Digital transformation is not just about replacing legacy ERP systems with new technology, it’s about reimagining and reinventing business processes for the digital age, leveraging the power of automation, data, and emerging technologies to drive innovation, create new business models, and deliver greater value to employees, partners, customers, and citizens.
Planning for Digital transformation projects is daunting especially when an organization hasn’t designed future processes and hasn’t acquired the skills to implement technology to implement such processes. The organization needs to run their daily business in an efficient manner while they are embarking on this multi-year venture.
Here are some key challenges organizations may face when undertaking digital transformation for large ERP systems:
|Legacy Processes and People||Organizational||Technology|
· Entrenched siloed processes that hardened over the years
· Lack of clarity on the impact of change as the ‘siloed’ legacy systems are kept together by a group of technology experts
· Lack of interoperability
· Siloed data and lack of data quality to use data as an asset
· Lack of scalability
· Lack of clarity on digital transformation objectives
· Budget and resource constraints
· Policy and Standards that are not caught up with the reality of the business and technology (e.g. Security)
· Wide variety of fast-changing technology offerings makes it hard to make the right choice
· Skillset (mindset) that knows only legacy/existing technology
· Inability to imagine business processes that can be transformed using the latest technologies (e.g. usual suspects AI/ML/Cloud/IoT/APIs/BlockChain etc.)
What changed in intelligence enterprise?
In the last 15 years, the Enterprise Resource Planning software industry has gone through major innovations in the key architecture layers e.g. Application, Data, Technology and infrastructure. Intelligent enterprise software uses all these combined innovations that will drive the next cycle of transformation.
Digital transformation can be approached in two manners improving digitization and adopting digital transformation. Although digital transformation receives much attention it gets confusing for everyone to reimage processes overnight. There is a transition time for new technology adoption and a wide range of business processes making the switch to the new platform. (When a new video powerful games console is launched, gamers still play old video games designed for the old console until new games are developed and released that can take advantage of upgraded hardware)
It is expected that when organizations will start with digitization (i.e. upgrade platform) to improve efficiencies. As organizations acquire skillsets to utilize new technologies and adopt new business models digital business transformation will pick up the pace.
Certain backbone office, industry-mandated, and regulated processes in established industries don’t require total reimagination but require better user experience, automation, and analytics ability to take drive the next round of productivity improvement.
Approach 1: Improve Efficiency with Digitization
Organizations have entrenched memory of processes that works (maybe siloed in many cases, but it works). This approach is not about abandoning existing processes but improving them. It’s about creating a digitally better version of itself. It’s about utilizing new technologies on the known business processes and laying a foundation for future ‘disruptive’ transformation initiatives. It’s an incremental approach. Organizations should take this opportunity to simplify, streamline and standardize processes and underlying data models in this approach.
Organizations can focus on the following capabilities without disrupting the core.
- Improve user experience (Fiori)
- Intuitive user interface (look and feel)
- Multidevice and multi-channel experience
- Personalization for better engagement
- Improve user efficiency (Automation)
- Automation of streamlined processes
- AI-enabled assistance
- Utilize data and analytics (Datasphere)
- In-app analytics and dashboards Forecasting and prediction (across various business domains)
- IoT integration for physical assets
- Risk assessments
- Improve integration (Integration, Network)
- Connected business with partners and customers
- Support Sustainabiy initiatives (Sustainability managmnet)
- Improve environment footprint and support ESG
- Streamline sustainability reporting
Approach 2: Adopt Digital model to transform
Certain organization or business functions requires a totally new approach and don’t believe that improving existing business processes but design completely ground-up new business processes that are not part of the current business model. This approach involves launching new products and/or services. This transformation can be a revenue enabler (corporations) or value enabler (governments)
- Business Network: Process and data integration with the business to support pay-as-you go, subscription, outcome-based buying and selling options
- Digital twins/IoT/ Predictive maintenance: Improve asset utilization, supports subscription/utilization-based services offering
- Customer or Citizen experience: Self-service that is based on AI/ML to address common scenarios
- Support new industry revenue stream: Circular Economy, Blockchain for supply chain traceability, Micro-power grids based on solar electricity generation
Organizations should use a combination of these approaches based on the business domain they are targeting for the transformation. To reduce risk transformation overload organizations may adopt new intelligent enterprises to improve their existing business processes and take this opportunity to build a foundation by upskilling their workforce and learning technical capabilities that can transform their business.
- “Design for Digital” by Designed for Digital How to Architect Your Business for Sustained Success By Jeanne W. Ross, Cynthia M. Beathand Martin Mocker (Designed for Digital (mit.edu))
- SAP Intelligent Enterprise White Papers – SAP Intelligent Enterprise White Papers | SAP Blogs (Accessed April 22, 2023)