The right approach to S/4HANA #10 – The Top5 Best Practices that define “Best in Class” S/4HANA adopters and set them ahead of their competition.
Some weeks ago, I had the opportunity to present my “The RIGHT approach to S/4HANA” concept in a global SAP Community webinar, which turned out to become the most successful SAP Community webinar ever based on registration numbers. Obviously, there is extremely high demand for guidance how to do the right decisions in the rough waters of the 21st century, where the intelligent enterprise can be the guide that helps you against the icebergs of disruption. Well, I can help you, and I will continue doing that.
One part of my session consisted of showcasing the Best Practices that set Best-class S/4HANA adopters in their position on top of the champions league. Look at the Bombardier-example I posted a few days ago on linkedin: Companies that use their implementation of the digital core to leap ahead of their game and transform themselves into an Intelligent Enterprise.
I want to do now a similar exercise as in the webinar and wrap up the “TOP 5” Best Practices concerning S/4HANA adoption, which defines Best-In-Class adopters.
In the previous Blog posts, we already discussed about most of them in detail, so it is now time to bring those Best Practices on one page. At the end after reading this post, you will be able to compare your own initiative to those “Do’s”. Do checkmarks and make the right choices, set up your program along with them or do corrections if needed.
#5: They prioritize core over edge
You really can get overblown, by the many opportunities a digitalization transformation can give you. And there are cases where you may feel hard-pressed at the point of decision where to start your initiative, how to staff and where to put the emphasis.
Let’s start with “core”. Well, the core is not really “one” thing, since a single thing rarely moves the needle, its rather a combination of technologies working together that has at its heart a platform for your mission-critical processes, also known as enterprise resource planning (ERP) which is S/4HANA. You can put it simple: It is a package that every company needs to fulfill its purpose and make a profit.
“Edge” is a family of powerful microservices that help you achieve a quantum leap in business outcomes by gaining insights, monitor real-time events and actions and execute special enterprise processes. Basically, an afterburner for your business.
This premise not only makes a “prioritization” at first glance difficult (who doesn’t want an afterburner?) and this is a point where it is easy to mix up the transition strategy and setting the wrong priorities.
The underlying premise is clear: The basic principles of success in the 21st century are digitalized end-to-end processes that put emphasis on customer centricity. And this is naturally a home game for the digital core which is S/4. If you would put your resources on the edge side in a dedicated attempt to raise as many Edge–advantages and innovations as possible while neglecting the Core–processes you would quickly come to a point where your innovation efforts are running on empty. Without the digital core at a maturity level that at least matches your efforts on the edge-side, your transformation runs out of steam. The Core is your door opener to the benefits of the Edge, and if this door is not open enough, your effort will not work out.
So, how to behave now? Prioritize Core? Well, it is more of a “do the one thing without neglecting the other” -topic! Get the Core running as advanced as possible and pull the Edge in its slipstream with it. Keep a wise pivot between those two. Edge needs a good Core foundation to work properly and an advanced Core alone maybe not enough for you.
So prioritize the wise pivot between Core and Edge, with the Core leading.
#4: They divide between commodity processes and differentiating processes.
A few years ago I was member of the strategic initiatives council of a major German car manufacturer. At the end of each year in December, a conference took place in which board members of SAP and the aforementioned car manufacturer, as well as the council and representatives of the several strategic programs, came together to discuss about the progress, direction and roadmap of these initiatives.
I remember one specific conference around five years ago where one group of was having a hard time: The customer-intern working group whose task was to build up a strategy concerning the consume of cloud services was heavily challenged by the then-skeptical CIO who wanted to know an easy-to-use method for classifying processes that could be put into the cloud immediately.
Turning to me he asked for my opinion and my answer was very simple: Any processes that are commodity are candidates to be put to the cloud immediately. It makes absolutely no sense to run processes in which a car manufacturer works the same as a food supplier or a chemical company in an on premise environment where everything has to be started up from zero that has already been done somewhere else. It is much wiser to profit from the experience of others and process best practices that are offered through Paas offerings like Success Factors or Ariba.
Those areas where you set yourself apart from the competition, where you up the game and define yourself, that’s the area where you want to individualize and you do that best either in on premise / single tenant cloud installation or on the SAP Cloud Platform.
But this thought of separating those two kinds of processes is the key for a fast and efficient transformation and S/4HANA implementation. By looking into the co-delivered best practice content or the model company and using SAPs cloud offerings for LoB services to cover your commodity processes you are able to cover already a big amount of your landscape with excellent content that vastly improves your performance in those areas. Having done that, you can then concentrate on those processes that really matter for you, that set you apart from your competition: Your differentiating processes.
When you start with a digitalization initiative like implementing S/4HANA, do a clear segmentation, this guarantees you the best possible result in both process worlds AND a fast and efficient implementation.
#3: They concentrate on consumable innovation
Castles in the air are Janus-faced. They can inspire, they can motivate you and they can be an interesting intellectual exercise. On the other side they can deviate your view away from more relevant, more urgent and more beneficial topics. Non-tangible innovation ideas can be like that.
Best in class adopters have recognized that, that’s why I always recommend building up an innovation roadmap where a customer lays out where we wants to be according to his strategy and capabilities in 1,2,3,4 years. Based on that we put along this timeline the implementational planning of innovations, starting those at GoLive first that are a) low-hanging fruits and b) having the vastest strategical relevance. The rest are then assorted on the further timeline.
This keeps your vision clear and your project plan feasible as well as it helps you to build a solution that at any state provides the best possible benefit.
#2: They lie an architectural map to maximize “Insight to action”
One of the most important aspects of a solution that enables you to run the bi-modal IT strategy to become an Intelligent Enterprise that is able to cope with the special digital demands of the 21st century and any disruptions that may shatter your I respective industry is the ability to provide optimal insight-to-action.
While traditional ERPs or even modern LoB offerings run short in that aspect lacking the digital core capabilities S/4HANA delivers big here!
All reporting or analytics environment that don’t set up on a digital core like S/4HANA use a static snapshot and pre-aggregates of dynamic numbers to provide KPIs to its users. But already by relying on precalculated KPIs you are working in a foggy environment that will definitely limit your ability not only to react to unforeseen events but make it even difficult to realize them as that.
The digital core enables you to see your KPIs “as they are” in real-time. Right now, and precise. So you should be dedicated to get the best out of it.
And “ … into action” is not possible if you have a break between your analytics system and your transactional system. Any insights have to result in a consequence directly.
Whenever you are forced to leave your analytical basis you lose context and orientation. Furthermore, any automation, decision support or AI is unable to give you a hand since you have a media break between these two disciplines and your transactional support isn’t able to connect.
So, insight without action is no real help, or to be more precise: Insight always has to have consequences in your routine operations that are guided and managed automatically by your enterprise management system. This guarantees that you not only get aware of critical situations, but you are able to counteract in the best effective way, or, in a less critical situation, are able to fulfill your goals and KPIs with a maximum of precision and efficiency.
#1: They look forward, not back and emphasize the strategic component
Have you ever experienced somebody with an excited glow in his/her eyes, grabbing you at the shoulder and telling you with tears of joy in the eyes: “We will start with a … *drumroll* …purely technical conversion!” No? Me neither.
Or remember the times when Steve Jobs, and other inspiring and visionary leaders turned around the fate of their companies to a better by chanting “We will bring first our old stuff onto the new platform, then …” … well, no. They did not.
Sorry to mock a bit about these approaches but in the book of “Least motivational and beneficial approaches to new technology “, the technical conversion approach actually appears (Chapter 3).
Best in Class companies don’t look back, they want to get the horsepower to the street by embracing the digital core benefits to become an Intelligent Enterprise. I often hear the statement “My processes are a direct result of the industry requirements of the area in which I do business.”
But in reality, if you look closer, way back to the moment those processes were defined, you find out that this statement is very often a self-delusion. Because most of times not the industry requirements are the true reason why a process is defined the way it is but limitations of legacy ERP.
And this legacy ERP you are about to bury. So why continuing driving with a handbrake on? For the sake of “not too much change”?
The Bombardier – example I posted here shows beautifully that no Best in Class performer is a result of constant conversions of long existing legacy processes but a tale of constant adoption, revision and change.
And this tale should start for anybody, who wants to be ahead of the pack, at a clean sheet of paper, checking how the technology can be a central enabler of the strategy.
After ten posts of my blog series I will tone down the efforts I put into these linkedin blogs a little bit to concentrate more on my upcoming podcast “SAP EXPERTS PODCAST” a format in which I can transport my topics and Best-Practices even better to you, as well as on publications on DIGITALIST, which I will repost here in a new series. Concerning these publications and podcasts, I hope to keep you as readers as well as I hope to win you as listeners.
Thanks a lot.