SAP Digital Transformation: Centralized Harmony
Digital transformation involves integrating digital technologies, solutions and workflows into all or most areas of an organization to make data more accessible, accurate and analyzable. But it goes well beyond the tech, catalyzing a cultural change as organizations fundamentally reshape their customer and employee experiences.
Enterprises with complex, long-standing resource planning systems are under pressure to modernize their business processes in response to deep changes affecting the supply chain, employee expectations and consumer behavior. This requires a digital transformation that centralizes ERP and makes business operations more coherent, providing a single source of truth and paving the way for consolidation of multiple ERP instances.
Of course, such digital transformation is increasingly sought and implemented among companies using SAP’s leading enterprise technology.
What is SAP Digital Transformation?
A successful digital transformation strategy can involve an array of new SAP technologies (S/4HANA, Ariba, Concur, SAP SuccessFactors). Generally, it requires the migration of an organization’s legacy data into a format suitable for the latest SAP platform, as well as a holistic rethinking of business processes.
SAP digital transformation is more than a pathway to immediate change. It creates the conditions for streamlined integration of new innovations and future business growth strategies. The benefits are clear:
- SAP-based intelligent technologies allow businesses to take full advantage of data that was either never collected or previously unused. This can assist in the shift away from traditional business models, with more comprehensive and in-depth information for effective decision-making.
- Complete visibility and detailed reporting across business areas makes it easier to track the service and business lifecycle, reduce security risks and improve compliance.
- Advanced analytics improve efficiency and productivity, with real-time data and customized analysis. Logs and performance reports enable predictive maintenance and provide actionable insights for improving workflows.
- Customer experience can be personalized, coherent across an omnichannel journey, and responsive to changing expectations. Their resulting satisfaction translates into higher retention rates.
- Automated and intelligent processes cut costs and mitigate the risk of human error. The total cost of ownership is also reduced with a SAP cloud-based solution, as expenditures for maintenance and dedicated resources are often entirely eliminated.
It is notable that SAP provides customers with expertise, services, guidance and support for their digital transformation through its Cloud Success Services team.
The Five Phases of SAP Digital Transformation
Digital transformation can change your business model and innovation will optimize your business processes – when done correctly with an organized methodology.
- Preparation – Determine your objectives and identify your requirements. You’ll need a thorough understanding of your operations, processes, the business case, and the impact of a successful transformation on different departments. One key decision that must be made is regarding the best strategy for SAP implementation. Organizations need to choose whether to pursue a “greenfield” or a “brownfield” approach, evaluating the pros and cons of each option in light of their processes, requirements, business needs, budget and timelines.
- Design – Transform the strategy into a detailed project plan. This can include: a business process blueprint (indicating what needs to be customized for the SAP implementation to be successful); technical architecture (e.g., system requirements, data integration layer); documentation (e.g., configuration, functional specification, master data); roles, authorization, and compliance frameworks; testing procedures; training documentation; and data conversion tools. At this stage, you can further refine the project and its timeline based on the information revealed in the project design process.
- Build and test – Build and configure the new SAP system based on the design created in the previous phase. With the blueprint in hand, you can make necessary infrastructure changes, eliminate non-productive processes, and complete additional configuration fine-tuning to meet your specific business requirements. During this phase, iterative unit and integration tests are conducted to ensure the desired outcomes and the associated documentation is drafted based on lessons learned.
- Final preparation – Business and team leaders, employees and systems all need to be ready for go-live. Employees should be trained on using the new SAP software, and the system itself should be subjected to stress testing (e.g., peak volume, daily load, etc.) and integration or functional tests. Plan out your go-live strategy, including a few unpleasant what-if scenarios, to ensure an effective, economical deployment.
- Go-live and support – Migration of all your data to the new SAP system’s production environment, with a system for monitoring transactions and tweaking performance as needed. Frequent maintenance checks will ensure everything is progressing as expected. A production support team should be active during this phase, troubleshooting, assisting end users, and sharing documentation. This can transition into long-term ongoing support, maintenance and managing a knowledgebase for future reference.
More tips for transformation of your business processes
Do things in order.
Every transitional phase of the methodology we outlined here should include testing of the system, its components, or the changes you introduced. User acceptance testing is critical in this regard and should be introduced early, as it also gives the business users a more tangible engagement with the process.
A successful digital transformation strategy requires taking a holistic view of the implementation project, with an eye on interdependencies and post-implementation synchronization. This also includes identifying training opportunities among your employees and establishing realistic KPIs. Defined and achievable milestones should include top priorities and quick wins that demonstrate the value of the SAP transformation initiative.
At the same time, take care not to focus on the migration and solution alone. An SAP digital transformation entails cultural changes that impact corporate strategy, management, roles and responsibilities. Make sure everyone at all levels fully understands what it means for them.
Data and customers can be powerful forces in shaping your SAP digital transformation. Robust data-driven insights can optimize your business operations and improve the migration process, while customer experience can guide prioritization of digital solutions for service personalization. Take the time to create a buzz among your customers regarding how digital transformation serves them and they may become your most effective champions.
Challenges of Digital Transformation
A SAP digital transformation involves a comprehensive deployment of solutions and processes across multiple sites. Whether executed serially or simultaneously, there are several key challenges and factors to consider during the rollout (especially on a global scale).
- The organization’s characteristics: Homogeneous business process activities are relatively easy to migrate to more centralized digital operations, as they are already standardized across units. However, organizations with globally diverse units face greater difficulty transitioning to standardized processes.
- Time and cost: A misidentification of infrastructure or workflow pain points can undermine the digital transformation due to a miscalculation of the project objectives or scope. This can lead to wasted effort and resources, poor business user buy-in, inefficient internal collaboration, and an unclear ROI.
- Code conversion: If your legacy system has accumulated code customizations, patches and workarounds over the years, it may be extremely difficult to adapt them to a new SAP framework. In addition, you need to identify customizations and fixes that may be unnecessary after digital transformation, as well as likely validation issues.
- Testing: At the production stage, downtime is a primary concern. If you don’t pre-test the new solutions you want to deploy, then the risk of system failures increases. And if the risk is not detected until go-live, of course, the result is even lengthier, costlier outages.
- Differing regulations: Every country has its own regulations regarding your business activities (i.e., tax codes, regulatory compliance, labor laws, etc.). On the other hand, a key objective of a digital transformation is to broadly standardize operations. Balancing these two demands across jurisdictions is not an easy task; yet, if it is not accomplished, then it can impact the quality of both internal and external audits.
SAP Adapts to Digital Transformation Needs
SAP is the clear leader in the ERP market, in part because the company knows how to respond to market demands. Part of their recent adaptation was the introduction of SAP S/4HANA and other solutions, for example, with technological changes well suited for digital transformations.
A significant aspect of most SAP digital transformations is migration to the cloud, with the convenience it offers for SaaS delivery of ERP applications. This also more easily enables remote mobile access, which has become a fairly standard expectation among users.
For an e-commerce digitalization initiative, SAP offers products such as SAP Commerce Cloud and SAP Ariba. Blockchain strengthens information security for trusted transactions after a large-scale SAP digital transformation.
SAP has expanded its analytics capabilities to support digital transformations that include new sources of data, such as the Internet of Things, and new demands such as real-time analysis. As part of its advanced analytics, SAP is leveraging the centralization and standardization of organizational data to apply AI and machine learning to identify trends and generate predictive insights.
Finally, SAP introduced software development kits (SDK) to support developers. Some aspects of the kits were explicitly designed to help customers accelerate their digital transformation and achieve their business goals.
SAP S/4HANA in the Digital Transformation Journey
SAP S/4HANA, released in 2015, is a complete, modular cloud ERP system and application suite powered by SAP HANA, with even more sophisticated AI and analytics capabilities. Designed for the digital economy, it provides a single source of truth for real-time management of business processes, dynamic planning and analysis, as well as seamless connections to internal collaboration networks. These features and capabilities make S/4HANA an ideal solution for comprehensive digital transformations.
SAP’s previous ERP system – SAP ECC – is slated to sunset in the coming few years. The planned end of maintenance and support for the legacy system is increasingly pushing many companies to move to SAP S/4HANA sooner rather than later. However, many of them also see the move to S/4HANA as an opportunity to carry out a broader digital transformation. Specifically, this includes reengineering and standardizing business processes to better fit operational needs that are no longer met by previous configurations and older systems.
SAP S/4HANA enables the transformation through three primary aspects of the solution:
- A model of centralized aggregation of data from multiple sources enables standardization, big data processing, and high throughput. Embedded analytics, machine learning and predictive modeling based on the collected data give you real-time decision support and actionable insights.
- A more user-focused interface, Fiori, is accessible via any device and includes personalized role-based cockpits and digital assistants. The solution provides enhanced visibility, providing employees with detailed information on their personal KPIs and enabling managers or supervisors to see the larger picture.
- Innovative process automation streamlines business workflows and supports innovation, agile application development and future digital technology integrations.
Panaya and Your SAP S/4HANA Digital Transformation
A digital transformation journey to SAP S/4HANA can be fast, accurate and efficient journey with the right tools and expertise. Panaya’s unique technology ensures a zero-risk migration and go-live without delay. The solution provides visibility into the project’s scope, effort, risks and common pitfalls of the transition to SAP S/4HANA.
Preparation and ECC optimization – Panaya’s ECC Optimization providesa toolbox that helps Maintain Your Current ECC and Prepare for a Low-Risk Conversion by supporting pre-conversion activities, such as moving to the HANA database and code cleaning. Whether it’s moving to HANA, upgrading to EHP8, cleaning your ECC system, or understanding the impact of S/4HANA on your current business process, Panaya provides you with complete visibility and control, guiding you to confidently take one step closer to SAP S/4HANA.
Assessment – Panaya’s S/4Assess helps build a plan and a business case, with the costs and benefits of the project. It provides a complete picture, covering how much effort – such as time, testing, and planned correction activities – is required to complete the project. Panaya’s rich dashboard displays the information on effort, progress, defects, risk and best practices, with drill-down into the code for each suggested change. Panaya can also provide analysis to help you decide whether to deploy on-premises or in the cloud, to go with a greenfield or brownfield implementation, and other deployment options.
Migration – Panaya’s S/4Convert covers end-to-end project execution, ensuring you understand and control the full scope of the project. This includes managing all workstreams, corrections and testing activities, some of which are completed automatically (such as through Automatic Code Corrections). Panaya’s built-in recording functionality tracks compliance and the use of e-signatures, in order to lock in approvals, while Panaya’s testing assets are added to a test library for re-use in future projects. S/4Convert helps minimize risk and significantly reduce project time and cost.
S/4HANA Version Upgrade – Panaya’s S/4Accelerate covers end-to-end project execution when upgrading from an existing SAP S/4HANA implementation to a new version of S/4HANA. This enables improved functionality and can help businesses upgrade efficiently and rapidly.