How SAP Manages Processes for Innovation

Ingrid-Helen Arnold posted this article on the SAP news website. It is useful to understand how SAP themselves innovate and take advantage of their own solutions.

Richard Branson says there is no such thing as an accidental entrepreneur – it’s deliberate, conscious and very hard work. I would say the same for innovation.

While the ideas that form the catalyst for innovation might come from a place of wild creativity, chaos or even anarchy, in order to execute and scale innovation, we need to be deliberate, conscious and steady. An idea that is never adopted is not an innovation.

While many believe that processes are an obstacle to progress, in my role as SAP Chief Process Officer and CIO, I see that good process management can be a key to innovation. On the one hand, it offers us a clear methodology for scaling innovation and, on the other, well-managed processes free up capacity to harness the creativity that new ideas require.

Here are some of the ways we are managing processes for innovation at SAP.

Solutions Scale Business Innovation

In the digital age, it is essential that companies are agile and fast enough to adapt to change. SAP is no exception. The solutions that we develop – based on standardised business processes – are innovating, accelerating and improving the way we work. This is absolutely game-changing. Our solutions enable focus and scaling.

Here are a couple of examples. Right now, we are leveraging the Ariba Network to manage more and more of our resources. When we turned to Ariba, SAP was growing faster than its procurement team, and we needed to innovate our procure-to-pay processes. Now, with simpler, more standardised sourcing and procure-to-pay processes, we are operating much more efficiently: we’re seeing a 50% increase in invoice automation, 20% increase in procurement productivity and a 42% reduction in procurement cost. And, with the implementation of SAP Simple Finance, our finance teams are able to deliver quarter-end closing five days faster than any other DAX company.

We are weeding out complexity and finding ways to be simple and innovative. And our business processes are absolutely key.

No Paper, More Impact

Organisational excellence is about driving business impact and creating value. Since we have no manufacturing line, we have to find ways to simplify and optimise our processes so that we can free our employees to focus on the work in their job descriptions. In other words, no paper and more impact.

As a cloud company, we have to make sure that our employees are as productive as possible and do not waste time on non-essential activities. By renovating our IT development process using Agile, we ensure that our developers spend their time on their area of expertise: coding. We improve processes in the finance function to ensure that our controllers are freed up to work on business simulation planning. And we have put HR in the cloud so that employees can access their key data simply, quickly and efficiently. By implementing strong business processes, we have scaled innovation, harnessed creativity and driven business value.

We all want to see return on investment, and to do this we have put measures in place that define clear business benefits for our IT investment. Called the business benefit framework, this is an easy-to-use methodology to create a standardised overview of any large planned IT investments. It is based on common value propositions and related business benefit drivers with a three year net present value. The framework contains a short series of clearly defined steps, and the result of these steps is a business benefit profile for each proposed investment, which provides operational process intelligence on which decisions can be made. By doing so, we put business value in the centre of everything we do.

Operational Excellence in IT

In the digital economy IT must drive innovation. IT leads the way in removing complexity to power the digital transformation. So, at SAP, we are seeing how SAP S/4HANA is removing complexity from our core systems, and helping us return to standard. We have simplified the data model so that there are no aggregates, no indices, no redundancies or discrepancies between systems. With one ERP system and one HR system for the whole of SAP, we are talking about little to no latency. This single instance strategy is a model for simplicity and excellence that we recommend.

By getting rid of long upgrade cycles, we ensure that businesses will be able to consume new innovation frequently. Our solutions enable focus and scale, which we have demonstrated in our move to the cloud. This frees up leaders, such as CIOs, to become trusted innovation partners to their organisations to keep their systems future-ready in order to keep pace with change.

In the end, it is about driving business value. If we streamline our processes so that employees can focus on strategic work, if we innovate our business by implementing our own solutions or finding ways to drive out complexity in IT, we create business value for SAP. And in so doing, we also create an atmosphere where creativity is valued, ideas can thrive and we innovate for excellence.