Executive interview: Handling vanilla S/4Hana change management

McBride, which produces white-label cleaning products for major retailers, is embarking on a major business transformation that will involve replacing all of its existing business processes with S/4Hana.

Speaking to Computer Weekly during the UK and Ireland SAP User Group Connect23 annual conference in Birmingham, the company’s chief transformation officer, Chris Ward, describes the transformation as “a fair challenge”. 

“We’ve made it harder for ourselves because we’re going with an ‘adopt’ strategy,” he says. “This means that McBride will take the vanilla, out-of-the-box business processes built into S/4Hana rather than adapt the ERP [enterprise resource planning] to match existing business operations.

“That means the journey to get there is harder, but I think the quality of the outcome is much better,” says Ward. “The SAP ERP is effectively a proxy operating model. All of the global templates that come with S/4Hana are the future of how we’re going to run our business, irrespective of where we are at.”

The upside of this approach, according to Ward, is that it leads to a better outcome. “You get an unencumbered flow of data because we’ve not had to customise anything,” he says. The downside, however, is the change management, which Ward says is much harder.

Looking at the change management, he says S/4Hana is one of seven transformations being run at McBride. However, all of the others stem from the success of the ERP implementation, which Ward describes as having the backbone of a fish.

“I would say 90% of the energy is going to change management,” he says. Even though it has headquarters in the UK and is listed on the London Stock Exchange, Ward says, “We’re not a UK business. We’re a European business, so a big part of our ethos for the programme is that it has to feel European.”

As a consequence, the programme team is European and people on the team speak multiple languages. “We have built a community of about 120 people comprising factory staff who operate all of the different elements of what we’re going to be introducing with S/4Hana.”

According to Ward, this team of 120 needs to be evangelical about the business processes that are running on the new S/4Hana ERP system. “They’ve got to be ones you have to win over as they are the people who need to understand what they are talking about when they take S/4Hana into the business,” he says, adding that “the real resistance to change won’t be at a logical level, it will be at an emotional level”.

To help the business manage this, he says the company has adopted the Adkar change model methodology, which aims to reduce resistance to change.

Managing the people side

The new ERP implementation inevitably involves changing working practices people have used for years. Given the heavily unionised nature of the business, Ward acknowledges the difficult conversations the team needs to have with trade union leaders to give the S/4Hana deployment a chance to succeed.

Discussing the questions trade unions may raise over how the software that ultimately allows the company to run more efficiently will impact the job security of their members, he says, “If I was in their shoes, I’d ask these questions, and if they didn’t, I would suggest that they do.” His approach is to give the trade unions and their members who work in McBride factories the confidence that their job roles are secure – but Ward says the nature of the role will change.

He adds that staff currently have to deal with the frustration of input data manipulation, which takes up “the lion’s share” of their work. “Whether they work in finance, in HR or manufacturing on the shop floor, all of their work is about input data manipulation, exporting this data to Excel, just to keep the wheels turning,” says Ward.

Ward’s ambition is to elevate the quality of the work staff undertake by using S4/Hana to handle all of the previously manual input data manipulation. The work they do then changes. “This is not a headcount thing,” he says. “It’s about giving staff the tools that enable them to get above the day job and actually use their experience and ability to make value-adding decisions. Their work becomes much more about analysis.

Ward says, for example, “How does the provision of insight help me make better decisions to drive my factory performance?”

Choosing the right implementation provider

The company took two years to find a suitable implementation partner and finally selected NTT Data Business Solutions. “One of the benefits of working with a company as big as NTT is their offshoring capability,” he says. “I think it’s amazing.”

Ward recently went to the outsourcer’s Hyderabad site. “I met all the team that will be doing the coding and the testing,” he says. “It’s an exceptional team.”

Given the size of NTT compared with McBride, Ward believes the company will not be lost among the many large customers of NTT. Looking back at the tender process, he says NTT put a lot of commitments in place to support the company, which is something he felt others who bid for the business were somewhat lacking. “I’ve got two contacts in NTT, my delivery director, because we’re now delivering the programme, and I’ve got a pre-sales contact.”

This is to help McBride select additional SAP components beyond the S/4Hana core as and when these are required. “I also have a monthly call with the European vice-president,” adds Ward.

This offers both NTT and McBride a form of offline governance, where he can have a frank discussion with NTT’s European chief about what he has been hearing anecdotally from the NTT team managing the McBride contract. Equally, Ward is also able to share his feedback from the McBride team.

The firm is effectively taking standard S/4Hana templates and mapping these onto what it needs to do to operate the business. 

NTT will follow a rigid structure with the S/4Hana deployment. The lack of S/4Hana knowledge at McBride means NTT makes the implementation choices, such as selecting the most appropriate S/4Hana business process template to use to deliver the required outcome. This business process replaces an existing one, which is why there is the team of 120 people, who work closely with NTT to understand these changes.

Getting board approval

The investment in the SAP system represents the biggest expenditure in the company’s 96 year history. Ward says the company had ended up with data silos, which inhibited streamline business operations and led to a situation that its customers found less than ideal in terms of how they dealt with McBride. “We operate across so many sites in Europe that we got to a point where data doesn’t talk to itself, and there was a little bit of a sense in McBride that the left arm doesn’t always know what the right arm is doing.”

Ward notes that a lot of the data is held locally and is not connected particularly well, which means data cannot flow across the company. This lack of data connectivity has become a bit of an inhibitor. “A lot of our processes run across countries, divisions and business units,” Ward explains, but while they were happy with the quality of products and trusted McBride as a brand, the feedback was that the company operated too slowly. The survey showed McBride took too long to do the basics, such as pricing, tendering and ordering more goods, when there’s a big promotion. “I think that’s fair,” he says.

Using the standard SAP methodology, Ward says McBride expects to finish preparations by the end of the year, and the project will then enter a design phase. The aim is to have the UK running S/4Hana by the spring of 2025, followed by Belgium, where two significant McBride factories are located. Remaining regions and sites across Europe will then be phased in.