Business Solutions with SAP

SAP Offshore Development Project Experience

September 26th, 2011 by
SAP Offshore Development

SAP Offshore Development

There is a time and a place for everything–, even SAP project offshore activities.  Unfortunately in the quest to save money the wrong approach can sound good on paper but cost you far more than the sales pitches would lead you to believe.  The SAP offshore sales pitch uses enticing rates like getting an offshore developer for about 15 to 20% the rate of an onshore resource (about 1 / 5th to 1 / 7th the price).  The initial reaction to all of the sales pitches is “wow, that will save us a bundle!”  The truth is sometimes it does and sometimes it does not.  And in many cases it can even cost you far more in hidden costs than local (higher priced) developers.


This is the first in a 3 part series on SAP offshore projects:

  • Part 1 – SAP Offshore Project Development Experience (this post)
  • Part 2 – Hidden SAP Offshore Development Costs
  • Part 3 – Where Does SAP Offshore Development Make Sense?

I’ve worked on 3 projects where off-shore resources were used for the initial project and 2 others where they were used for upgrade.  This is the “inside scoop” from my experience.

The Real Reason Offshore Development Seems So Cheap

Let’s set the record straight on one thing immediately, there is a REASON those rates are that cheap.  In the global SAP world it has less to do with the wages of the host country than you might realize.  In the SAP space there is still strong demand for strong SAP skills globally so market forces plainly dictate that real experience will pay market rate no matter what country it is.  Work Visa requirements for many countries with high SAP skill demand will allow the importing of actual skills –, heck, they let massive numbers of total fakes and frauds in the United States so real experience (rather than faked) makes it easy to move out of these host countries for far higher wages.

When Off-shoring Might Cost You More Than Local Resources

When your SAP project depends on large amounts of custom development work you may be in for reverse “sticker shock” at the actual hidden costs.  And by reverse “sticker shock” I mean it is like getting a car for 25% of what you thought you would have to pay BUT you find out the tires, battery, seats, steering wheel, and all of the key components of the car are “required” add-ons that you have to pay for separately.  But they only show you the nice, finished, new car with all of the “extras.”  The actual cost for a HUGE portion of the offshore development is hidden and that rate you were quoted is a joke! 

Your “offshore” resources have very little if any actual SAP development experience no matter what kind of a sales pitch you are given.  What you are “hiring out” is some smart college kid who is learning on your dime but *maybe* under the supervision of an experienced developer.  Yes, the rates are lower but in today’s economic climate you could probably find some aggressive local college kids who would do as good or better, for the same wage, and without any language barriers.  Maybe you should consider that and bring in one of those expensive local resources to train, shepherd, supervise, and teach them.  At least then you have the skills in house.

Some of the huge costs that are buried for a new project are in the whole development process itself.  SAP functional consultants, who are typically higher priced than technical or development resources, end up taking 2 -3 times the effort spelling out requirement details.  That extra effort translates into hidden cost that you do not see but it creates a great target for the offshore resources to “blame” for why they are struggling–, “I’m waiting on the functional consultant…” or “the spec had to be re-written…” or “it didn’t have enough detail…”  A truly experienced local resource already knows and understands the table structures, data sources, actual requirements, and has probably done similar SAP development work or reporting.  With a higher level spec in plain English, rather than detailed design with pseudo-code required for offshore work, local SAP resources can churn out a polished first pass development effort which needs only minor tweaks, takes less time to test and adjust, and has better performance.

The actual cost for a HUGE portion of the offshore development is hidden and that rate you were quoted is a joke! 

There really are situations where Offshore development is ideal for your SAP project, just don’t be surprised if the overall project “savings” you expect don’t materialize on a new project or one with complex development requirements.

How Can You Tell If You Are Being Bitten By Huge Hidden Offshore SAP Costs?

The one simple metric that will clearly illustrate if you are a victim of hidden offshore development costs is the total CALENDAR timeline for all development work.  In other words, after you get past the excuses, the finger pointing, the supposedly finished items that are always being reworked, etc., the calendar timeline tells all. 

No matter how many times the offshore development tries to suggest they are having problems getting “complete” functional specs, or how often they say they are done but have defect after defect to resolve, or whatever the excuse is, the simple calendar test will tell you the TRUE project impact.  If it takes 90 calendar days to complete development to the point that it can be used (defects corrected, tested, and ready for production) then it doesn’t matter if they estimate and then claim completion at 3 weeks.  The other 9 weeks to actual completion is project time that is taken from SAP functional resources, reworked development, business resources, etc.  So there is a huge hidden cost no matter what claims sales people may offer.

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How the SAP Consulting Peter Principle Works

September 12th, 2011 by
SAP Peter Principle

SAP Peter Principle

Most of us working in business for any period of time have heard of the “Peter Principle.”  It was “formulated by Dr. Laurence J. Peter and Raymond Hull in their 1968 book The Peter Principle, a humorous treatise which also introduced the ‘salutary science of Hierarchiology’ …” [FN1]  While the exact quote is a little different, it has come to mean that people tend to rise to their level of incompetence in organizations built on hierarchies.

As an important caveat before getting into this topic, I have known many really hard working folks who have risen through the ranks the “old-fashioned” way –, through hard work and “paying their dues.”

My Experiences with the SAP Consulting Hierarchy

After over 20 years in IT, and over 20 SAP projects, I have seen the Peter Principle again and again.  It’s the nature of how the IT consulting world works.  It is frustrating, and it is enough to drive the competent, diligent, and most talented consultants absolutely crazy.

The “Peter Principle” happens in the consulting world because this is what organizations who implement SAP demand of their implementation vendors.  Sure, that sounds counter-intuitive and crazy, but unfortunately it is a sad reality.

You might be asking yourself right now, IS HE CRAZY?  Maybe a little, but on this point, let me assure you, it is quite true and in a moment you will see exactly how it happens and why.

Enter the Crazy World of Consulting – Why Consulting Incompetence is Rewarded

Once inexperienced, incompetent, or “less than optimal” consultants get onto your SAP, ERP, or other IT project, you are now set up for seeing the “Peter Principle” in effect.  On your implementation or upgrade project an inexperienced or incompetent consultant will ultimately make a mess, however it won’t be seen right away.  There may be signs along the way, but only deep experience will recognize this unless it is blatantly obvious.  There is always some reasonable sounding explanation, or some gibberish, or some babble that is pronounced with confidence but you don’t really understand it. Or, they have become polished and provide entirely rational and reasonable explanations, whether true or not.  After all, they are the “expert” you hired so they must know what they are talking about, right?  Nonsense!

First Sign of the SAP Peter Principle

“Blah, blah, blah”  I have no idea what you just said but just so I don’t look stupid I’m not going to challenge it.

As I’ve written on many occasions, part of the key skills and experience a good consultant or business analyst MUST possess is the ability to take the complex and make it simple.  ANYONE can take something complicated and keep it complicated, or worse still, make it more complicated, or, worst of all, make it a mess.  It takes experience and competence to take the complex and simplify it.  But all that “technical babble” and jargon sounds so convincing, so educated, so, foreign.  It’s a foreign language that you don’t completely understand and these incompetents know it.  Unscrupulous consultants know if they can make something up and sound as though they know what they are talking about you will believe them –, you hired them for their expertise.  They can game you to increase scope, or extending project timelines, or busting your budget and they do this because they are personable and manipulative.

How Can You Identify the SAP Con Artists?

Accountability, Responsibility, and Quality.  The cons avoid accountability or direct responsibility.  On a project where they are discovered they must be nearly forced to have clear accountability for delivery.  They must be pressed into doing what I call “due diligence” around a solution to make sure it will work correctly.

If you catch it early enough you can keep these incompetents from being rewarded for blowing your budget, causing project delays, and creating even MORE complicated and convoluted processes than you had BEFORE you did your SAP implementation.

How Customers Provide Perverse Rewards for Incompetence

The incompetent consultant’s area seems to have users who struggle with problems / issues / bugs that need the most fixing and the most attention.  By this time many companies have invested so much time and effort with the incompetent consultant that they don’t see any other options but to continue with this fraud.  The incompetent consultant is needed badly to support the mess they make for some time after you go live.

One way you can tell you have been manipulated or gamed during the project is by the quality, completeness, and accuracy of the solution the consultant delivers at go-live. 

From a consulting firm’s perspective, the incompetent consultant puts in lots of extra billable hours, helps them get extensions and budget increases, and needs to have lots of extra consulting support.  They are always behind, and no matter how hard “they try”, they always have another excuse for why the problems they cause really aren’t their fault–, it’s always someone else.

These consultants stay on long after go-live to ensure that their questionable solutions are supported by the same person who made the mess to begin with.  This is what customers insist on because by the time go-live happens they are “stuck” with the mess and “stuck” with the “con”sultant who made the mess.

Incompetent consultants tend to be VERY personable most of the time, and ingratiate themselves with the customer / client so that there is no question that they are working SO hard, and doing such a GREAT job.  It could never be their fault.

How SAP Consulting Vendors Reward and Promote the Peter Principle

For the consulting vendor, billing hours go up, staffing and utilization numbers are high, additional “backfill” support is needed and more people are staffed.  From their metrics and possible compensation incentives the incompetent consultant is doing a great job!  On the other hand the highly experienced, competent, and diligent consultants “work themselves out of a job.”  The competent consultants tend to have fewer go-live support issues, they usually have more engaged, involved, and knowledgeable users.  And they are just plain better prepared.  They are not “needed” as you go-live and you, as the customer, get rid of them to cut the blown budget wherever you can.

In a partner oriented firm the incompetent consultant is headed for being a manager, senior manager, managing partner, etc.  The incompetent consultant has great utilization, helps to get more staff on projects, and is always busy.

In the consulting companies incompetence is rewarded and incentivized by the consulting firms.  The most competent and diligent consultants are passed over for career enhancement precisely because of their competence – they may finish projects earlier than their incompetent peers and may be “on the bench” more frequently.

The more skilled the incompetent consultant is at being personable, at presenting a compelling case for why they are doing such a great job but you need more resources, the better positioned they are for higher level promotions.  After all, in consulting firms, senior level positions are focused on getting billable resources out and billing.  The more experienced and capable at this the better positioned you are for partner or senior management.

Stay tuned next week – details on how to spot them and then ferret them out…

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SAP IT Convergence Beyond Business to IT Alignment

September 6th, 2011 by
SAP IT Business Convergence

Business - IT Convergence

In the new global business age it is more important than ever to leverage technology organization expertise for business benefit.  Too often technology organizations focus on technology for the sake of technology rather than for how it might improve products and services or how it might create more customer focus.

In today’s competitive global economy, filled with international economic instability, no part of the enterprise can afford to move very far from what pays the bills.  If your SAP or IT organization is focused completely on technology solutions you lose sight of what is important to the business.  And what is that?  Customers: customer retention, acquisition, loyalty, satisfaction, and experience.  Without customers there is no growth or revenue.  Without growth or revenue there is no need for that expensive SAP or IT investment.

Finding SAP IT Convergence in Innovation and Customer Focus

A dynamic shift away from “back office” or operational focus is needed to move the SAP organization toward genuine IT convergence.  To make the change requires a deeper and more meaningful understanding of business itself.  It requires a focus on the organization’s products or services (i.e. innovation, read Process Execution of Business and IT Innovation) and then how those products or services are marketed and sold.

This emphasis on IT convergence, especially in the SAP enterprise, is about preparing your organization for the changes which are beginning to shape the future of enterprise applications, or “ERP III” (for a detailed explanation of ERP, ERP II, and ERP III see ERP vs. ERP II vs. ERP III Future Enterprise Applications).  So what is ERP III?  ERP III is the next generation of enterprise applications which leverage social media (or other collaborative tools) in news ways to integrate customers into the borderless enterprise.

Without a clearer focus on customers as well as innovation in the enterprise, or “how business gets done,” the SAP and overall IT organization becomes a very expensive operational support layer.  Without the genuine business focus the organization becomes a commodity to be outsourced.

How Can You Transition to Full SAP IT Convergence?

By now the need for full convergence is clearer.  But if it’s still not clear enough consider another element or your SAP or IT organization–, look at the pay structure for your SAP skills.  Your SAP staff is likely paid equivalent salaries to very senior level employees at your company.  In some cases they may make as much as some of the junior executives.  And then remind yourself, this pay range is for non-management positions.  So we have to consider what it will take to change the organization to achieve convergence.

From the last few posts, as well as my own experience, here is my “short list” of important things to do to achieve convergence:

  • Steering Committee Engagement and Roadmap Management
  • Pursue business executive sponsorship but don’t wait for it to get started
  • Engage at all levels of the organization
  • MBA in the IT organization
  • Conduct one or more pilot programs and capture lessons learned

Start a communication program

Exchange staff program to integrate the IT organization into the business

Hold IT staff accountable for participation

Don’t let available tools stifle participation or innovation

  • Invest in NON-TECHNICAL IT training

Public speaking

Presentation skills

Meeting skills

Facilitation skills

Questioning and Negotiation

Conflict management and resolution

Managerial skills

There are two other areas that I will offer some insight on.  As a result of the explosion in mobile devices (literally hundreds of millions of them) there is a need to ensure that technology solutions are “device agnostic.”  In other words, as employees begin to provide their own smartphones be ready to support them.  If your organization is tasked with the cost for the plans and hardware, supporting employee provided mobile devices is cheaper even with the additional support overhead.  On the second front there are business direct buy purchases of technology.  As last week’s post pointed out, because of what the business perceives as a lack of responsiveness to their needs they are making more of their own direct technology purchases.  Learn to live with this and to engage in more of an internal consulting role so that the solutions are a better fit for the business and the SAP or IT organization.

How you approach the future for your technology organization–, isolation, alignment, or convergence; will determine how valuable you are to the business in the future.  And with today’s competitive landscape combined with the economic struggles it is more important than ever to demonstrate business value.

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