Together with their customers, three innovation architects from SAP have developed a systematic approach for demonstrating the potential of digital transformation to end users.
By enabling technology-driven application scenarios as part of an SAP S/4HANA implementation, the business innovation framework for SAP S/4HANA brings much-needed structure to the transformation process.
When asked about the setbacks he faced while inventing the light bulb, Thomas Edison famously said, “I have not failed. I’ve just found 10,000 ways that won’t work.” In today’s volatile markets, companies don’t have that kind of time.
To speed up innovation processes, business innovation architect Maria Fay and her colleagues Lars Friedrich and Andreas Spahn have developed the business innovation framework for SAP S/4HANA as an integral component for every SAP S/4HANA program.
Often, decision-makers don’t have a clear and systematic approach for implementations, nor do they have a meaningful framework for representing abstract concepts. The business innovation framework for SAP S/4HANA gives chief digital officers, SAP S/4HANA program managers, and user departments focused and easy-to-follow guidance on implementing innovations with the SAP ecosystem in a structured way.
“Our business innovation framework came about as a result of our daily interactions with customers,” says Friedrich. He and his colleagues speak with many companies that rigorously follow an approach that has, until now, proven effective in keeping their existing business models running. COVID-19 and its consequences – from disrupted supply chains to massive fluctuations in demand – are only the most recent signs of just how dangerous such an approach can be. And it’s a realization that is gaining traction.
“COVID-19 can act as a kind of accelerant,” Fay observes. “Decision-makers understand that they now have the opportunity to learn about digital technologies, such as machine learning and robotic process automation, and integrate them into core processes. For example, by using robotic process automation (RPA) bots to automate the processing of growing volumes of customer service requests.”
ERP Transformation for Continuous Improvement
The framework centers around three key interlinked factors:
- The corporate and innovation strategy
- The SAP business innovation architect and five central elements: SAP services, processes and tools, technology and data architecture, innovation maturity among employees, and the partner network
- The methods for orchestrating and integrating innovation into the SAP S/4HANA program
Already, there are more than 100 technology-driven process scenarios available as extensions to the standard SAP S/4HANA software.
Before embarking on their transformation journey to SAP S/4HANA, customers explore the various topics with the help of interactive workshop formats and prioritize intelligent scenarios on a road map. During the integration, the project team establishes an innovation governance approach, ideally integrated into the SAP Activate methodology, and uses an agile project methodology to try out initial application scenarios. In doing so, they streamline and optimize their core processes.
The end point of the transformation itself is then the starting point for continuously improving and enhancing the processes as the journey to the Intelligent Enterprise goes on.
“Our customers face enormous challenges,” says Spahn. “They need to redesign their processes, find out about the new technologies on the market, and seek out new innovation partners. Plus, they have the implementation of SAP S/4HANA ahead of them.
“Innovation” is such an overused word; what exactly does it mean?
SAP categorizes innovation along three horizons. The first comprises in-depth, technology-driven use cases that facilitate core innovation and can be activated immediately as part of the SAP S/4HANA implementation. For example, predictive models for delivery dates to customers or quantity contract consumption can make the corresponding supply chains and procurement processes more efficient – all based on SAP S/4HANA.
The second horizon spans promising innovation and project examples from industry that are enabled by technologies like the Internet of Things (IoT), blockchain, and intelligent RPA. For example, anomaly detection can support production and maintenance processes and thus prevent machine outages.
The third horizon encompasses future technologies and business models. Here, it’s never just about products, but always also about processes.
The business innovation architect referred to in the framework is not yet an established role at many customers. “That’s why we take one with us,” explains Fay. What is the most important quality that person must have? Motivation – alongside an entrepreneurial mindset and an interest in new technologies.
Additionally, process expertise is vital. “Architects, program managers, and industry experts can perform this role,” says Fay. “But what this position absolutely requires is process and method expertise and – it goes without saying – business knowledge.” The job of the business innovation architect is to assess the relevance and feasibility of existing scenarios, to identify new ones, and to implement them. The role should, therefore, be anchored in the project organization for SAP S/4HANA in order to support continuity and alignment with the standard and with individual streams and processes.
Business Innovation Architect as Change Agent
What that means in practice is that business innovation architects at SAP get all the experts around the table at workshops and make sure that the right technologies are being used, as well as bringing tools like Spotlight by SAP into play. They are the ones with access to the SAP innovation ecosystem. And they need tact and diplomacy. “A business innovation architect is always a change agent too,” says Friedrich.
The greatest hurdle is overcoming people’s fear of change. When they look at machine learning, they start wondering whether their jobs are at risk – and that’s a question companies must address. Transformation can’t succeed without open communication. Digital learning courses – particularly if they are hands on – help people engage with digital technologies. For example, it can be helpful to let employees learn about popular products like drones in a fun way and collect their feedback about possible uses in business processes, says Fay, speaking from her own experience.
The three innovation managers clearly enjoy technology. “In a few years’ time, we might not just be talking about autonomous cars, but about autonomous enterprises as well,” says Spahn with a grin. One thing is for sure: The challenges business leaders face are increasing in both complexity and volume.
“That’s why it’s important to establish a network with the right partners,” says Friedrich. “New partnerships must be implemented in a such way that they offer the company added value.” The work emerging from the startup incubators and research projects at the Technical University of Munich is a good example.
When they work with the business innovation framework for SAP S/4HANA, the three experts from SAP tend not to place too much emphasis on the buzzword ‘innovation.’
“The last thing we want is an innovation department that simply opens up a new silo,” says Fay. “It’s not about being able to say, ‘Look! We’ve got machine learning!’ We integrate elements from the framework incrementally at the customer, so that added value is easy to measure. We analyze the issues that employees are concerned about and we apply intelligent solutions to improve business processes – in line with our customers’ architecture and needs.”
What is very clear is that companies need to build up the expertise and skills that are essential to remaining competitive in the long term and to staying relevant. Because – while we know from Thomas Edison that you might have to make many attempts before reaching your goal – in the age of standardization and digitalization, it shouldn’t be 10,000.
Webinar: SAP’s Innovation Factory
Prototypes are great for jumpstarting ideas. A recent webinar hosted by SAP explains how to achieve rapid prototyping and make technology accessible. It also explains the importance of investing in innovation, the concept behind SAP’s innovation factory (“two teams – one approach”), and the new approach to prototyping it follows