The road to a Sustainable Business: How Large Scale Transformation (LTP) method can lead the way
Climate change is the greatest threat of our time, and its acceleration exceeds our previous concerns. The rising temperatures cause a variety of disasters, environmental degradation, extreme weather events, and food and water insecurity. This phenomenon disrupts economies, engenders political conflicts, and places the onus on each of us to amend our personal behaviors and business practices. Protecting our planet for the benefit of future generations is imperative and continues to gain prominence.
In the realm of business, adhering to the status quo is no longer adequate. There exists an urgent necessity for our economy to commit to embracing sustainability and instituting “net-zero” strategies. Nevertheless, the particulars of these strategies differ from company to company, necessitating the development of novel business models and the transformation of products and services in the pursuit of sustainability.
This is not a straightforward endeavor with a singular plug-and-play solution. It compels us to approach the topic from an original and novel angle, recognizing the complexity and interdependence of the issues at hand.
Choosing to become a sustainable business necessitates embarking on a transformational journey spanning multiple domains, including Environmental, Social, and Governance (ESG). Just concentrating on the “Environmental”, this transformation unfolds within the company, affecting the operating model on logistics, procurement, R&D, others, and extends beyond the organization, affecting the value proposition and supply chain. Although sustainability is not a novel concept, it is currently advocated as a comprehensive approach to genuine transformation, in line with the evolving ESG regulations.
Why is this the right time for such a change? Primarily due to the fact that significant organizations are initiating SAP transformation initiatives, including the migration to S/4HANA and the adoption of initiatives such as RISE for SAP to meet emerging business requirements. SAP ERP is a crucial solution for orchestrating essential operations, supply chain management, and more. As a result, clients are making substantial investments in overhauling their SAP landscapes, making it an appropriate time to initiate discussions about sustainability transformation, which has a profound impact on the configuration and operation of SAP systems.
We are adamant that our enterprise-level clients must commit to a genuine business transformation that has a significant impact on their IT Estate and influences the management of insights and data originating from diverse sources and domains, including SAP and non-SAP systems. In this endeavor, a hybrid approach is required because no single player, software vendor, or cloud provider, such as SAP or Microsoft, can address alone all the complexities involved.
To approach sustainability investments and transformations holistically with our clients, we recommend taking into account three distinct layers. Among these, the SAP Estate plays a strategic role, with reporting functioning as the visible surface of a significantly larger framework. This multifaceted endeavor represents a complex fusion of new business models and IT transformation, necessitating the creation of a roadmap that can be implemented in progressive stages and carried out in distinct waves.
Central to this process is the requirement for data derived from a multifaceted business puzzle, which becomes the driving force for sustainability initiatives and the measurement of their associated outcomes. The seamless collaboration of both SAP and non-SAP solutions is pivotal to effectively addressing the diverse business needs that arise throughout this transformative journey.
Clients need to define a dedicated “Sustainability transformation roadmap”; Clients need to re-engineer business processes, to re-architect IT solutions; and to do that, they need a new hybrid data platform to collect and make the best of data to secure a sustainability transformation.
The adoption of a flexible and scalable composable solution is crucial when migrating from an unsustainable business model to a sustainable one. In order to bring about a significant change in the operational practices of organizations, it is crucial to acquire a thorough comprehension of their current processes and determine the potential of implementing alterations that can promote more sustainable techniques, ultimately leading to the achievement of desired objectives.
Consequently, companies are actively seeking innovative methodologies and advanced technology to facilitate ongoing improvements in their business processes and overall operations, eventually striving towards the overarching objective of sustainability.
The Capgemini playing field for implementing the LTP Large Transformation Program involves the active participation of multi-disciplinary teams throughout the entire journey. This approach aims to effectively address both urgent and long-term sustainability concerns by following a staged process:
Working on the “LTP for Sustainability” Stage-1, we can define a business case beginning with sustainability’s ambitions and levers derived from interactions with business stakeholders, where we typically recommend SAP Signavio as the best-of-breed tool.
In stage-1, we must comprehend the current state in order to design business processes capable of meeting sustainability requirements. During the same stage, we begin delineating the Enterprise Architecture, where we typically recommend LeanIX (now owned by SAP).
LeanIX handles Enterprise Architecture and IT, while Signavio handles the business stream.
Working on the “LTP for Sustainability” Stage-2, we can execute “Value Stream Mapping”, where we finalize the Target Operating Models, the Target Enterprise Architecture, and the overarching intermediate steps necessary to reach the target. Understanding the target enterprise architecture enables us to produce the appropriate program backlog for implementing sustainability requirements, by addressing the architecture’s various layers end-to-end.
- Data Capture
- Data Processing
- Data Insight
The initial phase entails the precise identification of pertinent data for analysis, specifically for emissions calculations and related purposes. It is imperative to discern and confirm the availability of all essential data required to attain the sustainability objectives outlined in LTP-Stage-1. This presents a unique opportunity for modernizing various segments, including manufacturing execution solutions and IoT integration, thereby fostering the realization of an “Intelligent Factory.” Consequently, we can address any discrepancies or deficiencies that become apparent during the transition from the current state (as-is) to the desired sustainability state (to-be):
In the usual practice, data management primarily takes place within the IT hybrid platforms, integrating both SAP and non-SAP solutions working harmoniously. As we consider the Green-IT initiative, it presents an auspicious occasion to revamp our IT infrastructure by transitioning from on-premises systems to cloud-based environments, harnessing the diverse advantages offered by Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). In this process, it may also be necessary to introduce new solutions to address any existing gaps or inefficiencies:
The IT hybrid platform serves as the necessary technical infrastructure for operational function execution. In our pursuit of attaining sustainability objectives, the reengineering of business processes with an eye toward the anticipated new business model is a major focus. On the basis of the results and findings of LTP-Stage-1 and LTP-Stage-2, it is clear that this area is likely to be the most significantly impacted by our sustainability initiatives:
It is imperative that all master data, transactional data, and other pertinent information need to be accessible within a newly established unified data model. This typically takes the form of an augmented hybrid Data Lake, facilitating the seamless collaboration of both SAP (specifically SAP BTP – Datasphere) and non-SAP (leveraging Data Fabric – Hyperscalers).
The “Sustainability Platform Foundation” is anticipated to be the layer necessitating a ground-up implementation. Within this layer, structured and unstructured data will converge, originating from both external and internal sources. At this point, data will be organized and prepared for subsequent analytical and computational purposes:
Upon the availability of data for processing, a novel computing framework materializes, where we can foresee the coexistence of a diverse array of solutions. This spectrum encompasses SAP, non-SAP, custom-developed applications, Commercial Off-The-Shelf (COTS) software, third-party tools, and so on. This computing stratum represents the environment where emissions calculations and all other elements pertaining to sustainability are projected to be computed:
Evidently, following the data’s calculation phase, it will be primed for presentation and in-depth analysis within the reporting layer. In this context, we envisage the integration of top-tier, cloud-native solutions, leveraged through the widespread and accessible cloud platforms available in the market:
The following image depicts the overall architecture for sustainability. The next steps of “LTP Stage-3” and “LTP-Stage-4” are there to realize, deploy, and run the overall sustainability solution:
Unquestionably, our method represents a methodology for developing end-to-end architecture. It is essential to recognize that, on an individual basis, each client’s beginning point and final destination will vary. The notion of a “one-size-fits-all” solution is untenable. This is why we call it an approach or a method and not a product.
The opportunity to create a scalable and adaptable architecture is a crucial element to emphasize. In this context, flexibility refers to the ability to construct the architecture across multiple layers using software, market-ready solutions, and a variety of bespoke solutions. Some client scenarios will heavily rely on SAP solutions, whereas others may prefer non-SAP solutions that are seamlessly integrated into the existing SAP Estate. As with the destination, the starting point will be unique in every case, as some clients may already be utilizing Green-IT and native cloud solutions, and some may not.
SAP’s role in building the Architecture
SAP’s prominent role in shaping this architecture is primarily attributable to the fact that a large proportion of SAP ERP customers use it as the central system for managing vital business data, such as material master data, bill of materials (BoM), routing, cycles, and all essential components for a complete supply chain with planning, procurement, production, sales activities, etc. As a result, a considerable amount of data pertinent to emissions calculations and other sustainability metrics flows through SAP solutions. Nonetheless, it is essential to emphasize that SAP cannot comprehensively resolve this multifaceted challenge on its own. In order to define a comprehensive solution, the adoption of a hybrid architectural approach that takes into account relevant non-SAP solutions, becomes essential.
Let’s describe a basic scenario for the use of SAP solutions:
How can we non-exhaustively implement the scenario described for the Olive Oil producer company? This can be achieved through the integration of SAP S/4HANA with SAP Sustainability Footprint Management:
The current use case examines data consumption from SAP S/4HANA into a novel SAP product designed to facilitate the configuration and execution of sustainability calculations and related reporting. Within the SAP S/4HANA domain, we engage in traditional master data preparation, augmented by the addition of new attributes tailored to sustainability objectives, and customary process execution involving established procedures. A notable addition to this scenario is the introduction of SAP Sustainability Footprint Management (SFM), a new product that enables the use of ERP-derived data to conduct carbon calculations and generate ESG-compliant reports.
The current use case functions as an example of a portion of the end-to-end architectural framework.
To determine the formulation of the comprehensive architecture for sustainability, this endeavor becomes client specific. Utilizing the Capgemini methodology, we can tailor the solution to meet the precise requirements, utilizing the client’s existing resources and resolving any gaps in the pursuit of the optimal solution. This method entails a deliberative choice between extant market solutions, Capgemini’s catalog of solutions and assets, and the custom implementation of cloud-native technologies.