SAP ROI — Enterprise Architecture & Business Solutions

We won’t cover a detailed breakdown of RFP sections or RFP strategies but we will hit on some of the high points.  These high points together with a few ways to neutralize some of the vendor sales strategies can help to ensure you are getting the very best vendor or resources for the job.

This stage is probably the most intense for any company considering a technology project.  There is a lot of preparation to get a solid RFP that can set the stage for breakthrough results and solid payback for your technology investment.

The key foundational activities for a good RFP include a solid business case, a clear statement of scope and then the development of the RFP itself.  Some guidance can be found here in this article on and ERP and SAP business case for ROI, business benefit, and success.

What Type of IT Vendor, System Integrator, or Implementation Model

One other thing to consider during the RFP process is what type of vendor or implementation model you are looking for in your proposal.  There are a number of vendor options and each has their strengths and weaknesses but a review of the pros and cons of each is for another day. 

You may wish to employ a well established system integrator; a “boutique” consulting firm; or completely manage the project with your own selected staff of contractors; or you may want to consider a hybrid approach.  If you are considering the contractor route, of staffing a project yourself, you might wish to review the screening methods to find the right consultant Part 1 and Part 2.

You will also need to determine your project implementation model.  Will you do a pure time and materials approach, or fixed fee, or time and materials with penalties for under-delivery (over budget, over time) and rewards for over delivery (under budget, early), or time and materials with cost controls, or a blend of some of the approaches.

You may wish to include the characteristics of the experience of the consultants you want in your RFP as well.  For example you might insist that you want the team leads to all have small and mid-sized business (SMB) implementation experience and they should have done production support work.  Why are those important?  In my experience the SMB consultants have the deepest module and troubleshooting experience.  Consultants with production support experience understand ahead of time some of the problems a company will face after go live and can address it during the implementation portion of the project.  This site has several articles related to the important considerations around go-lives.  At the end of this post I’ve included a list of articles from my experience doing production support about the areas I have seen over the years that cause the most pain after you go live. 

Since consultants will be guiding your business, dealing with sensitive company information, and helping to set a new direction and focus, it is important that you are getting the consultants you are paying for and not the fakes, frauds, or con artists that are out there.

Dealing with System Integration Vendor Proposal Methods

Bigger system integrators tend to rely on the “wow” factor of fancy customer lists, huge size and scope, and other factors which may not always translate into a better solution for your business.  In the end, you have to ask yourself, what really matters to you as a company?  Is it flashy presentations that show off how great the vendor is, or is it the ability to deliver real results for your business with the people they bring to the table?  Sometimes it will be the large vendors or system integrators, but sometimes it won’t be.  The real question then is how do you make sure you are getting what you pay for whether it is one of the “Big X” vendors, a smaller boutique firm, or even staffing and running your own project?

Here are some steps you can take to help neutralize some of the sales pitches and focus on what really matters–, which vendor can really deliver the best results?

1. Determine in advance a list of business requirements you want the technology spend to address.  These should become the basis for your whole project, the guiding reason for the technology spend.  Understanding the business goals which are behind any of your company KPIs is important to help focus technology investment.




2. Develop a rational scoring protocol that addresses how well a vendor adhered to your RFP, scored section by section, and weighted to what is important for your company.




3. Set a slide presentation limitation.  Say, no more than 50 total slides for the actual presentation and no more than another 50 slides for an Appendix of supporting information.  If a vendor is unable to capture the important items to your company and its results (rather than touting how great they are) in 50 slides they may not be the best fit.




4. In your RFP it should be spelled out explicitly that customer qualifications and customer references can ONLY come from the specific resumes of the consultants being proposed for the project.  Ignore all the “gee whiz aren’t we special” because we have so many great customers our company has worked with.  If the customer list doesn’t represent the skills and talent they are proposing for your project, why do you care who else they have done business with?  You may also wish to note that any deviation from this will be scored harshly after all, who really cares if they have worked with every one of your competitors if none of those consultants will be working on your project?




5. During the Vendor presentation require an actual demo of some of the system functionality.  This will help to ensure that they vendor is bringing actual knowledgeable consultants to the proposal because they will have to take the time with some of their internal resources to be able to set the demo up and to have some of their knowledgeable consultants on site to show you the system functionality and to answer questions. 




6. Ensure that the vendor provides the implementation tools and samples of each of the templates and resources they use for the project.  Offer to sign an NDA to eliminate any of their arguments about “proprietary” information.




7. Include a provision in the RFP that unverified or unverifiable claims of business benefit will be scored harshly.  You may wish to note in the RFP that if a statistic or a reference to benefit is noted anywhere in the vendor’s presentation, whether on paper or during any oral presentation that it must be supported by an authoritative or verifiable source otherwise including it will be scored against them.  Unfortunately it is a routine practice for vendors to “promote” questionable or unverifiable “results” statistics and throw numbers around to try to persuade you.  The practice is fine so long as it is legitimate.  If a vendor claims they helped company “X” gain “Y” benefit then insist that you need a verifiable source for BOTH the benefit and for how the baseline for the benefit was established and then how the change was measured.  You may even wish to include such a provision in your RFP to the vendor so they know up front what your expectations are for their “claims of superiority.”




8. Make it a requirement that the system integrator or staffing firm provide an affidavit attesting to verification of consultant skills and background.  A lot of attorneys can draft a sound verification affidavit covering the due diligence used for screening project resources.  If you are a public company your executives have to sign off on financial statements under penalty of the Sarbanes-Oxley legislation (in the U.S.) so you might as well have your implementation vendors do the same.  If they won’t do solid background checks or verifications why do you want them at your company?




9. Have an explicit contract provision that your implementation vendor may only provide contract resources from the vendor’s direct staffing partners.  That contract agreement should spell out that those staffing partners may not use additional staffing partners more distant.  The reason is that as you move further away from the immediate implementation vendor, and as each partner takes their “cut” of the rate, you end up with more and more fakes.  After you begin to move further away from your prime vendor, everyone’s “cut” begins to reduce the final rate to much less than a normal market rate to the end contractor and any contractor with real experience will only go so far in rate concessions even in a down economy.  As a result you only attract fakes, cons, and liars.   




10. Include a provision in the RFP that asks the vendor to describe their process for handling less than ideal or less than optimal consulting resources.  Be sure that provision includes specific language noting that you would like to know their approach and policies on credits as well.  In this provision of the RFP make it explicit that this section will be scored heavily so that it may affect the overall decision process if the policy is not adequate.  You may even wish to go so far as to note that even if the vendor scores well they could be disqualified for not having a reasonable policy here.

The idea with this and all of the other tactics and techniques you intend to use is to set a clear expectation about the quality of the resources the vendor provides and the quality of the project you expect.  By doing things like this from the beginning and carrying them out throughout the early stages of the project you will set the stage for success and have the greatest opportunity to achieve breakthrough results with your technology investment.

For obvious reasons there is a heavy emphasis on getting the right resources.  After all, the people delivering the project and influencing or affecting the direction of your business are more important than the vendor behind them (so long as that vendor is reputable).

After developing your RFP the next stage is to determine the list of vendors you wish to submit to.  And you may even wish to throw in a couple of “wild cards” to the normal vendor selection just to get a different perspective from another type of vendor on how they would do your project.  The more knowledge you gain early in the process the more sophisticated of a client you will become.  The more sophisticated you are as a technology customer the better your results will be.

For those breakthrough results ask yourself what is important to you as a business, and what you believe you need to achieve that.  Be sure to build those expectations into your RFP somewhere and score them accordingly.  In the end what really matters in all of this is are you getting what you expect?

Some of the Biggest Production Support Problems with your SAP Project to Avoid:

Planning For a Smooth SAP Go-Live: Part 1
http://www.r3now.com/planning-for-a-smooth-go-live-part-1
(introduction, security and authorizations)

Planning For a Smooth SAP Go-Live: Part 2
http://www.r3now.com/planning-for-a-smooth-go-live-part-2
(master data, data transformation methods)

Planning For a Smooth SAP Go-Live: Part 3
http://www.r3now.com/planning-for-a-smooth-go-live-part-3
(process issues, blueprinting, testing, and change management)

Planning For a Smooth SAP Go-Live: Part 4
http://www.r3now.com/planning-for-a-smooth-go-live-part-4
(custom development, costs and consequences of inexperienced developers)

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

Related Posts:

• Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• SAP Reimplementation for Little More Cost than a Technical Upgrade Part 2
• SAP Reimplementation For Little More Cost than a Technical Upgrade Part 1

After the early efforts to develop a meaningful RFP and scoring provisions you move to the next step of deciding on which vendor you will engage to fulfill your technology project requirements.  Before beginning on this phase of your project it is really important to gain a clearer understanding and approach to the selection process before it begins.

Use the Early Processes to Help Educate Yourself

Use these early stages of your technology investment to gain useful business knowledge, not just about technology, but about business as well.  Enter the RFP and Vendor Selection processes with the idea that you want to learn as much as you can.  Not just about the vendors but about approaches, tactics, techniques, strategies, business ideas, and business process improvements.  After all, with any ERP project like SAP or any other large project there is a significant business component and if the vendor is unable to deliver business related approaches to technology do you really need them?

If you approach your vendor selection as a genuine learning experience you are far more likely to ask the tough questions that help to separate the different vendors and help to neutralize the sales pitches.

You want the biggest business benefit from your technology investment

I personally advocate a two-stage selection approach.  This two-stage approach does an initial vendor overview and review of options and alternatives and the second is to make a final selection from a shortlist.  In the shortlist you may want to include what I would call a “wild card” vendor.  That would be the highest scoring vendor with a different approach (such as the boutique shop or the staffing firm with a great resource pool) because they still bring a different perspective and approach to your business and project which could provide meaningful benefits.  And in some limited cases the “wild card” vendor may be the best fit for true breakthrough results.

In the initial stage a fairly large field of vendors is helpful because they help educate the business and selection committee while bringing multiple approaches to your attention.  In the first round I would limit the number of vendors allowed to propose to anywhere from 5 – 10 depending on your company size, the amount of budget / technology investment at stake, and the impact to the business.

In the second round of vendor selection I would select either 2 or 3 vendors for the “short list.”  Depending on your business you may also include the “wild card” vendor as an additional competitor for the business.  If nothing else the additional vendor model brings a new dimension to the competition for your business that can only help you get the best resources and the best deal.

Pre-Proposal Vendor Strategy Meetings to Sharpen Vendor Selection Focus

Lots of companies are careful in choosing the selection team members, in writing their RFP, and in trying to determine their needs and scope.  In spite of all of this up front preparation few of these companies take a small amount of time to have a few strategy meetings about the vendor selection.  Sure, they might have meetings about requirements gathering, or what key project characteristics are important for them, but few of them carry out strategy meetings to deal with the vendor sales approaches.

The ultimate goal is to treat this as a technology investment in the business, not some “beauty pageant” about who might have the best presentation skills.

Your selection committee may all be professionals–, skilled, talented, and qualified; they may have all worked together before and have a great rapport but at this stage of the process that does not ensure success.  It is important to have everyone on the selection team on the same page, all pulling together for the business as a whole.

One way to help facilitate moving in the right direction here is to have a few strategy meetings before your first vendor ever shows up on site.  You already know what the goal is–, you want the biggest business benefit from the technology investment.  Has that specific message been communicated to the selection committee?  You can not take this for granted because in the “heat” of the sales presentation it is not difficult to get caught up in the “dog and pony show” the vendors put on.

During these strategy meetings discuss the types of questions to ask the vendors, how they are to be approached, and what to do in various types of circumstances.  Ideas exchanged about how to achieve the goals of business benefit in these few strategy meetings will help all participants develop ideas, approaches, ways of questioning, and other thoughts on how to best neutralize the vendor sales pitches.  These meetings will help to sharpen the focus of all of the team members on the important project goal–, achieving breakthrough results.

For example, one of the classic sales tactics by some unscrupulous vendors is to engage in “techno-babble” to someone who might ask a tough question to try to look like the expert while intimidating that person from asking more tough questions.  Think about how to neutralize this, what do you think that sales person or vendor’s reaction might be if a senior level VP, or the CIO, or a senior IT Director spoke up and said “I’m not sure I understand your answer, can you simplify it in plain English so that we all understand it?”

Before the first vendor shows up, review and discuss each of the important scoring protocol categories.  Discuss some examples of what you would consider as meeting the requirement and what you would consider to be situations or circumstances that might need to be scored lower or even to have points deducted in the proposal.  Again, this approach helps to sharpen everyone’s focus and to “normalize” expectations of what is important to the business.  It helps to reduce some of the sales smoke and mirrors.

System Integrator or IT Vendor Selection Methods to Neutralize Smoke and Mirrors

1. Videotape the entire presentation and ensure that it is IN THE RFP that you will be videotaping and any sales claims will be binding.
2. Drill into customer qualifications or references (not just the WHAT they did, but HOW it was magic?  HOW does that apply to your situation?)
3. Functionality discussion – if a functionality question is asked that was NOT presented in the original RFP and the vendor answers it, propose that same question to ALL of the RFP participants, and ask them how they would solve it (what specific functionality, how many resources, what time frame, any additional hardware or software requirements).  Then compare these results to gauge if any of the vendors are just giving you a “sales pitch” that can’t be delivered.
4. Ensure that the vendors provide a “challenge” process demo of some pre-defined but untold process ahead of time.  This will quickly separate the companies that can deliver from those who can not.  Give them 4 – 8 hours to come back and deliver, score down for delays or incompleteness.
5. If the vendor claims to have some special development item or some special methodology then be sure to intensely explore how their “special” is different or better than a standard option and how support costs for any custom solution fit in the framework of any package application support agreement.  If this special item is compelling or important to the vendor selection then be sure to capture the key issues this special item addresses and then send it to all of the vendors in a follow-up questionnaire about how each of those vendors would handle that particular issue.  In other words, do not give away the vendor’s “special” but be sure to address the need or want that specialty item addresses.  I have personally been on MANY SAP projects where some custom developed TRASH ended up in the project because of a sales pitch when the standard functionality was already there, already integrated, worked well, and in some cases even worked better than the vendor’s “specialty” item.  Integrators who provide consultants who are less experienced are notorious for custom coding anything rather than finding ways to use standard functionality.
6. Include a contract provision with contingencies that employ the vendor for the blueprint phase with the follow up project work based on satisfaction with the final blueprint document and a first round prototype at the end of the blueprint phase.  This puts pressure on the vendor to bring the best folks to the table for the blueprint and to do a good job right in the beginning when it is most critical.
7. Include a provision in the RFP and vendor contract for credits related to resources that are not up to the quality and performance level expected for such a project.  This will require language from your legal department, but you get the idea.

Do NOT score any vendor or any vendor presentation until after the last vendor proposal.  Only take notes and make observations.  This will help to reduce some of the inherent bias that tends to exist for “first up” presenters.  Early vendor scores tend to be higher even for lower quality vendors because there is no “benchmark” established to gauge the early vendor’s performance.  By the time the last vendor is reached they are generally scored the harshest because those scoring the presentations have the benefit of gauging their performance against the backdrop of all of the other presentations.  As a result I personally advocate avoiding scores until after all presentations are complete and after followup selection committee discussions.

After the final vendor presentation it may be helpful to re-group and then compare notes, thoughts and ideas before doing any vendor scoring.  If you take this approach it is important not to openly discuss anyone’s score but rather to focus on the vendor presentation content and how well it lined up with both the RFP and the underlying business needs.

As a sidenote here, the reason it is important not to discuss scores at this meeting is because many people are practical.  In an age when many people feel insecure about their futures an open discussion of scoring at this meeting might unduly influence a more realistic appraisal of the vendor.  For example, Susie VP may openly announce she is going to score section “X” with a 10 out of 10 because it met her needs particularly well but Mark Director who has a dotted line relationship to her may see that the vendor only partially met his department’s needs for that section.  Therefore Mark Director might normally give a 6 out of 10 but hearing Susie’s 10 he may be more reluctant to score that vendor down for that section even though that would provide a more accurate appraisal of business fit for the vendor.

These discussions after all of the proposals are complete are also important because it will help to refresh everyone’s memory about the proposals and to again sharpen the focus on what matters to the business.  If you decide to have this meeting it may then be helpful to immediately do the scoring right after this wrap up and recap discussion of the vendor proposals.

Always remember the ultimate goal is to treat this as a technology investment in the business, not some “beauty pageant” about who might have the best presentation skills.

One suggestion on the scoring is that if you have five (5) or more people involved in the selection committee then it may be worthwhile to “normalize” the scoring of the RFP sections by throwing out the highest and the lowest score for each section.

For the low score it may be important as a business to “circle back” to that individual and understand what influenced their low assessment or score.  If there is some serious or significant gap the low scoring individual raises you may wish to address it with the implementation vendor and alert the group as a whole if they make it to the shortlist.  If they are the selected vendor it would be important to address any low scoring areas with the vendor prior to awarding a contract.  This type of expectation setting can make a significant difference in the quality of the project right from the beginning.  It sets the tone right from the beginning that business results from the software investment is what is important.

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

Related Posts:

• Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
• Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
• SAP Implementation Partner or Company Selection Criteria
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Competitive Pressures and Value Propositions, Is Lean the Answer?

After you have done all of the hard work, selected the vendor, and started on the blueprint path you have one more “low risk” opportunity to ensure breakthrough project success.  Keep in mind here there is more risk involved in this area of the project than in the previous stages because they were fully under your control.  You could directly mitigate the risk, you could decide against contracting with a particular vendor, and you could simply back away from anything up to the selected vendor beginning the project. 

Now that the vendor is selected you have one more major set of tasks that is still relatively “low risk” to the business to see solid results.  This is the last big opportunity before incurring huge costs to ensure that you are getting what you pay for–, that is in the blueprint phase.

Keep in mind that during or at the end of the blueprint phase of the project there are risks to changing out problem or underperforming consultants, and those risks are compounded by the size of the team covering a particular area (for example, a smaller team covering a single SAP module like SD, MM, PP, FI, CO, etc., carries higher risk than a larger team covering a single module).  If everything goes well up to this point then the reason you may end up replacing a consultant will probably be related more to personality and team dynamics than a lack of skill.  Some of the personality and dynamics you can work through, however a lack of skill is dangerous to your entire project.  As a result if there is a risk to replacing consultants during or at the end of the blueprint phase it may still be your best course over the longer term of the project.

You may wish to define in advance with the selected implementation vendor how they would mitigate the risk of replacing one or more consultants during or at the end of the blueprint phase of the project.  This way you are both setting the expectation in advance and forcing them to consider how they would actually take care of this problem.  By doing this you will help to ensure that the right tone for quality and results are set throughout the project.  This is your last chance to ensure that the vendor resources are the right fit and have the right skill and talent for your company.

1. A proper blueprint must contain the details of the HOW the functionality will be implemented, not WHAT will be implemented.  The WHAT of the blueprint is the scope.  You wouldn’t consider a home plan a blueprint if it only included an exterior elevation and a few artists’ renderings of the interior would you?  If the home plan didn’t have the foundation details, roof details, electrical, framing, HVAC, etc., you wouldn’t consider it a blueprint at all.  If your vendor provided blueprint document doesn’t contain the translation of the business requirements into the “HOW” of the functionality then it is not a blueprint, it is just glorified scope.




2. Be sure the implementation vendor provides a Blueprint Template ON DAY ONE of the blueprint phase.  Ask for examples of prior blueprints (scrubbed of the client name if they wish).  Ask for these as part of the proposal.  If ACTUAL samples are not provided, with significant setup details then disqualify any non-responsive vendor. 




3. Pay close attention during the start of the Blueprint to find out whether the consultant has any idea of what meetings to schedule, what key company individuals (by job / role) need to be in those meetings, or whether they know what to do.  This is a HUGE indicator of the fakes, frauds, cons, and those who do not have experience.  They don’t know where to start; they don’t know what people they need in what meetings or what order the meetings should be done in.




4. Be sure to sit in on the first couple of requirements gathering sessions for EVERY consultant.  If they seem clueless here, they probably are.  You might want to consider an IMMEDIATE change before you invest in a mess.




5. If you are a large enough company that you have more than one consultant assigned to a module you will want to insist that EVERY consultant conducts requirements gathering sessions with you there to observe. 




6. Unless they have been clearly noted as “juniors” or otherwise made clear to you as the paying customer they do not have experience, there is no reason companies should pay outrageous rates for inexperienced but “smart” folks.  And just to ensure that more senior consultants aren’t “flying cover” for them you might want to insist that they lead their own requirements gathering sessions while the more senior consultants are doing other work.




7. Create a blueprint project requirement that at least one entire process string, start to finish, for a simple process area must be completed by every single module.  This should include basic organization structure requirements and should be completed in less than 2 weeks after the first meeting (a really good consultant can do an entire process first pass including all documentation and requirements in a week).  This is another check point where you can evaluate the quality of the consultants that the system integrator has brought to your project.  IF you find that a consultant was unable to accomplish the task, or if their process blueprint documentation is so lacking in the HOW it will be done in SAP (rather than just the “what” the process is) then I would seriously consider asking the integrator to REMOVE this consultant from the project.  Better to do it now and possibly hurt a little of the blueprint timeline.  The alternative is to have this person possibly slow down the whole project, or make a mess out of the system design, setup, and testing, and then possibly blow the budget and timeline.  And even if they don’t blow the budget and timeline, and even if they don’t make a mess out of the project, WHY do you want to pay that integrator such a premium price for some junior resource that will not add any value to your business?  If that is what you want, PROMOTE FROM WITHIN!  It is cheaper and it creates more visible opportunity within your own company.  You don’t need this kind of high paid dead weight on your project.




8. Insist that a prototype of the simple process they defined is performed within 4 – 6 weeks of the blueprint start.  No matter HOW big, or complex, or far flung your company is there is no reason that a basic but CORRECT org structure and basic business process can not be set up and demonstrated within 6 weeks unless you have less than optimal consultants.  This is another chance to evaluate whether or not you should keep this person on your project.  If you want breakthrough business results then you had better have truly talented consultants.  If you settle for less then you will also settle for less than the results you really want from this huge investment.

Obviously there are risks involved in any SAP, ERP, or technology project.  If those risks are identified and addressed early on in your project you will set clear expectations about the quality of the work and what the final result should be.  There are things that need to happen on the company side of the equation as well, but this article addresses your investment in the system integrator.

If you make the hard decisions up front, and if you are diligent with taking steps like what these articles define then key project expectations about success and results will be set.  These approaches help you to see through a lot of the hype, hoopla, and sales garbage that is so prevalent and also sets expectations about the quality of resources you want on your project.  There is no way to anticipate every avenue some unscrupulous or desperate vendor might take, but by setting certain expectations and keeping the “traps” in place early on you are more likely to eliminate those vendors from the process before they can do any damage.  By being diligent early in the process through changing improper resources (and possibly demanding credits) you can help to set a tone and expectation about the quality of results you expect as well.

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

Related Posts:

• ERP, SAP, or IT Project Management and Prototyping for Success
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Planning For a Smooth Go-Live: Part 4
• SAP as a Change Enabler
• Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP