Benchmark-Driven vs. Bottom-Up Business Cases for SAP S/4HANA: Which Approach Leads to Real, Defensible Results?

When building a business case for an SAP S/4HANA implementation, companies often default to a "benchmark-driven" approach. This involves comparing current performance metrics to industry standards—whether it's inventory turns, days of payables outstanding, or other key indicators—and then projecting the potential improvements that SAP could deliver.

On paper, this sounds promising. Who wouldn’t want to achieve the same level of operational efficiency as the top performers in their industry? But there's a big flaw in this method: it's often disconnected from the actual day-to-day realities of your business. A business case based purely on benchmarks is abstract and risks being too idealistic.

In contrast, a "bottom-up" approach, which involves collaborating with employees closest to the operational processes, tends to produce more accurate, realistic, and defensible results. By involving the people who understand the current pain points, manual inefficiencies, and workflow gaps, companies can better understand how specific system improvements—like better data visibility or automated tasks—will drive tangible benefits. Here’s why the bottom-up approach is more reliable and how it can guide a more solid business case for your SAP S/4HANA project.

Benchmark-Driven Business Cases: The Risks of Chasing Industry Metrics

A benchmark-driven business case revolves around how far your company is from reaching industry standards in key performance areas. The idea is to highlight the gaps and argue that SAP S/4HANA will close them, resulting in significant improvements. But there are pitfalls in relying on this approach:

1. Theoretical Gains vs. Realistic Results Benchmarks reflect the performance of top industry players, but the factors that got them there might not apply to your business. Can you actually reach the level of efficiency implied by the benchmark? Or is it an optimistic stretch?
2. Lack of Connection to Current Pain Points A business case built purely on benchmark gaps often ignores the real-world operational challenges your employees face. Will hitting that benchmark truly make their jobs easier, or is it just a number on a report?
3. Questionable Defensibility While benchmarks are useful for setting high-level targets, they don’t reflect the unique constraints of your company. When stakeholders ask why the projected improvements are achievable, it can be hard to explain beyond “industry best practices.” This can lead to skepticism during the approval process.

Bottom-Up Business Cases: Grounded in Operational Reality

A bottom-up approach focuses on understanding the day-to-day struggles and inefficiencies faced by your employees—the ones closest to the work. This method doesn't just rely on industry comparisons; it digs deep into how SAP S/4HANA can address specific operational pain points. Here's why it's a better approach:

1. Real, Measurable Improvements By involving line workers and managers in the process, you gain direct insights into how a new system could streamline their work. For example, your warehouse employees might spend hours every week manually inputting data that SAP could automate, freeing up time for higher-value tasks. These tangible improvements provide a much clearer, defensible basis for the business case.
2. Data-Driven Solutions Employees can point to specific inefficiencies, whether it’s duplicative manual processes, outdated systems, or lack of visibility into critical data. The business case can then quantify how new tools—like real-time reporting or integrated workflows—can address these issues and deliver measurable benefits.
3. Increased Stakeholder Buy-In A bottom-up business case has the advantage of having employee input baked into the plan. When the people doing the work see that their voices have been heard, they’re more likely to embrace the new system and help drive the success of the project. This level of buy-in can make the difference between a smooth transition and a rocky implementation.

Building a Defensible Business Case for SAP S/4HANA

While benchmarks can provide useful context, a business case that’s rooted in the real-world experiences of your employees is far more defensible. When building your SAP S/4HANA business case, consider these steps:

1. Engage Employees Early Talk to the people closest to the day-to-day operations—whether it’s warehouse staff, finance managers, or sales teams. Ask them where they see the biggest inefficiencies and how a new system could make their jobs easier.
2. Quantify the Operational Gains For each pain point, try to estimate the time savings, error reductions, or other measurable benefits that would result from adopting SAP S/4HANA. These can include everything from faster approvals to fewer manual data inputs.
3. Use Benchmarks for Context, Not the Core Incorporate industry benchmarks as a secondary validation, not the foundation of your business case. Use them to show what’s possible in the best-case scenario, but keep the focus on realistic, achievable improvements grounded in your company’s operations.
4. Build a Clear Value Realization Plan A key to a defensible business case is showing not just how you’ll achieve the benefits, but how you’ll measure success. Develop a roadmap for tracking key metrics during and after implementation to ensure the projected gains materialize.

While it’s tempting to aim for the lofty goals promised by benchmark-driven business cases, the truth is that these often fall short of reality. A bottom-up approach, built from the insights of your employees, gives you a much clearer path to success with SAP S/4HANA. By grounding your business case in real-world inefficiencies and measurable improvements, you create a far more defensible—and achievable—vision of success.

By adopting this approach, your business case not only resonates more with internal stakeholders, but it also builds confidence that the benefits of SAP S/4HANA will actually be realized.