Inside Hillrom's business transformation into "Connected Care" - an SAP RISE use case

Profile picture for user jreed By Jon Reed May 26, 2021 Audio mode
Summary:
SAP's RISE fanfare won't hold up without customer use cases. In the run-up to Sapphire Now, I had the chance to dig into an S/4HANA RISE story with Hillrom's CIO Sven Krause. Krause also shared frank views on CEO Christian Klein's agenda, and how that factors in.

Hillrom's Sven Krause talking SAP RISE
(Hillrom's Sven Krause talking SAP RISE)

In my SAP RISE in review post, I challenged SAP on two fronts:

  • If the early SAP RISE customers are so enthusiastic, let's hear from them.
  • If smaller SIs are being included in RISE, let's hear from them also.

That second point on SIs is a work in progress (check the end of this article for more on that). My initial SAP RISE customer story underscored that SAP RISE is more than an SAP ECC cloud migration sales binge.

The customer, ELMS, is actually a greenfield SAP project (Can the upstarts at Electric Last Mile win the urban delivery vehicle market? An SAP RISE use case).

But that use case didn't address the relevance of SAP RISE to an existing SAP ERP customer. Next up: SAP referred me to an SAP ERP customer, Hillrom, whose transformation issues are arguably more similar to other classic SAP ERP shops. There is a twist, however - when Hillrom opted for RISE, they were already running on S/4HANA. Nevertheless, Hillrom CIO Sven Krause was well worth a listen.

Hillrom, S/4HANA, and a business transformation

When Krause joined Hillrom a year ago, Hillrom had already made some big decisions. They were already running on S/4HANA. They already had a range of IT projects underway with hyperscalers. But as Krause told me, plenty of thorny challenges loomed. Not the least of which: tying the S/4HANA project into Hillrom's business vision. Otherwise, you are running a technical project - with limited ROI and business impact.

So, when Krause joined Hillrom, did he know what he was getting into? Krause responded:

I actually did know very well what I was getting into, because I advised Hillrom, prior to joining, on what the direction should be. So I was very familiar with the product portfolio, and a lot of the leadership and strategy that the company as a whole was pursuing.

And what was his mandate? Krause:

Number one: make sure we're getting on the right path with the internal transformation, but also number two: tie it to what we're doing externally.

"So yes, I knew what I was signing up for," Krause joked. But we're getting ahead of ourselves here. As Krause explained, Hillrom is pushing to set the pace for a tech-infused medical industry:

Hillrom is a $3 billion medical technology company, active globally in over 100 countries. We're really focused on the acute care space, the primary care space, the home care space. So when you go for your physical exam somewhere, you're most likely going to be interacting with your physician and our devices.

If you go to a hospital, you're most likely going to be in one of our connected beds... And your doctors and nurses are likely communicating with each other on our communication solutions.

But the true motivations for this project are tied to Hillrom's push for healthcare transformation:

Our vision is really what we call advancing connected care. So it's the ability of our patients, our nurses, our doctors, our health systems to really communicate better with each other - and create connectivity that ultimately drives outcomes for our patients, patients and caregivers.

Acquisitions versus data connectivity - on SAP's integration challenge

You can't argue with the vision, but making it happen isn't simple. Example: when Hillrom's transformation began 18 months ago, they had to turn several acquisitions into something greater than the sum of its parts. The largest acquisition came with its own SAP system, not to mention its own people/culture/processes. Hillrom's recent acquisitions include contact-free "continuous monitoring technology" from EarlySense, and mobile health care technology from Voalte in the spring of 2019. Therefore, ease-of-integration is a core transformation criteria - not an easy thing to achieve. Krause:

As a company that has gone through acquisitions, and continues to grow through acquisitions, as well as organically, How do we get better? How do we integrate better? How do we serve our customers in a better way?

I see a potential conflict between a "connected care" vision and acquisitions like these. I don't believe such a business transformation is possible without a common data platform. Here, Krause puts stock in SAP CEO Christian Klein's integration commitments:

When you talk about what Christian Klein committed to last year, he not only talked about the movement to the cloud; he talked about how important it is for SAP to be at the forefront of cloud services and cloud capabilities.

Krause says the medical industry is finally heading towards cloud, spurred by the process changes invoked by the pandemic:

The same is true for our customers. When you think of large hospital systems, healthcare systems, delivery networks, they are also rethinking, "Okay, what does cloud mean for us?" Historically, a hospital didn't talk about this, mainly because of data privacy and patient data sensitivity, but they're now talking about it as well.

And working with hyperscalers - how does new technology impact how we can drive outcomes within the hospital? It's all about connectivity, interoperability, having devices connect to each other into EMRs. How do you get that information about the patient? And that's exactly what we're dealing with as well.

Krause sees a critical role for SAP here, and he expects them to embrace it.

Klein talked about the two top priorities: 'How do we get to the cloud? And how do we help our customers to drive integration and interoperability of the things that we as SAP have acquired?'

Krause has seen the problem of data silos firsthand, via his 17-year career at EY:

Many of my prior customers, when I was on the consulting side, have suffered through that with SAP over the last twenty years, every time they've done an acquisition. I think Klein made a very clear, massive commitment to make sure that those integrations work well.

Krause draws a parallel with Hillrom's integration work with their own customers, tying EMRs into different devices and hospital networks. He's looking for the same: 

That is what SAP is really working on as part of what they call their flow strategy and business transformation platform strategy. That commitment was important for us as we jumped on that RISE journey.

Why SAP RISE?

Why would Hillrom look to SAP RISE? Krause:

When Klein started his roadshow in 2020, we were listening very carefully. A few things that he talked about: number one, SAP needs to listen better to customers. Number two, SAP needs to make sure that the SIs are much better overseen, because his reputation ties directly to the ability of the SI to execute these projects. Number three, it's a cloud-first strategy, as he is going to invest heavily into cloud with everything that they're doing.

Krause says SAP has to overcome its own hosting history:

That was a big shift for us, because historically, I can tell you, I've worked with customers in the past that might not have gotten the best out of SAP when it came to hosting.

For Krause, SAP RISE simplifies his job:

The ability now to say, 'I'm going to get the best of both worlds. I get the hyperscalers' capability to scale and create stability, with the application knowledge of SAP. The fact that I was able to do both was a big point for us. When Klein talked about this last year, that's when we engaged heavily with SAP leadership on: Is this something that we can actually do?'

But why SAP RISE, given that Hillrom was already running S/4HANA on-premise, and their hyperscaler relationships were already in place? Krause says it comes down to each party doing what they do best.

There was no value for me in saying that, 'I need to own this part of the relationship,' where my team really needs to manage the hyperscaler.

Part of that was, 'Okay, SAP now has the operating system level and the database level, and the underlying level goes to the hyperscaler. And we continue to own the application -  that's where the differentiation for us comes in, is around the application.' We then work with SAP on things like the business transformation platform and other opportunities.

Krause doesn't want his team knee-deep in IT admin chores: 

The value of differentiation, for me, is not an IT function. It's not managing a hyperscaler. So for me, it was like getting the best of both worlds. Let the hyperscaler be really good at what they do. SAP takes care of the middle layer for me, and manage that for us. Then I can really focus on the application side, and the innovation side.

The wrap - business transformation needs quick wins too

Clearly, the dialogue Klein and his leadership team engaged in was persuasive to Krause. However, Hillrom's SAP RISE project has important steps to go. Half of Hillrom's manufacturing sites across 100 countries will move to the S/4HANA cloud, including all business units and commercial capabilities. Krause's team projects a 22-month timeline to complete these moves. 

For the connected care vision to be realized, Krause sees this cloud S/4HANA move as essential. Here, he talks in terms of business outcomes: product interoperability, improving customer experience with "seamless integration." Product visibility during purchasing, remote care services - Krause sees all this as doable via this project. This work is framed around what Krause likes to call the "augmented human" - data at your fingertips, intelligent processes, and a better employee experience. You're not achieving your customer experience without that.

Deloitte, Hillrom's ERP partner, is an important voice in their SAP RISE project and planning. One danger to a monster project like this: today's CIO needs quicker wins, and so do customers. Krause plans to accomplish this in two ways: first, by front-loading a major part of the SAP RISE go-live to only 12 months from now.

Krause hopes to build momentum by taking the Americas live first, and "delighting" those customers. He also plans to take another SAP cloud product live every couple of months - an ambitious timeline in a heavily-regulated industry. That includes SAP Ariba and CRM. Krause calls this the "two train model," with S/4HANA being the longer trip, and the cloud products delivering benefits on a faster clip.

I could fill another article with Krause's tips on tying an IT/ERP project into a business case that executive leadership can buy into. A big part of it, from Krause's view, is framing your project in terms of business benefits. He says too many big IT projects are more of a look back, with no strategic value. His team starts by asking the question: What are the business models of the future? That includes supporting subscription-based models across Hillrom's platform. "We said, let's build for that," says Krause. Now it's time to make it happen:

As you can see, it goes back to defining a clear vision of where you want to go, and how it ties to your broader vision. It's not just about an IT exercise, replacing an old ECC screen with a Fiori screen.

I give Krause credit for identifying the key SAP challenges of integration and SI partner accountability. He clearly puts stock in Klein's commitments in those areas. I see both as works in progress, with SI accountability the toughest challenge of all. As for the role of SIs in SAP RISE - particularly smaller SIs - that's an area I am pursuing. I'll pick up on that during our Sapphire Now coverage shortly.