Transformation stories: How to get digital transformation right
Digital transformation is absolutely a journey rather than a single destination, but what do organisations stand to gain and what hurdles stand in the way of success?
We’re now firmly ensconced in the digital era. However, there isn’t a big switch firms can flip and change from what was to what now needs to be. They have to transition and transform to ensure they remain fit for purpose both today and tomorrow.
That all sounds easy enough, but digital transformation is no easy task – and there is a lot of money, time and effort at stake. Indeed, analyst firm IDC suggested earlier this year that firms will spend just shy of $1.2 trillion on digital transformation efforts in 2019 as they try and gain a necessary edge in the new economy. Fortunately, there are organisations out there – such as industry leader SAP – that can help.
What is digital transformation?
Digital transformation is not simply about software updates or digitising existing processes, but offering organisations real opportunities to reimagine how they work and how they could work. Automation and the use of sophisticated technologies such as AI and machine learning – in addition to the cloud and mobile – all play a starring role in most digital transformation efforts.
There’s a lot to gain by embracing and succeeding when it comes to digital transformation. Indeed, analyst firm IDC suggested earlier this year that firms will spend just shy of $1.2 trillion on digital transformation efforts in 2019 as they try and gain a necessary edge in the new economy. "Digital transformation is quickly becoming the largest driver of new technology investments and projects among businesses," said Craig Simpson, research manager with IDC's Customer Insights & Analysis group.
"It is already clear from our research that the businesses which have invested heavily in DX (digital transformation) over the last 2-3 years are already reaping the rewards in terms of faster revenue growth and stronger net profits compared to businesses lagging in DX initiatives and investments."
But how can organisations successfully navigate the maze of challenges they face as on their transformative journeys?
The secrets of success
The first step in solving any problem is acknowledging there is an issue so you can take the necessary steps to change the status quo. Digital transformation is no different.
According to SAP, the market leader in enterprise application software, there are five pillars to digital transformation success:
- Ensuring executive commitment to the journey ahead
- Keeping focused on sustainable and tangible results
- Aligning budgets with resources
- Fostering a culture of innovation
- Building and honing data platform and skills
It’s important, therefore, to ensure you have the right vision and technology in place, but to remember never to underestimate the people element – those leading the efforts, those involved and those touched by the results.
"Digital is not just about technology; it is multi-faceted and should be diffused throughout the company," SAP states in its ‘Five pillars of digital transformation success’ whitepaper. "Successful companies are recruiting diverse talent and embracing an empathetic approach in design thinking."
Continuous innovation and transformation are a necessity
The Goodyear Tire & Rubber Company has been at the forefront of a continuously changing mobility industry for 121 years. The company has weathered many changes and remains as relevant today as ever thanks to its ability to lead with innovation in its products and services for customers, as well as in its internal systems and processes. The firm employs circa 64,000 people and boasts sales of 159 million-plus tyres around the world each year. With such a busy and complex supply chain, digitally transforming and ensuring its data capture and analysis mechanisms remain top notch is a key priority.
Goodyear had several business drivers that led them to adopting SAP S/4HANA now versus waiting a few more years. "Goodyear is running separate ERPs to support our business units in the Americas, EMEA and Asia Pacific and we identified a couple of key drivers to start our S/4HANA journey. First, we wanted to leverage SAP’s latest technologies, including machine learning and AI. Second, we wanted to harmonise our applications architecture and drive standardisation and simplification to better support new business requirements," said Horst Ebert, VP of Global IT/SAP at Goodyear.
"We went live with finance initially, deploying a technical foundation last year, and now we continue to add more innovations. We don’t consider our S/4HANA journey in isolation though, it’s part of our broader digital enterprise strategy and transformation to ensure Goodyear stays a technology and industry leader," said Ebert.
No need to go it alone
Organisations already know their own business and sector very well. They’re also familiar – as a result of the changing world we live in – with emerging and developed technologies and the need to innovate. However, the challenge is often in finding the right starting point or the right company to partner with.
"We support our customers in regards to this question by providing them with a number of digital tools to help them understand what SAP product innovations will support their digital transformation plans specifically," said Sven Denecken, senior vice president of S/4HANA and head of product success and co-innovation at SAP.
"We also provide tools to help customers measure and understand the value that digital transformation will bring to their business and how this benchmarks across other customers."
These tools include, but are not limited to:
- SAP S/4HANA Value Advisor offers a quick and easy way to measure value and ROI.
- SAP Innovation Discovery is designed to aid businesses in finding the right solutions for them based on their size, industry and specific technology area of interest.
- Business Scenario Recommendations for S/4HANA, a free report that showcases a firm’s current SAP usage so it can see where SAP S/4HANA and associated digitisation will have the most impact.
- SAP Transformation Navigator, which creates a personalised and industry-specific road map based on organisation’s current estate.
On the horizon
While many organisations have successfully overcome challenges and enjoyed the resultant benefits, it’s important to remember the technology landscape continues to evolve. The issues businesses face with digital transformation are very malleable.
SAP’s Denecken sees four distinct areas businesses should be mindful of going forward:
- Intelligence and automation
- Embedded analytics and conversational UI
- Experience data integrated into business processes
- ERP cloud
"Deploying a modern ERP solution via a true SaaS deployment model continues to be a trend we see, as customers look to benefit from more agility and a lower costs of implementation together with quicker innovation cycles afforded by multiple releases per year. [This is] all underlined with an approach that focuses on fit to standard rather than fit to purpose," says Denecken.
Digital transformation can be a daunting prospect, but teaming with the right partner, such as SAP, can help you find the solution that works for your business, revolutionise your practices and make your organisation ready for whatever challenges tomorrow might bring.
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