Transformation: The new normal
Business transformation has become ‘the new normal’. The reasons and scope of required readjustments are diverse – for example, increasing pressure from customers to offer sustainable products. The search for new suppliers because of disrupted supply chains or rising energy prices causes modification of business models. Or a lack of qualified employees and cost pressure sparks the need to design efficient processes through digital technologies.
Depending on the strategy addressing these challenges, the transformation affects the company’s entire value chain, selected business functions (like finance or supply chain), or processes (e.g., digitization of customer orders). The degree of change that is needed finally determines the transformation’s duration and complexity. For example, it raises the question of how many processes and IT systems will be involved. Employees need to be involved in the changes and have the opportunity to share their ideas to successfully realize the transformation goals.
As part of our SAP Signavio Community Spotlight campaign, in this blog post, we’ll explain the different flavors of a transformation, how to find the right balance when transforming, potential vs. reality, and how SAP Signavio can help you.
TRANSFORMATION IN DIFFERENT FLAVOURS
Enterprise programs typically start with estimating the full potential value, followed by building a plan of initiatives to close the value gap.
In view of the number of measures to be taken, management teams are challenged to identify and prioritize upcoming tasks. Often, available resources (internal and external) are limited. Therefore, a decision must be taken on what to implement and what not. After, it must be determined how transformation successes will be realized along a consistent plan of prioritized activities. ‘Value contribution’ and ‘feasibility’ are popular criteria for prioritization. Our clients love to work along a phased plan, starting with ‘Quick Wins’ right away for early outcomes.
FINDING THE RIGHT BALANCE
We’re following a customer-proven approach that is based on three strategic dimensions driving value in a company. The first dimensions are products or services that open up a company’s market and thus make revenue generation possible. The product portfolio design is a company’s fundamental decision to safeguard its existence. Depending on this, basic conditions are defined as how the customer interaction will be designed (second dimension). Higher-priced products or services require a customer experience that meets the expectation and aspirations of the product. And finally, a cost structure (third dimension) must be developed that doesn’t overstretch the market and customers find attractive and realizes the expected margin.
Within these three dimensions, we first start with a benchmark comparison of the company’s current performance (the inner circle in the chart). In turn, the outer circle shows which results the company’s peers have achieved. The company’s task during the transformation design is now to set up initiatives suitable for reducing the distance to the outer circle. If necessary, go beyond to generate additional competitive advantages.
The options for this can be different. They require a redesign of a customer journey or better availability of desired products. They often include specific changes to a process organization, such as shortening cycle times by automating individual processes to a greater extent.
SIZING THE REALISTIC POTENTIAL VALUE
To confirm the selected measures, we use a combination of external benchmarks (business KPIs) and performance indicators (PPIs) that we can extract from existing IT systems. This combination ensures that we gauge the distance to our competitors based on (undebatable) publicly available financial company data (annual reports). In the first step, the focus is thus directed to those areas in the company that show high potential. In the second step, this preselection is confirmed with the help of operational process performance metrics obtained through various process analysis methods. The desired granularity can be adjusted according to the information needs. A first assessment is possible within one day after connecting to the source IT system.
This allowed for a fact-based definition of initiatives with their respective value potential and implied cost for improvement, as well as prioritized activities, delivering short-, mid-, and long-term outcomes, depending on the chosen transformation goal.
From here, it’s all about execution, monitoring, and countermeasures to safeguard value realization throughout ‘Large Transformations’ and ‘Continuous improvement initiatives.
VALUE PROPOSITION OF SAP SIGNAVIO
Following a value-driven approach to transformation based on the SAP Signavio Process Transformation Suite and Methodology offers many benefits for companies.
In principle, every organization is subject to constant changes that need to be documented and tracked. Triggers are higher pressure from competitors, regulatory requirements, or new digital business models. The question is how to document these changes. Different solutions are selected within a company, introduced, updated, and trained individuals, or is a central process platform selected. This type of standardization cuts internal and external costs significantly.
Intuitive and collaborative handling of SAP Signavio solutions generates faster results. Modelers, consultants, and business users are in continuous exchange. Modifications can be implemented quickly based on valuable feedback. For example, due to legal requirements, different process variants are managed and tracked by the platform. New processes and their impact on future costs can be simulated.
In combination with analytical SAP Signavio solutions, process models will be further developed into an important control system in the company. Information on cycle times, the number of variants, the degree of automation, and IT systems can be integrated into the model down to the level of individual process steps. Existing inefficiencies are now uncovered and remedied with recommendations for adjustments to supporting SAP applications. This makes it possible to carry out focused improvement measures in planned or ongoing SAP implementations. The time to realize desired value contributions is reduced.
Particularly when updating SAP landscapes, a consistent design of new scenarios is supported in an integrated way. New architecture models are coordinated with process models at an early stage. IT departments and business work together to develop customized solutions. The graphic models supply a clear picture of the future processes and desired IT support. The SAP Solution Manager takes up and implements the specifications during system operation.
Main Drivers typically used for the Custom SAP Signavio Value Case:
- Reduce Business Process Management (BPM) costs
- Shorten the Time-to-Value for all process improvement activities
- Increase revenue through improved customer satisfaction for customer touchpoints
- Intangible: Improve the BPM maturity and create a culture for continuous Process improvement based on true collaboration
At which stage of your transformation are you? Let us know in the comments below, and stay tuned for more content to help you understand the best ways to integrate your change with your Enterprise Architecture and Business Technology Platforms.
Finally, on February 28, we will host a live webcast on the SAP Signavio YouTube page on how to make the most of your SAP Signavio integrations. Join us!
Great article Rainer - I really appreciate the insights on how to ensure you stay focused on the value adds & KPI measurements. Critical content for some many of our broad transformation projects! Thanks.