IBM was one of the earliest adopters of SAP S/4HANA, using the transformation process to optimize its quote-to-cash (Q2C) processes. SAPinsider sat down with Renee Hook, IBM’s Vice President of Global Quote-to-Cash Transformation, and Doug Watts, IBM’s CIO Quote-to-Cash SAP Lead, to discuss this digital transformation and what it meant for the business.

Q: What business issues are having the most significant impact on the market right now?

Renee Hook: I think the last couple of years have taught us that changes in the world can be unexpected. The challenge for any business is to adapt quickly to new circumstances.

The biggest business challenges we are all facing right now are uncertainty, growth, sustainability, and the ability to drive innovation at the speed we need to.

I lead IBM’s Quote-to-Cash Transformation. That mission is to support an integrated, end-to-end process that helps drive our sales cycle to encourage innovation and provide clarity for our customers, speed for the seller, and efficiency for our administrative teams. The challenge is keeping up with the rate of change. IBM is a 111-year-old company, and it is used to change. It has reinvented itself and driven change.

This is where we focus on technology, and we're very focused right now on digital transformation to fully leverage the power of technology. I believe technology helps us change the world.

Q: Is there anything you've learned throughout this transformation process that you think might be beneficial for others to know?

Doug Watts: We're just a little farther than SAP in the sense that the product we're using, S/4HANA for BRIM, is relatively new. We grow that together with SAP for our internal use. Soon we will be client zero for the brand-new IBM offering called Move to RISE with SAP on IBM Cloud. Our internal experience and lessons learned during this will become a valuable asset for our IBM Consulting partners.

In terms of key lessons learned in delivering S/4HANA, the largest one is probably preparation—the idea that this doesn't happen overnight. We invested a lot of time in understanding the benefits and standard function of S/4HANA BRIM.

We had a team that investigated for eight months before we started the migration project. We did our due diligence on our current two-decade-old SAP ECC environment and could identify core parts that would be relevant for S/4. Our going-in approach was to use a standard, out-of-the-box function in S/4HANA BRIM and keep the core clean. Because of that early investment, we could deliver the S/4HANA solution in less than a year. For a company with the size and complexity of IBM, that is a significant achievement.

Renee Hook: When we moved from ECC to S/4HANA, it wasn’t a lift and shift. Our approach was a business-led transformation supported by technology and change management. I think both are equally critical to success in order to have a successful rollout of a major platform like this.

We spent a lot of time understanding what we wanted to fix, what our pain points were, and what new functionalities S/4HANA brought us, including what SAP BRIM can do for us in order to enhance and increase the benefits we'll have with S/4HANA.

One other point is speed and acceleration—that's the name of the game. Gone are the days when companies can spend five or six years transforming. We need to focus on speed and agility in order to move quickly and course correct if needed. Those are two critical points.

Q: What are the specific KPIs and metrics you see companies measuring and looking for when they want to establish a business case for why they should invest in IBM Solutions?

Renee Hook: Again, I think the answer is speed. We're all under tremendous pressure to speed up our transformation and drive the benefits—not just for user experience for our sales team, our clients, and our partners, but also for productivity. So what we're very focused on from a KPI perspective is a reduction in process cycle times. That’s key to freeing up our client-facing teams to shorten the time to get what our clients need, get them the quote as fast as we can, and provide an updated price as quickly as possible. So we're very focused on cycle time reduction. We're focused on the automation of high-volume transactions that free up resources for higher-value work. And last but not least, we are very focused on our client NPS and what can we do to improve that relationship.

Quote-to-cash and S/4HANA should have a positive impact on our clients. From an invoicing and billing perspective, if you make it easy for clients to understand their invoices and provide them the ability to automate their payable systems, that's good for them, and that's what we try to do.

Doug Watts: Another major thing for a company our size is simplifying the IT architecture and improving the buying experience for IBM customers. IBM has many systems that all support the same functions, and we want to simplify those and bring them together in a single tool. Instead of having multiple quote-to-cash systems, we want to get to one system that best leverages SAP’s portfolio.

Even within IBM’s software business, we have different sales models. We sell appliances, on-prem software, and SaaS software. Our goal is to simplify and streamline so users don’t see the highly complex processes underlying each one. They come together in a single flow. Simplifying IT results in simplifying the quote to-cash process for IBM and its customers.

Renee Hook: That is key to integrating our CRM with our quote-to-cash tools. To Doug’s point, what IBM tries to do is make sure the support staff lives in the platforms. We don't want them signing out of one and onto another. On average, our sellers were logging into 12 applications. Now we're looking at it truly from an end-to-end perspective and having them live in the platform. It’s the same thing with quote-to-cash—have the execution team live in the platform.

Q: One of the Q2C transformation outcomes was that seller satisfaction reached 98 percent, up from the baseline of just 52 percent a few years before. What about this process improved the seller’s experience?

Renee Hook: No matter what role you're in at IBM, the company’s clients, sales team and partners are its top priorities. So we focused on what we can do as a support-shared services organization to support them. Those are the touch points. We touch everything. We touch marketing, opportunity, quote, contract, order, invoice, cash and incentives.

What we tried to do is give them a modern application that's easily integrated with other applications. We keep them in the platform, we focus on eliminating the nonvalue-add tasks such as manual validations and we bring the data they need to the platform rather than have them sign in to other applications.

If we bring the data to them, we don't have to have somebody going in there and doing manual validations. We focus on the automation, and that's what the sellers love. A big reason the satisfaction jumped to 98 percent is because they can self-serve. We provide them the automation and the data they need on the platform they're living in.

Q: What would you tell someone who's considering making a transformation like this but isn't quite sure they want to or can do it?

Renee Hook: They need to focus up front on organizational capability management. They should make sure their stakeholders understand what they’re trying to accomplish. They should make sure they understand what it means to these stakeholders and listen to them. It’s typical to go in thinking you know what they want, but nine out of ten times you don't.

Those considering transformation should have strong upfront OCM and strong upfront collaboration with their stakeholders. They should spend the right time on process transformation and the user experience they want to create. Then they need to pass this on to their highly talented CIO team who will then design solutions for the user experience through the technology and functionality. It’s critical that a transformation is a business-led transformation.

Doug Watts: Focus on outcomes. Many times, people think of transformation as systems, tooling, and process. But if they start with the desired outcome and agree—“this is what we want”—then they create a sense of purpose and agreement from their stakeholders.

Q: Could this explain why it's so important to have agreement from all stakeholders, especially between business and technology stakeholders?

Renee Hook: If you don't agree, you will not be successful. We've learned a lot of lessons at IBM about how to be successful with our transformation. It starts with a strong organizational change management process and collaboration with our stakeholders. We do this collaboration through showcases. As we're developing the experience, we have showcases after our two-week iterations when we bring the stakeholders in and show them that “this is what it looks like so far. Do you like it?”

In a lot of cases, we have the actual stakeholder do the demo in the showcases. It comes across as much better if we actually have a stakeholder rather than the transformation team doing the demos.

Start with organizational change management. Have strong collaboration with your stakeholders. You want to include them in the experience's development after you get it developed. “How does it look? Does it look like what you want?” These are actually simple things you may not pick up on if you don't have a UX person on your team.

For example, we had dashboards with red and green in them. My son, who is colorblind, came in once and looked at it. He couldn't see anything on the dashboard. If you focus up front and have a UX expert in there, you'll pick up on something like this a lot more quickly than we did in some of our work.

Tight collaboration with stakeholders and a CIO is critical. They will feel like they're part of it if you focus on the user experience. One last thing is that we ask “why” a lot. “Why do you do that? Why do you need that? Who are the users that use that data? What do they use that data for?” Many times, we find out that nobody's using it. I can't emphasize enough to start with the business process transformation. You have to start with your stakeholders. Include them in the development of the process transformation, the user experience.

Q: Could you talk a little bit about how this has helped engage employees?

Renee Hook: Our employee engagement throughout the transformation was actually very good. A digital and lean enterprise contributes to our seller satisfaction, but I've always believed that everyone wakes up every day and intends to do their best. When we focused on eliminating the mundane administrative tasks and our teams felt truly engaged in driving change and could see the difference they made, it sparked energy and enthusiasm.

Simplifying processes, eliminating waste, automating repetitive tasks, and integrating workflows shifted our employees’ time to more fulfilling tasks with a direct and visible impact on the company and value generation. When they feel part of driving simplification, reducing complexity and driving automation, and when they're allowed to do higher-value work, that alone drives energy and enthusiasm.

Q: Are there any other processes where you were hoping to use AI, automation or machine learning?

Renee Hook: We have two examples of AI in Quote-to-Cash. We have the BlueBot, and we have Contracting Language Analyzer. BlueBot is basically a virtual assistant that response to requests using natural language. We use this for our help desk. There are many questions that come up, and BlueBot is the first point of contact for stakeholders such as sellers and clients. It gives them the actions they need to answer their questions. They can also send emails, which connect them to an agent and raise a ticket so the user doesn't have to do that.

Another one we have used is the contracting language analyzer. It uses AI to read contracts and classify them into multiple categories. It proactively highlights contracts that have nonstandard terms so we can look at them before they go to our clients. We can make sure we're in agreement with the contract and it doesn't negatively affect us or the client.

Q: What do you think sets IBM apart in this space?

Renee Hook: What makes IBM special to our customers is the ability to be at their side at any stage of their business life. We're able to provide the transformation, technology and services to support our clients, assisting them and meeting their business goals. I think that's what differentiates us—the resiliency, collaboration and partnership we have with our clients. We are continuously reinventing. From what we offer to the services we provide, we listen to what our clients are saying and take time to understand their goals and commit to partner with them to reach those goals.

Doug Watts: IBM has been a market leader in the XaaS space for almost a decade. It has aggressively grown as a service business both organically and through strategic acquisition. With the 2019 acquisition of Red Hat, IBM is becoming a major player in the Hybrid Cloud market, a trillion-dollar market segment. Companies are actively looking to migrate their critical workload to cloud, and with Hybrid Cloud and Cognitive software, IBM can help clients on their journeys to cloud. Software that IBM sold in the traditional model of on-prem with a perpetual license, subscription and support is now moving to a more subscription-driven model. Customers have an option to pay based on their use of the software that can be deployed on platforms such as IBM Cloud, AWS, Azure and more.

We've worked very closely with IBM sales to set an example. If they have a client with a specific need that we have addressed internally, we can share our learnings to help them close sales. This internal-external approach is an important and growing aspect of what we do.