Two approaches for Digital Transformation by implementing Intelligent Enterprise
- Modular applications, Universal Data access, Business network and Scalable infrastructure provide a digital backbone for an intelligent enterprise.
- It will take time for organizations to build an intelligent enterprise by re-platforming technology, upskilling the workforce and reimagining legacy business process
- Organizations can start benefiting by improving efficiencies and building a foundation to build a digital business (irrespective of Greenfield, Brownfield or Selective Data Transfer approach)
Photo by Daniel K Cheung on Unsplash
Planning for Digital Transformation projects is daunting, especially when an organization hasn’t designed future processes and hasn’t acquired the skills to implement technology to implement such processes.
The organization needs to run their daily business efficiently while embarking on this transformation journey. It will take time for the organization to take full advantage of the new digital platform.
What changed in intelligence enterprise?
In the last 15 years, the Enterprise Resource Planning (ERP) software industry has gone through significant innovations in the key architecture layers e.g. Application, Data, Technology and Infrastructure. to develop a robust digital platform. Intelligent enterprise software uses all these combined innovations to drive the next cycle of productivity gains and business transformation.
Digital transformation can be approached in two ways 1) by improving digitization and 2) by adopting a ‘digital first’ business model.
Organizations won’t be able to utilize all these new technologies to implement ‘reimaged’ processes overnight. There will be a transition time for new technology adoption, and a wide range of businesses will be re-engineered for the new digital platform. (When a new powerful video games console is launched, gamers still play old video games designed for the old console until new games are developed and released that can take advantage of upgraded hardware)
It is expected that when organizations start their digital transformation journey they will start with the platform upgrade and will focus on digitization, they will focus on improving efficiencies to gain immediate benefits. As organizations acquire/upgrade skillsets to utilize new technologies and adopt new business processes, digital business transformation will pick up the pace.
Regulated industry business processes and certain standard back-office functions don’t require total re-imagination. Still, it needs better user experience, automation, and analytics ability to drive the next round of productivity improvement.
Approach 1: Improve Efficiency with Digitization
Organizations have entrenched memory of processes that works and get the job done (siloed in many cases). Replaforming with intelligent enterprise is not about abandoning existing processes but improving them. It’s about creating a digitally better version of itself. It’s about utilizing new technologies on the known business processes and laying a foundation for future ‘disruptive’ transformation initiatives. It’s an incremental approach. This is different than digitization which happened 15 years ago when manual/paper-based processes were converted to electronic processes. These improvements will be driven by connecting fragmented processes, providing a better user experience and introducing automation.
Organizations should take this opportunity to simplify, streamline and standardize processes and underlying data models in this approach.
Organizations can focus on the following capabilities without disrupting the core business processes.
- Improve user experience (Fiori)
- Intuitive user interface (look and feel)
- Multidevice and multi-channel experience
- Personalization for better engagement
- Improve user efficiency (Automation)
- Automation of streamlined processes
- Machine Learning based digital assistance
- Utilize data and analytics (Datasphere)
- In-app analytics and dashboards Forecasting and prediction (across various business domains)
- IoT integration for physical assets
- Risk assessments
- Improve integration (Integration, Network)
- Connected business with partners and customers
- Support Sustainabiy initiatives (Sustainability management)
- Improve environment footprint and support ESG
- Streamline sustainability reporting
Approach 2: Adopt a Digital model to transform
Certain business or business functions require a totally new approach. Build new ground-up business processes that are not part of the current business model. This approach involves launching new products and/or services.
This transformation can be a revenue enabler (corporations) or value enabler (governments)
- Business Network: Process and data integration with the business to support pay-as-you-go, subscription, outcome-based buying and selling options
- Digital twins/IoT/ Predictive maintenance: Improve asset utilization, supports subscription/utilization-based services offering
- Customer or Citizen experience: Self-service that is based on AI/ML to address common scenarios
- Support new industry revenue stream: Circular Economy, Blockchain for supply chain traceability, Micro-power grids based on solar electricity generation.
Here are key challenges organizations may face when undertaking digital transformation for large ERP systems:
|Legacy Processes||People/Organizational||Technology adoption|
· Entrenched siloed processes that hardened over the years
· Lack of clarity on the impact of change as the legacy systems are kept together by a group of technology experts
· Siloed data and lack of data quality to use data as an asset
· Lack of scalability
· Lack of interoperability
· Lack of clarity on digital transformation objectives
· Budget and resource constraints
· Policy and Standards that are not caught up with the reality of the business and technology (e.g. Security, Cloud)
· Wide variety of fast-changing technology offerings makes it hard to make the right choice
· Inability to imagine business processes that can be transformed using the latest technologies (e.g. Usual suspects AI/ML/Cloud/IoT/APIs/BlockChain etc.)
· Skillset (mindset) that knows only (focused on) legacy/existing technology
Organizations should combine these approaches based on their target business domain for transformation. To avoid total business disruption and also to reduce the risk of transformation overload, organizations should adopt intelligent enterprises to improve their existing business processes in selected focus areas. They should take this opportunity to build a foundation by upskilling their workforce and learning technical capabilities. This will provide a solid foundation to build and deliver more transformational capabilities in the next 3 to 5 years.
- “Designed for Digital – How to Architect Your Business for Sustained Success By Jeanne W. Ross, Cynthia M. Beathand Martin Mocker (Designed for Digital (mit.edu))
- SAP Intelligent Enterprise White Papers – SAP Intelligent Enterprise White Papers | SAP Blogs (Accessed April 22, 2023)
- Various SAP.com links (Accessed April 22, 2023)