Optimising financial processes

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8 Critical Success Factors for ERP Enabled Transformation

This started out as a discussion on “8 Critical Success Factor for S/4HANA Transformation” until it became obvious that the lessons learned are applicable to any ERP enabled Transformation/Change Program.

My own experiences and discussions with many global organizations, in the wake of such ERP enabled transformations, have a common theme in the realization that the core business processes have not changed at all and “the old problems are still the new problems!”.

Upgrading an enterprise resource planning (ERP) system is one of the biggest and most expensive decisions that leadersship will make. It can often cost as much as $500 million, last several years, and determine important elements of the business operating model for the next decade.

So we need to get it right!

A common resource of available experiences, observations and recommendations is long overdue.

And this is the start!

8 Critical Success Factors for succesful ERP enabled Transfromation are summarized below, and further resources follow.  

  1. Business Process Scope – which business processes do you want/need to change?
  2. Business Process Visibility – are the AS-IS end-to-end business processes (not just workflows) documented, with variants (alternative journeys)?
  3. What is the Business Case for Transformation (New business process design, rationalization or technical upgrade)?
  4. Data Clean-Up – does your plan include Master Data Cleansing, History Archiving, customization removal?
  5. Application Architecture – the new hub-and-spoke model forces you to think/invest in more than core ERP.
  6. Usage Considerations – what User Experience options are right for my business communities?
  7. Controls Considerations – is a redefinition of your Risk & Controls architecture planned?
  8. Application Access Governance Considerations – what is the planned approach to hub and spoke application access and the impact of Joiners/Movers/Leavers?

In a separate stream of consciousness, McKinsey recently produced a report “The ERP platform play: Cheaper, faster, better” available here, where they discuss the need to eliminate customizations and to “shrink the core”.

Pedro Berrocoso shared an interesting perspective and the Gartner ERP Roadmap in a recent post entitled “Making ERP sweet again without the calories of the past”.  In this post he describes the need for a user-centric and experience oriented design focussed on business outcomes.

Gartner assert that ERP’s need to reframe their value proposition as a central business operations and data hub and lose their reputation as outdated, monolithic technologies. RPA, AI, NLP and other emerging technologies won’t suffice to run reliable business operations if not backed by a strong ERP.

“Without a clear ERP strategy, any business is fighting with one arm tied behind it’s back!”

SAPInsider reports that SAP S/4HANA total adoption to date Is behind expectations, with over 30,000 customers still to adopt the new flagship ERP.  While mainstream maintenance is ending at the end of 2027, extended maintenance is available until the end of 2030 should an organization wish to purchase that option. This means that the real deadline is already 2030. 

The Register reports on new data from Gartner that suggests, that despite seven years on the market, SAP S/4HANA has not been licensed by two-thirds (69 percent) of ERP Central Component (ECC) clients. The S/4HANA vision underplays the complexity of the migration, they comment.

Not to miss out on a party, we have produced a Playbook and “Transformation Checklist” addressing some of the core themes and recommendations for success in planning and executing your ERP enabled transformation, be it S/4HANA or any other Cloud ERP. Let us know here if you would like a copy.

Thank for reading . . .