The Financial Risk and Reward of Tech-Enabled Transformation

In the-rapidly evolving landscape of digital transformation, few professionals bring the depth of insight and practical experience that Dan French offers.

As Co-Founder and CEO of Consider Solutions, Dan has spent over two and a half decades at the intersection of technology, management and process optimisation. 

His journey through high-level consulting and performance improvement has positioned him as a thought leader in helping organisations navigate the complex terrain of enterprise digital strategy.

Since establishing Consider Solutions in 2000, he has pioneered a 'consultancy reimagined' approach that goes beyond traditional consulting models, with more outcome-driven efficiencies and savings.

Consider Solutions provide thought leadership, analytics, technology integration and best practice insight on the journey towards ‘World Class Finance & Operations’. It serves global brands including BT, Bombardier, Sony Music, Starbucks and UNICEF.

With expertise spanning general management, technology integration and process change, Dan has witnessed firsthand the struggles many enterprises face in digital transformation.

Here, he speaks to Procurement Magazine about the current state of digital transformation and its critical role for businesses. 

What is the current state of digital transformation and why is it critical for businesses?

Digital transformation represents a key priority for enterprises in their competitive battle to engage more deeply with customers, suppliers and partners, streamline end-to-end process cycles, enhance revenues and optimise operating costs.

Despite this importance, there's a significant challenge: a much-quoted McKinsey statistic reveals that 70% of digital transformations fail, while approximately $2.3 trillion is still spent annually on these initiatives.

These massive capital investments, often with 5-10 year payback periods, are absolutely material to investors, making it critical to understand how to maximise and ensure return on investment.

How does SAP S/4HANA fit into digital transformation strategies?

Cloud ERP, with S/4HANA as the exemplar, is considered the core platform to enable enterprise digital transformation. The core ERP system is viewed as the engine of digital operations and transforming to SAP S/4HANA can enhance operational efficiency and serve as an enabler for strategic capabilities.

However, the true impact lies not in the software platform itself, but in what such an implementation enables. S/4HANA is designed as a lean core of financial processing, surrounded by process-specific satellite applications for sales, procurement, HR and other functions, requiring a comprehensive approach to integration and transformation. 

Procurement leaders will recognise that effective integration and data consistency between the new generation ERP and specialised procurement suites (S2C, S2P et al) are key.

Why do many organisations fail to realise the full potential of their digital transformation efforts?

Organisations often start with high aspirations and large budgets but fail to deliver financial P&L impact in their transformed processes.

This failure typically stems from a fundamental misalignment between strategic ambition and detailed implementation plans. A critical issue is the disconnect in understanding what constitutes a "business process" - leadership views it as end-to-end value streams driving the company (such as source to pay), while technical experts often see it as a series of system workflow steps.

This misunderstanding leads to situations where companies believe they are transforming processes, but are actually just swapping automation and workflow for the same set of tasks.

What does true digital transformation actually involve?

Real digital transformation begins with eliminating non-value-adding tasks, simplifying steps and workflows and then moving to automation and integration of key tasks in an end-to-end process.

It requires a comprehensive understanding of various business journeys, which differ across spend categories, customer segments, product types and channels. For instance, in the spend cycle, journeys vary based on factors like direct or indirect spend, tail or core, spend category, buying channels and supplier type.

How should organisations approach measuring the success of digital transformation?

Transformational value should be measured through P&L impact, focusing on process changes that can increase revenue and margin, reduce costs through streamlined operations, enhance asset utilisation, optimise external spend, decrease headcount and inventory, reduce balance sheet liabilities and improve customer engagement and experience.

This requires a strong, easily communicated understanding of end-to-end processes and the related journeys, informed by those in the business with deep knowledge and experience.

What are the key considerations for successful digital transformation?

Successful digital transformation demands alignment between leadership, technology and integration teams on specific processes to be transformed and key pain points to be eliminated. It necessitates a detailed, business-focused action plan that delivers P&L impact by process, moving beyond technical requirements and AS-IS workflows.

Organisations must adopt a holistic view that looks across and beyond the ERP landscape, understanding the role of various applications (such as procurement and S2P suites) in creating end-to-end process transformation and focusing on optimising high-value journeys while eliminating low-value ones.

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