This is a companion article to SAP Customer Center of Excellence for Azure (SAP CCoEA) where I discussed on:
- Multi-cloud model consisting of SAP and Microsoft Cloud Services.
- Capability model of a Unified SAP Customer Center of Excellence for Azure.
- Role Mapping of a typical SAP SME to Microsoft training and certification.
I had left key topics to keep short article length. I hope to be able to cover some of the gaps here.
Just to recap the role of SAP CCoE:
“Customer Centers of Expertise (Customer COEs) act as collaboration hubs across IT and Lines of Business in their companies. Their mission is to provide transparency and efficiency of implementation, innovation, operation, and quality of business processes and systems related to the SAP software solutions and services They have the knowledge, the capabilities, and the network to centrally drive continuous improvement and continuous innovation.”
So, as you can see the key words of improvement of quality and innovation is important for a SAP CCoE. Both of which can affect how an organization structure and how it behaves as a culture.
Over the holidays, I started to research into innovation, organizational structures and culture. I have left out continuous improvement because this topic is a separate article. Here, I will describe some of the latest business and technical literature for:
- Innovation for Organizations
- Patterns for Organizational Structure and Culture
I draw material from two books and many blogs which I found to be very useful (see summary references below).
Innovation for Organizations
Imagine you are the new SAP CCoEA leader, and you are tasked to design and setup an organizational structure. Your main charter is foster agile business innovation like SAP Embrace program.
First, we look at the stages of innovation. McKinsey’s three horizons approach is a popular model and many innovators use it.
Figure 1: McKinsey’s Three Horizon Model Approach for Innovation (Source: McKinsey)
Steven Blank (from the lean startup movement fame) however wrote of the deficiencies of this classical approach.
“This time-based definition made sense in the 20th century when new disruptive ideas took years to research, engineer and deliver.
That’s no longer true in the 21st century.
Today, disruption – Horizon 3 ideas – can be delivered as fast as Horizon 1 ideas.”
I agree with his last point because of the emergence of cloud technologies like Microsoft Azure and SAP Cloud Platform. Delivery of projects are short, agile achieving faster time to market. But there is always an operational function or Hybrid SAP and Azure Operations (continuous improvement). This is in parallel to Cloud Adoption and Transformation capability area.
Gartner’s Bi-Modal IT concepts covers this mode of of IT well. But I found from Dr. Ralph-Christian Ohr and Frank Matte’s ideas more compelling. It resonates well with SAP’s vision of the Digital Core and its solution extensions to cloud platforms. It had 2 planes (x-axis for business model, y-axis innovation types):
- Optimize the Core (Optimization of existing business models and technologies)
- Reshape the Core (Transformation of existing business models and / or scaling up new business models / technologies)
- Create the New (Creation of new-to-the-company business models and technologies)
Figure 2: Three Playing Fields of Innovation (Source: Dual Innovation here)
They further explained criteria of whether the business unit should work alongside a corporate innovation center. We can apply this to SAP CCoEA organizational design:
- “Innovation strategies at BU and at Corporate level
- Corporate innovation management set-up
- Maturity of BUs in driving explorative innovation
- Innovation pace and dynamics
- Level of exposure to Digital Transformation”
Figure 3: Organizational design options for Reshape the Core – (Source: Dual Innovation here)
A balanced organizational design for the conceptual SAP CCoEA is needed as SAP S/4 HANA at the Digital Core is a packaged application. This is subject to organizational maturity, culture and different use cases.
By 2018, both authors started to put forward this blended model in this article: Scaling-Up: The foundation. They also talked about Ambidexters (blend of skills in as I had proposed in the original SAP CCoEA article). I found the origins of this concept came from a 2004 Harvard Business Review ‘s The Ambidextrous Organization.
For further detail reading, their dual management model for innovation here.
Figure 4: Scaling-Up: The foundation : Dual Management Framework(Source: LinkedIn here)
I would leave you to further read the source reference articles to gain more context and insights.
Patterns for Innovation Structure and Culture
I borrowed this sub-heading title from the Cloud Native Transformation book.
From a technical perspective, SAP S/4 HANA “on-premise” software installed into an Azure Virtual Machine is still considered a monolithic application even though we can orchestrate some agility at the infrastructure level.
I would reckon there will be no full cloud-native end-state scenario unless an organization has chosen the strategy of going S/4 HANA Public Cloud -Multi-tenant version (standardized versus single tenant – read the excellent article here).
There is a need to straddle across a blend of approaches from waterfall to cloud native, predictive to collaborative (culture) and hierarchical to DevOps/SRE (team structure).
The three authors go on to describe 24 different types in team patterns including one called “Strangle Monolithic Organizations” ?.
Figure 5: Strangle Monolithic Organizations (Source: Chapter 7 of Cloud Native Transformation )
Other examples include:
- Manage for Creativity
- Gradual Onboarding
- Agile for New Development
- Exploratory Experiments
We must consider the dynamic nature of projects in Cloud Adoption and Transformation Quadrant of the SAP CCoEA capability model.
One of Bill Gates’ recommended books Loonshots had some very interesting ideas by Safi Bahcall. He asserts that culture eats strategy for breakfast. Structure eats culture for lunch. I recall my old post on culture and I now agree with his convincing argument.
In Microsoft, we are constantly subjected changes to organizational structure where people move around. Safi also writes about the Bush-Vail rules, one of which complements the concept of growth mindset to what he calls system mindset (borrowed from Garry Kasparov – Chess Champion). He also discussed Product or P-Type and Strategy or S-Type innovations.
In cloud, this would fall within more on P-type as we tend to innovate, fail-fast and quick to deploy. However, he also described S-type loonshots that can dramatically change the way industries and societies are transformed (example: Facebook-social media, Walmart-retail and Google-search). Finally, Safi also stressed the importance of integrating (phase transition) between what he called the artists for Innovation work and soldiers for Sustain Run work where their world view of risk are very different. Quoted here in an interview:
Bahcall: It starts by recognizing the difference between what I call artists and soldiers. You need to separate the artists and soldiers. The soldiers are the ones who are in manufacturing, in marketing, in product design, or in product delivery. They are the ones who are responsible for getting products on time, on budget, and on spec consistently to customers. You have the artists who are responsible for coming up with the crazy, wacky new ideas.
Those are two very different goals with two very different languages. If you’re a manager or a leader, make it clear in your own mind who you’re talking to and what the objective is. Unless you separate them, you will do exactly what you just said, which is de-risking exactly when you need to be taking risk. For example, that word “risk,” it’s one English word. It should have one meaning, but it doesn’t. To a soldier, risk is a bad thing. If you are assembling, preparing for battle, you want the least amount of risk possible. If a general says to a soldier, “You really de-risked this plan,” that’s a huge compliment. Now, if a leader says to an artist, “You really have no risk in your art,” that’s an incredible insult. The same English word, “risk,” has four letters, but means two completely different things.
From Cloud Native Transformation book, I found a similar concept, and it had a more sophisticated analogy Pioneers, Settlers and Town Planners (credited to Simon Wardley here). In this model, it nicely details how each type of project team member deal with different scenarios, what they are happy with and the use cases.
Figure 6: Pioneers-Settler-Town Planners Innovation Structure Model (Source: Wardley’s blog)
If we were to flip the Town-Planners and Pioneers, we will have a nice mapping model to the cloud maturity model with Dual-Management Framework included. This gives a good understanding of their characteristics of the CCoEA staff member archetype.
Soldiers are comfortable in a predictive culture and in hierarchical team structure while artists are happy to be experimental and be part of an internal Supply Chain organization. The authors defined this as separate product with “full tech and business generation responsibilities in the teams” or “Exploration Unit”as defined by Ohr et al in Figure 4
For the original diagram, please refer to Chapter 5 of the Cloud Native Transformation book. Adaptations are in red outline and yellow shaded.
Figure 7: Cloud Native Maturity Model Matrix (Source: Adapted from Chapter 5 of Cloud Native Transformation)
With the above framework models described above, I now describe the high-level Structural Characteristics of SAP CCoEA capability model in Figure 8.
Figure 8: Structural Characteristics of an SAP CCoEA (Source: Authors’ own)
After reading, digesting and synthesizing through all these concepts, notice that I have not prescribed a single organizational chart. Patterns of the organization for Innovate and Build in the Cloud Adoption & Transformation quadrant needs to be tailored by project/program leaders.
We cannot simply prescribe something and hope that innovation will occur as people view risk differently. Other factors include skills, organizational maturity and culture must be considered too. Leaders and Managers from the Govern need to adopt good practices in leading/managing teams in the tradition of Bush/Vail. Architects (Inventors) need to be predict, empathize, collaborate with a wide-variety of stakeholders (external and internal) to build P-type innovations for incremental value impacts while looking for S-type transformative value impacts.
With the above steps of analyzing organizational culture and staff characteristics, I hope this has given you a guide to consider the factors involved in building team patterns for a SAP CCoE on Azure. Granted that, for SAP SaaS solutions (Successfactors, Ariba) and classical ‘on-premise’ SAP S/4 HANA point of view will be slightly different in implementation of organization of teams, methodologies and technologies versus what is described in Cloud Native Transformation book, I still highly recommend it to get inspiration for innovation work in a multi-cloud world of SAP and Microsoft Azure.
The whole goal of the SAP CCoEA is to deliver greatest business value for the organization through innovation and optimized operations. I hope you have found this article useful and valuable.
Other Relevant Articles:
Bits or pieces? blog by Simon Wardley
Cloud Native Transformation: Practical Patterns for Innovation (Dec 2019) by Pini Reznik, Jamie Dobsonm, Michelle Gienow
Future-proof Your Innovation Management: Dual Innovation blog by Frank Mattes and Ralph-Christian Ohr
Innovation Excellence blog site – many great and insightful articles
Innovation Follows Culture Follows Structure blog by Ralph-Christian Ohr whom also co-authored with Frank Mattes Scaling-Up Corporate Startups: Turn innovation concepts into business impact
Scaling-Up: The foundation blog by Frank Mattes and Ralph-Christian Ohr
Scaling-Up: The framework blog by Frank Mattes and Ralph-Christian Ohr
Scaling-Up: Crossing the internal chasm in corporate innovation blog by Frank Mattes and Ralph-Christian Ohr
Steve Blank’s blog
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