Successful ERP transformation with the ADDVALUE framework

Unfortunately, slowed down or failed ERP projects are not an isolated case. The reasons for this are mostly due to the complexity of the project, because the introduction of ERP systems such as SAP S/4HANA is more than just a technical changeover. It represents a major change in a company’s processes and way of working and offers strategic opportunities to remain competitive in the digital age.

A successful corporate or project strategy depends on a culture that encourages employees to implement it. Therefore, change management in transformation projects is of great importance and vital to the success of the project.

The impact and intensity of the influencing factors emanating from people, their working methods and motivations are often underestimated at the beginning of a system-based transformation. Yet they are intrinsically important and, in our experience, can be managed well if the following success factors are taken into account:

• Clear company and project goals
  All parties involved have internalized how the project goals feed into the company’s objectives and how the software will contribute to value creation in the future.
• Management commitment and support
  Management supports the project and actively drives it forward. Resources are made available and obstacles are removed.
  
• Understanding ERP implementation as “business change”
  Processes and often also organizational structures are reorganized – the departments are clear about the contribution they can make.
  
• Positive collaboration and leadership culture
  The internal and external networking of data and people is promoted and a new collaboration culture is actively supported.
  
• Harmony of Can, Want and May
  A successfully implemented ERP system gives employees more freedom for value-adding tasks. Employees and their competencies are better reflected in these tasks than in routine tasks (“can”). The transformation has a positive effect on a motivating work environment and satisfaction (“want”). Management provides the framework within which new things can be tried out (“may”).
  

In this way, an ERP transformation can succeed that is wanted by a majority of employees and is in line with the company’s goals.

The ADDVALUE Framework at a glance

For the implementation of SAP S/4HANA, our team developed the Transformation Framework ADDVALUE. It considers the technical implementation together with the challenges in business, IT and organization and offers companies a comprehensive orientation during the transformation process. It consists of eight project phases with corresponding methods and tools that frame the technical implementation, promotes the alignment of business and IT, the further development of employees and executives, and networked collaboration across departments.

The phases harmonize with the measures recommended in SAP Activate and form a complementary model. It is accepted that individual phases may also overlap. So far, this has proven to be a pragmatic approach in practice. The following provides an overview of the respective focal points.

The eight phases of the process model

ALIGN – Alignment of (digitization) strategy and project portfolio.

At the beginning of the project, a basis is created for decisions in the context of digital transformation. Management creates a common understanding about the strategic context of an ERP project as well as the change dimensions and impact on the strategy and organization of the company. A shared commitment by executives to the strategic goals and guard rails of the digital transformation (digital agenda) is essential, as is strategic prioritization across the project portfolio, taking into account objectives and interactions.

DEVELOP – Setting the framework for transformation.

The appropriate implementation strategy in terms of strategic alignment is selected, the business case is developed, and a project vision and change management strategy are developed. IT is busy aligning the existing infrastructure and system landscape with future requirements. Change management accompanies and moderates central decision-making processes and derives the effects of these decisions on people and the organization. The goal is to create transparency about the current state and identify critical gaps.

DESIRE – Increase readiness for transformation in a targeted manner

In the next phases, the project is crucially dependent on the cooperation and collaboration of many other stakeholders. Therefore, a strong desire must be created within the company to decisively move the entire organization forward with this project. A comprehensible change story is developed, which gives direction to the entire communication and describes which changes are coming and when and how the organization will be positioned in the end.

VERFIY – Verifying the scope of change and refining the tools

This phase is usually dominated by the fit-to-standard workshops. They are critical to the success of the entire project, and a great deal of tact is required in balancing the various interests. In the workshops, it is particularly important to focus on the opportunities of an ERP implementation for the business and to reconcile them with the different interests of the organizational units. Without the willingness of both sides to approach each other, this phase will not be crowned with success.

APPLY – Supporting successful (agile) realization

This phase is characterized by agile development loops to map the processes in the new system. Since a finished system is not yet available at this point, extensive tests take place here with an ever larger circle of users*. Selected key users can share first impressions of the new system in the individual organizational units.

LAUNCH – Ensuring workability for go-live

In the last weeks before the launch, detailed cut-over planning begins. Everyone involved in the project must know exactly what their role is, so company-wide go-live communication once again plays a key role. IT sets up an appropriate problem and error management system with clear guidelines on how to deal with problems and support requests that arise. The LAUNCH phase is once again an important test for the interaction between business and IT. Only if sufficient trust has been built up in the course of the preceding months will it be possible to master this critical phase together.

UNFOLD – Consolidating the new S/4HANA organization

The successful go-live marks the beginning of “hyper-care,” a transition phase that is as short as possible before the company can switch back to a steady state and, for example, return process responsibility to the line organization. With the transition into calmer waters, successes should now also be celebrated.

EXPAND – Continuing the digital transformation into the future

The EXPAND phase is no longer part of the actual ERP project, but this is where the course is set for possible extensions and optimizations. This includes, for example, the connection of additional organizational units, the addition of additional applications and functions, as well as the constant questioning of processes and the implementation of new technologies.

Conclusion

A key benefit of digital transformation is to create more agility and flexibility in IT and the entire organization to better enable continuous change. The presented framework takes into account the processual, structural and cultural effects of an ERP transformation, related to the entire organization with all interactions. It helps to build a bridge from the corporate vision to the concrete everyday actions of the employees. Only if this bridge is successfully built will such a far-reaching transformation project be successful.

You can find the complete article in the current print edition of ERP-Information magazine or free of charge online.

For more information on a successful SAP S4/HANA transformation, we recommend our reference book Business Transformation with S4/HANA.