The Engineered Adventure: From Data to Destiny

After having finished the choreography of an SAP S/4HANA - driven digital transformation in the blog series parts

• Show Me the Value: The Choreography of an SAP S/4HANA Transformation,

• What's in it: The Business Values of an SAP S/4HANA Transformation,

• Finishing the Choreography: Designing value-driven SAP S/4 HANA Transformations,

it's time to share some success stories of the referring digital transformations today starting with an engineering company.

The engineering company, which serves as a reference, recognized emerging market trends in 2019 indicating a shift towards outcome-based business models and increased demand for flexible manufacturing solutions.

The vision: Manufacturing as a Service

The C-level suite of the company envisioned a transformational journey to capitalize on the market trends of agility and customer centricity by offering innovative pay-per-use services and manufacturing as a service. In 2020, it was decided to complete the changeover in a model plant within two years in order to switch the decline in capacity requirements due to the pandemic into the company's design in a meaningful way. This vision also entails leveraging SAP S/4HANA's advanced capabilities for data integration, analytics, and real-time insights to support this new business model.

The engineering company embarked on an SAP S/4HANA implementation journey in parallel to enable seamless data integration across all business functions, including sales, manufacturing, finance, and customer service. By consolidating data from disparate systems into a unified platform, SAP S/4HANA was supposed to provide a single source of truth for decision-making and to enable real-time visibility into key business metrics.

Leveraging manufacturing capabilities should allow customers to outsource their manufacturing needs to the company, providing them with on-demand access to production facilities, resources, and expertise. SAP S/4HANA's production planning, scheduling, and execution functionalities were selected to support efficient and agile manufacturing operations.

The Project: stepwise towards the digital future

Reviewing the first phase of the transformative journey, five pivotal steps illuminated the path toward the successful implementation of SAP S/4HANA as the foundation for their paradigm-shifting digital transformation, enriched with many process engineering solutions:

1. Strategic Alignment: At the outset, the company's leadership, orchestrated a comprehensive alignment of strategic objectives with the vision of the impending digital transformation. Through diligent planning and deliberation, they ensured that every facet of the implementation was intricately woven into the fabric of the company's overarching goals. This alignment set the stage for a cohesive and purpose-driven transformational journey.

2. Robust Planning and Preparation: The implementation team embarked on an exhaustive phase of planning and preparation. Recognizing the significance of solid groundwork, they diligently mapped out the intricacies of data integration, process optimization, and system migration. Through comprehensive risk assessments and contingency planning, they fortified their resolve to navigate potential challenges with agility and foresight.

3. Agile Implementation: With the rough - cut blueprint laid out, the implementation team dopted an agile approach to execution. By breaking down the transformational journey into manageable phases, they fostered a culture of adaptability and responsiveness. Through iterative cycles of implementation, testing, and refinement, they ensured that each milestone brought them closer to their envisioned destination.

4. Seamless Integration and Training: Central to the success of the implementation was the seamless integration of SAP S/4HANA across all facets of the organization. Moreover, comprehensive training programs, equipped employees with the requisite skills and knowledge to leverage the capabilities of SAP S/4HANA effectively. This investment in human capital served as a cornerstone of the company's digital readiness.

5. Continuous Monitoring and Optimization: Through the establishment of robust KPI frameworks, the responsible operations managers tracked the performance metrics, ensuring that the digital transformation yielded tangible returns on investment. Moreover, they fostered a culture of continuous improvement, leveraging insights gleaned from real-time data analytics to drive iterative enhancements and refinements.

The Success: Strategic goals executed consistently

Having done a benefit mapping from strategic alignment (OKRs) down to operational monitoring of KPIs after 18 months of running the new "as a service" - solution, the following KPI figures have been reported:

Revenue Growth:

KPI: Increase in revenue generated from new business models enabled by the new digital solution landscape.

Revenue growth of 11% within the first year of implementation, driven by the adoption of pay-per-use and manufacturing as a service offerings.

Customer Satisfaction:

KPI: Improvement in customer satisfaction scores post-implementation.

Customer satisfaction scores rise by 24%, indicating a heightened level of satisfaction with the new pricing and service delivery models.

Time-to-Market:

KPI: Reduction in time taken to introduce new products and services to the market.

Time-to-market decreases by 47%, allowing the company to swiftly respond to market demands and stay ahead of competitors.

Cost Savings:

KPI: Decrease in overhead costs and inventory levels.

Overhead costs reduced by roughly 25% due to more efficient resource utilization and just-in-time manufacturing (project costs unconsidered)

The KPI figures mentioned were only determined on a random basis, but represent a clear indicator for having achieved the tangible benefits derived from the digital transformation initiative, underscoring its positive impact on key aspects of the company's operations, financial performance, and market position.

The Conclusion: Unveiling the New Frontier

In a moment of revelation, Anna Wagner, the visionary internal program representative, identifies the impact on price calculation in particular as a key added value of the first phase of the digital transformation: "Gone are the days of rigid pricing structures; pay-per-use is our trailblazing direction now," she proclaimed.

Petra Leineweber, head of Program Portfolio Management, beheld a transformation of unprecedented magnitude. "Revenue surged, buoyed by innovative pricing models and heightened customer satisfaction," she recounted with pride. "Operational agility soared as time-to-market plummeted, while cost efficiencies propelled profit margins to new heights," she added, her smile a testament to the tangible impact of their endeavors.

The second phase of the digital transformation is currently being implemented. Core objective of this next chapter is the service business in particular to be made more flexible for customers who continue to invest in their own machinery.

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Michael Philipzen