How SAP S/4HANA and Cloud Move Midmarket Visibility Forward

By Rizal Ahmed, Chief Research Officer, SAPinsider

Key Takeaways

• Build your proof of concept for your SAP S/4HANA project based on addressing visibility and/or planning pain points
• Training and change management are critical in winning the battle to reduce unnecessary customization and embrace best practices
• Companies need to utilize a lens that focuses on agility when they evaluate partners for their SAP S/4HANA and Cloud Journey

Increasing the breadth and scope of business visibility has become a critical priority for most organizations as markets and working environments remain in flux. Our recent SAPinsider research on SAP S/4HANA and Central Finance found that visibility was the largest challenge and source of investment in 2021. Over half (53%) of our survey respondents in this study named financial reporting and visibility as a top pain point. Patience with complex systems and hard-to-navigate reports is at an all-time low with the understanding that there is a plethora of technology and solutions to address this challenge.

SAPinsider recently sat down with Gordon Folz, Vice President, Microexcel to talk about how they are working with their unique customer base of mid-market SAP-based manufacturers to improve visibility and planning as well as reinvent their business processes as they take on the volatility of today’s economic climate.

According to Folz, one of the important differentiators for today’s companies lies within the evolution of HANA database and the migration that many are considering from core SAP ECC solution to toward SAP S/4HANA. The advent of cloud-based platforms and IaaS solutions embodied in the hyperscalers such as Microsoft, Google, and Amazon are also critical factors.

But as Folz describes the buzz that these solutions receive for their performance is not the true headline story particularly when it comes to creating a business case for such a project. “SAP HANA and S/4HANA are game changers not just because of the speed and the increased performance they deliver. Many of our midmarket clients don’t have a critical mass of data to make this worth the investment. What really matters is the core architectural change of being able to have actionable insight into information so when an Accounts Payable person gets asked by a treasurer what’s going on with cash flow, they provide an immediate answer. If there’s an error, they can act on it without spending days and days pouring through reports,” describes Folz.

Where Does Visibility Truly Matter

Point in time views of the business are just a piece of what businesses are really looking for and IT teams are struggling to deliver. The past year of pandemics and disruption has shown that best thought-out plans can be rendered obsolete quickly and that organizations need to have flexible, nimble planning processes that can account for immediate variability and uncertainty. That is why according to Folz, planning is a major focus of their overall projects and the way they work with their clients to build their business case.

According to Folz, most mid-market clients do not rely on complicated algorithms or statistical modeling to forecast and plan. “This makes it even more difficult for them to effectively plan and forecast for something you can’t see,” says Folz.

This is where Artificial Intelligence comes in. Microexcel works with a partner to show how together with SAP S/4HANA they can use an AI-based resource planning algorithm that analyzes past scenarios to help them model forecasts for procurement, manufacturing, and inventory.

Folz says these examples captivate executives and stakeholders, but also make them a bit uneasy trusting a computer to make such critical business decisions. “When we present to an executive audience, they get fascinated with the capabilities but for some it gets too weird when they start taking direction from the system on what quantities they should buy, how many units they have to produce, and what they should carry in inventory. It’s a complete disruption of their current process, but it is very real and relevant to what they do and what they are going through,” comments Folz.

Additional conversations, training, and change management are needed to help executives understand how to provide checks and balances as well as mitigate the risks around using these solutions. As they start to understand the accuracy in these machine-driven forecasts, their confidence grows. Ensuring that the data is accurate and actionable is an important requirement to help turn their point of view.

Fighting and Winning the Battle on Standard vs. Customized Business Processes

Microexcel also works hard with customers to help them accelerate their move toward SAP S/4HANA while reducing key complexities. Central to their approach is helping their clients understand how much customization they really need to migrate. This is essential to reaping the true transformative benefits of SAP S/4HANA, says Folz.

“Some clients we see have customized to such an extent it’s hard for them to do a greenfield or take advantage of some of the key processes and capabilities of SAP S/4HANA. We work with them to do a detailed analysis of how much customization needs to be incorporated into the new system. We help them to get into a stable state in a cost-effective and timely fashion so that they can use the transformational aspects of SAP S/4HANA and embrace the fifty years of best practices that SAP has built into this new system,” describes Folz.

What may be surprising to some, says Folz, is that it is usually the executives, not the end-users in mid-market companies that can be resistant to change. These decision-makers want to preserve the customization because they are comfortable with the way the screens look and the processes work. “Unless there’s a major reason or regulation dictating a change, the executives typically want us to leave the customization alone,” says Folz.

The only way to combat this mindset is through information and education. Folz and Microexcel have spent a tremendous amount of time and resources ensuring that training and change management are cemented into every project right from the beginning. “Training is not an afterthought for us. We have incorporated it at the beginning and throughout our model. We do not outsource change management. Our delivery people are change management experts with 10-15 years of project experience. They understand the rigor and discipline required to be successful, says Folz.

But Microexcel does not exclusively focus on classrooms and meetings to win over change resisters but provides a technology-based solution that provides users with a contextual guide of how new processes work and what the key differences are between old and new. This allows each user or executive to have a deeper, practical understanding of what has changed and the potential impact.

They also then work with the executives to fully comprehend the impact on the business when it comes to revenue, cost, visibility, and efficiency. “We help executives understand how these changes are important to help them run the business. What drives business value is adding the top, reducing what’s in the middle, so that they all have more when it comes to the bottom line. So, we show them in tangible ways how this move helps them see that inventory is right, working capital is right. It’s a very holistic approach to change management,” Folz describes.

The Road to Self Sufficiency: Lessons for Choosing your Partner

Microexcel prides itself in helping its clients not just make the move to SAP S/4HANA and the Cloud, but to become self-sufficient in managing their own applications and infrastructure. This is in stark contrast to what many SAP customers in the enterprise experienced when they implemented ERP 10-20 years ago. Consultants were heavily involved in these on-premise projects and when they departed, they took much of the knowledge with them.

According to Folz, Microexcel focuses on self-enablement, and he compares their approach to that of the food industry’s effort to make their consumers more self-sufficient when it comes to cooking and meal preparation. “We do this, in the same way, assembling the necessary tools, guides, and accelerators. We give them all the ingredients to produce a beautiful meal and when they take it out of the oven, they own it,” described Folz. Microexcel is prepared as well to provide project management or ongoing maintenance and support where and when necessary.

In the end, Folz says that whether you choose them or other partners, there are lessons for selecting the right partner for your SAP S/4HANA or Cloud project. A big part of this relates to the way projects are run and the evolution of expectations from both users and executive stakeholders. The multi-year project is no longer the norm. Even for longer projects, there is a belief that there should be interim benefits and ROI achieved along the way. Customers need to take the time to evaluate their partners are ready to support these new models.

“Projects are really different than what they were 15-20 years ago. You need to hold your partners to very different requirements. They need to be more agile, flexible, and adaptive than they have ever been. Before projects could come in 6 months longer than planned and it would be no big deal. Now the economy so dynamic and diverse that an outdated or ineffective project management and delivery approach can have severe negative consequences to a business,” warns Folz.

What This Means for SAPinsiders

Look at visibility and planning to build your business case: It’s clear that these areas represent some of the core pains within the business. Explore the use cases of SAP S/4HANA and the cloud to support innovation and ROI in these areas. Do not overcomplicate your pilots but find some quick wins to show return in these areas.

Use a combination of soft skills, training, and technology to drive change management: Change management is the cliché that never disappears when it comes to projects. The foresight that you use to incorporate training right from the beginning will help you recognize and win over those that are resistant. Move beyond meetings and classrooms and leverage contextual help and training to show users both the differences and benefits of new models.

Use agility and independence as ways to measure partners:  Project expectations have changed as deeply as the technology over the past years. You need to make sure that your prospective partners understand how to apply agile principles and can help you not just implement but understand how to use and manage the final solution. Relying on their expertise for the near term is fine, but you do not want to become overly dependent on their skillsets and knowledge.