Acquisitive growth had resulted in tangled business processes throughout the company. How could the complex be made simple, enabling streamlined operations to help build a profitable future?
By engaging with IBM® Services to create an enterprise strategy to transform to an entirely new target operating model, the company will maximize the benefits of its forthcoming journey to SAP S/4HANA.
12-monthreturn on investment expected
12-weekIBM HANA Impact Assessment delivers strategy to enable digital transformation
Builtbusiness case for digital transformation of the enterprise, enabled by SAP S/4HANA
Business challenge story
Technology triggers a business review
This global specialty chemicals company has grown rapidly. As the company developed new products and extended to new markets, what were once simple manufacturing, sales and distribution processes had become inevitably complicated. Layered onto this complexity, the company added new processes from acquired businesses, resulting in heavy customization of the central SAP instance.
For some time, the company had been considering ways to simplify operations. In particular, the company’s global supply chain – the way it processed, fulfilled and shipped orders – was convoluted and inefficient, which also affected support services, regulatory compliance and financial data. While shifting from business-as-usual to a new way of working was potentially disruptive, the support and development costs for the heavily customized SAP environment were rising.
The consequences of complexity showed up as a lack of agility. When new business requirements arose, it took longer and cost more to simply adapt the existing customizations.
The release of SAP S/4HANA created an ideal time to take a new approach. The challenge was to define the target operating model and map out how the business transformation journey could be enabled by SAP S/4HANA. The senior IT management team presented a request to build the business case for change. The team understood that simply migrating existing processes to the new SAP S/4HANA solutions would not deliver the transformation they desired. How could the company take maximum advantage by developing a greenfield SAP S/4HANA implementation that would enable the new digital enterprise?
Developing the business case
Within a month, executive support was enrolled in developing the business case, and the first step was to find a partner that could help build the enterprise strategy. The company’s internal IT team was busy with day-to-day operations; and to execute the project it made sense to engage external expertise. For the true commercial benefits to provide the greatest value, the company looked for a partner that would provide true depth of SAP knowledge to maximize the advantages.
At the technical level, the IT team had spent considerable time evaluating how SAP S/4HANA could benefit the company. Some technical advantages resonated, such as the reduction in database tables – in this case from tens of thousands to hundreds – while the simplified architecture promised reduced administration workload.
A business process team lead commented: “Internally we considered this to be a building project. Of course, we could be our own architect, surveyor, general contractor and so-on, but you get a better result if you employ specialists. Similarly, external advice tends to have a higher value, and a recommendation from a consultant often generates actions and results more reliably.”
Based on more than seven years’ experience of successful engagements, the company chose IBM Services to establish a strategic alignment program, based on the Tier3 strategic alignment component of the IBM SAP HANA® Impact Assessment methodology. This strategic alignment engagement created the business case for change, delivered as a series of initiatives that encompasses resources, teams, change, timelines, cultural renewal and new target operational model, all designed to map out a successful journey to the digital enterprise.
The team lead remarked, “IBM came in with benchmark data from both the chemicals and related industries, and showed us what the ‘best of the best’ were doing. For example, IBM identified transportation benchmarks that showed we were spending up to three times more than the industry average, and that our procurement was significantly less efficient than our peers. This outside view from IBM Services was highly valuable, and delivered insights we had not identified ourselves. We looked at what it might take to reach the highest benchmark, and the savings it would generate, and validate the best path for our company.
“Additionally, IBM brought in cognitive analytics to help mine the data, which helped us understand where we were, and where we could find the greatest opportunities for savings and improvement.
“Often if you run projects internally, everyone is part-time with business-as-usual work that distracts them. When the project started, IBM also brought the hustle and bustle of a ‘get this done’ culture, with a methodology, process and positive timeline that pulled us through to the finish.”
IBM interviewed more than 50 people to discover current processes and workflow and gain program buy-in. The interviews led to IBM-hosted workshops focusing on key supply chain business areas, order to cash, plan to manufacture, procure to pay and record to report, designed to find ways to simplify processes and map them to SAP S/4HANA.
Owning the strategic plan for success
With the strategic alignment process complete, the company owns a plan that defines the target operating model in terms of objectives, the business case and the SAP S/4HANA implementation blueprint. The plan demonstrates how the business processes would change, identifies the areas that would benefit most significantly from redesign, and shows which areas generate the greatest return. Additionally, the Tier3 strategic alignment process provides a guide to the project sequence, where savings delivered by early quick wins can be used to fund subsequent phases, with an identified total return on investment of 12 months.
IBM Services is working with the company on the next steps, including training on the SAP Activate process for fast-track SAP S/4HANA implementation success.
The team lead explained, “SAP S/4HANA will be the enabling technology that supports the company’s digital transformation. If you really want to leverage the power of SAP S/4HANA a full review of your processes is essential, following the best practices embedded in the software. Customers do not pay you extra for a complex shipping order process.
“Working with IBM Services has shown the company just how much work you can complete in a short time and how to create an appetite for change. Additionally, the IBM Services team guided us on how best to engage and capture the support of our executives. In 12 weeks we moved from a position of uncertainty to a clear plan. The IBM SAP HANA Impact Assessment offered a deep review of our processes, the opportunities, and the potential savings that becoming a digital enterprise can deliver. By engaging with IBM, we are confident that we will maximize the benefits of our journey to SAP S/4HANA.”
About Specialty chemicals company
This specialty chemical company combines market insights with chemistry and application capabilities to deliver valuable solutions to customers in the global transportation, industrial and consumer markets.