The Transformation Imperative, Business Processes and SAP Portfolio Play

Blog /Transformation-Imperative-Business-Processes-SAP-Portfolio-Play

Most business leaders feel the digital-transformation imperative. According to analyst firm IDC, by the end of 2017, two-thirds of the CEOs of Global 2000 companies will have digital transformation at the center of their corporate strategy.

But the clock is ticking and many business leaders are shaking in their boots. Findings from a new survey, as reported in InformationAge, underscore the tremendous pressure to transform that business leaders across industries face today:

  • 85% enterprise decision makers feel they have a timeframe of two years to make significant inroad on their digital transformations, or they will suffer financially and fall behind their competitors. 55% of those say the timeframe to adapt is a year or less and 59% worry that it’s already too late for them.
  • 47% of companies haven’t actually started yet, and a further 33% are developing their plans but won’t execute this year.
  • Only about 25% of businesses are very confident in their ability to execute a comprehensive digital business strategy.

Evolving technologies. Lack of leadership. Lack of internal alignment. Skills shortage and cultural resistance. These are all factors contributing to digital hesitancy. There’s also the question of where to start? A one-off project, probably led by shadow IT in a rogue business unit, lacks gravitas. A complete business-model overhaul is probably beyond your reach, and more than your Board could stomach.

If you let digital technologies guide your transformation strategy you will fall victim to vertigo. If you simultaneously chase every opportunity for digital transformation, the patient (your business) will most assuredly bleed out on the table.

Focus on the business process, again!

As a term, “business process” has been around since Adam Smith introduced it in his book, The Wealth of Nations (1776). Simply put, a business process is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers.

From Adam Smith’s “division of labor” to Frederick Winslow Taylor’s “industrial engineering” to Henry Ford’s “mass production” to Hammer and Davenport’s “re-engineering” to Peter Drucker’s “decentralization and outsourcing,” the business process, continually re-imagined, has spawned many advances throughout the history of business.

Why is this? While the definition of business process hasn’t changed over the years, much has: how we define business, products, materials, customers, markets, services, transactions, competitors, etc., changes by the minute. Moreover, the vast array of enabling technologies is constantly evolving. Re-imagining the business process amid great flux is indispensible for identifying opportunity.

Complexity: the business process killer

Yet, business processes themselves can impede transformation in many companies. According to a recent, in-depth study conducted by Harvard Business Review, an overwhelming 86% of the 746 business managers surveyed feel their business processes and related decision making has become so complex as to hinder their ability to grow in a digital economy.

And, according to the Harvard Business study, the cost of this complexity is high:

  • Six out of ten survey respondents say complexity increased operational costs by at least 11%.
  • Nearly 50% say their IT systems cannot respond quickly enough to deliver innovative business models or processes.
  • 43% say complexity slows growth, impedes their ability to respond quickly to competitive threats, and interferes with effective decision-making.

The business process digital bonanza

As the engines of work activity, business processes are essential to transformation. They move workers forward in their daily jobs, help propel strategic initiatives, and perhaps most importantly, provide the framework to make and implement business decisions. 

For these reasons and more, at NTT DATA, we strongly advise our SAP customers to hitch their digital transformation initiatives to the business-process workhorse.

Here’s a bit of our rationale:

  • Touch the customer. Business processes invariably touch the customer. In fact, it is from the customer perspective that the business process must be completely re-imagined. There are many technical KPIs to keep a digital project on track, but a measurable, positive impact on the customer experience at every phase is the only way to ensure your project is relevant and viable.
  • Just the right size. Not to big or small, a business process has an identifiable beginning and endpoint, allowing for controlled-scoped projects that deliver fast and measurable quick-wins.
  • Across the enterprise. Business processes span functional lines of business, which ensures adequate involvement and buy-in from business leaders across the enterprise, and staves off the risk of fastening a shiny new technology to the edge of operations.
  • The integration imperative. Of necessity, business processes involve multiple applications. Each application can be assessed for digital enhancement (or end-of-lifing), and most importantly, can be evaluated from the perspective of its ease-of-integration with other, vital applications. Seamless integration is the indispensible glue that holds together the many tactical pieces of a digital strategy. (Note: creative integration is the new customization.)
  • Data rich. Data is the lifeblood of your enterprise. It flows through your applications, business processes, and assets, enabling you to measure performance and track goals. Externally, data represents the physical world including your customers, their actions, desires, proclivities and misgivings. How you store, manage, understand and act upon insights contained the ever-increasing volume, velocity and variety of data says everything about your organizations’ digital maturity.

A practical look at digital transformation and SAP’s portfolio play

As business process is at the center of digital transformation, you must examine core processes to ensure orders are tracked and transactions are processed in real-time. This is where SAP S/4HANA comes into play. SAP S/4HANA covers all core business processes (e.g. order-to-cash, procure-to-pay, plan-to-product, request-to-service) and core capabilities such as core finance, as well as a variety of more specialized line-of-business and industry capabilities.

While every business must decide what digital transformation means to them, all businesses know that they must improve the customer experience. Consumers freely turn over volumes of personal data. The return implied is an immersive experience painstakingly accrued over numerous, consistent, accurate, high-quality interactions across all touch points. Customer engagement solutions by SAP Hybris, help satisfy the demands of “always-on” consumers.

Ensuring that your business attracts, trains and retains the very best employees prompts a review of cloud-based HCM solutions such as SAP SuccessFactors.

Examining how your products and services can be sourced should compel you to evaluate the role business networks play in today’s digital economy. On this front, SAP Ariba has more than 2 million buyers and sellers leveraging its comprehensive source-to-pay solutions and business network to simply and efficiently manage relationships and spend, and SAP Fieldglass provides flexible workforce management programs for managing contingent labor.

All would agree that empowering employees with the capability to track performance, analyze trends, make informed decisions and improve business outcomes is a tremendous boon for business. SAP HANA and SAP BusinessObjects solutions afford organizations the ability to completely rethink how information is created, consumed and shared.

Pick a process and get started!

At NTT DATA, we understand that becoming “digital” is not a one-project wonder. We also understand that few enterprises can afford the time and resources of a complete business model transformation.

To help our customers identify and prioritize the process areas that could most benefit from digital transformation, we apply our Customer Friction Factor (CFF℠ ) — a proprietary framework for evaluating, understanding and improving how customers conduct business with your organization.  Following this assessment we can help you understand the degree of friction your customers are experience across channels, how that amount of friction compares to your competitors and what actionable steps you can take to improve the experience. 

In the end, the fact remains that digital transformation is paramount, and every business leader must strategize how best to quickly and cost-efficiently move their enterprise's digital-business needle from where it registers today to where it must be to advance business, sustain a competitive edge, and ensure relevancy.

So pick a business process and get started!

Contact NTT DATA today to learn more about how our SAP expertise and Enterprise-Grade Digital Business methodology can advance your digital transformation initiatives.

Post Date: 1/25/2017

Tim Clark - NTT DATA Tim Clark

About the author

Tim is a Vice-President with NTT DATA with responsibility for SAP Consulting and the global HANA COE. He has 20+ years of experience in the SAP space with a focus on leading large scale global transformation programs and outsourcing engagements. He has worked across 30+ countries and a variety of industries, including Wholesale Distribution, Semiconductors, Building Materials, Consumer Products and Oil Field Services. Previously, Tim was a Vice-President at Neoris/CEMEX and a Partner at Accenture.