Undercover CIO: Building the Case for SAP S/4HANA

Undercover CIO in SAP S/4HANA July 27, 2019

We’re inching closer to SAP's 2025 end-of-service deadline and companies across North America are evaluating when they need to make the move to SAP S/4HANA. Yet, most are still struggling with one of the biggest barriers to the new, intelligent enterprise enabled ERP—building a strong business case.

As a global CIO charged with not only building a case, but making the move, I can shed some light on an approach to this challenge and what to avoid in the process. But before I even get into what to include in the business case, who should be at the table, and any other considerations, I need to stress the most important factor: Your business case is not about upgrading to the newest technology. Your business case is about solving existing business issues in a new and improved way.

Every Problem Needs a Solution

Asking for an upgrade just for the sake of an upgrade is not going to cut it. You’ll be faced with budget restrictions and naysayers that follow the, “if it ain’t broke, don’t fix it,” mentality. Many companies have this mindset and are still running early 2000 instances of SAP. So, why take that approach when you know you’ll be faced with roadblocks?

Focus on existing business processes first and ask questions. Are your business processes efficient and effective, or are they fractured and siloed? Do they enable a lean and/or agile organization? Can your business processes adapt with your changing competitive landscape? Is your talent pulling data out of SAP and manipulating it in spreadsheets? Can your executives trust this information and use data to drive informed decisions? Are you able to beat your competition and become an intelligent enterprise?

Bring SAP S/4HANA Along for the Transformation Ride

Start by solving your business issues and build in how SAP S/4HANA helps eliminate the roadblocks and enables the proposed solution. I’ve seen too many corporations go out there and ask, “How do I build a business case on SAP S/4HANA?” The answer is, “you don’t.” Instead, focus on what it is you’re trying to achieve, and then bring SAP S/4HANA along for the ride.

When we went through the exercise at my company, we never mentioned ERP, we never mentioned SAP, and we certainly never mentioned SAP S/4HANA. What we started with was, “We don’t have solid data to make informed decisions. We don’t have the ability to adjust our business processes as our business conditions evolve without a big effort toward customization.” We purposely drove our efforts as a transformation of business operations. We presented that it takes new processes, leading talent, business strategy, and enabling new technology to do it. Only after making that case did we bring into the conversation that emerging technology would not work within our existing legacy environments. We said that SAP was the leader in our industry, and we should consider SAP S/4HANA as part of the solution.

Who’s at the Table?

Typically, the business case is spearheaded by either the business function within the corporation that is trying to solve the need, the process team that is trying to help enable it, or by the IT/IS organization. One lesson that I learned early on as a CIO is that I or my IT/IS team cannot build the business case alone, and we don’t present any numbers that finance has not agreed to.

So, before you even begin the process, bring in the finance team to help develop the business case. In most cases, it is the finance team that presents the business case to the board or CEO of the company. If the team doesn't have direct knowledge of the how and why of it, you’re setting yourself up to fail.

Aside from the finance and IT/IS teams, you need to include business function representatives at the table as well. All these players are critical to building a solid case and should be involved from the very start.

Building Blocks for Building the Business Case

Obviously when building a business case, you need to include timing, cost, and scope, but the most important thing to include is really the benefit. Are you trying to generate additional growth? Are you trying to reduce operational costs? Are you trying to increase your speed to market? Again, focus on the objective and make sure it’s tangible so you can build all of it into your business case. Then, be sure to include how it’s going to be measured. 

This goes back again to having representation from all business functions at the table so they can each take ownership of their objectives, whether it's increasing sales or reducing lag time. The end goal here is to have a sustainable adoption of the solution and you can only do that if everyone is at the table and the objectives are clear and measurable.

This makes your business case stronger. At my company, we will be able to go back to our business case and measure each business function by its original objective and see what’s been achieved and what hasn’t. It changes the conversations and holds everyone accountable to the overall goals of the company.

Does Infrastructure Matter?

“What about infrastructure?” I keep hearing that question. The truth is, I believe given the speed and change with which technology evolves, we are probably going to see infrastructure become a pure commodity fairly soon. The technology that we’re using today will not be the same as we’re going to use, say five years from now. So, if we know technology is changing at this pace, why do we really care that much about what the infrastructure solution is anymore? Instead, I put more focus on ensuring we have a cybersafe solution.

When focusing on the conversation around infrastructure, gear toward the cost of maintaining it during the life cycle of the solution the business process is tied to. If you know your business case has a three- to five-year life cycle, then all you need to consider is the three- to five-year infrastructure cost.

It’s a Journey, Recognize That

Here’s a radical thought for you: No one should focus on change management. Change management traditionally centers around training and internal communication on how to use the solution. That’s great, but it’s not enough.

Shift your focus to “journey management,” which focuses on the movement of where the culture, the talent, and the capabilities are today to where you want it to go. This is the only way you’ll have a sustainable operation in the future. It’s about culture change. It’s about philosophy change. Change management is a subcomponent of the journey management. The journey management really focuses on how you’re moving that population base, be it from the tech side or the user side and from how they do things today to how they have to do things in the future.

My Two Cents: Throw ‘Em in Your Case

When I think back to previous upgrades with SAP ERPs, whether it was from R2 to R3, or R3 to SAP ECC, it was easily understood across the board. As we’re going from SAP ECC to SAP HANA, it’s not just about a new database architecture, or new configuration options—it's a fundamental philosophy change in how businesses can leverage and use SAP S/4HANA solutions. First, I suggest that you take a deep look into your business processes and understand how you can leverage SAP S/4HANA to improve them. To do that effectively, you need to have team members who understand both the lean processes in your industry and the real capabilities of the software solutions to enable them. And no one person has all that knowledge, so you will need a team of folks.

Last piece of advice: Do not allow customizations. In our case, the president and I both have to approve all customizations. And like the old drug campaign of the past, we “just say no!”

If you have a question and/or have other suggestions, please reach out to undercovercio@asug.com. If you’re an executive, you can join us at our local and national ASUG Executive Exchange events to network with other executives looking to get more value from their SAP systems.