Value advisory is a necessity for business transformation success
by Mpho Matsitse, Head of Industry & Value Advisory at SAP Africa
JOHANNESBURG, South Africa, 21 July 2022 -/African Media Agency(AMA)/- The pandemic and growing relevance of 4IR technologies continues to drive greater digitalisation across industries. According to Gartner, 64% of organisations are accelerating their digital investments in 2022.
Global spending on digital transformation is expected to reach nearly $2-trillion this year, with the global cloud computing market estimated to reach $474 billion in 2022, an increase of over 16% from $408 billion in 2021.
However, fewer than three in every ten digital transformation projects succeed. Among the contributing factors for the high failure rate is a lack of a compelling business event for change within the organisation, unrealistic expectations when it comes to delivery timelines, and insufficient investment in value management, according to McKinsey.
In fact, in another study conducted by McKinsey, where 5400 IT projects were researched, it was found that on average, large IT projects run 45% over budget and 7% over time, while delivering 56% less value than predicted – the famous “ROI”.
When digital transformation succeeds, it can revolutionise businesses and entire industries. A 2020 study found that successful digital transformation projects created 66% more value and improved corporate capabilities by 82%. One in every two companies are also expected to generate more than 40% of their revenue from digital products and services in 2022, compared to one in three companies in 2020.
However, when a digital transformation project fails to deliver the requisite business value, it can lead to abandoned digital initiatives, lost opportunities, organisational underperformance and a lack of agility to deal with emerging threats and opportunities, not to mention a despondent workforce that is opposed to change because they do not believe in its value.
Unlocking quantitative, qualitative business transformation outcomes
How can organisations improve the outcomes of their business transformation efforts?
Value advisory services provide the strategic tools for tech and business leaders to help drive digital transformation projects to successful outcomes. These services leverage methodologies that align business and IT onto one compelling event for transformation.
Value advisory services quantify the value to be gained through outcomes such as revenue uplift, cost reduction, risk mitigation, and general business performance improvement. It aligns business transformation activities to a clear roadmap that prioritises quick time-to-value and clearly quantifies the net present value (NPV) to be gained from such activities.
Using a set of tools and processes to evaluate important business strategy objectives and their associated processes, value advisors can help assess where and how new technologies can unlock hidden business value. Leveraging value advisory services can help turn business opportunities and challenges into building blocks for successful, sustainable intelligent enterprises.
This can cover the entire business transformation and innovation lifecycle, from strategy to value assessment, enterprise architecture, change management and determining which solutions are best suited to enable the desired business outcomes.
A blueprint for value advisory success
How best can organisations engage value advisory services to help drive business transformation to successful outcomes?
Firstly, value advisors spend the time understanding the problem statement or compelling event for change in relation to the broader strategic business imperative to be attained, key industry trends to be considered and a competitive analysis of market share in the said industry of the customer.
Value advisors work with customers to map out a collaborative approach that jointly identifies business areas with the greatest potential for digital transformation. The engagement process is documented in a vision-to-value approach that considers which areas of the business holds the most promise for value generation, and provides guidance on the quickest way to unlock that value bearing in mind aspects such as cost analyses, benefits, and risks associated with business transformation.
Industry Value Advisors can also help co-design the IT strategy and define the associated governance requirements to ensure adequate adoption throughout the organisation. In line with best practice, a Customer Centre of Excellence is usually developed during this phase to ensure IT service excellence throughout the transformation project. With this in place, advisory services help secure the success of the business transformation project through strategic guidance, program management and quality reviews.
Finally, with any business transformation initiative, change management is essential. And yet only 34% of change management initiatives are a clear success; half are outright failures. Value advisory as a discipline can bring about vital insights to the change management processes to help lower employee resistance to change, and accelerate the adoption of the new business capabilities to be unlocked during the business transformation process.
In closing, organisations can future-proof their operations through systematic, structured innovation that continuously explores the potential value of new technologies on the organisation’s business model.
The outcome of this project is digitalisation that delivers to the business’ needs, empowers employees with new tools and capabilities, standardises key business processes in line with global or industry best practices, and helps sustain the benefits of digital transformation while moving the organisations closer to the ideal of an intelligent enterprise.
And in light of ongoing budgetary pressures, business and IT leaders across Africa will also be encouraged to know that value advisory services are offered free of charge to any customer wishing to do business with SAP.
Distributed by African Media Agency (AMA) on behalf of SAP Africa.
SAP’s strategy is to help every business run as an intelligent, sustainable enterprise. As a market leader in enterprise application software, we help companies of all sizes and in all industries run at their best: SAP customers generate 87% of total global commerce. Our machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers’ businesses into intelligent enterprises. SAP helps give people and organizations deep business insight and fosters collaboration that helps them stay ahead of their competition. We simplify technology for companies so they can consume our software the way they want – without disruption. Our end-to-end suite of applications and services enables business and public customers across 25 industries globally to operate profitably, adapt continuously, and make a difference. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improve people’s lives. For more information, visit www.sap.com.
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