S/4HANA transformation projects are all the hype with organizations, as they strive to develop a digital core as a competitive advantage and existing legacy systems reach the end of life in 2027. Still, very few organizations bring the appropriate skills or tools to successfully manage such transformations. In this blog we shed some light on the biggest challenges of such transformation projects and explain the potential of transformation analytics in increasing the success rate of those transformations.
Some of the most prominent digital transformation projects are currently SAP S/4HANA (S/4) transformations. As S/4 implementations call for a fully-fledged business transformation, the projects become extremely complex, considering all operational and administrative aspects of an organization and thus create the need for massive change initiatives. This holds multiple challenges for organizations and project managers alike. A study recently published by Camelot among companies currently planning an S/4HANA transformation showed that 64 percent of the panel see the involvement of all relevant business units and stakeholders as a challenge. This ranks significantly higher in the study than other factors like the choice of deployment model or the redesign of business processes. As 26 percent of respondents say that they don´t even have a change management team in place, one can safely say, that the area of change management is often neglected.
Short Introduction to Transformation Analytics
Transformation Analytics is a process and tool-enabled discipline that allows for systematic collection of data and its evaluation to generate insights to support people-related and data-based decisions during a business transformation. Many see transformation analytics as an evolution of change monitoring because it delivers insights to proactively improve goal achievements rather than simply monitoring them. For this reason, a holistic change management concept should always include transformation analytics.
Challenges of S/4HANA Transformation Projects
Next to the challenges any project manager encounters while managing a transformation project, such as staying on time and budget or steering and planning efforts and resources, S/4HANA transformation projects have additional demanding challenges: Lack of internal project know-how, qualification of external and internal staff, not enough time for transformation, insufficient OTP planning or missing risk management.
Missing risk management
From our experience, project managers are missing required transparency and visibility of risks, leading to delays in deriving appropriate countermeasures. For example: One of the most common pitfalls in S/4HANA projects is that the definition of scope often is unclear and alignment with the corporate strategy remains incomplete. This means that employees have no transparency on the extent and effect of the project and therefore fail to understand its advantages and positive effects for themselves and their organization. And since the organization’s strategy represents an already established common mind set, it is especially destructive when employees do not see a clear link to this strategy. Accordingly, they fail to resonate with the purpose of the initiative, which leads to uncertainty and misunderstanding and in turn creates resistance towards the change initiative. To identify such behavioral aspects in a change initiative can be extremely difficult and it is even more difficult, if not even impossible, to solve retroactively.
Lack of internal insights
In addition to this, project managers are dependent on experience and data when making decisions or defining project actions. This often leads to a misfit of project need and taken measures. This becomes apparent in S/4HANA projects since one of their most common reasons for failure is an insufficiently planned implementation strategy, as relevant internal insights are missing throughout the course of a project. The steering of the project therefore tends to rely on trial and error rather than on continuously collected data providing valuable insights on the people side of the project.
Both, missing risk management and lack of internal insights, lead to limited control and overview of activities and effects and thus have direct negative impacts on resource planning and implementation. For this reason, transformation projects need to make risks and reactions visible. Data needs to be made accessible and measurable by defining realistic KPI frameworks, which enable transformation analytics.
How Transformation Analytics Reveals the Invisible
Comprehensive, extensive & relevant sentiment data information that was not previously available for decision-making can be uncovered by collecting sentiment data from inside the organization, via a transformation analytics tool and based on a comprehensive transformation analytics approach.
Correlation of collected data with other leading transformation KPIs and project milestones
Transformation analytics tools collect perceptions, opinions, and reactions of different stakeholder groups at different stages of an ongoing transformation project through short digital questionnaires. They relate the collected data to activities from stakeholder engagement to communication and training, clearly showing the effectiveness of these types of activities and hereby allowing to focus on truly value adding measures.
Proactive people-focused risk management within the project
Most importantly, the gained insights now allow the project and change management to proactively steer the transformation based on data and statistics rather than gut feeling and experience alone. For S/4HANA transformation projects this means that the challenge of aligning the extent and effect of a change initiative with an organization’s strategy can be overcome by integrating stakeholders’ opinions and perceptions early on. In this way a risk management within such transformation projects is actively incorporated and supported.
Stakeholders need specific transformation management
A comprehensive transformation analytics strategy allows the definition of individual change journeys for different stakeholder groups and supports the conception of communication and implementation strategies within transformation projects. Transformation analytics provides a reliable framework and is based on valuable data to successfully manage transformation projects. For S/4HANA projects this means that the organizational transformation planning becomes much more effective and project managers can purposefully distribute resources and lead, instead of manage, the transformation.
Transformation analytics is the key to successfully manage people-focused S/4HANA transformation projects. It generates valuable insights and reveals risks and challenges, which in turn allows pro-active and effective resource management and decision making. This is made possible by collecting sentiment data and information from employees and putting it in relation to other leading indicators for transformation success. This provides full transparency on project events and milestones and enables proactive and effective project and change management.