced similar contracts. Such comparative costing capability is highly valuable to growing firms without the resources to retain seasoned managers steeped in contracting experience.

SAP Cloud ERP offers growing firms another advantage – business compatibility with traditional aerospace primes and more recently established players.

Startups and midsized firms in the space segment are often parts of a prime’s subsidiary network.

It makes sense for suppliers and subsidiaries to be on the same business process playing field as the primes, many of which use SAP’s ERP.

The commonality between SAP’s ERP offerings makes for more efficient, mutually addressable communication, particularly in matters of supply chain visibility.

“Using the same business objects as the prime allows you to share information in a format which is easy for the prime to assimilate,” de Klerk affirms.   

Effectively communicating up and down the network is more important than ever given the rising supply chain complexity and compliance requirements in the space industry in general.

“Resilience is a hot word but really it’s about managing supply chain complexity,” Eugene de Klerk says. “Small disturbances in the massive [chain] can cause unforeseen consequences. Visibility and information exchange are going to become more important to supply chain security as time goes on.”

A pair of additional concerns are driving manufacturing scale-ups to Cloud ERP de Klerk points out: One is the need to migrate R&D and design information to manufacturing; Another is the need to provide financial visibility to investors.

Success Story - Information Exchange & Financial Transparency

Cloud ERP can give firms a major leg-up in transitioning from base product development to manufacturing roll-out and delivery. The reason is that it can integrate effectively with Product Lifecycle Management (PLM) tools, facilitating data flows between systems. It’s one of the most valuable functionalities that comes with Cloud ERP, increasingly sought out by customers.

“One of the big problems for small companies is that their PLM systems are divorced from their manufacturing system because integrating them is extremely expensive,” de Klerk explains. “How do you get the data out of your PLM system and into your manufacturing system? We have pre-built interfaces that allow you to get CAD data into your manufacturing system.”   

The feature allows smaller firms to forgo the cost (and time) of doing CAD-manufacturing software integration in-house, or hiring a software engineering firm to make it happen. Cloud ERP allows such integration to be in-place immediately, feeding the iterative back-and-forth between design and tooling and speeding the process of scaling-up manufacturing execution.

Without such integration, it’s very difficult for manufacturing-oriented startups to grow de Klerk adds. Cloud ERP allows enterprises to efficiently set up materials/resources ordering and establish supply metrics required to scale across many units.

“That’s where Cloud ERP is instrumental,” he says. “It helps you do all this resource planning and bring it on board quickly.”

As growing spacetech firms grapple with the mechanics of their business organization and management, they simultaneously have to demonstrate their financial fitness to shareholders and other backers. Financial visibility is key to attracting increased external support and ensuring efficient use of investment inputs.

“You likely have capital investment in your business from VCs or other shareholders,” de Klerk asserts. “One of their main requirements is financial visibility. How do they track where the money’s going and can they trust those data sources?”

The nuts and bolts of a firm’s finances can be tracked, displayed, and reported with Cloud ERP. It allows management to leverage advanced data capabilities with AI at the application level, placing a real-time view of analytics around manufacturing, supply chain, and finances in their hands and in the hands of potential investors.

“It really helps you manage the financial components and gives you visibility into them. It’s one integrated suite – the planning, the finances, the recording,” de Klerk says.

A Cloud ERP suite, with a core that helps standardize and organize business processes and with additional applications for specific capabilities, has previously been so expensive, so time-consuming to set up, and resource-intensive to maintain, that only large businesses with well-established space segments and brands could afford it.

However, the affordability, availability, and scalability of Cloud ERP have flipped the paradigm. It has arguably removed a significant barrier to entry into the space business, allowing startups and smaller firms to manage business processes well beyond their capacity to manage in-house.

You can think of Cloud ERP as a business accelerator, unlocking resources to power the growth of spacetech firms which are now tackling industry problems from disaggregating download processing to launching on-orbit sustainment services for LEO satellite operators. They’ll diversify the sector, and some will become the primes of the future.

About SAP 

To learn how SAP can support your aerospace business goals, visit sap.com/aerospace or request a personalized demo with an SAP Aerospace Industry Expert.