In the first part of the post series, we addressed fundamental inquiries crucial to a successful SAP S/4HANA implementation, covering pivotal questions around the different SAP S/4HANA impact layers, such as SAP infrastructure, data migration, data integration, and applicatory processes. In the second part we drilled down from the generic added values of an SAP S/4HANA Transformation to customer - specific values illustrated by the case study of an engineering company. Let us now take an in-depth look at how a company's potential added value can be identified at the application and process level in the first place, so that it can then be evaluated as part of the preliminary program planning and incorporated into the individual implementation tranches depending on the added value and implementation risk, taking dependencies into account. In order to focus the discussion on the essentials, it is necessary to differentiate at an early stage between mandatory changes (mandatory in the migration from ECC to S/4HANA) and optional changes (additional benefits by replacing legacy or introducing new functionalities). Mandatory Changes during the migration to S/4HANA The following topics must first of all be regarded as functionally mandatory for the migration and are therefore non-negotiable unless they have already been implemented in preliminary projects: Adoption of New General Ledger (NewGL): SAP S/4HANA introduces a simplified and unified General Ledger (GL) structure known as NewGL. Customers must migrate their existing GL data and adjust their GL configuration to align with the NewGL framework. Implementation of Business Partner: SAP S/4HANA replaces the separate customer and vendor master data with a unified entity called Business Partner. Customers must migrate their existing customer and vendor master data to the Business Partner model and adjust related processes and transactions accordingly. Conversion to Universal Journal: SAP S/4HANA consolidates financial accounting and controlling data into a single table called the Universal Journal. Customers must convert their existing accounting data to the Universal Journal format and adapt reporting, analytics, and reconciliation processes to utilize the new architecture. Adoption of Material Ledger: SAP S/4HANA streamlines inventory valuation processes through the Material Ledger functionality. Customers must adjust their existing Material Ledger configurations and processes to align with the simplified functionality in S/4HANA. Transition to Asset Accounting in SAP S/4HANA: SAP S/4HANA offers a completely renewed asset management module, requiring customers to adjust their existing asset accounting processes, configurations, and master data management to align with the new functionalities and architecture. Removal of Legacy Transactions and Functionalities: SAP S/4HANA removes certain legacy transactions and functionalities that are no longer supported or relevant. Customers must identify and replace any deprecated transactions or functionalities with updated equivalents available in S/4HANA. This has to be considered when using the results of the readiness check in terms of the so-called simplication items and custom code adjustment requirements. Transition to SAP Fiori User Interface: SAP S/4HANA encourages the use of the SAP Fiori user interface for improved user experience. Customers must adapt their existing user interfaces due to the fact that the former non-Fiori transaction is no longer existent. Benefit Mapping for preparing the S/4HANA Roadmap In order to use a structured framework for aligning project objectives with strategic business goals, the customer we are referring to, used benefit mapping of the Managing Successful Programmes (MSP) approach before planning his SAP S/4HANA project in implementation tranches. By mapping benefits, you ensure that each wave of the SAP S/4HANA project directly contributes to overarching business goals (represented by the long-term OKRs), such as increasing efficiency, enhancing customer satisfaction, or improving profitability. This ensures that resources are allocated efficiently, focusing on delivering the most significant value early in the project lifecycle. For an SAP S/4HANA implementation, this could mean prioritizing modules or functionalities that address immediate business needs or pain points. The Value Dependency Network has to be interpreted from two ends: from the right to answer "WHY are we changing capabilities?" from the left to outline "HOW we'll be changing the capabilities through project streams within the transformation program". This proactive approach enables project managers to anticipate potential obstacles to realizing benefits and develop mitigation strategies accordingly. In the context of an SAP S/4HANA project, this could involve identifying potential integration challenges or data migration issues early on and moreover provides a common language for discussing project objectives and outcomes, fostering alignment and collaboration among stakeholders. In the case of an SAP S/4HANA project, this could involve engaging business users, IT teams, and executives in discussions about the expected benefits and their importance to the organization. Once the most important benefit maps have been created, each of the (sub-)projects have been evaluated regarding their impact on the dimensions of Added Value to Enterprise's success Ease of implementation (to take also potential risk into account) As a consequence, all potential program components can be "value - mapped" in a 4 quadrant model depending on the degree of added value or Ease of Implementation. The orange squares indicate the mandatory components of a program, while the blue diamonds tend to show the optional but often very relevant (sub)projects in terms of added value. Once you've done that, it's time to plan up the entire program according the results of the value mapping and the applicable budget. In our example, the program planning follows the idea that the program first ensures that the mandatory program components are implemented on the critical path. Components that are a prerequisite for the subsequent implementation of program components with very high added value are also implemented as early as possible. The remainder of the program (in this case until the end of 2027) will be implemented in different agile implementation tranches according to the priorities based on value mapping and scheduled accordingly. In creating a holistic SAP S/4HANA program plan, success hinges on some logical steps: deriving benefits from OKRs, mapping them against program outcomes, and differentiating between mandatory and optional items. Through transparent evaluation, prioritization, and consideration of dependencies, organizations can forge a structured roadmap that not only ensures project success but also aligns seamlessly with strategic objectives. Embracing this approach fosters a dynamic, agile environment where every program item contributes meaningfully to the overarching goals, ultimately driving transformative success for the enterprise. Michael Philipzen

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. Michael Philipzen