Scale! The one facet of business that leaders and CXOs love and hate at the same time. They love it, as it drives down cost and allows them to increase their market reach. They hate is, as with scale comes complexity and the associated perils. The one common quandary that most leaders driving business transformation face is “How do we design a scalable business and technology framework that will drive simplicity?”. While we had looked at how a cloud based framework can help in driving simplicity in the post “Designing for simplicity”, we shall look at how we can leverage cloud for addressing the other facet of the equation, Scale!
Let us consider the same example in the previous post, the large global corporation with multiple lines of business driving a procurement transformation initiative through a common “Procure to Pay platform”. As is the case with any global corporation with many business units, no two businesses are ever the same, be it in terms of revenue generation or cost of operations or process maturity or technology landscape. A good starting point in any IT led business transformation journey would be to assess the process maturity across the companies and analyze the IT enablement of the processes. Typically, a study of the above in a global company would throw up a picture like this:
As is evident, there are clearly two levers that are play here:
- Process maturity/IT enablement
- Landscape fragmentation
These levers present two approaches to driving transformation and the resultant technology approaches:
If one were to wear a CIO’s hat and approach the transformation, a logical choice would be to take a ERP family approach, i.e. roll out the new “Procure to Pay” platform, one ERP family at a time. While this sounds a valid approach from a technology standpoint, as it helps handling integration and master data harmonization, one ERP at a time, it presents a two front battle for the CIO. Given the fact that not all companies in the same ERP family have the same process maturity, the IT team will have to battle both process change and platform change at the same time.
Anyone with an interest in warfare would know that opening up two fronts in a battle is an extremely risky strategy and while it may not result in defeat always, can lead to a long drawn out battle.
The ideal approach to drive a successful business transformation would be to look at “process maturity clusters” and plan the roll out, one cluster at a time. This is akin to the staggered starting positions in a track event. While the finish line remains the same for all athletes, the start positions are staggered given the distances they have to cover.
With all “process cluster” based deployments of global scale, come the template based approach where in a set of global processes are designed as “core processes”, with the country/business unit specific processes handled locally. The key to any business transformation initiative at scale is to maximize global processes and minimize local processes, but it is easier said than done with both central and business units vying for a say in the way the “to-be” processes are designed. Typically, the scenario which emerges is a fought out compromise with a process structure which is optimal as well as feasible.
Now that the process clusters are identified and the template is finalized, what remains is the landscape architecture which will enable realization of the “To-Be” processes.
This is where the complexity presents itself and hence comes the need for simplification. Taking a process cluster approach would mean that different sets of data and ERP families need to be integrated to the new “Procure to Pay” platform at different points in time.
What would have been a challenge in the traditional “On-premise” world presents a big opportunity for simplification in the “Cloud world”.
With Ariba’s Procure to Pay solution and its Federated Process Control architecture, global companies can set up “One to Many” mapping between a common procurement platforms with “global processes and rules” set at a parent realm while the “local processes and controls” set at the respective child realm per ERP family. What this allows is the flexibility to deploy the common platform based on process maturity clusters without compromising on the nuances of the backend ERP. With a single integration later and ERP specific objects such as cost centers, org elements etc and modelling tools are available out of the box in Ariba Procure to Pay for most ERPs, plugging in different ERPs into a single rollout phase becomes as simple as rolling out the solution per ERP cluster.
This ensures that business and technology leaders have to fight only one battle and that is of process change, which is made painless by the simple and easy to use “Total User Experience” by SAP Ariba
Now that we have looked at leveraging the cloud for driving simplicity and scale, , I shall explore how organizations can leverage the cloud for speed in the next post “Designing for speed”.