What is blocking to unlock the “Sustainability Blue Ocean Strategy - Uncontested market space” on the SAP S/4 HANA/Cloud Transformation Projects?

[STALANKI]

“Don’t compete. Create. SAP Sustainability blue ocean strategy can pursue high value market differentiation and low cost simultaneously if we can reconstruct industry boundaries by implementing the sustainable processes. Competing in the overcrowded industries is no way to sustain high performance in the current economic climate. The real opportunity is to create blue oceans of uncontested market space using SAP ESG Products in your core business capabilities. The value and profit propositions set out the content of your sustainability strategy. The people proposition and your SAP programme and Partner teams determines the quality of execution." - Modified version of Chan Kim Quote

Background

The biggest roadblock for many SAP customers currently is how to build a compelling business case for moving from the SAP ECC to SAP S/4 HANA and other SAP Cloud products. While SAP Value Life Cycle Manager  provides a head start for many customers, a lot of customers are not aware of it and some customers may or may not trust the metrics directly from the vendor. We generally recommend our customers to issue RFQ for phase 0 assessment before they progress to the next phase as it will help them to build the business value case correctly across all the value dimensions and especially sustainability as one of the prioritized value dimensions which many customers are missing. It will also help organizations to go down the right transformation path.

Wider Economic Impact of  the SAP Sustainability Value Case

While many organizations are rolling out sustainable strategies at the corporate level due to the changes in the economic, legal, and regulatory terms and conditions, these strategies are still not widely understood and communicated across the organization.

According to World Economic Forum WEF, SAP customers generate 87% of total global commerce and contribute to the significant share of GDP. We can change the  way we design, supply, produce and ship and consume many products on the planet if every SAP Customer reads their own corporate strategy and incorporates their overall objectives into the SAP S/4 and SAP cloud business case. The right ESG partner will help you not only to build the SAP S4 HANA business case  but will also help you to embed sustainability strategic elements into the business case.

Challenges

As we are working on the several SAP deals across the geographies and having conversations with customers on sustainability across industries, we are seeing the below common themes:

1. Lack of Awareness of their own Sustainability Strategy and How SAP Cloud Transformation Project can deliver a significant difference to their overall sustainability corporate strategy if we embed sustainability aspects into their business process.


2. A lot of SAP customers and partners still believe SAP ESG products require additional skills and hence it may shoot up costs if we include sustainability in the proposals


3. A lot of SAP customers believe SAP ESG products are very expensive as the price of these products is not publicly listed on the SAP Discovery Center.  Additionally, they believe the products may not fulfill all the industry specific ESG requirements and a lot of data collection/model changes are required as we don’t have  the crystallized metrics to measure how sustainable processes deliver on the future value promise.

Inflection Point for Sustainability

We can change the equation rapidly if every SAP customer incorporates below changes :

1.  Build Sustainability Role Based Purpose User Stories to engage your employees by linking their purpose into your Corporate Sustainability Strategy. Embed that as a boot camp training into every corporate programme initiative to meet your long term sustainable business goals


2. Train your SAP Functional and SAP Technical teams on SAP ESG products to  make the believe that these products only need upskilling of your current process, data, integration and analytic skills


3. Engage the right partner (ex: Partner with mature ESG and industry knowledge who has built their own accelerators) to co-innovate with you, SAP and build a new line of innovative sustainable products for your industry. Agree new product or innovation risk reward value based commercial model rather than a traditional service based commercial model to make it a win-win for you, SAP and the partner. It will help you, SAP and partners to build the revenue from your future business model if it works and share the risks if it doesn't work. More importantly, they become "your army of business force that brings success, wealth and health to our economies".

Sustainable Business Process Discovery Pilot

We can pilot and track the value of the sustainable business processes using the below approaches according to the context of the client. We can leverage signavio or any process modelling/governance/collaboration tool to achieve below.

Identify As-Is processes and Contrast it with S4 HANA to Optimize Target S4 HANA Process Design (Brownfield/Selective Data Migration)

1. Mine the SAP ECC candidate processes to demo the As-Is processes


2. Identify the pain points and sustainability glitches, (ex: amount of plastic used in the product, non-sustainable materials used in the BoM, Carbon emissions to manufacture and ship the product ,overall time taken to ship, overall time taken to invoice, over time taken to procure materials etc)


3. Import the SAP S4 HANA best practices into the Process Modeler to see if any of these processes can be improved especially in pain point areas and sustainability


4. Compare and Contrast with S4 HANA best practices to see if best practices help and add sustainability variants if required


5. Identify the custom variant required if there is a legal requirement or business value due to sustainability or to fix the pain point


6. Create the customer experience journey and link them to standard best practices by collaborating with all the stakeholders (optional step but a value add)


7. Set up Process Governance metrics and continuously improve against the sustainability/business value  KPI’s for S4


8. Set up notifications to alert business process owners if it doesn’t meet the sustainability/business value KPI’S, or train the AI model to auto correct the process gap

Start with S4 HANA Fit to Standard Process Design and Continuously Improve (Green Field)

1. Import the SAP S4 HANA best practices into Process Modeler


2. Demo the best practices with sustainability variations to the customer (ex: amount of plastic used in the product, non-sustainable materials used in the BoM, Carbon emissions to manufacture and ship the product, product compliance variations)


3. Create the customer experience journey and link them to standard and sustainability variant best practices by collaborating with all the stakeholders (optional step but a value add)


4. Identify the custom variant required if there is a legal requirement or sustainable/any other business value


5. Set up Process Governance metrics and continuously improve against the sustainability/business value KPI’s for S4


6. Set up notifications to alert business process owners if it doesn’t meet the sustainability/business value KPI’S, or train the AI model to auto correct the process gap

How do we embed intelligent sustainable enterprise elements into the Programmes?

While there is no magic bullet to solve the puzzle, Please check out my ideas https://blogs.sap.com/2022/08/09/transitioning-from-sap-cloud-transformation-experts-to-intelligent-...

Conclusion

I had a great deal of learning in Sustainability in the last few years and I am still learning. Hence, Please share your views, ideas and experiences.

Sustainability Blogs, Webinars and Courses

Sustainability Overview Courses

Corporate ESG Fundamental for Business leaders (udemy.com)

The A to Z of ESG - Environmental & Social Governance (udemy.com)

Fundamentals of Intelligent Sustainable Business (udemy.com)

SAP Sustainability Blogs and Courses

Sustainability with SAP S/4HANA Cloud 2202 | SAP Blogs ( The blog Provides Overview of all SAP ESG products)

Sustainable Digital Supply Chain and Logistics ( The blog series can help you to understand on how  supply chain and logistics can be transformed using the SAP ESG solutions)

Sustainability: Learning from Leading Companies | openSAP

Sustainability and Business Innovation (Repeat) | openSAP

SAP Sustainability Sales

SAP ESG reporting Webinars

https://partneredge.sap.com/en/library/education/psd/2022/sep/e_oe_te_w_scf_27148.html

https://partneredge.sap.com/en/library/education/psd/2022/sep/e_oe_te_w_hsa_27145_1.html

SAP Signavio to Accelerate Sustainability Journey

Envision new Sustainable Business Models Using Signavio