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Co-innovation leads to co-validation (Part2) – the value lever of SAP S/4HANA

By Sven Denecken & Bert Schulze

Last time we talked about the paradigm shift of the subscription economy and the increasing relevance of co-innovation coming along with it. We also pointed out that Co-Innovation is a state of mind, not a single group or a single program.  You can find the 1st blog here: Co-innovation leads to co-validation (Part1) – the relevance of co-innvation

Today we will focus on Co-Innovation in action and talk about customer driven and validated value levers for the post-modern ERP solution SAP S/4HANA.

Complexity and habits are the beasts be domesticated

Co-Innovation always starts with the market and customer point of view. To stay competitive in today’s fast changing business environment, enterprises are urged to innovate, react and transform quickly. But many companies struggle due to high complexity. Within large organizations up to 80% of business time is spend on non-value-adding activities (BCG, Complexity Report), just because scattered and duplicated information create different versions of the truth and complicate the decision making process. If this issue would have not been tackled sooner or later, the problem will only get bigger.

According to our customers, the ideal contribution to solve the challenges is a digitized core. It gives back a company the much needed flexibility. With the help of the regained agility even the biggest enterprises is back where it can change, grow with disruptive technologies and build on innovations easily – without losing automation or scale.

The vision and strategy we co-innovated with our customers is to drive towards the perfect enterprise. To deliver on this mission, we worked with customers on use cases and scenarios to proof value creation in a digital, networked economy. Serving both masters, the classical IT approach of high automation and changing the company build on new disruptive technologies at the same time has been a gordian knot in the past.


Software design and existing complexity, build on the boundary conditions of the past, were fenced within batch oriented processes. A move of the application core was only possible towards one of the goals. “Fail fast” as the key characteristic of the new digital transformation economy did not go along very well with the “A plan is a contract” approach of IT.

See more details in our series here: #S4HANA – the use case series – Overview

However, the change to a digitized core does not happen in the basement, but requires the collective genius of the subject-matter experts.

At SAP we work together with the customer to leverage all the opportunities of a new thinking, away from batch oriented processes to the maximum extend.

Identify value levers via Co-Innovation

Many of you might have heard about the s-curve adoption cycle of innovation. This model has been used for different purpose like for example “Diffusion of innovations”, the bestselling book from  Everett Rogers, a professor of communication studies. Fundamentally it defines 4 stages of innovation adoption,

  • Start Up
  • Scale
  • Compete
  • And Transition

The innovation is going through all of these stages, though we can see that ERP, Enterprise Resource Planning, as known today is fairly out-optimized. But build on boundary conditions of the 70s.

The mathematical turn in the s-curve is characterizing the start of the transition phase and a point of diminishing innovation

Adoption of new, breakthrough technologies and disruptive innovations is not possible within the same curve. It requires jumping on to the next level to drive adoption through the phases 0f innovators, early adopters, early majority, late majority, and laggards.

Thinking outside the box is on the flag of our Co-Innovation program. It requires approaching situations in new, innovative ways; conceptualizing challenges differently; and understanding your own position in relation to any particular competitor in a way you’d never thought of before.

How do we cultivate the ability to look at things differently from the way we typically look at it?

It requires thinking with an ignorance of convention and boundaries that are mind blowing. “You need an interdisciplinary team focused on agility and rethinking your differentiation based on new technologies.”

Methodologies like Design Thinking help to get into it. Design Thinking is a mindset backed by a set of tools that gives a powerful new way to solve problems and unlock potential. It complements the existing approaches by focusing on understanding the human side of things — what technology is and what that technology innovations means to our customers and their customers.

When does a value lever become game changing?

I would like to take an example with SAP´s in memory technology SAP HANA. For few years it has been an ongoing discussion about the value of speed. If you look at core processes from a velocity perspective but focus solely on the existing environment, you end up rating the solution just as an improvement for a business process with limited business impact.

Co-Innovation helped us to create use cases away from the existing environment towards business transformation. Because when we started combining the key capabilities of the in memory technology with elements of the application layer, we unleashed the power to transform business processes.

Customers helped us in the Co-Innovation process to change perspective and move from the value of technology towards understand the value levers of business and how the technology can contribute to it.

  • Increase efficiency
  • Increase effectiveness
  • Increase agility

are levers that are on the short list of executives to do´s today.

Looking at it outside in, it has been obvious, that SAP S/4HANA solution creates significant differentiation based on the in memory technology and it´s key capabilities to contribute to the value levers and make it a game changing solution.

Co-Innovation example of increased effectiveness: Speed up signal to action

Speed up signal to action is one of the most relevant aspects of today´s digital transformed world. Every employee in a company is nearly overwhelmed with information from various sources, internally as well as externally. Focus on the core competences and most relevant steps become a basic survival strategy. Manage all information and identify a clear signal to action is out of people´s depth these days.


Here is where Co-Innovation with customer´s created a “System of Me” and help system user to focus on exceptions rather than daily business. See also

With all Co-Innovation customer engagements, once thing has been clear: if we are able to help companies with a new architecture to speed up the signal to action, it will change the effectiveness of companies´ dramatically.

The technical ingredients we bring to the table:

  • Embed analytics within the transactional system (merge OLAP&OLTP)
  • Design new role based dialogs
  • Recommend, steer & monitor execution in real time
  • deprecate extract, transfer, load processes and related delays

Summary and Outlook

With the help of Co-Innovation we started digitizing the core. Organizations are now able to respond to the new digital transformed world and make better use of disruptive technologies like cloud, business networks, big data or mobile.

The ability to adopt and change is the key to success and the Co-Innovation process will lead the way. Stay tuned for further blogs in this series, where we will get into some examples of Co-Innovation done right.

…and follow us for frequent updates @SDenecken and @BeSchulze

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