Why do customers take on business transformations, and where do they get off track? New project data sheds light

What motivates a business transformation? It may sound like an obvious question, but it's not. Is transformation sparked by the software vendor? Is it driven by a product upgrade, such as ERP modernization? Can the new breed of process insights vendors help customers keep their transformations aligned with business goals? And, amidst the transformation buzzwords, have we lost track of change management?

These questions are important enough to get customers onto airplanes, and prompt ASUG to conduct an in-depth study. Last month, I found some answers – via the first SAP Signavio event for customers and the SAP ecosystem in the United States.

The Orlando event started with SAP Signavio co-general managers Gero Decker and Rouven Morato Adam demonstrating how Signavio can help customers streamline work and not get bogged down by manual tasks. A live demonstration I was able to witness showed how the SAP Process Automation tool can return results in less than 15 minutes.

But I wasn’t there just to learn about SAP Signavio – although I learned a lot! I attended to share ASUG research based on an SAP-ASUG collaborative project conducted in the months prior. The fresh results revealed how to get through business process transformations quicker. You can view my full process transformation presentation if you’d like.

But if you want rapid information, here are the key takeaways. SAP Signavio and ASUG conducted this research to better understand why business transformations are undertaken and what challenges surface along the way. If you need a quick overview on Signavio before we get into the results, you can check out ASUG’s SAP Signavio overview. We also dug into the planning and execution specifically of S/4HANA migrations that many ASUG members are taking on. What we found out is that change management can help you get through your business transformation faster. However, companies aren’t necessarily placing the priority on change management necessary to achieve that outcome.

Top motivators for business transformation

• 57% better employee experience and productivity
• 50% faster access to analytics and reporting
• 48% ability to react more quickly to new business demands

When we asked ASUG members why their organization is transforming, the top reasons are so organizations can move more quickly.

Have a strategy in place

No matter what phase of the S/4 migration ASUG members are on – most organizations have at least a strategic approach to their implementation, with the largest share having a detailed strategic approach (43%). Some organizations are even using Design Thinking to strategize the move to SAP S/4HANA. But among organizations who have yet to implement S/4HANA or are still deciding whether to move, they note that they don’t have a strategic approach planned (45%), far more than the average (20%).

Change management is largely cooperative, but needs improvement

When evaluating the change management responsibility during a business transformation, like S/4HANA, most often, change management is a cooperative effort between both the IT department and LoB (Line of Business) departments (54%). If there is not a cooperative effort, IT departments are typically responsible (42%).

We also asked ASUG members to evaluate this change management process at their organization. It’s sort of striking, not only how many said it could use improvement (41%), but specifically the share that just don’t know/aren’t sure (42%).

Clearly the change management process needs improvement, as just 17% indicate the current process is great. This tells us that even though organizations are prepared and largely collaborating between IT and LoBs for change management, the collaboration might not be running deep enough in the organization. 

Though it’s good to see that when change management is good – proper planning and supportive change leadership are in place.

Linkage – faster implementations, change management, and strategic planning

We looked more closely at the 37% of organizations who completed their SAP S/4HANA migration in less than 12 months. Among this group, they were more likely than average to have change management and the roll-out of SAP S/4HANA as a cooperative effort between IT and LoB. They were also more likely than average to describe their strategy/planning as a detailed strategic approach. So, to get there faster, change management was a collaborative effort and the detailed strategic groundwork was laid. According David Wascom, SVP, Executive Programs and Head of Content at ASUG, he said:

 Using Signavio as a framework for delivering operational excellence and continuous improvement, even tying in customer experience and innovation, can provide a business-focused solution that supports an ongoing transformation agenda.

Change management – not a top focus, but is top challenge

ASUG’s 2022 Pulse of the SAP Customer research outlined the top focus areas that are most important to organizations in 2022. And organizations are focusing on a lot (standardizing business processes, automation, dashboards/analytics were the top three). But, change management fell toward the bottom of the list (third from the bottom), as it’s pitted against other more day-to-day operational demands. 

But of course, while change management isn’t a top focus for organizations, it is a leading challenge – especially when rolling out new technology. Also, from ASUG’s 2022 Pulse of the SAP Customer Research, resistance to change is the number one challenge organizations face. Which should not be too surprising, as we can’t place change management in a lower priority and hope roadblocks don’t occur. 

Business transformation challenges

• 67% Competing business priorities 
• 47% lack of internal skills need to make the change
• 43% change management

Earlier I mentioned the benefits of a business transformation, but I want to emphasize it again: ultimately, organizations undergo business transformations to move more quickly.

But these are the top challenges that impede on realizing the benefits of business transformation. These top three challenges also further highlight the importance of IT and LoB collaboration when it comes to business transformations. And when there is a disconnect between the importance of change management and a lack of prioritization of change management, those competing business priorities will come to a head and slow down your transformation.

Do you want to hear more on change management or overcoming challenges when migrating to SAP S/4HANA Cloud? Check out these other webcasts from ASUG Research and SAP Signavio.