archive

Video: Learn How Lloyd’s Register Uses the Cloud to Help Its Customers Engage and Turn Ideas Into Solutions

As one of the world’s leading providers of professional services for engineering and technology, Lloyd’s Register always aims to improve the safety and performance of its customers’ critical infrastructures. This aim became increasingly urgent in 2020 as geopolitical and economic uncertainties, evolving global supply chains, and the disruptions caused by the COVID-19 pandemic challenged the resilience of asset-intensive industries.

With its headquarters based in London and operations in over 75 countries, Lloyd’s Register empowers its customers to weather the storm by helping address uncertainty with digital solutions.

Learn how Lloyd’s Register uses the cloud to improve asset management, maintenance, and sustainability through predictive maintenance analytics and empower its customers to help transform ideas into innovative solutions.

How can SAP Cloud and an agile approach serve as the foundation of a digital transformation journey and an engine for innovation and learning?

Watch the video:

 

Read the full story

 

For Premium Members —

>> Watch the full on-demand keynote session, “Customer Journeys to the Cloud,” featuring Ferrara, Commscope and Lloyds Register, from SAPinsider’s 2021 SAP S/4HANA, Data and Analytics, Cloud and Admin event. You’ll learn how they targeted systems to move to the cloud, and successful use cases; how they were able to demonstrate ROI for their cloud migrations; and hear lessons learned and emerging best practices for cloud migrations.

>> Become a Premium Member and gain the insider advantage

SAPinsider is the largest, most influential and fastest growing global membership group of SAP professionals.



Lloyd’s Register Adopts SAP Cloud As The Engine to Address Uncertainty In Asset-Intense Industries

Innovation Is More Than Vital For Business Success — It Is An Exercise in Learning

by Alex Soto, Editor, SAPinsider

The resilience of asset-intensive industries was challenged in 2020. Geopolitical and economic uncertainties, including trade sanctions, evolving global supply chains, and the disruptions caused by the COVID-19 pandemic affected performance, and an urgency arose to address the aging infrastructures of offshore structures such as oil and gas rigs, and shore-based installations including refineries and chemical plants.

At the same time, customers and investors want to associate themselves with companies that place a high value on sustain­able operations, according to Oz Rodriguez, Head of Product GTM Strategy at Lloyd’s Register, a leading engineering and technology professional services provider. This mixed bag of challenges are forcing asset-intense industries to innovate in order to succeed in 2021 and beyond.

Witnessing the sea change, Lloyd’s Register is embarking on a journey to help customers weather the storms of uncer­tainty and disruption and empower them with modern digital solutions.

Lloyd's Register Company Snapshot

The Cloud Is An “Engine” For Transformation

Disruption is not new to Lloyd’s Register. Since the 16th cen­tury it has transitioned through the three industrial revolutions – water and steam power for mechanized production, electric power for mass production, and electronics and information technology for automated production.

In the face of today’s rapidly changing business environment and the current digital revolution, Lloyd’s Register is accelerat­ing its digital transformation.

“The company understands the importance of continually transforming its business model and structure and embracing new technology,” Rodriguez says.

Embedded in the company’s 200+ year history is its deep-rooted desire to drive better performance. Core to the organi­zation’s strategy today is developing customer-centric digital applications. “What better way of doing so than utilizing the cloud,” Rodriguez says.

“We found that the cloud is the center – we call it an engine and not a platform,” Rodriguez says. “Every part has a function that allows you to quickly scale without compromising on cost or quality.”

Intelligence At All Levels

Lloyd’s Register is building a software-as-a-service (SaaS) technology engine on Microsoft Azure and SAP Cloud to sup­port services heavily utilized by its customers. By integrating machine learning, artificial intelligence, and natural language processing (NPL) to its digital solutions, the company is bolster­ing its asset and facility performance and risk management offerings with predictive capabilities.

Benefits to customers include minimized business inter­ruptions and prolonged business continuity. For instance, predictive capabilities enable companies to foresee potential problems and failures in critical equipment. Customers can then take corrective actions, such as determining whether a piece of equipment needs to be modernized or replaced.

Bringing intelligence to all levels of the enterprise creates an environment where people just don’t react, according to Rodriguez. It enables customers to manage and maintain their assets more proactively.

Innovation Is An Exercise In Learning

Moving everything for every customer at the same time will not work and there is no one-size methodology for everything, accord­ing to Rodriguez.

“Take it in small chunks, use test sites, maybe in locations with more advanced users who will give more feedback. Then, take lessons from it and implement in the next cycle,” he says. Rodriguez adds that it may be necessary to have an on-premise solution and its replacement running concurrently because, as he puts it, “innovation is an exercise in learning.”

Oz Rodriguez, Head of Product GTM Strategy at Lloyd’s Register,
Oz Rodriguez, Head of Product GTM Strategy, Lloyd’s Register

Through an agile, user-centric methodology, Lloyd’s Register enables testing of ideas. This approach allows for more informed decision-making, like whether or not to pursue further expansion of an idea and turn it into a solution.

Customer feedback is vital. For example, Lloyd’s Register’s customers pushed for an integrated application that connects to their ecosystem to create a system of record for equipment.

The company is connecting its cloud solution with various ERP systems, including SAP S/4HANA instances, using the SAP Integration Suite (previously called SAP Cloud Platform Integration Suite) to synchronize information. The result is enhanced data quality and real-time information for decision-making instead of previous data sharing methods that could take days to weeks.

Predictive solutions also help improve sustainability. For example, Lloyd’s Register’s AllAssets offers predictive maintenance analyt­ics to help customers continuously operate without breaking down. This capability is vital for preventing environmental disasters. It also helps improve customers’ maintenance regimen without requiring them to install anything else, saving costs.

Committed to the Journey Together

Lloyd’s Register is strengthening its digital footprint to bolster its quality assurance, performance, and risk management solutions. It collaborates with technology partners and systems integrators to build an integrated, technology-enabled, and agile innovation portfolio.
Partners’ contributions, customer feedback, SAP Cloud, a mature methodology, and integration of technologies such as machine learning, artificial intelligence, and NPL are central to the successes thus far.

In its journey to innovation, Lloyd’s Register is becoming increasingly agile, while reducing operational risk and enhancing busi­ness productivity for its customers for years to come.

What Does This Mean for SAPinsiders

Engage your customers in the innovation process. Always check your assumptions. Gather feedback from people in the field. Bring intelligence into the process to create an environment where you and your customers don’t simply react to uncertainty, but proactively work to address future challenges.
Make it easy to test ideas. The ability to test quickly determines whether an idea can become an opportunity to solve customers’ most critical problems. This may require adopting a mature agile methodology and running an on-premise solution and its replacement at the same time.
Recognize that innovation needs an engine to run. With SAP Cloud as the technical foundation, the cloud becomes more than a platform – it becomes an engine for innovation and learning. People drive the engine and apply lessons learned in the next cycles.

 

Watch a short video to learn how Lloyd’s Register’s cloud strategy empowers its customers to address uncertainty with digital solutions and predictive maintenance analytics and transform ideas into innovative solutions.

 

For Premium Members —

>> Watch the full on-demand keynote session, “Customer Journeys to the Cloud,” featuring Ferrara, Commscope and Lloyds Register, from SAPinsider’s 2021 SAP S/4HANA, Data and Analytics, Cloud and Admin event. You’ll learn how they targeted systems to move to the cloud, and successful use cases; how they were able to demonstrate ROI for their cloud migrations; and hear lessons learned and emerging best practices for cloud migrations.

>> Become a Premium Member and gain the insider advantage

SAPinsider is the largest, most influential and fastest growing global membership group of SAP professionals.



SAP S/4HANA Migration from SAP ECC – A Controls Perspective

by Ad van Dijke and Hugo Rothengatter, KPMG Advisory | GRC Technology

Moving to a new SAP S/4HANA system from SAP ECC also means that existing configuration, transactional, and master data have to be migrated to the new SAP S/4HANA environment. Migrating data completely, in time, and correctly, in a controlled way is of great importance. But it can be a challenge and questions have to be answered. For example: Are sufficient controls in place to ensure correct and complete migration and which you can proof this afterward?

Our recent involvement with SAP S/4HANA migrations identified the following specific challenges:

  • Incorrect/incomplete migration of business partners (customer and vendors)
  • Mismatched old and new G/L account figures
  • The stock totals per materials do not match

This article is intended as a practical guide for SAP audit/control professionals involved in risk and control activities before, during, and after SAP S/4HANA migration from existing SAP ECC systems. We will provide you with insights into the main SAP S/4HANA changes impacting controls with financial relevance and provide you with our better practices for pre-and-post migration control activities.

Please note that this guide is meant for migrations from SAP ECC to SAP S/4HANA using the so-called Brownfield approach (as opposed to Greenfield) which means that the existing SAP ECC data and SAP ECC installation is migrated to SAP S/4HANA.

We want to emphasize the importance of the following control activities while doing the audit/controls work:

  • The (pre) migration control activities which should be performed prior to migration in SAP ECC
  • The (post) migration control activities in SAP S/4HANA after going live
  • The timeliness and documentation of the migration control activities

The expected control activities and our recommendations are included throughout this article. These are based on our practical experience and should be validated by the accountable individuals in the migration – and controls/audit team during the planning, testing, execution, and handover/closure of the project. Please also note that this article is applicable only for SAP S/4HANA versions 1809 or higher. Also, be aware that this article is not meant as a complete migration approach as it only covers the data migration controls perspective.

Main Finance Relevant Functionality Changes in SAP S/4HANA

SAP S/4HANA contains many important changes compared to SAP ECC which are also relevant for controls and audit professionals. Financial relevant changes in SAP S/4HANA include the following enhancements:

  • Universal Ledger which integrates several modules into one Financial Ledger (including non-leading Ledgers, Revenue Recognition, Asset Accounting & Controlling). This has a controls impact as the underlying configuration, total tables, and transactional tables have been changed.
  • Universal Ledger with support to up to 10 parallel currencies per ledger. Real-time conversion for all currency types is supported. This has a controls impact as the determination of exchange rates is different.
  • New Asset Accounting with automatic reconciliation between General Ledger and Asset Accounting and the use of multiple depreciation areas to handle multiple valuation principles (e.g. IFRS/GAAP/Local Tax). This has a controls impact as the posting logic of secondary (additional) depreciation areas is different.
  • Replacement of SD Credit Management with Financial Supply Chain Credit Management which enables integrating external credit information, scoring/categorizing customers, credit cases, and credit decision-making. This has a controls impact as the entire functionality of Credit Management and the underlying control reports are different.
  • Replacement of the valuation of stock by the mandatory Material Ledger which enables multi- currency valuation, flexible valuation methods, and a simplified data model. This has a controls impact as the entire functionality of stock values/totals and the underlying control reports are different.
  • Replacement of SD Revenue Recognition by SAP S/4HANA Revenue Accounting which enables integration with the Universal Ledger. This has a controls impact as the entire posting logic and functionality of revenue accounting and the underlying control reports are different.
  • Replacement of Customers and Vendors by business partners which enables a central place to manage all kinds of business partners including employees, contacts, and legal owners. This has a controls impact as all the old transactions for creating and changing customers and vendors are different.

In the next sections of this article, we explain how this changed functionality impacts the control activities to be taken in migrating SAP ECC to SAP S/4HANA.

Main Changes in Control-Relevant Tables

As shown in the picture below, the functionality changes also have an impact on existing ECC tables. Some tables have been replaced. Others have been altered. See the overview below for table changes relevant for internal control with a financial impact. Because of the changes in underlying tables, the execution of controls and controls-related data analysis are also impacted.

Main Finance - SAP HANA Migration Figure

These changes in the underlying SAP S/4HANA data model impacts several aspects of control related work including:

  • Data Analysis (for example, Manual Journal reviews due to S/4 Universal Ledger)
  • Configuration controls (for example, Credit Management settings due to FSCM Credit Management)
  • Financial controls (for example, Revenue Recognition reviews due to S/4 Revenue Accounting)

Recommended Control Steps

When migrating from SAP ECC to SAP S/4HANA, the SAP Software Update Manager (SUM) is available for the technical conversion. Due to the changes in the data models, SAP S/4HANA will have to convert the SAP ECC data into the SAP S/4HANA new data models using SUM. As part of the steps in SUM there are several pre-and-post-conversion checks which are related to the functionality changes in the image above (previous paragraph). Next to SUM, organizations can also use the SAP Readiness Check which includes amongst others a reconciliation analysis that identifies inconsistencies in the General Ledger data.

In addition to the checks performed by SAP SUM and the SAP Readiness check, we recommended performing additional checks included in the tables below. Executing these additional control steps and documenting them will provide you with more assurance to the internal and external stakeholders/auditors.

We will provide you with various better practice pre- and post-conversion checks which can be performed in the current SAP ECC system or SAP S/4HANA. We will also provide some recommended SAP notes to read in case you require more detailed information.

See the tables below:

Table 1 - Checks Executed by SAP Software Update Manager
Table 1 – Checks Executed by SAP Software Update Manager

 

Table 2 - Classic or New G/L postings
Table 2 – Classic or New G/L postings

 

Table 3 - Classic or New G/L balances
Table 3 – Classic or New G/L balances

 

Table 4 - Finance Configuration
Table 4 – Finance Configuration

 

Table 5 - House Banks
Table 5 – House Banks

 

Table 6 - Customers/Vendors
Table 6 – Customers/Vendor

 

Table 7 - Asset Accounting
Table 7 – Asset Accounting

 

Table 8 - Material Valuation
Table 8 – Material Valuation

 

Table 9 - Controlling
Table 9 – Controlling

 

Table 10 - Revenue Accounting
Table 10 – Revenue Accounting

Other Considerations

We recommend that you fully document all exceptions found in both SAP Software Update Manager (SUM) as well as the controls steps you choose from this better practice article. Please be aware that performing the SAP S/4HANA data migration cannot be considered as a technical responsibility only. The data migration has important functional and implications which should be dealt with during migration.

Further Reading

In case you wish to obtain more information on the data migration aspects we refer to the following information and SAP notes (and its attachments) from SAP SE:



Reducing Closing Time and Increasing Data Quality at KMD

KMD Re-architects its Financial Consolidation Process with SAP S/4HANA Cloud for Group Reporting to Conform to New Accounting Requirements After Acquisition by NEC

By Matt Gillespie, Contributing Writer, SAPinsider

The largest IT firm in Denmark, KMD, an NEC Company, specializes in digitizing public-sector operations, from municipal governments to branches of the military. After being established in 1972, KMD was owned by a Danish municipalities association and then by various investment entities until it was acquired at the end of 2018 by NEC, the Japanese global systems integrator. As part of the acquisition, KMD was required to make a number of accounting modifications to conform its processes to those of its new parent company.

The first of these changes required adjusting the fiscal year from beginning in January to beginning in April, which was incompatible with KMD’s current legacy con­solidation system. At the same time, KMD was tasked with closing in four days instead of eight, along with putting new, more detailed reporting requirements in place. And finally, the firm needed to introduce a new global chart of accounts. Together, these challenges constituted the need to re-conceive the consolidation process, which KMD addressed using SAP S/4HANA Cloud for group reporting and SAP Analytics Cloud.

 

Optimizing Workflow and Developing the Business Case

The KMD team searched out inefficiencies in the existing consolidation process. For example, a lack of peer-to-peer transaction reconciliation when local companies uploaded their balances meant that discrep­ancies first appeared after consolidation, when they were more complex to resolve. Likewise, transactional data was not validated before being loaded, poten­tially obscuring structural issues. In addition, cash flow creation was entirely manual, due to data-quality limitations of the consolidation system.

Workflow analysis by KMD revealed issues that arose because of the separation of duties between local con­trollers and groups. That is, local controllers submitted data that was acted on by Group Finance resources, which loaded the data and ran processes on it. When questions arose, the local controllers had to be brought back into the workflow, to take advantage of their more intimate knowledge of the data. This approach created inefficiencies that KMD chose to address by assigning a new sphere of responsibilities to local controllers.

One measure of that new responsibility was an inter­company reconciliation of uploaded balances directly among peers, so that issues are resolved directly by those who know the data best. Local controllers also took on expanded roles in data validation, including tasks such as checking trial balance and opening bal­ance levels, verifying balance sheet specifications, and running currency conversions. Local controllers also became responsible for running cash-flow reports and validating cash flow against the corresponding positions on the balance sheets, before closing the period out and signing off to Group Finance.

KMD Group Finance performs higher-level tasks such as running eliminations for intercompany transactions and consolidation of investment, as well as performing topside adjustments if needed. After validating the consolidated cash flows, Group Finance closes the period and reports out to management at both KMD and NEC.

 

Selecting the Consolidation Solution

With the workflow established, the team assessed the pros and cons of continuing to use SAP Business Planning and Consolidation versus implementing SAP S4/HANA Cloud for group reporting. In the 10 years that SAP Business Planning and Consolidation had been in place, business users and Group IT had developed deep experience and best practices around the tool, and automatic data integrations were in place, the equivalent of which wouldn’t be available with the SAP S/4HANA solution.

On the other hand, SAP Business Planning and Consolidation would need to be re-implemented to accommodate the new chart of accounts, and SAP had marked SAP Business Planning and Consolidation with maintenance ending in 2027.

SAP S/4HANA Cloud for group reporting is SAP’s strategic consolidation solution, and it is well-suited to KMD’s strategy to move as much as possible to the cloud. KMD Group IT was highly interested to investi­gate the software as a first means of investigating SAP S/4HANA, to better understand issues such as security and transport.

KMD determined that the benefits of moving consolidation to SAP S/4HANA justified the project’s license and implementation costs, as well as the com­plexities that can come with being an early adopter.

 

Implementing SAP S/4HANA Cloud for group reporting

In fact, the implementation path proved exception­ally smooth, and it was completed in just six months, which KMD Principal Application Architect Christian Andersen attributes in part to exceptional help from SAP. For the first two months, the team investigated SAP S/4HANA Cloud for group reporting functionality to discover its potential and build prototype configura­tions. It spent the next month putting those concepts into practice, creating the basic SAP S/4HANA Cloud for group reporting configuration and performing preliminary unit testing.

The team had a significant pain point during the implementation around data quality from the source system, which interfered with cash-flow automation. KMD addressed it by developing data-correction pro­cesses for local controllers that help avoid propagating data errors upstream to Group Finance.

The team also invested a month in developing the reports needed to implement SAP S/4HANA Cloud for group reporting in SAP Analytics Cloud, with live inte­gration to SAP S/4HANA Cloud for group reporting for real-time data. As a test, the team converted seven months of historical data and ran the SAP S/4HANA solution side-by-side with SAP Business Planning and Consolidation to verify that both systems reached equivalent results at period close.

Lessons Learned and Key Take-Aways

KMD has reduced closing time from eight days to four while also improving data quality. A significant contributor has been the shift of responsibility for intercompany reconciliation from Group Finance down to the local controllers. This change creates workflow efficiencies by mitigating data errors at the Local Finance level, a process that also dramatically improves the quality of data loaded into the consolida­tion system. Cash flow is dynamically calculated on the fly, and automated data validation frees up resources in Group Finance, freeing time for analysis that used to be consumed by reconciliation.

 

Company Snapshot

KMD, an NEC Company

Company Details: One of Denmark’s largest IT and software companies, KMD works to digitize societal and organizational challenges.

Headquarters: Denmark

Employees: ~2,000 employees (2019-2020)

Annual Revenue: 4,834,075 DKK ($785,872 US)



Ingevity Seizes Business Opportunity to Increase Agility and Push the Bounds of What’s Possible

Leveraging Real-time Analytics: A Game-Changer for the Specialty Chemicals Industry

Brianna Shipley, Director of Editorial, SAPinsider

A simple operating principle can be found at the heart of Ingevity’s mission to develop, manufacture, and bring to market solutions that help customers solve complex problems: People working together to create meaningful impact and exponential results.

To achieve this end, the leading provider of specialty chemicals and high-performance carbon materials, is constantly looking for opportunities to grow both organically and inorganically. The company’s strategic approach to growth is one of the driving forces behind its most recent transformation initiative to become more agile.

Ingevity’s products are used in a variety of demanding applications including asphalt paving, agrochemicals, bioplastics, and automotive components that reduce gasoline vapor emissions. Capturing the opportunity to spin up the services it needs quickly and easily will better support its diverse customer base.

In pursuit of purifying, protecting, and enhancing the world, Ingevity is embarking on a journey to position the business to take advantage of technologies like artificial intelligence, machine learning, and robotic process automation, and make the world more sustainable.

 

Integrated Digital Platform Supports Effective Planning

Ingevity is investing in additional skillsets for the team with an eye toward deploying and supporting new technologies, allowing effective planning, and ultimately facilitating an agile service deployment model. Integrating analytics and machine learning into the company’s business functions and plant floor operations, for example, will support Ingevity’s need for speed by enabling the business to adopt predictive and preventative maintenance across all of its equipment and meet customers’ needs on demand.

The company has already deployed SAP Integrated Business Planning modules to get some quick wins and early benefits in this area. “We’re deploying the modules in phases, starting with demand planning and then moving on to supply, and so on,” Michael Mullis, VP of IT and CIO of Ingevity, says.

In addition to infusing skills into its workforce, Ingevity is considering ways to further enhance and empower its teams by establishing centers of expertise (COE) within its supply chain, planning, and finance functions.

But first, in order to bring its vision of creating an agile business model to life, Ingevity must create a solid foundation by building an integrated SAP S/4HANA business platform, migrating from a 20-year-old, heavily customized version of SAP ECC 6.0.

Critical to upgrading Ingevity’s technological core has been its people, and ensuring the well-being of its workforce through workplace enrichment programs is an important component to the project’s success.

“We’re very focused on change management and the potential for employee burnout, which in a remote environment is happening in isolation. We’re keeping tabs and keeping an eye on the team and making sure people have an opportunity to voice concerns and checking in regularly,” Mullis says. He adds that the company’s systems integrator partner, Capgemini, continues to play a significant role in supporting Ingevity’s business transformation, from providing implementation expertise to helping the company navigate the challenges of completing a migration project remotely.

Organizational and Process Redesign Propels Transformation Forward

Ingevity is applying an agile approach to its SAP S/4HANA implementation, as opposed to the traditional waterfall approach that the team is used to. In addition to the challenge that this learning curve presented, the company also launched its transformation initiative in July of 2020 — during the pandemic. The timing of the project required Ingevity to reimagine its work teams through a remote lens.

“That’s been an interesting journey in its own right — how do you implement a global business transformation leveraging SAP in a remote working environment?” Mullis says.

In order to adapt, Ingevity has had to redesign its original project team structure to ensure the correct stakeholders are involved when it comes time to make or escalate decisions and provide reporting. A second tier of leadership was added to the project team, called the operating committee, to sit between the executive steering committee and those directly involved in the project.

“The operating committee has become a key vehicle for us to really help understand whether we’re making the right decisions and whether we’re communicating effectively,” Mullis says.

Ingevity selected key business owners, stakeholders, and decision makers from its supply chain, finance, operations, manufactur­ing, and customer service functions to serve on the new committee. These employees are focused on identifying key decisions, the impacts of those decisions, and how, as leaders of the organization, they can help the company drive that message.

The executive steering team reports on whether Ingevity needs additional guidance in a certain area or support from SAP or Capgemini.

Ingevity has also had to rely more heavily on Capgemini to make sure that the methodology and the process are clearly understood and articulated in advance of each of the different phases. This special attention to communication has kept the project moving forward, with the team planning to conduct a pilot go-live in October 2021, and start the final deployments in early 2022.

Following the go-live, Ingevity will need to reengineer its business processes through SAP S/4HANA, allowing the company to focus on data management and master data governance.

Analytics as an Enabler

Ingevity is looking forward to leveraging insights as a result of the planning and forecasting capabilities it will gain with SAP S/4HANA at its foundation. Once real-time analytics is enabled the business will be able to make use of the information by leverag­ing master data management tools.

Once SAP S/4HANA is live, the cloud-based planning solution will replace SAP Advanced Planner and Optimizer and OMP, and will be further extended by various other software-as-a-service (SaaS) offerings from SAP.

“SAP S/4HANA leap-frogs us forward with all of the new functionality available in the latest version, and in preparation for the migration journey we moved all of our new and existing SAP systems to the cloud — Microsoft Azure.”

Ingevity had already committed to its SAP S/4HANA cloud journey prior to the RISE with SAP announcement but Mullis acknowledges that the transformation-as-a-service offering is a great step forward to help make it easier for other companies to move to the cloud with SAP S/4HANA driving the business.

“I like what SAP has done. By bundling all these pieces together it should really help make it easier for others to start their journey.”

Today, Ingevity is about to exit the build phase and enter the testing phase.

“Ultimately, we’re building a digital platform for the company so getting the core in now helps us position ourselves for technologies like artificial intelligence, machine learning, real-time analytics, and robotic process automation.”

What Does This Mean for SAPinsiders

  • Overestimate the power of effective communication. Checking in on employee wellness and ensuring that critical information is articulated to the appropriate people is ever more important when working in a remote environment. This may require adopting a new leadership approach or restructuring teams to ensure lines of communication flow.
  • Consider how a technology upgrade can impact the larger business. Ingevity’s move to an integrated SAP S/4HANA business technology platform from its legacy system will open the door for business transformation in other areas, such as supply chain and customer experience. When creating the business case for your own upgrades, consider how functionality that you will gain can enable the business to meet customer needs, inform decision making, and even impact company culture.
  • Don’t be afraid to step back before you step forward. Mullis knew that the company needed to increase its focus on data management and master data governance before it could take advantage of real-time analytics. Preparation is key to achieving great things.

Company Snapshot: Ingevity

  • Provider of specialty chemicals and high-performance carbon materials that purify, protect, and enhance the world around us.
  • Headquartered: North Charleston, South Carolina
  • Operates in 75 countries around the world and employs approximately 1,750 people
  • Annual revenue: 1,216.1 million US dollars (2020)

 

 



The Role of Analytics in Business Process Intelligence: A RISE with SAP Perspective

by Kumar Singh, Research Director, Data & Analytics, Supply Chain Management, SAPinsider

Transformation initiatives position technology as an enabler. This enabler works best when it is aligned with optimal people and process capabilities. And yet, the ability to sync these three aspects remains a key challenge for many organizations undergoing a digital transformation journey. Before they embark on their strategic initiatives, organizations must consider whether their business processes and organizational design need to change in order to accommodate the new digital reality.

This holistic solution view is at the heart of RISE with SAP. The solution offering is a combination of three primary components. Business process intelligence (BPI) and technology migration components form the foundation for building the pinnacle capability of an intelligent enterprise. BPI is more critical in the foundational components, as it extensively leverages all three key ingredients for transformation (people, process, and technology). Analytics is one of the threads that links these three ingredients in true BPI capability.

This article will explore the critical role analytics plays in the BPI component of RISE with SAP.

Business Process Intelligence Component of RISE with SAP

The BPI component of RISE with SAP builds process foundations. Sub-components of the BPI component are shown in Figure 1. The objective of the BPI com­ponent (and consequently its sub-components) is to build best-in-class processes, process management, and process intelligence capabilities to enable organiza­tions to become an intelligent enterprise. Each of the sub-components shown in Figure 1 plays a critical role in achieving this objective.

Business Process Intelligence ComponentAccording to SAP, sub-components of the BPI com­ponent include the following capabilities.

Analyze

  • Leverage predefined process KPIs and process flows
  • Drill down into details based on system data
  • Understand user interactions
  • Access all your process data for a 360-degree view

Design and simulate

  • Design future processes based on current data
  • Blend mined data to simulate new processes
  • Derive expected business impacts based on your operational data

Improve

  • Gain process insights to drive action with process automation tools
  • Enable non-technical users to create automation scenarios without code
  • Create outcomes quickly with predefined content

Roll out and govern

  • Manage and govern processes for end users
  • Collaborate and roll out documented process changes from “Home Base”
  • Tie applications to process models and get real-time process insights into SAP’s core applications

Monitor

  • Monitor process performance changes and con­tinuous transformation
  • Achieve real-time blending of process perfor­mance data versus modeled processes
  • Gain full visibility into the process community

Model and manage “Home Base”

  • Access SAP’s dashboard to view core processes at a glance
  • Manage and collaborate on processes with respec­tive departments
  • Enable quick and easy access to SAP’s Process Discovery tool

Benchmark

  • Compare your business with other businesses in your industry
  • Drill down into details quickly from different angles
  • Receive business impact data based on your operational data

The following describes the role that analytics plays in each of these sub-components.

Monitor and Analyze: Analytics plays a central role in both of these sub-components. Descriptive analytics approaches are primarily leveraged to moni­tor processes and analyze their performance. This means that business intelligence (BI) tools as well as specialty business process management (BPM) tools play a key role in these sub-components. SAP’s acquisi­tion of Signavio — a leader in the enterprise BPI and process management solutions space — highlights the role BPM and BPI solutions play in building a holistic process transformation portfolio. This monitoring and analysis of business processes can be based on historical data or near real-time data, enabling these sub-components to allow users to look at key perfor­mance indicators (KPI) of the processes to understand and evaluate process performance. If the monitoring is happening in near real time, any discrepancies that may lead to process failures, disruptions, and quality issues can be flagged immediately.

Keep in mind that a best practice is to manage capabilities in these sub-components and a few other sub-components through a centralized process management hub. In the RISE with SAP offering, this centralized hub capability has been named “home base.” This centralized capability baselines existing processes, manages and documents process changes, and designs and re-engineers business processes. You can imagine this as being a control tower for your BPI and BPM capabilities.

Design, Simulate and Improve: Like the “Monitor and Analyze” component, analytics is the key tool in these components as well but starts playing a more critical role. These three sub-components heavily lever­age diagnostic and prescriptive analytics, which in turn leverage descriptive data as inputs. Prescriptive analytics approaches help answer questions like what if? and what is the best? and provide results that allow users to simulate various process scenarios and provide insights on how to design best-in-class processes and/or make improvements to existing processes. Diagnostic analytics also help improve processes by answering the question why did it happen? helping identify issues that may be impacting the process or causing process failures. Best-in-class BPI tools generally have these capabilities inbuilt with the BPM aspects.

With the advent of machine learning (ML) algo­rithms, they are increasingly being incorporated for diagnostic analytics for root cause analysis and failure diagnostics. Algorithms like regression and clustering are already being leveraged by many organizations.

Model and Manage: As has been the theme with all other sub-components discussed, these components also heavily leverage analytics, primarily descriptive and prescriptive analytics. Virtual digital models of business processes are created which allows those leveraging these tools to support components like Monitor, Analyze, Design and Simulate. Consider that a best practice is to centralize these capabilities in the central hub mentioned previously. Optimization models, which are prescriptive analytics models, are also leveraged in process modeling, and help answer the question what is best?

Many BPM tools have risk management modeling tools to achieve Sarbanes-Oxley Act (SOX) compliance. These models leverage predictive analytics algorithms. Predictive analytics algorithms leverage historical data points to predict future outcomes or values of dependent variables. A key aspect to understand is that all the sub-components discussed so far are not siloed and hence influence, impact, and support each other. Therefore, the end-to-end process is an iterative one, powered by analytics.

Benchmarking: Management guru Peter Drucker once quoted: “If you can’t measure it, you can’t manage it.” It is imperative that to build world class business processes, you need to benchmark them con­tinuously, against the best. Benchmarking approaches primarily leverage descriptive analytics, however the key aspect is not the approach, but rather the numbers against which you benchmark your processes.

What Does This Mean for SAPinsiders?

For years SAP customers have expressed concerns that the intricate and massive platforms and solutions provided by SAP bring with them a set of challenges. RISE with SAP provides a one stop shop for all digital transformation needs of its customer base, irrespec­tive of where organizations are currently in their transformation journey. And analytics plays a key role among the foundational capabilities that support this solution offering.

Some key aspects that SAPinsiders need to keep in mind are:

  • Analytics is one of the core capabilities of BPI. Therefore, most best-of-breed BPI and BPM tools have inbuilt analytics capability. However, a care­ful evaluation must be made to determine if those requirements meet your unique business needs.
  • The underlying data will define the success or failure of building world class BPI capabilities. Your analyt­ics capabilities are as good as the data that feeds into these tools. Implement an effective and robust data collection and data management infrastructure to eliminate data latency, quality, and integrity.
  • Analytics talent is the other pillar of successfully building BPI capabilities. While capturing insights and data from business processes is required, it is not useful if that data is not leveraged to generate value, like process improvements, process re-design, or process optimization. Invest in building an ana­lytics talent pool dedicated to BPI and BPM.
  • Benchmarking is not just dashboarding. Design KPIs strategically and thoughtfully. Leverage them to improve your processes continuously by benchmark­ing against the best in your class.