July 2020 – First companies successfully transitioned and are taking stock of the mega-project “SAP S/4HANA Conversion”. How to learn from it and implement the system as efficiently and sustainably as possible? One of the most important factors, which nevertheless is easily overlooked, are the people their selves, who must carry the far-reaching change.
Our series of articles around our process model “CH/4NGE” deals with these less obvious challenges, which occur in the context of the project and are often unfortunately recognized too late. Along the 6 phases of the SAP ACTIVATE Framework, we discuss possible solutions and give tips & tricks on how to counteract or even prevent them early on.
After all comprehensive decision-making and preparatory measures have been taken in the previous phases, we deal with the concrete course for implementation in the third, the Explore Phase. At this point, it becomes clear how and in what direction we want to change, the conceptual basis is laid. So how do we start? The mountain does not only seem huge, it really is. So, it is all the more important to maintain a structured overview in this sensitive phase.
What happens in the Explore Phase?
In the Explore phase of the S/4HANA conversion, we already have an agreement on where we want to go. The target picture in terms of solution validation, target organization, roles and processes becomes concrete. The necessary work streams, including solution adaptation, application design & configuration and data management are defined. So-called Fit (to Standard) and Gap Analysis Workshops are methodologically popular for exploring SAP Best Practices and standard business processes.
In the S/4HANA context, these are referred to as end-to-end scenarios, for example order-to-cash or procure-to-pay, because the suite maps them holistically along the value chain. The aim of the workshops is to identify company-specific gaps to the SAP standard and to document the target solution including necessary delta requirements. Ideally, a backlog with technical and functional requirements is recorded, which later serves as the basis for the Realize phase and is processed in the form of agile sprints. In this context, the company’s own process developments are scanned and prioritized – which ones should be included? Which ones need to be adapted? Which ones are obsolete and can be cleaned up once and for all?
Speaking of cleanup: During the Explore Phase, all master data is cleaned up, corrected and prepared for the changeover by the affected business users. From a change management perspective, there is also a lot going on now: if not already done in one of the previous phases, now is the time for a thorough change network analysis to identify influencers and supporters in the organization. Change Agents as well as sponsors are nominated and prepared for their roles. The often underestimated stakeholders are analyzed and a motivation plan is created. In the course of this, it is advisable to translate the training needs of the different groups into an initial training strategy. But not only that. Proactive communication should also start at this stage at the latest – even though no facts for statements or sophisticated announcements exist yet.
What are the typical challenges in this Phase?
Now that things are being tackled concretely, of course a lot can go wrong. The organisation is being mobilised, and there are initial results on which the work of the coming years will build. Rumours arise, questions come up, shortcomings in the data and organisational structure become clear and may put a stone or two in the way.
Among them – again – the topic “silo thinking”. As often as the term occurs in the context of digital transformation, it is just as important to break down these silos.
Silo thinking hinders interdisciplinary cooperation
Successful digitisation depends on automation across the entire value chain. Silo thinking, or rigid thinking in departments and responsibilities, hinders interdisciplinary cooperation between areas and thus impedes entrepreneurial progress in (almost) all digitisation issues. After having discussed the problem in the first article of our CH/4NGE series in the context of the process-based as-is analysis, we encounter it again in the Explore Phase in the context of the Fit-Gap Analysis mentioned above. These analyses determine how far away the future solution is or must be from the SAP standard. In order to find this out, meaningful end-to-end scenarios are defined for the future. If those involved think in rigid structures, the result is incomplete.
End-to-end scenario means that the process runs “across the boundaries of the value-added components”, so there is often no clear process owner. In the new environment, an “end-to-end scenario owner” should therefore be defined who, in close coordination with the process owners, is responsible for a smooth and optimal design across the process boundaries. It requires diverse perspectives, critical reflection, but above all, an open attitude with regards to the future of the process landscape. A good way to break through silo thinking is the use of simulation workshops. In the S/4HANA context, they enable you to realistically think through end-to-end scenarios and design them for the future across departments.
Existing potential for improvement, for example in terms of consistency, comprehensibility and completeness, can be uncovered. Aspects such as: “We have always done it this way” must be critically scrutinized and deviations must be examined to determine their raison d’être. The overriding goal of the workshops should therefore always be the general process reflection and optimization.
The effects of the SAP changeover are complex
As discussed in the last article, the heterogenous stakeholder groups of the megaproject represent a central challenge. But not only the groups themselves are of great interest. The different effects of the changeover on individual groups in the company also increase the complexity of good change management enormously. It therefore makes sense to adopt an approach as decentralized as possible and to make targeted use of so-called Change Multipliers or Change Agents in the individual branches of the company. Why this is important and what role these Change Agents play in the construct will be explained in the next article on the Realize Phase.
But what should this decentralized approach then convey? What must be done with the many groups in order to get them on board for the changeover? – Tailor-made and effective Change Management Measures require a careful Change Impact Assessment as a basis. Without a thorough analysis of what changes will happen for whom, when and how, all efforts in this context are pure speculation. Since the project itself is too cost-intensive for experiments, it is recommended to analyze at user level which codes are used by which user groups using a suitable tool (e.g. CPC.fit). In combination with the SAP Simplification List (“Which functions will be eliminated in the future?”) and the SAP Feature Description (“Which new functions will be added?”), precise requirements can be defined, and promising enabling measures developed.
From change management perspective, the Explore Phase is an extremely sensitive one.
The first rumours about a change are spreading, the mood is changing – we are talking about the first “valley of tears”, as the change is now becoming visible within the organisation. The result: Resentment arises and cannot be resolved because it only smoulders under the surface. In addition, resources must be activated for the cleansing and preparation of the master data, which are otherwise not involved in the project. So where should they get the motivation to spend extra time going through the data in addition to their daily business? The scenarios described are not uncommon and hold a lot of potential for a loss of control. In the zeal to contain them, the reasons for the loss of control are often ignored: uncertainty.
One of the most important measures in the Explore phase of an S/4HANA conversion is therefore appropriate, transparent Change Communication. In the last articles we have already described components that must be implemented now at the latest. With the goal of counteracting the fears and questions of the employees and thereby removing the breeding ground for rumors, the project should be communicated transparently and authentically.
The Change Story – in the best case already adapted to the individual situation of the individual user groups -, planned timelines, support options and last but not least, but especially important for credibility, also honesty that there can be no final answers to many questions at this point in time. In order to get the support of the staff, it is therefore necessary to get them on board and give them the feeling that they are part of the whole and can help develop the new solution.
Change Diagnostics – an indispensable part of success
A final challenge, which must be addressed during the Explore Phase, is the conceptual and operational setup of Change Diagnostics. What sounds like a medical treatment is an indispensable part of success in projects like an S/4HANA implementation. Human reactions to change are difficult to calculate. Although the change architecture provides a systematic framework, there is often a lack of realistic indicators that allow precise measurement of success. And admittedly: There are much easier tasks than measuring people in their attitude and commitment.
In order to counteract this, a sensibly structured Change Diagnostics Framework with company specific KPIs is the ideal solution. These can be obtained, for example, through regular interviews with the organizational change agents in order to obtain a realistic picture of the situation. Experience shows that working in change sprints is also a good way to react quickly to new requirements. In an agile working mode, planned change measures can then be tracked and adjusted continuously. This forms the basis for a precisely tailored and targeted change management, so that SAP S/4HANA can not only be successfully “installed” but also “implemented”.
- Silo thinking hinders interdisciplinary cooperation – ensure an open mindset for cross-organizational cooperation and empower competent “end-to-end scenario owners”!
- The effects of the SAP changeover are complex – conduct detailed change impact assessments as a basis for target group-specific enabling and communication measures!
- Prevent rumors – start with open communication, even if there are no hard facts yet!
- Change does not have to be a black box – define suitable KPIs for continuous success measurement!
The Realize Phase, the fourth of the SAP ACTIVATE Framework. We deal with insights and challenges when it comes to the technical implementation of the new S/4HANA Business Suite. We also discuss: Why are iterative change sprints valuable? How can well networked change agents have a significant impact on the success of this mega-project.
Do you have questions about change management in S/4HANA transformation projects?
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