Key Aspects of Business Transformation
Business transformation has been the buzz word for a lot of organisations in the last few years. The advent of cloud technology has brought the topic of business transformation in the front and centre for several organisations. However, there has been a lack of consistency in the understanding of “what is business transformation?”
Business transformation is generally considered as upgrading technology to support the business, move to the cloud or even simplifying the technology landscape. While all these are potential outcomes of business transformation the above doesn’t define business transformation.
As per my understanding, business transformation can best be defined as a journey to iteratively re-evaluate the vision of the organisation in the context of the current economic, social, and ecological environment to deliver value to all internal and external stakeholders by leveraging the latest technology innovations.
The success of business transformation relies on the following core dimensions:
- Business Model
- Enabling Technology
- Value Management
1. Vision & Strategy
For any organisation to be successful it is critical that there is clarity on the vision and strategy of the organisation. It is a critical input to any transformation journey. Generally, the leaders of the organisation, the C-suite, typically define their goals and objectives for their respective line of business which then rolls up and formulates the vision for the organisation. The role of an Enterprise Architect is critical during this phase. The Enterprise Architect gathers the viewpoints from various stakeholders within the organisation. Vision alone is not sufficient; it needs to be substantiated with a strategy that will operationalise the realization of the vision in a time bound manner. The vision and strategy will guide the next stage which is the business model. During this stage the measures for success are also defined allowing the organisation to benchmark and monitor their transformation journey over a definite period of time.
2. Business Model
The business strategy is what informs the business model. A business model is the design of the lines of businesses within an organisation to enable commercial opportunities. The business model is the foundation for the target operating model (TOM). The TOM describes how the organisation will operationalise the business model to fulfil those commercial opportunities and generate value for the customers. The TOM is critical to understand the interdependencies across the lines of businesses and how they interact with each other. The TOM is underlined by the business capability model or the business capability map. The business capability model is a high-level view of the business capabilities with the lines of businesses operating in an organisation. The business capability model can be organised either by the functions within an organisation or by LOBs or by business operations. Typically, an Enterprise Architect defines these artefacts to chart out a roadmap or a strategic plan for business transformation.
3. Enabling Technology
The next step in your transformation journey is to start defining the technology that will enable the target operating model. Typically, the IT organisation drives this function bearing in mind current business requirements as well as requirements of the future. The technology decisions are also guided by latest industry trends, implement cost of ownership, value to the business and ongoing support costs. Technology roadmaps are owned and driven by Enterprise Architects. This is where architecture as a practice plays an important role in defining the architecture guidelines and principles, a governance framework, capturing different stakeholder viewpoints and represent them with the help of various architecture artefacts like Enterprise Architecture, Business Architecture, Information Architecture, Data Architecture and Technology Architecture. One of the critical aspects of this phase is to define a deployment model for the business transformation. The deployment model should be able to deliver value in a timely manner based on identified business priorities / criticalities and compliance requirements.
4. Value Management
The deployment of technology enables the digitisation of several processes laid out within the TOM. The organisation is on the path to realize the goals that the organisation set out to achieve. The KPIs and value drivers identified during the Vision and Strategy stage are now tracked and monitored. As a part of this process the organisation strives to find improvement opportunities whether it is in the form of re-imagining the business processes, adoption of latest industry trends or use technology innovations to further improve the value of the transformation.
While these are some of the core aspects of business transformation there are additional parameters that make a transformation successful. Some of the additional considerations are:
- Ensure a strong governance framework to effectively drive the various stages of transformation
- Effective management of risks during the transformation journey
- Ability to respond to changes with agility
SAP Business Transformation Services (BTS) has an established Enterprise Architecture practice which specialises in building out the business transformation journeys for our customers, irrespective of the technology platform and the phase of the transformation journey.
SAP BTS provides specialised services on topics related to business and IT strategy, value management and performance management. BTS encompasses a unique combination of skills within business, industry and SAP applications to re imagine business models, design future roadmap and target state architectures to realise business value. The Enterprise Architects within BTS operate within the 4 dimensions described above by
- Assisting in building the vision and strategy
- Re define and Re imagine the business model
- Provide advisory on enabling technologies
- Help in realising the value from technology investments
My next blog will talk about the methodology used by SAP BTS to support the customer as a trusted advisor and provide a holistic view – not just technical. Watch out for this space!