Celonis process mining aids Hager's S/4HANA journey

Process excellence is the goal

The S/4HANA migration is part of Project 2030 (P2030), a corporate-wide initiative to meet future business and technological requirements, Helbing said.

Frank Helbing

As part of P2030, the project team interviewed Hager's top management to make sure that S/4HANA would support the company's future operating model.

"We decided to perform a conversion of our existing ERP system to S/4HANA, and this will be surrounded by a new implementation of function-specific extensions," he said. "Including things like integrated business planning and a new financial consolidation system."

Working with SAP, Hager conducted an S/4HANA transition study to decide if it was going to take a brownfield approach and upgrade its existing system, a greenfield approach and undertake a new installation of its ERP or some combination of the two for the project. Hager Group executives identified operational and process excellence as top goals for P2030, and SAP suggested that Hager look at Celonis' process mining tools, according to Helbing.

Business process X-ray

Celonis, co-headquartered in Munich and New York, is one of only a handful of companies specializing in process mining. Its software crawls through an organization's business processes and analyzes how the processes work and where there may be breaks or flaws.

Alex Rinke

"The idea we came up with 10 years ago was to have this X-ray for business processes, to be able to go into any company and show them how their processes are running," said Alex Rinke, co-founder and co-CEO of Celonis.

When you look at these challenges, it means you need to really understand your system before you can begin the migration to S/4HANA.

After a proof of concept proved to Hager management that the Celonis "X-ray" had value in preparing the company for an S/4HANA migration, the project team implemented the process mining software to more fully examine its processes and make sure they are optimized for the new system.

"There are a couple of challenges with an S/4HANA migration, for example, high customization, unclean master data and business processes that are not harmonized," Helbing said. "When you look at these challenges, it means you need to really understand your system before you can begin the migration to S/4HANA."

Finding process blocks

Hager first implemented Celonis process mining on its quote-to-cash process, where the software uncovered inefficiencies that were causing delays in the process, according to Helbing.

"For instance, we saw that we have unnecessary credit checks, which were blocking the order flow and causing delivery delays," he said. "That was an area where we could improve the cycle time and also reduce manual interactions where people have to take care of the blocked documents, sales orders, and release them, unnecessarily spending time on them."

While that kind of analysis can help any organization improve processes, Celonis is also helping Hager with two specific phases of its S/4HANA migration project -- fit-to-standard analysis and test preparation and execution.

S/4HANA migration fit-to-standard analysis, part of an implementation project management framework called SAP Activate, compares an organization's existing processes with around 280 S/4HANA best practices, Helbing said. The usual fit-to-standard approach involves conducting workshops where consultants ask questions about how processes work, a tedious job that's prone to leave gaps.

"It's a pretty hard exercise because you really need to have in mind all your process variants, and you need to explain to [the consultants] how they work, which takes a lot of time," Helbing said. "The data-driven insights from Celonis allow you to reduce your costs and efforts for performing those fit-gap analysis workshops, because you can much faster explore existing processes and discover the variants based on fact-based insights. You can also do conformance checks, which take your existing processes and compare these with SAP's best practice processes."

Process variants a risk

Risk prevention is the key to effective test preparation and execution, Helbing explained. Knowing the processes in detail can help firms understand the less common variants of those processes which are commonly not included in testing.

"Then you have a huge risk, because later on, a process might not work as expected," Helbing said. "Celonis can help you here because it shows you the most common process variants, but also the less common ones, so you can take those less common ones into consideration for your testing."

The time and effort that Celonis has saved Hager in preparing for its S/4HANA migration are significant, Helbing said.

"The effort is incredibly high if we were to try to discuss with each sales organization about how the process flow is, so you'll never get the complete picture," he said. "Since we've implemented Celonis, we've seen immediately how the processes are in reality. I think we've saved many days and weeks for discovering how the processes work in today's system. Of course, you have some idea how they should work, but you're never 100% sure how they work in reality."

Jim O'Donnell covers ERP and other enterprise applications for SearchSAP and SearchERP.