Business Transformation Essentials

Case Studies and Articles

Axel Uhl, Lars Alexander Gollenia

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317170464
• Edition: 1
• Topic: Commerce
• Subtopic: Stratégie commerciale

Transformation programs are an common feature of global companies carrying out major strategic change projects. These programs combine business and technical expertise to bring together management and information systems. Managers rate firms' transformation competencies relatively poorly, and the success rate of such endeavours is correspondingly low.

Using a variety of case studies including: Allianz SE, Shell, SAP, Vodafone, and Mercedes-Benz, this book provides unprecedented insights into characteristics of current transformation programs and the potential that can be leveraged by applying a holistic transformation management approach.

1
Introduction

Axel Uhl (SAP) and Lars Alexander Gollenia (SAP)

The interest in managing complex transformation projects has risen significantly, since we published the Business Transformation Management Methodology book in 2012. This is reflected in the increasing number of publications in this field and in a more frequent application of the methodology at international companies in numerous countries throughout the world, such as SAP, DHL, and Samsung.

This interest is due, in particular, to the still low rate of success of transformation projects. Only about 30% of IT projects are completely successful (cf. Ward and Daniel 2012; Uhl and Schmid 2013) and an unusually large number of IT projects even end in total disaster (so-called black swans).

Our study results and those of other research teams show that the reasons for failure are usually very similar, and that companies have different competencies for the management of these projects. However, competencies evolve from learning processes, and learning can occur in a variety of ways. The most arduous, and painful, and also most expensive form is learning from one’s own experience. If, for example, the Tollgate or Berlin Airport projects were carried out a second time, many of the mistakes that had been made the first time could be avoided.

Another form of learning is based on sharing one’s experience and expert knowledge. This form of learning, which has been practiced for thousands of years, is easier, more cost effective, and helps to avoid making the same mistakes all over again.

When we – an interdisciplinary team of experts comprising practitioners, academics, and consultants – first came together six years ago, we set ourselves the target of generating more knowledge about these recurring problems in complex projects and of developing a framework that aims at helping project managers improve their project management.

A great deal has happened since this first meeting. Using dozens of in-depth case studies, our network of experts, which now consists of more than a hundred researchers, company representatives, and consultants, has developed a holistic Business Transformation Management Methodology (BTM²). This methodology is not some kind of recipe for successful transformations, but rather a methodological toolbox that takes into account the interdependence of the most important parameters and contains a variety of tools for holistic management.

Both empirical studies and case studies provided the basis for this methodology. The case studies in particular have proven to be a real treasure trove of practical knowledge. Interestingly, not only have they helped us to develop the BTM², but they have also inspired us to develop the Business Transformation Assessment. This means that we are now in a position where we can evaluate many different transformation projects at varying stages of the transformation process, make predictions about their chances of success, and make important suggestions for improvement.

The use of case studies has proven invaluable in conveying the BTM² know-how, whether in MBA courses or in the training of customers or consultants. A single case study of course does not represent scientific evidence – and this is not even our claim – but it does encourage discussion and analysis and it motivates people to take an intense look at the BTM² and explore it. This prompted the BTM² trainers, who are actively involved in teaching or in practical application to express their desire to have the case studies published in addition to the methodology book.

Besides the case studies, this book also features the results of a Transformation Management Survey conducted together with the University of St. Gallen (Switzerland) showcasing the current state of development of transformation management in practice. Additionally, we also included several articles which explain how expectations with regard to the role of IT management in transformation processes are changing and why the future CIO has to take transformation and innovation aspects into consideration. The readers of this book will also learn what about the potentials of the BTM² and how this holistic business transformation management approach corresponds with other typical methods such as Enterprise Architecture Management, TOGAF (The Open Group Architecture Framework), or ASAP (AcceleratedSAP).

The contributions presented in this book were all developed by the network of the Business Transformation Academy and represent a particularly interesting selection of case studies and articles that were published in our 360°– the Business Transformation Journal.

We would like to take this opportunity to express our sincere gratitude to all of our authors, customers and partners and, in particular, to SAP AG and the University of Applied Sciences and Arts Northwestern Switzerland, who have given us such loyal and lasting support for so many years. Special thanks go to the entire team of the Business Transformation Academy: Tomasz Janasz, Rita Strasser, Dr Michael von Kutzschenbach, Christine Lorgé, Alexander Schmid, and Janina Berga.

Visit Business Transformation Academy at: www.bta-online.com.
More articles and case studies can be found at: www.360-bt.com.

Prof. Dr Axel Uhl and Lars Alexander Gollenia

2
Transformation Management Survey: Current State of Development and Potential of Transformation Management in Practice

Gerrit Lahrmann (BMW Group), Robert Winter (University of St. Gallen), Axel Uhl (SAP)

A lot of global companies are currently carrying out major change projects with high strategic relevance. These transformation programs combine business and technical content where information systems and management come together. The following article explains what characterizes current transformation programs and the potential that can be leveraged by applying a holistic transformation management approach. Companies that rate themselves as mature in regard to transformation management assess certain transformation aspects differently than less mature companies.

Transformation describes the fundamental change of a company and is an effective answer to an unstable, permanently changing economic environment.1 In light of the current economic crisis, many companies have initiated extensive transformation programs e.g. to improve profitability or better control risks. These programs often combine business and technical content by using IT investments as a basis for enabling or facilitating organizational changes.

Examples of such transformation programs that we analyzed include:

• Introduction of a new banking platform for all member companies of a banking group – program duration of two years, budget of 60 million euros

• Global standardization of corporate processes based on an integrative Enterprise Resource Planning (ERP) platform in a high-tech company – program duration of four years, budget in excess of 1 billion dollars

When a company decides that it wants or needs to initiate a transformation program, numerous questions arise. What exactly should the program achieve? What drives a successful transformation program and what prevents it from being carried out? What basic approaches are there for ensuring that a transformation program is successful?

Business practice is a good starting point for answering these and similar questions. That is why the following pages present the results of an empirical study designed to describe the current state of transformation management and point to areas in which further development can be realized.

Figure 2.1 Characteristics of Data: Participants

Empirical Study

The study was conducted using a questionnaire. Part I involved collecting demographic information about the company representative and the company in general. In part II, details about the company’s transformation program were gathered. Part III introduced a holistic transformation management approach, and the participants had to evaluate its potential. A self-assessment comprised part IV, whereby participants were asked to characterize the maturity of their company with respect to the individual components of the holistic transformation approach and specify to what extent they value each component. Additional questions targeted the completeness of the approach. Finally, in part V, open questions were asked about the aspects of transformation management not covered by the previous questions.

Representatives from 28 companies in the high-tech (25%), manufacturing (29%), banking and insurance (11%), logistics (11%) and service (11%) industries participated in the study. The questionnaire addressed managers such as program leaders, directors, and regional CIOs, in particular at large, international companies. Specialist departments and IT representatives also participated. 72% of the 28 companies in the survey are located in EMEA (Europe, Middle East and Africa), 14% in the Americas and 14% in the Asian Pacific region. More than 70% of the companies have more than 10,000 employees. Figure 2.1 summarizes the key participant characteristics.

Transformation Programs in Practice

The transformation programs analyzed in the study have a typical duration of two to four years and a budget of between ten and 100 million euros (see Figure 2.2). Smaller companies (< 10,000 staff members) have an average of 52 full-time employees committed to the respective program. For larger companies (> 10,000 staff members), this number is 126. Most transformation programs are rooted in business transformation or combine elements of this and IT transformation. The programs strive to reduce costs, increase sales, and improve agility (defined as the ability of a company to respond to changes more quickly). Surprisingly, mitigating risks was not viewed as being very important, despite the recent economic crisis. Figure 2.3 shows how many times one particular goal was mentioned (frequency) and the priority it was associated with. The classification of Baumöl2 was used and expanded for this purpose.

Figure 2.2 Characteristics of Data: Projects

Figure 2.3 Objectives of Transformation Programs

Figure 2.4 Deliverables, Enablers and Inhibitors of Transformation Programs

Business optimization, business models (operating models), roadmaps, standardized processes and platforms – all functional topics – were mentioned as desired key outcomes (“deliverables“) of transformation programs. The enablers of successful transformations are: support from top management, stakeholder management, and clearly communicated responsibilities. Resistance to changes, organizational obstacles, and limited resources prevent successful transformations. Figure 2.4 summarizes those deliverables, enablers, and inhibitors of successful transformation programs.

Holistic Transformation Management

Possible components of a holistic management approach were derived from technical literature to gain an optimal overview of transformation management. The approach is based on the established business engineering framework3 and breaks down into the following levels:

• strategic level

• structural and process organization level

• IT implementation level.

It comprises thirteen components. Questions about additional required components led to the approach being regarded as complete.

What Potential Does a Holistic Approach Have?

To determine whether transformation programs are more successful when a holistic transformation management approach is used, company representatives were asked to assess the effects of such a program implementation. A transformation program from the respective company or a sample program was used as a basis for the evaluation.

Figure 2.5 summarizes the conclusions of the r...