Jeff's journey to a Digital Business

11
Jeff’s Journey to a Digital Business
www.ensead.com| info@ensead.com | +31 (0) 6 11 76 75 21
Mendel Koerts
Director at ENSEAD Advisory
V2.1

2
Disclaimer
While every precaution has been taken in the preparation of this deck, ENSEAD
Advisory assumes no responsibility for errors or omissions, or for damages resulting
from the use of the information contained herein. The opinions expressed herein are
subject to change without notice.
Trademarks
SAP® is a registered trademark of SAP AG, Germany. The use of general descriptive
names, registered names, trademarks, etc. in this publication does not imply, even in
absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
© 2016 – ENSEAD Advisory
MENDEL KOERTS is the founder of ENSEAD Advisory and
Associate Director with Gartner Consulting. As an Enterprise
Architect he has specialized in IT Strategy, Architecture, and
Governance, predominantly SAP related. Opinions expressed
in this deck are strictly his own.

3© 2015 – ENSEAD Advisory
Jeff C. Brightlight
Divisional CIO
Fictious Ltd.

© 2015 – ENSEAD Advisory 4
4 – 6 April, 2016
Jeff is still jet-laggy, but one term still resonates in his mind… Digital, Digital, Digital…

IT may not matter, but Digital does. Jeff
is convinced of that. Gurus… MNM
‘IT doesn’t matter’, so…
(N. Carr, 2003)
‘Business Technology’!
Forrester Research et al (2007)
But ‘in the Digital world, previously
impossible solutions become viable’,
(Negroponte, MIT, 1995)
And ‘the Digital world needs
architecture’…
(Rijsenbrij, Radboud University, 2004)

Jeff’s colleague Charlie Longroad
presents on disruptive change

The Apple of cars -
bought unseen 115,000 times.
• 350 km range
• Software downloadable
• Autopilot

Diageo and Thinfilm Unveil the Connected
"Smart Bottle"
“You Can't Wait … Your Friends Will Get an Alert
Once You Open Their Gifts …”
Sources: Diageo and Thinfilm sites, Gartner

The team realizes the Digital Business's
first wave is now…

Welcome to the Digital Wild West,
where opportunities come and go quickly, and winning or
losing has meaningful consequences for the business.

Jeff’s team at least defines Digital
Business and decide on a PoC Digital Core
“… creating value at the new frontiers of the business world, creating value in
the processes that execute a vision of customer experiences, and
building foundational capabilities that support the entire structure,
through Digital Technologies…”
11© 2016– ENSEAD Advisory
Source: McKinsey
Anton d’Entamico as an Enterprise Architect will lead the Digital
Core Proof of Concept, based on S/4HANA 1511.

Source: the Guardian
‘Hey Jeff, extra meeting
with Bill VanDeBoard.
Tomorrow, 7:30 am…’
Some time
later…

Over dinner with old colleagues Jeff felt as if they were speaking Babylonian…

“When we at Fictious talk about Information
Management, we talk about (big) data stuff…”

“High volume, velocity and/or variety of information assets that demand new, innovative forms of
processing for enhanced decision making, business insights or process optimization.”

Jeff explains how the Fictious strategic
planning cycle drives the Portfolio
The IT Program & Project Portfolio at
Fictious is maintained:
• By annual top-down strategic planning
to (re-)align with business strategy, and
• By adding bottom-up input coming
from the operational level
Strategy
Execution
Planning

Good morning Seff!
I assume you have seen
today’s newspaper…?

Thursday, 7 April, 2016

And you Seff, you need to come up with our
Digital Business Model next week. Capice?

Anton d’Entamico,
Enterprise Architect
“Talk to SAP…”
Charly Longroad
IT Strategist
“Remember Xavier?”
Patricia Portillo
IT Portfolio Manager
“Scaled Agile!”
Jeff consults his team, the Office of the CIO

Hazzo Plettau
Account Executive
“We have a superduper Z-SIMPLE solution for you but first upgrade Z/390 to T/5!”

…???...
ANTON!!
After that meeting, Jeff was caught staring out the window for hours, rumor says.

Overall Project Status ‘PoC Digital Core”
• Project Summary
– Project progressing as per the plan
– Well-balanced mix of internal and external resources
– Relevant findings for strategizing the Digital Core
• Track Cloud alternatives
– Both Public and Private Cloud alternatives
• Track Central Finance
– Suite on HANA (SoH) with Simple Finance (sFin) 2.0
stable
– Final Sprint completed
• Track Sourcing & Procurement (S2P)
– S/4HANA 1511 with embedded SRM installed. Buggy
– Burndown rate better than expected
• Issues
– S/4HANA documentation says there’s no HCM
anymore in 1511. When checking the system it actually
is. Another PoC required e.g. for SFSF?
Overall Project
Status:
Project
Confidence:
Project Status
Project Timeline
Sprint Sprint Sprint SprintSprint Sprint Sprint Sprint
Kick off PoC Cloud alternatives
Central Finance PoC
PoC Sourcing & Procurement

Activities Performed
Track Status Cloud
– Private cloud provider selected - SAP HANA
Enterprise Cloud (HEC), Platform-as-a-Service
(PaaS)
– Public cloud provider selected - Amazon AWS.
Infrastructure-as-aServ ice (IaaS)
– Installation of 3 SAP HEC-based instances
completed:
• Suite on HANA (ECC6.07),
• sFin2.0 add-on
• NW GW w/ Fiori Front-End Server 2.0
• Series of financial Fiori apps
• SLT, DMIS, AIF3.0
– Amazon AWS-based installation completed (1
instance), sized at 50% of HEC
• S/4HANA 1511 SP1
• Embedded NW GW w/ Fiori Front-End
Server 2.0
– SAP HEC connected via VPN, AWS is not
Activities Planned
– Feed results back into Digital Core Strategy
Findings
– SAP HEC took 2,5 months to complete versus 2
weeks for Amazon
– Installation costs differ a factor 10
– Run cost differ a factor 10-15
– HANA database on AWS crashed after SP1
import
– Securing the connections time-consuming
Track Status:
Track
Confidence:
PoC Digital Core

Track Status cFin
– SAP HEC based Suite on Hana connected to
internal ERP source system via SLT
– Basic configuration of Finance done
– Decided not to use MDG for master data
mapping
– Mapping tables maintained for financial master
data
– Installed missing components DMIS and AIF
– Real-time replication triggered by new posting
gotten to work
– Working on issues with intitial load, which does
not go via SLT
Activities Planned
– Update ERP Roadmap accordingly
Findings
– Customization of S/4HANA is business as usual,
no suprises
– Central Finance functionality not stable
– Getting Fiori apps to work requires special
expertise
– Fiori apps for Finance mostly working okay
Track Status:
Track
Confidence:
PoC Digital Core

Track Status S2P
– Basic configuration of Finance done
– Basic configuration of HCM PA and OM done
– Master Data created
– Configured entire Procure to Pay process in 3
weeks
– Connection to external catalogue established
– Working on issues with the Fiori apps
– System restored because of compatibility issues
with notes
Activities Planned
– Update ERP Roadmap accordingly
– Decide on joining S/4HANA customer care
program
Findings
– Back-end integration of SRM into S/4HANA was
done reasonably successful by SAP
– Entire software components appear missing
(MM_PUR_REQ)
– Interaction between front-end and back-end very
buggy, 1511 SP2 will contain ~5000 notes
– S/4HANA Analytics best suited for reporting on
data in S/4HANA database, but can’t replace the
Corporate Data Warehouse
Track Status:
Track
Confidence:
PoC Digital Core

Watermanagement IoT voorbeeld
Anton also went to a cool session on Digital Water Management
http://www.slideshare.net/tbroek/saphcp-iot-for-watermanagement

Patricia, can we
do our meeting
via Skype?

• Often costs more than
expected
• Often takes longer than
expected
• Often differs from what was
expected
Delivering Enterprise Applications
has its known challenges…
Patricia Portillo

• Freeze budgets
• Freeze timelines
…and focus on a working product.
• Freeze quality
Which is why we…
Patricia Portillo

Agile projects only form one part of
responsive IT organisations…
32
• Fights with Support & Operation teams over
resources, especially scarce ones
• Fights with business over project priorities
and time-to-market for changes or fixes
…which is why Fictious is to scale up Agile!
• Fights with Support & Operations teams over
locked objects and transports

PortfolioProgramAgileteam
Jeff feels Scaled Agile may work for Enterprise Applications. How about Digital?

‘And uhm, Jeff, what exactly is a (digital)
business model? I got confused,’ Patricia asks
http://www.slideshare.net/Scheelh/value-based-management-presentation-at-sapphire-2010
??
Business Model as per Value Based Management, von Rosing et al.

Jeff explains his learnings from a recent
course on (digital) business models
A business model can be broken down into
the following elements:
• A customer value proposition that
fulfils an important job for the
customer in a better way than anything
competitors offer;
• A profit formula that lays out how the
company makes money delivering the
value proposition, and;
• The key resources and key processes
needed to deliver that proposition.
https://hbr.org/product/reinventing-your-business-model/an/R0812C-PDF-ENG
http://www.businessmodelgeneration.com/canvas

Jeff leaves him a voicemail
As per Anton’s suggestion Jeff called Xavier, who runs an Advisory company

Hi Jeff -
You must be aware that Digital Business is really the ultimate
Business IT alignment effort.
Be sure the “speed of change” is reflected in your IT Architecture
just as well as in your IT Governance Model.
Let us set up a videoconference to discuss further.
info@ensead.com
Re: Digital @ Fictious
Jeff soon receives a mail from Xavier and reads it
on his way to his monthly IT department briefing.

‘I wanted to work with Fictious because I have some marvellous ideas on new Digital
offerings. It mixes 3D, IoT, all from the cloud. Now, where will I fit in the creation of a
Digital Business Model for Fictious??’– question asked during IT department briefing.
38
Well, Jeff…?

Then, Jeff realizes good ideas are not
bound to strategic planning cycles…
Empower people to act.

Jeff realizes the Fictious strategic planning
cycle misses an essential step
The IT Program & Project Portfolio at
Fictious will now be maintained:
• By annual top-down strategic planning
to re-align with business strategy
• Bottom-up input that comes from the
operational level, and
• From the middle-in to explore market
developments
Strategy
Execution
Planning
Oops, almost late for his videoconference with Xavier!

1. How well do you know where change is occurring?
2. Do you know which customer journeys matter?
3. Are your teams collaborating across functions?
4. Do you have a disciplined ‘test and learn’ approach?
5. Are your budgets tied to progress?
6. Do you have mechanisms to challenge ideas?
7. Are your people empowered to act?
8. Is your IT operating at two speeds?
9. Are you coordinating a portfolio of initiatives?
Source: McKinsey
Anton Jeff Patricia
Xavier

42
Xavier
suggests
to shift to
‘platform
thinking.’
Source: Gartner

With Bill’s question in mind, the first focus is
on the Business and Leadership Platform
Source: Gartner
Leadership Platform:
• Leadership as a team sport
• Influence over control
• A culture of leadership
• Ecosystem leadership
Business/value platform:
• Platform business models
• Two-sided business models
• Open business models

Based on his session with Xavier, Jeff
presents his thoughts to the Board
Jeff suggests the Board is to empower a Leadership Platform for Digital Business.

Cool, finally we
can play a bit!
So currently you feel you are on
your own out there… but with
like ten mates it becomes a
platform. Interesting…
GO AHEAD JEFF!
Let me in,
let me in!!

The Leadership Platform conducts creative
design workshops to think up Digital offerings
Many creative ideas were thought up...
Source: GroupMapping

Shaving foam just-in-time, in collaboration
with market challenger…

“Fictious will improve brand loyalty and reduce supply chain costs by on-line publication of 3D scans in
the form of .stl files for 3D printing, accompanied by guidelines for filaments and printer types. Also a
moderated community will be created to share tips and tricks. A partnership with 3Dhubs.com will be
forged to train and certify 3D printshops.”
3D parts

Jeff realized that in order to act swiftly, a
series of delivery issues need to be tackled
Source: Gartner
Current delivery issues:
• Time to market too long
• No means to experiment
• Releases resulted in down-time
• Business priority changes are noted too
late, requirements misunderstood
• Strategic planning and budgeting cycles
address yesterday’s world
• Innovative technologies are not reviewed
for business potential
Xavier suggests these measures:
• Two-speed capability to explore and
exploit
• Fast-track to allow dynamic refactoring
that hardens and scales
• Fast-track experiments with smaller
vendors

‘Two-speed IT’, Xavier says, ‘is one
crucial delivery concept to avoid chaos.’
Safe-track Fast-track
Reliability Goal Agility
Price for Performance Value
Revenue, Brand,
Customer Experience
Waterfall, V-Model,
High-Ceremony IID
Approach
Agile, Kanban, Low-
Ceremony IID
Plan-Driven,
Approval-Based
Governance
Empirical, Continuous,
Process-Based
Enterprise Suppliers,
Long-Term Deals
Sourcing
Small, New Vendors,
Short-Term Deals
Good at Conventional
Process, Projects
Talent
Good at New and
Uncertain Projects
IT-Centric, Removed
From Customer
Culture
Business-Centric,
Close to Customer
Long (Months) Cycle Times Short (Days, Weeks)
Sprinter
Marathon
runner
IID = iterative and incremental development
Based on Gartner

Jeff calls Anton: ‘Enterprise Architecture
to ensure consistency of the two speeds!
Safe-track architecture
Fast-track architecture
Based on McKinsey and Gartner
Experiment and fail faster
Robust and reliable service
Daily or weekly releases
Quarterly releases
Allows for instant creation and
deployment of applications across
channels, promotes auto scalability
Ensures the ability to upgrade applications
with zero down-time, harnesses automation
so some processes can be scaled up
Release management
Agile prototyping
Enterprise Architecture has to ensure consistency of two speeds

Jeff concludes that this again influences his
portfolio planning process…
Safe-track + Fast-track =
Top-down
Bottom-up
Strategy
Execution
Planning
Strategy
Execution
Planning
Two-speed IT
Based on Gartner
Strategy
Execution
Top-down
Bottom-up

‘And all this has consequences for your
people’, Xavier continues his story
Source: Gartner
Xavier elaborates on the HR
impact:
• Continual talent innovation
• Drawing digital talent from beyond IT
and even enterprise borders
• Experimenting with more dynamic, opt-
in structures and cultures
• Viewing vendors as digital inhibitors /
accelerators

Jeff informs HR about the skill set that needs
to be developed over the next year

And he Yammers: ‘Where do you fit in the
creation of our Digital Business Model?’
• As an IT leader, you could fit in the cross-functional Digital
leadership platform to work on new business models, fed by bottom-
up input from newly hired talent
• As an IT manager, you ought to drive implementation of advanced
delivery mechanisms and build a two-speed IT architecture
• As an IT professional you will understand our strategic context and
feed your ideas to the Digital leadership platform
• As an IT Architect you will flesh out the constructs of Digital
Business in the context of your area of focus, like IT Security
Based on Gartner
Inspired by the question asked during the IT department briefing, Jeff writes:

‘Gladly, we’re already looking into technology
issues’, Jeff informs Xavier.
Source: Gartner
Jeff’s already exploring:
• Highly modular, open information and
technology architectures
• Postmodern ERP / Digital Core
• Cloud / XaaS
Current technology issues:
• On-premise Enterprise Applications
running out of maintenance
• Most are tightly integrated
• Data is duplicated across applications
• Security breaches were reported lately
• Connectivity and bandwidth issues
• Mobile devices not managed properly
• BI is synonym to reporting
• Outdated storage technology
• Many complaints about user experience

‘Hey Jeff… Just overheard
some incredible news…!!!’
FIRED!!

Digital is Big Business
JEFF BRIGHTLIGHT
CIO of the YEAR
2016
2016
Source: CIODAY.nl

My journey to a Digital Business
CIODAY presentation by Jeff C. Brightlight
Chief Digital Officer @ FictiousDigital Ltd.

Jeff begins with explaining how the journey
towards a Digital Business started …
• Challenged and learned from exemplary
disruptive Business Models
• Arrived at a definition as of how Fictious
would see Digital Business
• Had the Board call for Digital offerings
• Created a Digital Leadership Platform
• Conducted creative design workshops and
invited unusual suspects to join, like a
psychologist and an artist
• Assessed Digital-readiness and actioned
accordingly
In short, he elaborates on how FictiousDigital:

…and how he has been driving the internal
Digital Business Transformation…
• Vulnerability of current business model
• Preparedness of all the Leadership
• IT talent acquisition and talent
development approach
• Agility of IT delivery mechanisms and
governance constructs, and
• The current state of our information
and technology architecture
Jeff explains how the transformational journey of FictiousDigital started by
assessing how Digitally-ready we were, like

… by introducing and incrementally perfecting
‘platform thinking’ across the board
• Trained all IT staff in Digital
• Implemented a revised Planning and
Portfolio Management process
• Moved to two-speed IT, with Enterprise
Architects responsible for coordinating
• Scaled up Agile
• Strategized the Digital Core and HCP
• Started to work with vendors as digital
inhibitors / accelerators
• Empowered all employees to blow the
whistle on Digital
Some of the actions in IT …
‘In the Digital world, previously impossible
solutions become viable’ (Negroponte, 1995)

Empower your employees to blow the
whistle on Digital. Get yours,
send a mail to info@ensead.com

Want to read more?
• Key take-aways SAP TechEd 2015
• https://www.linkedin.com/pulse/key-take-
aways-sap-teched-2015-mendel-koerts
• 9 must-knows before implementing
SAP Simple Finance. Uhm... now
S/4HANA Finance...
• https://www.linkedin.com/pulse/9-must-
knows-before-implementing-sap-simple-
finance-sfin-koerts
• Agile SAP - contradiction in terms?
• https://www.linkedin.com/pulse/agile-sap-
contradiction-terms-mendel-koerts

66
QUESTIONS TO JEFF?

Jeff's journey to a Digital Business

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