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ERP and SAP Business Case for ROI, Business Benefit, and Success

November 23rd, 2009 by
ERP or SAP Business Case, CRM, ERP, BI, and IT investment, where is the business benefit?

SAP Business Case Target

Your company’s SAP or ERP business case should start before your RFP, and not just at a high level. It is important to take some time up front to get educated and develop some key understanding before ever issuing an SAP RFP.

There are a number of steps you can and should take, first among them is to get educated.  Educated software buyers are more sophisticated, and the more sophisticated you are the better your results will be.

There are many benefits to being an educated software buyer.   The more educated you are:

  • The better the quality of the ERP RFI or RFP.
  • The better choice you will make at vendor selection (you’ll be able to see past sales pitches to the substance).
  • You’ll be able to make a more objective assessment during demonstrations.
  • You’ll be able to focus on ensuring vendors show you what is really important to make a better decision.
  • The better your project will be scoped and blueprinted, and;

Ultimately, you will end up with a better project and results overall.

The most successful RFP business case for an SAP, ERP, or IT project will include several components:

ERP Project Value Proposition Elements

  • Operational Excellence – expected cost reductions from automating and improving ongoing operations and their processes.
  • Customer Focus – how will people, processes, and technology enable operations, goals, and reports to focus on the customer needs and wants? How will sales, marketing, and customer service be integrated and extended to delighting the customer? Tools and resources to empower customers for success with the organization’s products and services.
  • Innovation – Tools and resources to support internal and external collaboration, engineering efforts, and market intelligence.

Business Competitive Pressures to consider for your SAP Project

An honest assessment of the organization’s strengths and weaknesses in the four core competitive pressures businesses face [FN3]:

  • Customer options
  • Vendor power
  • Existing competitors
  • New (innovative) products or services.

Underlying the value propositions and the competitive pressures is the need for solid business goals and metrics that you expect the software application to enableI’ve provided some insight on the process of developing meaningful KPIs which can become the basis for a solid business case.  That article helps to define the business drivers that are necessary to intersect with technology.  By changing how you look at SAP to focus on the business rather than the technology you are far more likely to achieve great results and more satisfaction with your implementation.   And on top of that, by making the business drivers the focus of all of your efforts you will also gain more meaningful insight into aligning the right implementation vendor with your technology project.

For success in highly competitive global markets your organization must be agile enough to change and adapt as necessary. This is true no matter what the size of the organization is.  And by focusing on business needs rather than just on the technology you are far more likely to design processes, goals, metrics, and project expectations that will help to keep you from getting locked into rigid technology restrictions.

Where to start with developing a solid SAP business case based on business and IT strategy:

  1. Get your company “A” team together to work on the initial project definition. Be sure they are the people that will have key responsibilities for the SAP project (and they should be key decision makers for the vendor selection process).
  2. If you have not acquired an SAP software agreement yet then contact an SAP sales rep and ask about getting a copy of the ASAP toolset as part of your evaluation process for software selection.  Be prepared for the sales pitch but if you have not yet decided on SAP just insist that you are going through the up front due diligence of Discovery and Evaluation of what SAP might be able to offer.
  3. If you’ve already agreed to purchase the SAP software then have your sales rep give you access to SAP’s ASAP toolset. Install it on any web server (Apache, IIS, etc.) and begin getting your team familiar with it.
  4. Set a timeline and deadline for the initial project team to produce a business case with your company’s core strategic direction.
  5. Get familiar with the ASAP tool set.
  6. IF you have an SAP software agreement then you also have something called “IDES” available to you free from SAP. That is a complete SAP system used for training by SAP America. It is the full and complete application with pre-loaded data for a fictitious company. If you are a licensed SAP customer it is NOT a trial version, it is an educational version that does not have some short term expiration date. Along with it you can also go through installing some of SAP’s Best Practice scenarios to get more familiar with the Best Practices resources SAP provides.
  7. If you do NOT have an SAP software agreement or if you do not have the time or resources to set up an internal educational system there are several reasonable online services for direct SAP access.
  8. If you set up the SAP IDES system, or decide to get remote access, then have several key decision makers about the SAP vendor selection begin to get familiar with the software to help with your own understanding.
  9. Get familiar with the ASAP tool set.
  10. Plan on spending about 3 – 6 months on all of this PRE-project prep work depending on the size and complexity of your company and implementation requirements.  It may take 2 – 4 weeks or more just to put the RFP together after you have had a few months exposure to SAP’s resources and tools.

From this exercise one of the most critical drivers of success in the initial business case will be the ability to define outcome based business drivers for the project. These outcome based business drivers should be articulated in such a way as to be able to be verified after go-live and sufficient enough to write a contract with a vendor to include them along with penalties for lack of compliance.

SAP Business Case critical elements

No matter how you draft, define, or craft your business case it should contain a few critical elements:

  • People – the expected organizational effects or company changes such as: changes in workforce behavior, more collaboration, greater cross-functional cooperation, more customer focus, etc.
  • Process – the existing business processes will be implemented along with any expected cost savings from improvements or automation (lagging indicator processes).
  • Process and Technology – any new business processes that will address competitive pressures or value propositions and any expected savings or revenue opportunities (lagging and leading indicator processes).
  • Technology – the Key Performance Indicators (KPIs), reporting requirements, goals reporting, and other metrics that the SAP implementation will address and provide the details for (lagging and leading indicator reports). This would also include any new technology that is needed or desired to reduce operational costs or improve revenue and profitability.

Notice that this business case includes the three key areas of business process and technology intersection in the marketplace–, people, process and technology. It is equally as important to note that the best business case will also focus on both lagging and leading indicators of success. And one other key point to keep in mind is that this type of business case is focused on business transformation. Transformation in the form of developing an organization that is more focused on competitive pressures, company value, and growth. As a result all any application can do is to enable those transformation efforts, and it can lead them, but it cannot make them happen.

The best measure of success of your SAP project is whether the tools, resources, and means to achieve that business transformation were delivered as expected.

In other words, did the software and implementation vendor provide you with the tools and resources you need as a business to address your business drivers and your business reasons for doing the project?

No software, technology, or even capital equipment is going to suddenly make you money by itself.  Even capital equipment needs the raw material, labor, or service inputs that produce the products or services you make in a new, cheaper, or better way.  In other words, no equipment or technology investment alone is going to create revenue, profitability, or cost savings without having proper inputs and outputs to use that resource.  It is the new or more effective way of processing those inputs and outputs that makes the difference and this is where your business case should focus.  What do you hope for SAP or any other technology to enable your business to do better.

Business transformation must come from the business although it is enabled by the technology.

From this business case a set of “success criteria” and of strategic goals, initiatives, processes and reports can be defined to be included in an RFP to a vendor. And although I’ll write another post on RFPs another day, one of the most important focal points of an RFP and of an SAP project is in achieving “operational independence” which is just a fancy way of saying that you have developed the internal competence to be able to process day to day SAP related issues without outside vendor involvement.

Consider Independent SAP Contractors as SAP Project Auditors and Coordinators

If there is sufficient funding available it would also be helpful to bring in one or two very seasoned contract veterans at this point to help educate you and your team about the ASAP methodology, SAP’s Best Practices, solutions options, help with an RFP, and in learning how to use the SAP system, etc.  And even if you don’t have an SAP license yet, your company may wish to use one of the many SAP educational services that provide access so you can get some initial exposure to the application with no risk and no obligation.

If you decide to bring on an outside contractor or outside vendor resources to help with the initial efforts it would be to your advantage as a company to insist that by accepting that responsibility they will not be allowed to participate as a competitive vendor during the RFP.  This will prevent your up front efforts from being skewed or distorted  to have the “deck stacked” to ensure only they get the project. And by employing one vendor’s resources for that portion of the project with an absolutely clear expectation that they will not replace the final vendor you help to avoid some of the finger pointing and “gaming” between the vendors.

In spite of an incumbent vendor or consultant’s claims, or their sales pitches on how they know your business the best, you are likely better off using their talents for the vendor selection and for guidance during the actual project.

Whoever you bring in during the Discovery or Evaluation phase (independent contractor or implementation vendor) it would be best to draft an agreement that they are not allowed to participate in the RFP process as a competitive vendor. However, depending on your vendor selection it might be a good idea to work out an arrangement with the incumbent vendor who helped during the Discovery or Evaluation phase to be first choice for project staff augmentation of your internal resources or staff augmentation for the prime vendor only if that vendor does not have certain key resources during the course of the project.

SAP Business Case conclusion

Good luck on your SAP business case, it will be the beginning of a business focused journey that will help to move your SAP implementation, SAP upgrade, or SAP development work in the right direction toward realizing real business benefits. You might actually discover that elusive “ROI” and recognize the ERP system’s promise of enabling your organization to be more competitive in the marketplace and enhance your value proposition.  Using your new system to enable the business to focus more effectively on the underlying measures that are important for revenue and profitability should be your primary goal.  And defining what those measures and processes look like creates the foundation for the success criteria you need for your project.

For a little more insight read the article on effectively scoping your SAP project [4] to get some initial scoping for the SAP RFP. Being able to do some initial SAP scoping work before your SAP vendor RFP will help to level the playing field some.

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[1] SAP as a Change Enabler
http://www.r3now.com/sap-as-a-change-enabler

Change How you Look at SAP to Create ROI
http://www.r3now.com/change-how-you-look-at-sap-to-create-roi

Why SAP Projects Fail to Deliver ROI (and How to Change IT)
http://www.r3now.com/why-sap-projects-fail-to-deliver-roi-and-how-to-change-it

Using SAP to Improve Revenue and Profitability
http://www.r3now.com/using-sap-to-improve-revenue-and-profitability

[2] SAP PDF files with overviews of the toolsets for use on your SAP business case.
ASAP Methodology and Tools Overview (KEY Resource)
ASAP Proven Methodology for Fast Successful Implementation (similar to the one above)
Additional Resources for Using SAP Tools and Methodologies for Success (similar to the ones above)

Nearly every SAP vendor claims they use the SAP ASAP methodology but few actually follow it.

[3] Adapted from Harvard Professor Michael Porter’s “Five Competitive Forces” model. Professor Porter adds a fifth consideration–, the entry of new competitors. This author believes that while the fifth “force” might be a valid consideration for academic purposes that in practicality if an organization were able to master the other four competitive pressures then the barrier to entry for new competitors would be so high as to make that competitive pressure irrelevant. That fifth force only becomes a real factor if one or more of the other competitive pressures sufficiently lower the barriers to entry.

[4] Effectively Scope Your SAP Project
http://www.r3now.com/effectively-scope-your-sap-project




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Corporate and Personal Liability for Fake Consultants

November 20th, 2009 by

Legal Liability

Too many companies have not considered the potential legal liability to shareholders or other company stakeholders for having “fake” consultants at involved in their company IT projects.  This can be applied personally or coporately for the fake IT “professionals” that vendors and placement firms bring to company projects.  By not conducting sufficient due diligence in screening vendor resources, or for inconsistent labor practices there is a much larger potential for liability than many realize. And that would include both corporate and personal liability for Directors and Executives that fraudulent “consultants” may cause.

There is not only the potential of torts for negligence or gross negligence but there are also potential wrongful termination suits for any regular employee your company might need to terminate. The real shock is that more of this type of legal activity hasn’t already taken place, but it is just a matter of time.  It’s not important to take this author’s word for it, just read this material and then have your corporate counsel and HR departments review it as well and then ask yourself what the consequences to you and your company might be.

For example if an employee submits a false or fake resume or otherwise lies on their application to your company about their skills and you fire them there may be both personal and corporate liability.  This is true if you do not use at least similar diligence, care, and consequences for vendors and their resources.  If a CIO, IT Director, or some other managing official were so brash as to knowingly ignore the fraudulent vendor resources or consultants and then not apply the same standard for regular employees there may be a solid case for wrongful termination of anyone who is fired for false claims. You might as well just remove that clause on your employment applications and employment forms where you claim you can fire an employee for false information.

The most disturbing aspect of all of this is if you dare fire an employee for fraud, embezzlement, theft, or other such infractions but discover that a fraudulent consultant has come to work at your company you may be subject to wrongful termination liability there as well. In other words, if you or your company won’t deal with the frauds, cons, and cheats that come into your corporate environment through contracts and other means then you may be implicitly waiving any legal ability to enforce those standards on your internal employees. 

Your risks and exposure are far greater than you may think.

The first time a lawyer takes one of these cases where you have done an expensive ERP or IT implementation and it is discovered that one of more of the resources was a fake you may be in serious trouble.  Consider this:

First there is the potential for wrongful termination suits as already mentioned above.

Second there may be personal or individual liability if it can be demonstrated that there was not an adequate amount of due diligence in verifying the skills and experience of the vendor resources.  This exists because if you do any kind of prior employment verification on regular employees but do not do at least a similar amount of verification of the skills and qualifications for high paid vendor resources an argument could be made for negligence.  If it is serious enough, it might be gross negligence. 

Third, even if you win a lawsuit employee morale will be damaged.  The negative employee and public perception from the legal discovery process of finding out just how much you paid to that fake consultant will KILL your career and any future you might have at any company.

Fourth, there may also be U.S. Sarbanes-Oxley implications for any financial performance impacts caused by inexperienced consultants.  Couple this with the potential personal liability for negligence or gross negligence that may obtain and you have a serious mess.

Fifth, you may be subject to corporate liability for terminating, suing, or pressing ANY charges for any employee who has pilfered or stolen anything from you.  If you do not do the same thing for any consultant that a vendor brings to your company.

Sixth, you may still have liability for not taking action against a vendor or placement firm if you find a pattern of their use of fraudulent consultants that is not isolated.

Seventh, back to U.S. Sarbanes-Oxley legislation, it may not be enough to hide behind a vendor or consultant’s liability insurance for supposed “protection” if it can be shown you did not have sufficient controls in place to prevent your company from being defrauded by these con artists and cheats. You may discover that certain exceptions to your own corporate insurance policies will not protect you in the case of this type of “negligence”.

You and your company WILL settle every one of these cases that comes across your desk no matter how ridiculous the claims of the lawyer’s client, your former employer, might be.  See point three (3) above to understand why you will settle every wrongful termination case where anyone who is fired can possibly dig up any consultant on one of those expensive IT projects with a falsified resume. 

During discovery any lawyer can get copies of the consultant resumes and the experience presented by the vendor or consultant for the project. From there it is not a difficult issue for them to make the necessary HR calls to the companies that the consultant lists on their resume to verify all of the experience the consultant listed from every company they supposedly worked at.  And most HR departments will track down information even on contractors if you approach them.  And let me assure you, with the MASSIVE AMOUNT OF FRAUD done on a regular basis they WILL find at least one or two resumes from fake consultants.  And if you weren’t careful during the hiring of a few years ago you may be in deadly serious trouble in your own IT or Engineering departments with lots of fakes and frauds in there as well.  You may quickly discover that your technical departments have several fakes, frauds, and cons.  Are you ready for the fallout?

If this happens you may be in serious trouble.  If it goes to litigation and there is more legal discovery over what your company paid for that fraudulent consultant your career as CFO, CIO, IT Director, or other IT professional is over. 

The worst case scenario is if it is discovered that you fired an employee for theft, embezzlement, or fraud and then took any kind of civil action or made a criminal complaint against them.  You might as well hang it up. 

When it comes out how much that FRAUDULENT CONSULTANT and their fake resume cost per month that you didn’t throw off the project, or take civil action against, or file a criminal complaint against for fraud or embezzlement, your head will be on a silver platter.  Shareholders will be hunting for you and both HR and the legal department will have your number on speed dial.

This is all in addition to the messes and dissappointment that so many companies experience from the lack of expected results all of these frauds and fake resumes have created in the marketplace.  Wonder why your IT projects go over time and over budget? I’d almost be willing to wager that some 75 – 90% OR EVEN MORE of those projects were staffed with several fake consultants with fake experience and fake resumes. Wonder why you’re paying so much for that ERP project and not seeing the desired results?  Wonder no more.

Further Reading:

 How to screen for SAP consultants
Avoid fake SAP resumes, fake SAP experience, and get the experience you pay for.

Screening methods to find the right SAP consultant
http://www.r3now.com/screening-methods-to-find-the-right-sap-consultant

Screening Methods to Find the Right Consultant – Part 2
http://www.r3now.com/screening-methods-to-find-the-right-consultant-part-2

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Screening and Interview Methods to Find the Right Consultant – Part 2

November 18th, 2009 by

SAP fake consultant and fake resumes

Previously I wrote on the subject of finding the right SAP consultant and how you can avoid getting ripped off, or worst case, having your business wrecked.  That previous article, Screening Methods to Find the Right SAP Consultant, has been widely read, well accepted, and I’m seeing some changes in the marketplace.  Companies are tired of being ripped off along with the lack of results or ROI from their large IT systems implementations. 

At the foundation of SAP or any IT consulting is communication –, clear, concise, easy to understand communication.  If your SAP candidate is unable to speak clearly, and in an understandable manner about the subject, you should immediately be suspicious.  If a consultant has some three (3), five (5), or more years of experience listed on their resume and even one full-cycle project then they must have demonstrated some basic skills or they are likely a fake and a fraud.

WHY would you hire a “consultant” who has a barrier to “consulting?”  And you really have to wonder about any prior ACTUAL experience they have with someone else who did hire them.

If they speak in technical “jargon” and can not “translate” that jargon to normal conversation then it is entirely possible they have never been on an SAP project. One of the key skills that every decent SAP consultant must master is the ability to help client counterparts understand and translate the SAP jargon into plain and understandable business terminology.  If they lack that skill they probably lack the critical experience to help ensure your project is a success.

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This is part of a series which explains the widespread FRAUD involved with SAP, Oracle, or other business software consulting.  I have no issue with H1B’s, student visas, etc., but these folks should be willing to work their way up just like many hard working folks rather than wreck your business and damage the industry through fraud.  For more extensive insight into the problem, AND specific methods for dealing with it, please see some of the other posts:

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Important Consulting and Business Analysis Skills

  • Facilitation skills
  • Meeting skills
  • Process mapping
  • Business case (or whitepaper) development
  • Problem solving
  • Organizational dynamics

If these skills are weak it may be due to personality differences, interaction styles, depth of experience, or other reasons.  However, if they are lacking altogether you are probably dealing with a fake.  Even if the consultant who lacks these skills is not a fake, you probably do not want them on your project anyway if you expect good results.  When it comes time to screen or interview them you might want to think twice if there are any type of language barriers to the employees you will be assigning to work with them.

Let’s look at them in detail one at a time: 

SAP Consultant Facilitation Skills 

On any large IT project, especially an ERP project which directly impacts so much of the business and organization there are:

  • requirements gathering sessions,
  • design sessions,
  • blueprint writing,
  • solution assessments,
  • problem resolutions,
  • fit / gap analysis,
  • business process design,
  • translation of SAP / ERP speak to business language,
  • knowledge transfer,
  • training,
  • and organizational change.

The ability to communicate clearly, in an understandable manner, and to be able to translate application processes and requirements into intelligent business language is a key to these activities. How else are you going to get any kind of a decent blueprint, specification documents, or potential whitepapers explaining your options? If they are in SAPanese or other technical jargon they are virtually meaningless to a business driven project. If there are language barriers or the individual is too technical and unable to speak in plain, non-techie type language how will knowledge transfer and critical change management activities be carried out?

The ability to “extract” the key information (through facilitation skills) for all of these activities can not be underestimated.  The questioning skills, the language skills, the ability to verify understanding and re-frame the issues in terms that everyone understands are absolutely vital to performing all of these key functions.  On top of that, they are critical to knowledge transfer to your internal team.

Consultant and Business Analyst Meeting Skills

Strong communication skills and the ability to stay on task and on point are critical to a successful project.  It is imperative to have at least fair organizational skills and strong communication skills.  Without strong language specific skills it will be difficult or even impossible to understand, capture, and then summarize the key points of the meeting or to be able to keep it on point.  Together with the actual meeting process there are some meetings where the key point of the meeting must be “socialized” or shopped around even before the meeting ever takes place.  Sometimes you have to win over naysayers or get key supporters on board so that the meeting is more of a formal communication.  You may need to understand and be able to address any legitimate objections key stakeholders may have. This requires language dependent good listening skills, and strong communication skills to be able to try to persuade, influence, and address objections or concerns.  If there is a language barrier there is also some measure of an understanding barrier as well.  Meetings are likely to be unproductive wastes of time.

SAP and ERP Project Process Mapping

Start to finish, A to Z, you must be able to look at a sequence of events and understand their dependencies and any gaps.  This is a central skill for design, blueprinting, and business needs.  Disjointed or “shoe horned” patches of activities are not sufficient to develop a working process.  And you must have strong enough language skills to be able to understand the business terminology, and then translatae that into SAP terminology, and transfer that understanding to the client side participants.

Along with that you must have a decent level of insight to understand what can be enabled by technology and what are inherently manual processes.  After evaluating a process the key is to be able to simplify, streamline, and automate the complex.  Any comprehension or communication gap will negatively affect this ability. If there are technical development requirements do you think that language, understanding, and comprehension barriers will produce good specs for development?  How will they prevent going back and forth and wasting all of the high priced developer’s or other consultant’s time?  

Anyone can take the complicated and keep it that way, or worse, make it more complicated.  The mark of skill AND EXPERIENCE is the ability to take the complicated and make it understandable and workable; the sign of innovation and exceptional skill is the ability to simplify.

SAP Business Case or White Paper Development

Along with blueprinting this requires a significant amount of local language specific comprehension and writing ability.  If there is a language barrier you can forget about a detailed, thorough, and well-done blueprint document, business case for a scope change, or a white paper explaining the options. 

How will they understand all of the issues to present the appropriate pros or cons for an issue, or to explain it correctly?  How will they understand the complex inputs and outputs to translate that into formal requirements that make any sense?

Business and SAP Problem Solving

In the entire ERP space, whether it is ERP, CRM, BI, SRM, or other SAP applications the ability to understand how and where a particular business problem fits into the application space requires deep skill and experience.  That requirement goes beyond what you can get through some self-directed training, a certification program, or even a single project. 

Real problem solving skills require a level of knowledge and understanding of the business, the subject matter, the applicable technology together with a fair amount of creativity.  Language or communication barriers will make this a difficult process.

SAP Project Change Management and Organizational Dynamics

Along with all of these activities you must also evaluate the company or organizational counterparts.  These are often called “core team members” from the business.  You must be able to assess the business area the application will touch on and consider the affects of certain changes on that organization.  The deep understanding demands solid language skills to discern subtleties of the personalities in the organization.  Where there are language barriers the ability to assess and understand the cultural dynamics will be impaired.  When it comes time to evaluate the impacts of certain changes on the organization, and how much change they can absorb, this lack of understanding will create problems.  Where there are gaps here I see CONsultants constantly suggesting technical fixes, new application functionality, or scope changes where the organization is not ready to absorb the change.

Conclusion on Screening and Interview Methods for the Right SAP Consultant

SAP, ERP, and other large scale IT projects are critical to your business and its functions.  Done correctly you can see great results.  Done in the wrong way and the results can be damaging enough to your business that you might be better off taking your budget, withdrawing the money, putting it in a pile, and lighting it on fire. 

Some of these frauds can end up costing you so much that you would have been better off without the budget in the first place.  Few companies recognize the amount of damage and the hidden costs on the entire project that these con artists end up creating.

One other thing to consider in all of this is if the “consultant” lied or cheated their way into the project what else will they lie or cheat you out of?  How much is enough?  And where will it end?  Since they are clearly stealing from your company through fraudulent means, what else will they steal?

When you are interviewing, screening, or even considering your next SAP, ERP, or other Technology consultants shouldn’t you be sure you are getting what you pay those huge fees for?  Carefully consider the skills you need for success, and for Business to IT Alignment and you will be much happier with developing business oriented solutions.

Additional Resources About SAP Frauds and Fake Resumes

Some of the sites that give more insight on FAKES in the marketplace:

Screening Methods to Find the Right SAP Consultant

SAP World is FULL of Fakes and Stolen Resumes

Indian Firm giving advice and guidance on using their prep materials and developing a FAKE resume

Vendor implementation firm accused of using fakes, vendor responded from internal employees, maybe they are fakes?

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