A Simple Framework for Driving Benefits from an S/4HANA Program

It’s an easy thing to say, and probably not 100% true that there are no benefits to simply implementing IT and that you need to change the way you do things to actually get improvement in your business (I believe that there are some benefits that occur naturally and of course benefits of being on a supported release, security etc.)

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However, if we work with this premise, what is a good framework for identifying benefits and driving them? I assume everybody has one, but maybe they don’t, so if I type out a very simple version that everyone can either choose to read it or not. And it appears not everyone does have a framework as I keep being asked for one.

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So, if you start from the 1st?stage of a large S/4HANA program, typically you will interview the key stakeholders and either by benchmarking or a study you will establish that you are doing the program for some key reasons for example:

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1.?????? Better customer service and reduced lead times

2.?????? Redeployment of staff to customer phasing roles

3.?????? Cash flow

4.?????? Sustainability, etc.

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I would term these?Impact Areas –?i.e., the overall transformation target/objective.

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You can then look at the scope of the program and work out what is included and create a set of end-to-end value streams Horizontal and Vertical that covers the scope.

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You can then work out the Improvement Opportunities or Value Unlocks – high level change/bucket categorization to secure the objective - e.g., optimize inventory.

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And then identify Value Drivers – i.e., the changes to be made by capability to secure the value unlock and to which KPIs are attached – e.g., stock turns.

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And then at a lower level attach OPI’s to individual components that will add together to deliver the KPI and the overall objective.

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But its far more complex than this as there are multiple KPI’s affected by each OPI, and nothing really is delivered in terms of benefit unless in most cases there is a business change associated with the solution component delivered and some of the solution components are nothing to do with systems. They could be to do with equipment or data or training, etc.

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Let’s take an example, Company X wants to improve many things, reduce carbon footprint, become more profitable, improve customer service from its S4 program, etc.

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One of the end-to-end processes we look at is customer (revenue generating) end to end process?where we identity demand buy stock to put into a warehouse from where it is shipped to their stores and sold to end clients. We look at this value stream and establish that we should be able to take a week out of time from order to stock on store and this will improve customer service and time to serve KPIs, it will also reduce working capital by 5 days, and if by bench-marking against the best in class, we should be able to reduce the head count in the goods-in department by automating the process by 50% saving money as well, so a single improvement affects multiple KPIs and also multiple Value Unlocks.

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We then establish what new capabilities are needed to provide these improvements.

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It’s clear from the workshop that the current goods-in process is not good and results in delays, and many mistakes so a capability to do automated good receipts would be great at, a group of wise enterprise architects and business people are gathered together and?it is worked out by the enterprise architects that this can be delivered by a series of solution components.

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1.?????? You need WIFI/5G in good in (some of the stores are in remote places)

2.?????? All the purchased goods need to be labeled correctly

3.?????? The Staff need to be trained and redeployment activity undertaken (Company X is a good employer)

4.?????? BAR CODE Scanners and Robots for put away need to be procured and delivered - this is actually being done by a separate modernization program

5.?????? And SAP EWM need to be put in

6.?????? Master data and purchase order data had to be improved

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?Now the tricky part, each capability is delivered by solution components (most non SAP) and you can track them and say what has to be in place by when, and as you release the components and create the new capability you should be able to record the improvements in OPI’s and there for the KPI’s and prove the impact you have had on the bottom line as you unlock the value.

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Complex/simple? It depends on your point of view… worthwhile probably but at the correct level of detail but does it prove the S4 based program delivered? Yes!

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PS: It gets more complex as Objectives/KPI’s change and you will want to deliver continuous improvements