Navigating the Complexity of Large-Scale Transformation Program (LTP): From Setting Objectives to Tracking Benefits

In today's dynamic digital era, organizations are continuously seeking to drive sustainable change that brings tangible business value. Large Transformation Programs (LTPs) have emerged as a crucial vehicle for achieving these ambitious goals. However, these programs are about much more than just implementing new technology—they necessitate a holistic transformation of the business operating model, encompassing changes across people, processes, data, and technology. The ultimate goal? Enhancing business performance and outcomes.

The Complexities of Large Transformation Programs

Implementing a Large Transformation Program (LTP) is no small feat. The intricate nature of these programs—comprising multiple components, several partners, and phased releases over many years—poses significant challenges. Identifying and tracking the desired business benefits becomes increasingly difficult as the LTP progresses through its lifecycle.

Our Structured Approach to Transformation

Our LTP Method offers a structured approach designed to navigate this complexity effectively, ensuring that organizations can pinpoint and track the benefits of their transformation initiatives.

• Defining Transformation Objectives: The journey begins by clearly defining the transformation objectives of the program, typically falling into one of 6 impact areas - revenue growth, working capital, cost reduction, operating margin, sustainability, and branding/reputation. These objectives must align with the overall strategic goals of the organization, providing a clear vision of the desired transformation outcomes.
• Determining Capability Changes: Once the objectives are set, the next step is to identify the necessary capability changes to achieve said goals. This involves conducting stakeholder interviews and analyzing the current state of the organization's capabilities and operating model to uncover pain points and opportunities for improvement. Capability changes may include process re-engineering, adopting new technologies, or altering organizational structures and cultures.
• Mapping Out Capability Changes: To ensure transformation success and enable the realization of business benefits, it's critical to map out these capability changes thoroughly. This mapping should detail the specific improvements (Value Drivers, delivered by a single or group of capability changes) required in various business areas and illustrate how these improvements contribute to delivering business benefits (Value Unlocks), aligned with the transformation objectives.
• Linking Capabilities and Processes: In addition to understanding the capabilities of a business, and the necessary changes to improve those, understanding the relationship between business capabilities and processes is fundamental. The reason for this is because for SAP- enabled change we gather requirements by process, build by capability, test and deploy by process. By clarifying the many-to-many relationships between capabilities and processes, organizations can determine the requirements that capability changes impose on processes, thus the needed solutions to satisfy said requirements, and ultimately deliver the capability change and expected benefits.

Proving Benefit Realization

In LTPs capability improvement and bottom-line benefits can be delivered by various solution components— some IT, some non-IT, some SAP, and some non-SAP—implemented in multi-partner environment, increasing the complexity of relationships between objects that need to be tracked to prove the benefit delivered by a specific solution. So in the end how does an organisation know if benefits have been realised?

This is done through monitoring of KPIs (Key Performance Indicators) and OPIs (Operational Performance Indicators), understanding the relationship between the two and their respective linkage of KPI to Capability Change and OPI to Process.

On an LTP scope and at LTP scale, the connection between a KPI improvement, and the process improvements needed is complex. KPIs are likely comprised of data derived from OPIs – for example Inventory Turns KPI will be influenced by ‘lower-level’ forecast and stock accuracy measures.

Therefor one can’t and shouldn’t expect to link KPI improvement directly to a Process (or specific Solution) but should link it to a Capability Change.? And link Process/Solution changes to one or many Capabilities. And measure the success of the Process/Solution change through OPIs..

An Illustrative Example

Consider the insights shared by David Lowson in his article, "A Simple Framework for Driving Benefits from an S/4HANA Program ." He details how a large enterprise (Company X) aimed to improve multiple aspects, including reducing its carbon footprint and enhancing customer service and profitability via an S/4HANA program. One critical focus area is optimizing the end-to-end customer (revenue-generating) process, which includes identifying demand, purchasing stock, warehousing, shipping, and ultimately selling to end customers. By closely examining this process (also known as a horizontal value stream), it’s determined that reducing the order-to-stock on store time by a week could significantly enhance key performance indicators (KPIs) like 'customer service' and 'time to serve'. Moreover, this optimization would reduce working capital by five days. With best-in-class benchmarking, we identified an opportunity to automate the goods-in process by 50%, thereby also reducing headcount and saving costs—all contributing to multiple KPIs and Value Unlocks.

From the process workshop discussions, it becomes clear that the current goods-in process is inefficient, resulting in delays and frequent errors. The solution? Implementing automated goods receipt capabilities. A team of experienced enterprise architects and business leaders have mapped out the required solution components to deliver the required improvements:

• WIFI/5G Infrastructure: Ensuring connectivity even in remote store locations.
• Correct Labeling: Ensuring all purchased goods are accurately labeled.
• Staff Training and Redeployment: As a responsible employer, Company X will train and redeploy staff.
• Barcode Scanners and Robots: Procuring advanced technology for automated goods put-away—currently part of a broader modernization program.
• SAP EWM Implementation: Integrating SAP Extended Warehouse Management.
• Master Data and Purchase Order Data Improvement: Enhancing data quality for operational excellence.

So where is the challenge? The complexity lies in the ability to track each solution component that delivers the capability change in an environment where solution components will be distributed across locations and time. And as each component is released, it is crucial to record improvements in OPIs, which in turn increasingly influence the KPIs, and prove the impact of the changes that unlock the value.

Conclusion

Identifying and tracking benefits is certainly not a simple task, and one which is a must for LTPs…

To aid organizations avoid complexity and drive sustainable business change that generates significant value our LTP Method advocates and helps build precise relationships between the objects that need tracking to prove value has been delivered. It establishes a framework to create a golden thread connecting Transformation Targets, Impact Areas, Value Unlocks, Value Drivers, Capability Changes, Value Stream Processes, Program Requirements, and Solution Components.

To explore more about identifying and tracking benefits throughout your LTP, join us on July 12th at 2 pm CET for our 7th webinar in the LTP series: "From Ideas to Impact: How to Identify and Track Benefits throughout your LTP."

Secure your spot and register today via the link: From Idea to Impact: How to Identify and Track Benefits throughout your LTP

Embark on your transformation journey with a structured method that guarantees sustainable business change and value realization.

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