Red Thread Transformation: Looking Through The Right Lens (Part 1)

David B. Smith

Part 1 in a 2-part series about the importance of devising a structured and referenceable digital transformation strategy. Read Part 2. 

Many organizations are looking to come to grips with the implications of a move to an intelligent ERP system on a 2025 timescale. They want to understand what such a move can deliver through increased speed of performance, the value of a drive to standard, and the promise of their roadmap innovation. However, is a deadline-driven perspective that looks at the technical and system changes really the right lens to be looking through to unleash true business potential?

As organizations challenge themselves to extend their core business capabilities, to drive more adaptive and innovative business models, there is a recognition that current systems of record will take them only so far on this journey. Delivering a true step-change in business potential challenges some fundamental strategic business principles, conversions, and rules.

What has really changed for business in this digital era is the pace; the need to adapt, adopt, and restructure as a pattern of constant business reality; and the need for greater visibility. This real-time, connected, and autonomic business capability driven by digital technology is the factor driving the real business potential. What business often needs in support its future strategy is a system of action that can articulate a very close approximation of the digital to the physical. This involves a better connection to customers, suppliers, and partners with the visibility, simulation, and autonomy required of a more advanced digital agenda.

Historically, most companies experience a once-in-a-generation chance to deliver some fundamental change in the way the business operates. This may be driven by a need to adapt to the market or the customer or to take advantage of new thinking or technology. This requires radical changes to underlying systems. We are seeing that forthright companies are looking at this “2025 migration deadline” as a generational opportunity to create the baseline digital-enterprise solutions to deliver their future digital business.

A red thread for transformation: connecting the dots

Companies striving to take further advantage of this digital journey recognize that they have to get smarter in thinking this through. How can they work together across their lifecycle and plan a way forward so that future business systems are more agile and capable to address the ever-expanding future needs of the business?

Too often, business-change programs pile into the architecture and deployment strategy without time spent building the business rationale that drives transformational change. Inevitably, to connect the corporate strategy in support of the business imperative, a well-aligned approach is needed. This needs to change the business model and take full advantage of the technological innovation in the most efficient and focused way, ensuring that the resulting outcome is fully realized in sustainable monetary terms.

The secret to success is doing it in a way that navigates a “red thread” of continuity that connects the business ambition with the business value in a well-conceived transformation plan articulating the direction.

This approach enables traceability of outcome back to strategic intent. That is, when having conversations around the “how to” of design choices or deployment approaches, we can relate to the “what” we aim to achieve in operational practice and the why” of the strategic and business value that this will deliver.

In an agile approach, each team member and partner in the transformation is playing their part in making this happen, but too often they lack a reference guide. This “red thread” structured referential approach helps articulate corporate intention, guide decisions, and clarify outcomes. It also accelerates delivery and ensures that the outcome is driven by real business intent and value.

A more structured and referenceable digital transformation strategy is achieved by these three clear integrated and iterative stages:

  • Ambition: “Why do you need to do what?” – To align strategy via business capability models and identify pain points and gaps; essentially, to define the ambition of the business with a pragmatic understanding of what the business can achieve with a new digital platform
  • Value: “What can you achieve?” – To determine the value of changes to business conventions, processes, and technologies; the real business outcomes for the customer, shareholders, and employees in doing “what” differently; and create recommendations to close gaps
  • Direction: “How would we go about making this happen?” – To define a roadmap to develop future-state architecture and implementation options and create a recommendation to the board; in short, to determine how to move from the current business model in logical steps that address the changes needed to business operations, the applications landscape, and the transformational change, and how to make the case for change

Conclusion

Taking advantage of new business innovation and enhancing digital business capabilities can be a complex challenge. Too often, companies take a total cost of ownership (TCO) or architectural view. While this is needed, the true value potential of digital business change needs to be correctly informed by the options, choices, and business value that this offers.

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David B. Smith

About David B. Smith

David B. Smith is a chief business transformation director within the Business Transformation Services (BTS) team, at SAP. He advises major global and UK clients on how to drive transformation agenda to make the most of their investments in SAP solutions. David started work in the manufacturing sector and has broadened that experience to include business and digital strategy as well as transformation programs across a range of industries including utilities, finance, consumer products, telecommunications, and government. He is an experienced senior business Management consultant with a passion for delivering business transformation through strategy, design, and delivery. David has over 30 years of strategy and program management and business consulting with the likes of SAP, EY, Capgemini, and Andersen Consulting.