Approaching SAP S/4HANA implementations within pressured retail environments

Last year marked the slowest rate of spending growth in the UK for a decade, which was partially driven by Brexit uncertainty. And while many retailers had hoped consumer confidence and spending would be restored in 2020 it is proving even tougher, with the impact of COVID-19 testing retail sectors in different ways. In recent years business operations have been optimised for efficiency; built to support omni-channel retail strategies, minimise costs and reduce inventories. But for some retailers, these changes may have compromised business resilience and their ability to absorb and respond to major disruptions. Fortunately, new technologies are emerging that improve visibility across the end-to-end supply chain, and strengthen companies’ ability to resist such shocks. And once the dust settles, many businesses will no doubt embark on transformation projects to adopt these technologies into their processes to thrive in the future.

So from a technology delivery perspective, now is the time to challenge the status quo of widely accepted approaches to enterprise software deployment, and to define the best way to deliver a digital transformation. In our first blog we discussed how with the right technical setup and focus on fit-to-standard S/4HANA could be a game changer. In this blog, we explore various factors that will impact the implementation plans of an S/4HANA solution in complex IT environments.

1. Choose the right delivery method for transformation success

SAP implementations have traditionally followed a waterfall delivery approach whereby project activities are broken down into sequential phases with specific tasks. But this approach has come under criticism for being less interactive, resource intensive and stubborn to adapt to changing project requirements. Agile delivery was then put forward as a possible ERP implementation strategy as a response to market demand for early and continuous deployment of software. Whilst retailers tend to prefer agile delivery, it can increase the complexity of managing ever changing business requirements in large scale implementations. With a plethora of delivery methodologies available from SAP (e.g. ASAP, Activate) and other big consultancies, as well as accelerators to support both delivery approaches, knowing which one is right for your business can be tricky.

The main question asked by clients when planning their S/4HANA deployment is ‘how can we make them less monolithic?’. How do we break the scope into smaller deployments while adding value and staying true to the business case benefits? Due to the highly pressured business environment, retailers usually can't wait for year-long projects to see return on their investment. Retail trends are changing every year and accurate planning for future seasons requires flexible metrics and intelligent insights. So an ERP technology solution has to enable retailers to manage the majority of their daily operations, while peripheral applications address changing requirements (either in season or pre-season) and provide intelligent analytics to support decision making.

Based on my own project experience to date, the best way to approach an S/4HANA implementation is to follow a hybrid approach mixing:

• Longer deployment cycles that will follow a fit-to-standard, waterfall approach and deliver substantial scope by keeping the core SAP as clean as possible. This approach is suitable for re-designing one or more process areas such as a unified billing solution or a streamlined purchasing process integrated with vendor networks.
• Frequent deployment cycles (sprints) to design, build, test and deploy functionality outside of core SAP. This approach works for software changes focused on specific process areas, for example changes required to improve user experience, and peripheral apps/products. This approach can also be used to integrate legacy systems or peripheral apps with SAP using standard APIs.

2. Define your roadmap and manage your scope

The success of a retailer’s hybrid delivery approach relies on a clear technology roadmap. At its best, the roadmap is informed by a deep understanding of current end-to-end business processes, and a defined integration and infrastructure strategy. Retailers should work on agreeing their technology roadmap before they embark on a business transformation to identify the areas that need improvement and the processes that add value to their business.

Project delivery also requires effective, and ongoing scope management. For S/4HANA implementations, any design change made in one functional area (e.g. Sales) can directly impact the technical set up of one or more areas within SAP (e.g. Finance). The design of master data in particular (e.g. article master or site set up) usually triggers client discussions, because enriching the data structure can impact anything from product allocation in the supply chain network to the creation of purchase orders and the integration with peripheral systems. For Project Managers tasked with tracking the implementation’s scope, we suggest building-in two processes from the outset:

• Incorporate proof-of-concepts in the design phase: This gives business users the opportunity to experience parts of the end solution. Any user issues or change requests can be incorporate into the final solution design. Unlike a Minimum Viable Product (MVP), a proof-of-concept is built to validate some technical assumptions before starting with configuration and development of the overall solution.

   

• Follow a robust change request process: Once the business requirements and the solution design are finalised, any additional changes should follow a change request process. Change requests should be assessed against the business case benefits, as well as the impact on design, cost and timelines. A request could be rejected for a live deployment cycle or sprint but may be added to a future development cycle based on the overall programme deployment plan.

It goes without saying that simplicity is key to this process – the more custom the solution is, the more complex the scope will get.

3. Build a strong business case

A robust business case will be crucial in defining the prioritisation and sequencing of your deployment drops. Be clear on what your long term strategy is and how an S/4HANA transformation project will support your strategic goals. Prioritise the outcomes of the programme and reflect those priorities in your deployment critical path. This is an essential step in your transformation journey as every scope and programme planning decision going forwards will tie back to the business case. The success of the transformation will be measured against the outcomes defined at this stage.

4. Consider external dependencies

Various factors which are outside of the programme’s team remit can influence your delivery approach.

• A waterfall approach would typically require steering committee approval once a milestone is achieved, in order to secure budget for the phases that follow. Similarly, projects following an agile deployment cycle would require funding approval to start. If for example your funding cycles are twice a year this may hinder your ability to kick off new phases or projects, so should be considered upfront.
• Similarly, if production environment changes are only permitted once a quarter, this will impact the flexibility you have to structure project phases and plan go-live milestones.
• In many cases, third party vendors or internal IT teams follow agile development cycles where they allocate resources on a quarterly basis depending on external demand. That should also be taken into account when deciding programme timelines, delivery approaches and dependencies.

Due to the pace of change in the retail industry, most retailers have multiple funding cycles throughout the year but tend to limit production releases to a few times a year (around December, April or big promotion events). The key challenges for project leads is firstly aligning third party vendors and IT teams, secondly designing a deployment plan that pulls business processes in the same direction globally and finally proactively addressing issues that impact reaching programme milestones.

5. Successful implementations are business owned and IT enabled

Both business and IT teams should be aligned on the scope and work hand in hand to deliver the agreed business benefits. They should also be trained on the chosen delivery methodology and the tools that will be used as part of the programme. S/4HANA transformations require sponsors, management teams, functional teams, developers and users to maintain a constant pace in building a working solution that is constantly evolving. Regardless of how an implementation is structured, the project can only be successful if the individuals involved are passionate about achieving their goals.