All areas in the company should clarify in advance which goals can or should be associated with the conversion to SAP S/4HANA and which hurdles and risks are to be considered in the process of transformation.
The associated goals:
- establish the necessary process security
- guarantee secure, reliable processes for all areas
- Thinking about developments in the near future as early as the strategy, roadmap and design stage.
In the following, we will take a look at the core aspects of six contact persons in the company as examples:
The conversion to SAP S/4HANA is the transformation project of the decade for shareholders, managing directors and CFOs of most companies. It requires the courage to make decisions and a sure hand. We stand by the aforementioned group of people during this process.
What is important:
- Efficiency: convert the ERP to SAP S/4HANA securely and silently; minimise risks and costs through high automation.
- Long-term: build a technological infrastructure with which the core business can be served and which supports the new strategic business areas
- Data transparency: create access to all data in real time to strengthen the strategic ability to act
- Security: safeguard the existing business despite the transformation
- How will my business change in the next five to ten years?
- Which new business models are part of the corporate strategy?
- How can the requirements of the future already be translated into requirements for an ERP system today?
- What is the maturity level of existing processes and what can be derived from them?
- Can the solutions of today be further developed in such a way that they still meet the challenges of tomorrow?
- What opportunities and risks arise from the conversion of the existing ERP system to the new process and system platform?
- Do I want to reorganise the processes in the company in the course of the ERP conversion or should only disruptive factors be eliminated? What functionalities and licences do we need for this?
- Which initiatives that have already been started are worth linking with S/4HANA - and which are not?
- How quickly can I achieve positive effects? How do I determine the value contribution of the positive aspects I expect?
- How high is the project budget that I can also represent externally with a clear conscience?
- How do I convince my organisation of the goals? How do I motivate all employees to get the best out of the project?
- How do I keep the risks on the path to transformation as low as possible?
Whether by choice or business necessity, the Head of IT is always at the centre of the IT part of the transformation. This often also changes the operational organisation significantly. Before the decision for the project is made, the pressure resulting from the impending end of maintenance is also particularly on the IT department, as it must ensure the functionality of the systems. During the transformation, the mood of optimism (new platform, basis of modern technologies) and risk perspective (work on the heart of the company) usually alternate.
What is important:
- Pulling together: activate all business units to jointly manage the project from planning to implementation in the company.
- Strategy: strengthen the overarching importance of the IT department
- Integrating the IT department: develop the IT organisation, improve cooperation between business units and IT, automate IT service management
- Ensure secure transformation: eliminate operational failures and costly rework
- Resilient project methodology: resolve business and technical interdependencies with teams not involved in the project
- Clear roadmap: in line with the IT roadmap, use the project results to support the long-term system architecture - strengthen the protection of company networks
- Who in the company can be involved to define the objective of a S/4HANA conversion?
- Does the company's IT strategy or IT roadmap answer important project questions about the operating model, vendor preferences and core technologies?
- Which competences are needed in the respective project phases? Which ones are available internally, and for which ones are there already long-standing partners?
- Which effects from the transformation can be anticipated in the context of licence negotiations? What licensing arrangements need to be defined to best support the business objectives?
- What changes need to be made to the IT infrastructure through new hardware or connections between the company and cloud provider networks? How can the existing protection of the company networks be maintained or strengthened?
- Can the risks for a successful go-live be clearly foreseen? Is there sufficient focus on the continued operation of critical business areas?
- Does the project approach meet the requirements for documentation, quality assurance and IT security?
With the transformation project, the Head of Accounting primarily has the opportunity to reposition his or her own department vis-à-vis the other corporate divisions and to make a significant contribution to the digitalisation of administrative processes. Accounting is often confronted with manual follow-up work if processes do not already take accounting requirements into account during the business transaction. The cross-functional way of working in ERP conversions allows requirements to be implemented to an extent that would hardly be possible in isolated accounting projects.
What is important:
- Security: not compromising accuracy and publication timing of reporting.
- Data access: Obtain information more quickly
- Quality enhancement: improve financial statements by reducing complexity and diversity in processes
- Harmonisation: harmonise and produce high-quality valuation and reporting for the group and divisions, while taking into account legal requirements of legal entities in all countries
- Foresight: formulate a clear vision for the accounting organisation in five or ten years' time and determine process design in relation to this, leverage opportunities for automation and prepare staff for their future roles
Questions for success:
- When and how will accounting be involved in the design process for the new system?
- What challenges from bad data or inefficient processes are already known and need to be improved?
- Which activities (e.g. clean-up, analysis) should usefully be completed before the project starts? Which are unnecessary?
- Who in the team is suitable as a "key user" to represent accounting in the design of the end-to-end processes and to get to know the new system early on?
- Are the conditions in subsidiaries known? Is uniform work already being done? Who would be able to provide information?
- How can the employees planned for the project be relieved of their regular duties?
- How can master data be brought under control? What are good processes for maintaining customer, supplier and material master data with other departments?
- How can the perspective change from balance sheet items to value flows? What coordination can take place with Controlling? Which with sales?
- Can all valuation views (group, local accounting and tax) be mapped automatically along the processes? What is required in the process for this?
SAP projects are often attributed to the finance area. The reality in many companies is different: There, the ERP system is the backbone of the flow of goods and production. The existing systems have been optimised over years, so the motto "Never change a running system!" applies initially.
Nevertheless, there is a lot of potential in the cooperation with the other departments and the definition of international standards. New technologies and standardised procedures lay the foundation for a closer connection of suppliers and procurement platforms. Industry 4.0 thrives on this. Making this possible and at the same time maintaining the processes that are running well usually justifies the (renewed) elaborate work as part of the ERP transformation.
What is important:
- No regression: ensure status quo of operational processes, maintain company-specific best practices.
- Process adjustments: Standardise processes where necessary - grant degrees of freedom in the sense of the customers in order to be able to react sales-wise to needs in international markets.
- Error-free: correctly map the flow of goods in the system
- Optimise purchasing: Make purchasing data more readily available and standardise commodity groups
- State of the art: switching to the latest technology (e.g. interfaces with business partners, data connection in warehousing and transport or the integration of sensor technology/Internet of Things)
- Avoid manual work: digitalise and automate processes
- transparency: integrate supply chains
- meet new customer requirements: Individualisation (batch size one) and flexibility in change management
- What is the target picture for the supply chain sector in five or ten years?
- What external developments will influence supply chain operations or system requirements in the coming decade?
- How can the supply chain become more flexible to cope with increasing market uncertainty and changing framework conditions?
- Which obstacles in the processes have existed for a long time and are requirements for the new system?
- Are there organisational changes that are to be implemented in the course of the transformation?
- Who in the team is suitable as a "key user" to participate in the design of the end-to-end processes and to represent operational issues?
- How can external partners be involved? What impact, if any, will the system change have on them?
- How can the experiences from recent system implementations or roll-outs best be incorporated into the upcoming ERP project?
- Which IT products are currently used in the supply chain? Is this also the strategy for the future? What is the status of the tool roadmap?
Similar to the Head of Accounting, the Head of Tax - if the project is approached properly - has a great opportunity to address the tax challenges at the root: early in the business process. If, at the same time, a process governance is established that ensures involvement, then significant efficiencies in the tax department and a better level of automation can be achieved.
What is important:
- Transactional data: consider the tax requirements in the transactional processes.
- Security: ensure tax compliance
- Focus: simplify tax reporting, make tax planning more precise, minimise administrative efforts
- Avoid additional manual work: map tax, customs and other legal requirements in the ERP transformation
- Foresight: integrate future (as yet unknown) tax requirements into business processes and thus contribute to automation in the long term
Questions for success:
- When and in what form will the tax department be involved in the design process for the new system?
- Who in the tax department is familiar with the business processes and how well? How can an organisation structured according to tax types best contribute to a project that functions according to end-to-end processes?
- How can colleagues in the tax department participate in the design of business processes on an abstract level when the tax assessment is actually aimed at the individual facts?
- What possibilities are there for mapping decision-making paths in the system?
- How can the variety of possible transactions and their assessment under tax law be checked in tests? How can we cooperate with other departments so that they accompany the tests?
- How can the transformation project be used to sensitise all departments along the company processes to tax issues?
The Head of Compliance benefits from documented processes, risk transparency (in the project and in business operations), procedures for changing the system, allocating authorisations, governance, etc.
Often compliance requirements are not yet adequately covered by systems, so manual controls have to be documented. Transformation is often accompanied by a higher degree of standardisation, which can ensure better quality management. But where standards are set, workarounds may increase. This is a good reason to be fully involved in the transformation project.
What is important:
- Quality assurance: not compromising the internal control system (ICS) with new processes and systems.
- Risk under control: ensure that risks remain controllable for the company through good governance, documentation and control mechanisms
- consistent reporting on business performance and risks: include controls, policies and risk metrics in process design
- better quality management: automate controls and reviews, make risks more transparent
- Time savings: more time to improve processes and identify new risk potentials, as compliance staff spend less time on controls and reviews
- What elements of the risk and ICS strategy should be brought into the transformation project? Is there an opportunity to design risk reporting in parallel with the redesign of business processes?
- What is the best method to accompany the process design?
- How can compliance issues be included in tests?
- How will the cutover from the existing to the new system world take place and how will the transition also be handled with regard to external auditors?
- Are authorisations verifiable in the new system? Can breaches of guidelines or segregation of duties be quickly identified and tracked?
- How can data protection also be ensured in the course of tests and during the transition phase?
Consulting, Head of SAP & Finance Transformation
KPMG AG Wirtschaftsprüfungsgesellschaft