SAP & Oxford Economics: The True Cost of Transformation
Procurement functions are increasingly focused on transformation to meet the growing demands for efficiency, sustainability and strategic alignment in business operations.
Modern procurement goes beyond simply purchasing, the function plays a pivotal role in reducing costs, enhancing quality and aligning with organisational goals.
By leveraging technologies like automation, AI and data analytics, procurement teams are streamlining processes, managing risks and improving decision-making.
Today’s business transformations are diverse, ranging from creating new products or services and entering new markets to adopting cybersecurity frameworks and transitioning to net-neutral carbon emissions.
However, SAP and Oxford Economics stresses that these transformations are neither swift nor inexpensive and sometimes the costs can be hidden. According to research from the two companies – only 57% of business transformations end up being worth the time, money and effort they require.
An exclusive look at the current global state of business transformation
In the research report, the two SAP and Oxford Economics provide insights from 800 respondents, including IT professionals and leaders from corporate strategy, R&D, finance, manufacturing, HR and operations.
The paper reveals:
- Only 51% of transformation go according to plan
- 58% of transformations end up going over budget
- The average cost of transformation is €9.5m
- 63% of respondents face resistance from leadership when it comes to the value of transformation
- Almost 50% of initiatives highlighted by respondents remain incomplete and budgetary constraints pose a significant challenge
“Transformation challenges will always exist, particularly in aligning execution with strategic road maps,” says Dee Houchen, head of Marketing for SAP Signavio and SAP LeanIX.
“As companies navigate these complexities, the path to successful transformation remains a critical focus for global businesses, which is why this research is so relevant.”
From Strategy to Execution
In conclusion, the disconnect between the confidence level of respondents and what the report data reveals about the true cost and organisational impact of transformation is mirrored in the equivalent disconnect between strategy and execution.
SAP and Oxford Economics explain that while three in five say their major transformation plan was well communicated across their organisation, only 53% say it was clearly defined in the first place.
While most are employing strategic practices they can often lack the final piece of the puzzle when it comes to converting strategy into action.
“SAP Signavio and SAP LeanIX solutions offer clarity and transparency in business transformation, helping organizations leverage enterprise analytics and process data to really turn transformation plans into action through supporting decision-making, setting timelines, and tracking progress effectively,” Dee adds.
“This report is an invaluable resource for anyone wondering why their transformation efforts have slowed, what they can do differently, and how others have identified and overcome similar hurdles to their own.”
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