In SAP S/4HANA and PLM implementation projects, one of the most critical early decisions for a project manager is determining where to start and what to define as the template standard.
If these decisions are made based on vague departmental opinions or system constraints, the project will almost inevitably suffer from rework and political friction in later phases.
This article provides a practical, execution-oriented guide for project managers to define and align on business capability priorities, based on TOGAF® principles, in SAP and PLM implementations.
1. Why Start with Business Capabilities?
SAP and PLM are merely enablers of business capabilities—the core abilities an organization must possess.
Starting from modules, processes, or system structures often leads to IT-driven discussions and conflicts between departments.
Instead, follow this sequence:
- Define the business capabilities required
- Identify which capabilities to prioritize for transformation
- Determine how SAP/PLM will enable them
Executing this sequence properly ensures that the project charter, scope, roadmap, requirements, and testing are all aligned under a single, coherent narrative—significantly improving stakeholder alignment.
2. Required Inputs for Capability Prioritization
Before initiating prioritization discussions, project managers should prepare the following inputs.
2.1 Business Capability Map (L1–L3)
A structured breakdown of enterprise capabilities independent of organization or systems.
Examples include:
- Demand and Sales (forecasting, order management, channel management)
- Product Development (product planning, BOM management, change control)
- Manufacturing (production planning, scheduling, quality management)
- Procurement (strategic sourcing, supplier evaluation, purchasing)
- Finance and Controlling (standard costing, profitability, budgeting)
The key is to define what the business must be capable of—then later map organizations and systems.
2.2 Business Strategy and Key Initiatives
Capability prioritization must align with corporate and business strategy.
Review:
- Mid-term business plans (revenue, profit, growth markets)
- Business strategies (electrification, CASE, global production shifts, service models)
- Digital/DX strategies (supply chain visibility, data-driven management)
The key question:
Which capabilities will become sources of competitive advantage?
2.3 Current Maturity, Performance, and Cost
Assess each capability’s current state:
- KPIs: delivery performance, defect rates, inventory turnover, cost variance
- Process maturity: standardization level, reliance on manual work, exceptions
- Inefficiencies: duplicate entry, Excel-based processes, manual workloads
Visualize using a heatmap (red/yellow/green).
“Strategically important but weak” capabilities become top candidates.
2.4 Value Streams (End-to-End Flow)
Example:
Product planning → design → production preparation → procurement → manufacturing → delivery → after-sales
Map capabilities to this flow to identify bottlenecks and ensure end-to-end optimization rather than local improvements.
2.5 Organization, Sites, and Systems Mapping
Overlay:
- Responsible organizations and locations
- Redundant capabilities across units
- Systems landscape (SAP, PLM, legacy, Excel)
This reveals where investments will create the greatest impact.
3. Evaluation Criteria for Prioritization
Use a simple scoring model (e.g., 1–5 scale) across these dimensions:
- Strategic alignment: Contribution to business strategy and competitive advantage
- Value stream impact: Influence on customer value and bottlenecks
- Maturity gap: Distance from target state
- Financial impact: Revenue growth, cost reduction, margin improvement
- Criticality: Business continuity, compliance, risk exposure
- Coverage: Number of business units/sites impacted
- Feasibility: Effort, dependencies, and implementation risk
Example:
Battery cost management and quality traceability in EV strategy would score high across strategic alignment and criticality.
4. Evaluation and Governance Process
4.1 Preparation Phase
- Develop an initial capability map
- Highlight strategically relevant capabilities
- Establish a common language across stakeholders
4.2 Strategic Prioritization (TOGAF® Phase A)
- Evaluate L1 capabilities at a high level
- Define project vision based on prioritized capabilities
- Align scope with capability objectives
4.3 Detailed Assessment (TOGAF® Phase B)
- Conduct workshops with business, IT, and site leaders
- Score L2–L3 capabilities
- Document rationale and visualize results via heatmaps
4.4 Roadmap Development
Plot capabilities using a value vs. effort matrix.
Example roadmap:
- Phase 1: Global master data, costing, BOM integration
- Phase 2: Demand-supply integration, production optimization
- Phase 3: After-sales and field data integration
Clarify SAP vs. PLM responsibilities at the capability level.
4.5 Governance Board Approval
- Present capability heatmaps and roadmap
- Finalize scope, investment priorities, and timeline
- Define what is explicitly out of scope
Example success metrics:
- Improve global cost management capability from Level 2 to Level 4
- Reduce engineering change lead time by 30%
5. Practical Tips for Project Managers
- Speak in capabilities, not modules
- Always include a capability map in scope documents
- Limit evaluation criteria to a manageable set (around seven)
- Reassess priorities throughout the project lifecycle
- Use capabilities as a common language between SAP and PLM teams
Conclusion
Business capability–based prioritization provides a structured and strategic foundation for SAP and PLM implementations.
By aligning transformation initiatives with business capabilities rather than systems or organizational boundaries, project managers can significantly reduce rework, improve stakeholder alignment, and maximize investment value.
Reference Links
- The Open Group – TOGAF Standard, Business Architecture: Business Capability Planning
https://pubs.opengroup.org/togaf-standard/business-architecture/business-capability-planning.html - Comprehensive Guide to Business Capability Planning in TOGAF（Visual Paradigm）
https://togaf.visual-paradigm.com/2025/01/21/comprehensive-guide-to-business-capability-planning-in-togaf/ - Understanding and Creating an ArchiMate Capability Map in TOGAF（Visual Paradigm）
https://guides.visual-paradigm.com/understanding-and-creating-an-archimate-capability-map-in-togaf/ - How to Create a Business Capability Map, Examples & Templates（Avolution）
https://www.avolutionsoftware.com/our-resources/how-to-create-a-business-capability-map/ - The Business Capability Map: The “Rosetta Stone” of Business Architecture（Business Architecture Associates, PDF）
https://businessarchitectureassociates.com/wp-content/uploads/2020/10/5deecd9698d1d5cef8c9c313ea7b9316.pdf - Use Business Capability Maps as the key to the hidden Treasures of Digital Transformation（LinkedIn Article）
https://www.linkedin.com/pulse/use-business-capability-maps-key-hidden-treasures-digital-goebl
- Maximize value in SAP S/4HANA transformations（EY, English）
https://www.ey.com/en_jp/insights/consulting/maximize-value-in-sap-s-4-hana-transformations - Tool-based governance framework for SAP S/4HANA Transformation（Infosys）
https://www.infosys.com/services/sap/insights/tool-based-governance-framework.html - A Proven Approach for a Successful S/4HANA Transformation（LinkedIn Article）
https://www.linkedin.com/pulse/proven-approach-successful-s4hana-transformation-uma-singh-m9rdc - How to navigate your business-led SAP S/4 HANA journey（LinkedIn Article）
https://www.linkedin.com/pulse/how-navigate-your-business-led-sap-s4-hana-journey-john-larsen-aiyle - Successful SAP S/4HANA transformation for transportation and infrastructure（Roland Berger）
https://www.rolandberger.com/en/Insights/Publications/Successful-SAP-S-4HANA-transformation-for-transportation-and-infrastructure-operators.html
Disclaimer
Parts of this article were developed with reference to generative AI suggestions and were reviewed, refined, and supplemented based on the author’s professional expertise and judgment.
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