How Organizations Transform

⇨ 84% of organizations say that transformation is important to their organization

⇨ The most common form of transformation is infrastructure based

⇨ What should you plan for your own transformation projects?

In late 2021, SAPinsider surveyed 140 members of our community to better understand the importance of transformation to their organizations along with the types of transformation that they were performing. The results of that research were published in our Transformation in the Enterprise Benchmark Report, but I wanted to explore some of the results that we saw around how organizations transform and what those mean to the SAPinsider community.

The Importance of Transformation

When it comes to how important transformation is to organizations, it should come as no surprise that the vast majority of organizations place a high importance on transformation. In our research, one in five (21%) said that transformation was extremely important to their organization, while nearly twice that many (38%) said that it was very important. Another quarter (25%) said that transformation was important. This data was based on respondents ranking the importance of transformation to their organizations on a seven-point scale.

But why is transformation so important? We can get a better understanding of this by looking how organizations transform and what transformation plans they have. The most common type of transformation being either planned or performed is that of upgrading or implementing new software or solutions in the cloud. In our research almost two thirds (62%). While cloud-based solutions have become significantly more common over the last two years as organizations react to having a remote and distributed workforce, it is just the most recent in a series of infrastructure changes that began with a shift to client/server architectures.

What is significant for many organizations though is the fact that while an initial move to the cloud may have started as long as a decade ago, only a small proportion of enterprise applications have moved to cloud-based infrastructure. When looking the proportion of organizations running SAP workloads in the cloud these numbers are higher because they include software-as-a-service applications like SAP Concur, SAP Ariba, and SAP SuccessFactors. But a large proportion of core SAP applications like ERP, financial, and data warehousing are still using on-premise data repositories. While organizations do have plans to move these systems to the cloud, much work remains to make that a reality.

Moving beyond infrastructure-based transformation, the next two biggest areas of transformation are updating and redesigning business processes (56%) and redesigning business process models with a digital mindset (51%). Both these types of transformation are crucial to organizations that are seeking to modernize processes to adjust to updated governmental requirements for security and data privacy, or simply to remain competitive in today’s rapidly changing business environment.

What Does This Mean for SAPinsiders?

The full report includes detail on how organizations measure the success of transformation, challenges that they are encountering with transformation, what is driving transformation, and transformation strategies that organizations are employing and can be accessed here. But what should SAPinsiders be planning as they consider their own transformation and can draw from our research on how organizations transform?

• Prioritize your most critical transformation needs. If your infrastructure is aging, replacing that infrastructure represents your priority from a transformation perspective. But if you have the opportunity to both update hardware and move to new software that will help your organization comply with new privacy requirements or replace ageing processes without the need for significant customization and overheard, focusing on that transformation will provide more long-term benefits even if the project itself is larger.
• Educate your teams on the benefits of transformation as well as on the skills that they need to make any transformation project successful. One of the biggest challenges identified by respondents to research was a lack of skills or knowledge around transformation. Taking the time to understand what knowledge exists in your internal teams, and particularly where gaps exist, can help ensure that you have the time to prepare your teams for any future transformation projects.
• Evaluate whether cloud-based solutions will provide the benefits that your organization needs for future success. As was discussed, many workloads are moving to the cloud because of flexibility and scalability, but also because it is in these environments that most vendors are focusing their development efforts. While some vendors only offer cloud-based solutions, or only offer new versions of solutions in the cloud, those that have had on-premise offerings are starting to emphasize development of cloud-based versions. An example of this is SAP S/4HANA Cloud. While the on-premise version initially had more features, SAP’s development emphasis is now on their software-as-a-service version. Even if you have mostly on-premise solutions today, in the future you may have no choice but to move to the cloud.