Agfa's Digital Transformation - Navigating Legacy and Embracing Standardisation

Agfa, facing declining film business and slow new venture growth, tackled aging infrastructure and complex legacy systems with a bold digital transformation. They focused on standardisation and efficiency by implementing SAP S/4HANA Public Cloud. This case study highlights Agfa's pilot project success and key factors for global scaling.

The Challenge

• Declining Core Business: The rapid shift to digital imaging significantly impacted Agfa's film business, resulting in shrinking margins.
• Legacy Systems Complexity: Four independent SAP ECC systems, riddled with 60-80% unused customisations, created operational inefficiencies and hindered agility.
• Aging Workforce: A large portion of the workforce, aged 55-65, was trained on legacy systems and accustomed to bespoke solutions, leading to resistance to change.
• Slow Growth in New Ventures: Growth in new business segments wasn't offsetting the decline in the film business.
• Urgent Need for Standardisation: The company needed to streamline operations, reduce costs, and improve efficiency to remain competitive.

The Solution

Agfa strategically decided to adopt a "standard first" approach, eschewing a lengthy process redesign exercise. The key elements of their solution included:

• SAP S/4HANA Public Cloud Implementation: Leveraging the SaaS model of SAP S/4HANA Public Cloud to adopt out-of-the-box functionalities and reduce customisations. 
• Pilot Project in US and Canada: A representative pilot project in the US and Canada, encompassing production, shared services, HQ functions, and complex regulatory requirements, served as a proof of concept.
• Deloitte Partnership: Collaborating with Deloitte to ensure successful implementation and provide expertise in SAP S/4HANA Public Cloud.
• Emphasis on Show and Tell & Exploration Sessions: Focus on training and knowledge transfer to gain user buy in.
• Integration Focus: Prioritize seamless integration of the S/4HANA Public Cloud with the rest of the IT architecture.
• User Adoption: Intensive focus on change management and user adoption.

Implementation and Results

• The pilot project, launched a year ago, demonstrated the feasibility and benefits of the standardisation approach.
• The go-live, two weeks prior to the case development, exhibited remarkably low defect rates, indicating the success of the implementation.
• The pilot successfully convinced the organization that the standard approach was viable.
• The biggest effort was put into integration and user adoption, both very important to a successful transition.

Key Learnings and Challenges

• Change Management is Paramount: Overcoming resistance to change from a workforce accustomed to custom solutions requires a robust change management strategy.
• Pilot Project as a Catalyst: A well-executed pilot project can build confidence and demonstrate the value of standardisation.
• Integration Complexity: Integrating a cloud-based system with existing infrastructure can be complex and requires careful planning.
• Balancing Standardisation and Flexibility: Striking the right balance between standardisation and the need for some level of flexibility is crucial.
• Scaling the Solution: Successfully scaling the pilot project across the global organisation presents a significant challenge.

Recommendations

• Develop a Comprehensive Change Management Plan: Implement a structured change management program to address resistance and facilitate user adoption.
• Establish a Centre of Excellence: Create a dedicated team to manage the S/4HANA Public Cloud environment and support users.
• Prioritise Data Migration and Integration: Ensure seamless data migration and integration with existing systems to minimise disruption.
• Foster a Culture of Continuous Improvement: Encourage a culture of continuous improvement to optimise processes and maximise the benefits of the new system.
• Communicate Regularly and Transparently: Maintain open communication with stakeholders to address concerns and build trust.
• Carefully plan the global rollout: Learn from the pilot, and build a detailed rollout plan, with clear milestones, and proper resource allocation.
• Create champions: Identify key users within each department, and train them to become champions of the new system.

Conclusion

Agfa's journey demonstrates the potential of standardisation and cloud adoption to transform a legacy-heavy organisation. By embracing SAP S/4HANA Public Cloud and focusing on user adoption, Agfa has taken a significant step towards achieving operational efficiency and sustainable growth. The success of the pilot project provides a solid foundation for scaling this transformation across the global organisation, enabling Agfa to navigate its challenges and secure its future. The biggest challenge now is scaling the project, and not loosing the momentum that was gained during the pilot.

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