Bombardier’s CIO on why digital transformation is integral to SAP S/4HANA – and competing with aerospace giants

From the slew of use cases we delved into around Sapphire Now, there isn’t one right way to approach SAP S/4HANA.

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Though I generally agree with DSAG’s view that companies should take a position on digital transformation before they embark on S/4HANA projects, in some technically-focused scenarios, transformation isn’t necessarily the driver. Den Howlett fleshed out some S/4HANA angles – and why one size doesn’t fit all – in SAP S/4HANA – conversions, greenfield and variability.

One SAP S/4HANA customer I was eager to get to was Bombardier. I was a bit wary of SAP’s interview blurb I was provided, which emphasized Bombardier’s digital transformation angle to a hyperbolic degree. But I do like to hear from customers who have embraced transformation for their own reasons. Would this be one of these?

E. Jeffrey Hutchinson, Global CIO for Bombardier, Inc entered the Bombardier picture two years ago, with transformation as his IT imperative. As he told me:

I was brought in to help with the transformation, both within the IS/IT arena, and in how we’re enabling the rest of the corporation transformation.

At the ASUG Annual Conference, co-located with Sapphire Now, Hutchinson co-presented on the tools SAP provides to ease S/4HANA migrations and how to do an analysis of your legacy systems and environment. But that’s not Bombardier’s mindset. “We took a fundamentally different approach to it,” says Hutchinson.

Can transformation give you a market edge?

Almost two years ago, Hutchinson sat down with the presidents of Bombardier‘s two biggest business units. The topic? What will it take to thrive in the years to come – up against competitors with very deep pockets? Hutchinson emerged from those meetings with a transformational plan:

We’re talking to the presidents of the train and transportation side about: what is it that fundamentally makes a difference with the competition out there? We are a $16 billion dollar business – that in our industry is very small. If you look at Siemens, if you look at Boeing, they’re one hundred billion dollar businesses. So we’re never going to have the money to out-invest them.

But if you can’t out-invest, what’s the alternative? Job one: awesome/quality products.

We make some of the greatest planes and trains in the world. So for example, we now have a new business jet called a Global 7500. You can fly from New York or Montreal to Tokyo, non-stop. It has four cabins and restrooms. This is a business jet, and it flies close to Mach speed. On the transportation side, we move 500 million people a day by our trains around the world.

Awesome products? Check that box. But you need more. For Hutchinson’s team, it’s about leading in tech adoption, driving efficiencies beyond their competitors. That means harnessing data for better customer results, or experiences, if you want to board that buzzword train. Hutchinson:

If I can’t out-invest them, then I’ve got to figure out a way that I can become more efficient, that I can have better productivity, that I respond better to my customers’ needs, that I can make better decisions than they can. Faster, more data-driven decisions.

Then Hutchinson said something that is sure to make SAP executives smile:

To get that insight to make the right decisions, that means the data becomes very, very critical. And I’ll use a cliché that SAP likes to use, but I have the scientific meaning. If I’m going to make better data-driven decisions, I’ve got to have the intelligence to do it, so I make better insights from it, so I need to get the corporation to become much more of an intelligent enterprise.

Bombardier pursues their own intelligent enterprise

Hutchinson defines “intelligent enterprise” differently:

Now, my view of intelligent enterprises is slightly different from SAP’s. I don’t disagree with them, but it goes beyond the tools and the technology – and beyond the software.

People and process carry the day:

It’s about changing the culture. It’s about getting corporations to work in a much more collaborative way, end to end.

The end-to-end process aspect is where Hutchinson feels that traditional ERP, and IT – has fallen short. And if you don’t nail that, your people can’t carry you:

If you look at our corporation, everyone works hard. Everyone’s dedicated to success. But we know that we’re not the most efficient when you look at end to end processing.

And that is where Bombardier’s digital transformation began. Hutchinson says at the first meetings, there was no mention of SAP, or any tech for that matter:

We went out there and said, “Okay, we’re going to try the largest transformation effort this company’s ever going to try.” We never once, up front, said anything about S/4HANA or SAP. As a matter of fact, we assumed by default that’s who it’s going to be. Instead, we said, “We’re going to go through and look at those areas of our businesses that can get the biggest benefits.”

They started with operations and manufacturing:

That whole supply team operations area, we’re going to out-produce our competition, that’s got to be better. The whole supply chain’s got to be better than the rest.

Then supply chain optimization feeds engineering, which feeds into aftermarket, pulling in sales and marketing as well. Bombardier has communicated this is a five year transformation push. When Hutchinson joined two years ago, they were about one year in.

Don’t start with S/4HANA, start with a white board

The enterprise part of this began nine months ago, with one hundred executives flown in from around the world. Hutchinson joked his job was to help executives realize no one is doing their jobs perfectly. You might think your baby is beautiful, but maybe it’s not exactly beautiful to others. That means coming up for air, looking at how different divisions get the job done:

People came into initial workshops, with, “Oh, I know my world, and I’m doing everything perfect,” and left after the first wave with, “Wow, this other site does it this way. I could do it that way, too.” We [fostered] the mindset of total openness.

Though they didn’t talk S/4HANA, project leaders from SAP and Bombardier’s S/4HANA partner, Emphasis Consulting, were present in these white board sessions. They focused on eight major areas of change:

We purposely did not introduce the SAP upgrade. We brought the people in to renew what the capabilities would be. Our focus was on the business case.

Then it was time to show how S/4HANA could enable the changes agreed upon:

After we finished the first couple sessions, we took what we had and then demonstrated S4/HANA, and how it would work.

It was a three week immersion: no cubicles, but plenty of espresso:

It was everything a 75 year old corporation wouldn’t do.

Flattening hierarchies and questioning assumptions was the tone:

Everyone was an equal there. It really broke down the mindset. Everyone could speak their mind, and really use a design-thinking mindset to how we were actually driving… That fundamentally got people out of their vaults.

That kicked off an eight month process of prep and blueprinting, still ongoing as of our Sapphire Now chat. The S/4HANA go-live date hasn’t been set yet, but Hutchinson’s team is targeting 2020. From there, a series of rollouts are planned, as they move a range of older SAP systems, and other ERP systems from acquisitions, onto S/4HANA.

The wrap – on quick wins, customer experience and Qualtrics

Despite the risks, I’m still a fan of broad transformational projects. Paying lip service to transformation or doing it on a small scale doesn’t work. That said, what about quick wins for morale and momentum? Hutchinson told me that’s important to Bombardier also – as long as the quick win builds towards your long term plan.

As an example, Hutchinson pointed out a win they’ve already identified: inventory reductions. Standardizing the inventory reduction process across business units came out of those “We do it this way, how does your unit do it?” convos. Putting in processes that will eventually be automated is another step forward:

What you want to do is minimize the impact. You want to get the benefits, but minimize the impact within the business units.

Hutchinson says they will turn their attention to customer experience/service as well. Once you have heightened precision and visibility into plane maintenance and downtime, you can schedule that maintenance in time windows where it won’t affect customers – and make sure the right licensed technician is in the right place. And yes, Bombardier is going to evaluate what Qualtrics can bring to the table there also:

How do I get that understanding of when someone’s happy or not happy? That whole sentiment, that “X” part of it, is going to be critical into our future.

A project of this scope requires as much know-how as you can muster. For Hutchinson, serving on the ASUG Board and connecting with so many SAP users is a win for all sides. He spoke on the impact of sharing lessons with the CIO of Maple Leaf Foods, amongst many others:

One of the biggest things I see with ASUG is it brings together a peer-to-peer capability from an executive level, all the way down.

Hutchinson has also seen a big improvement in the overall dialogue with SAP the last couple of years. He told me SAP has been much more in tune, with a mindset of customer needs and service.

Now for the go-live push. This is one story we’ll need to check up on for sure.