Business Solutions with SAP

ERP II & ERP III – SAP Business IT Revolution

October 31st, 2011 by
Business Systems

Business Systems

The day after I released my last post (SAP IT Governance – Achieve Business IT Engagement) published a review of the CIO future direction. While I do not agree with all of the Gartner conclusions they published I certainly agree with the “new CIO manifesto” (TechRepublic: Get drastic: 15 IT best practices to kill). Reading through the comments left on the TechRepublic post was enlightening, most of the comments focused on the details of one or two points of disagreement while missing the focus of the entire message.

Denial of the purpose of any IT initiative, especially SAP business solutions, will only lead to significant levels of outsourcing. IT areas and functions that become more like “commodities,” or, as one commentator calls these functions “taxes” on the enterprise are quick to be outsourced. While these “taxes” are necessary infrastructure components (such as e-mail, phone, wide area networks, and even PCs or laptops), other areas are starting to be seen as commodities subject to significant cuts.

SAP Consultants Must Get Serious About Customer Focused Value (or find another career)

Unless more functional SAP application consultants get serious about understanding business and helping stop the fakes then enterprise applications will become a commodity as well. This isn’t just idle speculation. Those of us who have been around SAP for 10 years or more (and some of us approaching 20 years or more) remember the days when ABAP skills were sky high–, now they are a commodity which is frequently outsourced to India, Malaysia, or China. The same commodity status is true of SAP Basis–, it is outsourced overseas or to hosting providers. Without real value SAP (or Oracle, MS Dynamics, etc.) are soon to follow.

The Coming SAP Business Technology Revolution

The TechRepublic post hit on a key theme which is the focus of this site–, helping business realize (and recognize) value from their SAP projects. Under the subtitle “New CIO manifesto” TechRepublic notes:

“information [may be] more important than information technology” and the majority of IT spend will be used to “measurably improve… financial conditions of an enterprise” by supporting “revenue generating rather than expense related business processes.”

This manifesto is more aligned to sales, marketing, and innovation. These areas of the enterprise are in line with CEO priorities (see e.g. What is the Proper Relationship for the CIO, CEO, and CFO?). The TechRepublic post then goes on to note that:

“IT has to stop thinking of itself as a business utility and start seeing itself as a business catalyst. In order to do that, it’s going to have to think in business terms and economic impact for everything it does…”

What Can Skilled SAP Consultants Do to Prevent Becoming Commodities?

FIRST do what you can to educate clients around consultant screening (for details see Protecting Yourself from SAP Consulting Fraud). For example, if you find out a client is looking for consultants ask them if they have received that candidate’s references from their last three projects and whether they directly asked for confirmation of experience from those references?

As clients continue to see marginal or substandard results from so many of these frauds they will consider you the same and rate pressure will quickly move you to commodity status. Worse still, you may be on a project where you have to do so much clean up and correction behind an incompetent consultant just to get your own area working that you do not have the time to deliver on real value that will set you apart.

SECOND make sure you focus your consulting efforts on delivering value to your clients. When I say value I mean in terms of business benefit and return on what you are being paid for. Don’t just do some configuration because that is what you are being told, or because that is what is in scope. Do it in such a way that it helps the client long term. For example, just because SAP supports a particular type of functionality the ongoing maintenance after go live may not be in the client’s best interests. Carefully consider the short and long term effects on your customer of what you do. If you take this approach you may lose out on a little extra billable time in the short term, BUT you will stand out to them as someone who looks out for their interests. When it comes time to upgrade or add on additional functionality a call from you could land you a direct client without the middle man staffing firm. You can avoid competing with so many of the frauds the staffing companies try to place which may destroy a client project and damage the value you can add.

The choice is yours. You can start working to be more client and customer focused to generate value or you can watch the marketplace move you to commodity status. In the end no matter how good you are as the marketplace erodes your value in it does as well. It’s time to start acting like a consultant, a paid advisor to give your client the best possible direction you can and in doing so you also help to protect your own future as well. For more insight on delivering SAP enterprise value focus on the components of ERP II or ERP III (see ERP vs. ERP II vs. ERP III Future Enterprise Applications).

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SAP IT Governance – Achieve Business IT Engagement

October 24th, 2011 by
SAP Business IT Convergence

Business - IT Convergence

Proper SAP project governance is a function of the business in partnership with IT.  With the exception of a few of SAP’s technical applications (like parts of Solution Manager, HANA, etc.) the entire application suite is about business; business transaction processing and business processes. If key business resources are not directly engaged in SAP project governance you may never realize the SAP benefits you expect.

This brings me to the point of what benefits you expect from an SAP implementation?

From what I have seen there are generally 2 broad “buckets” of benefits on SAP projects.  The first “bucket” is focused on consolidating and eliminating systems while the second is all about transactional business execution.  Or, IT benefits and business benefits.

SAP Project Drivers in IT

The first benefit “bucket” is related to pure IT cost reduction with a focus on consolidating and eliminating legacy systems for many of the following reasons:

  • reducing numerous applications’ license costs
  • narrowing technical infrastructure needs
  • simplifying technical architecture
  • reducing system maintenance costs
  • reducing legacy staffing needs
  • standardizing on a single development platform

If your SAP project is more of a pure landscape play, around replacing legacy systems, then SAP project governance would fall more clearly under IT.  However these types of projects usually end up having the business user community demand that all legacy system functionality be meticulously reproduced in SAP.  In the end you will likely achieve some measure of savings but far less than you originally anticipated.  Any expected savings will generally be consumed through mountains of custom coded solutions which will need continual care, maintenance, and feeding after go-live.  These custom coded “solutions” are not supported by your SAP maintenance agreement and can eat you alive in post-production support costs.

SAP Project Drivers in the Business

The second benefit “bucket” is related to business processes and business transaction execution producing results such as:

  • improved cycle times
  • greater process automation
  • inter and intra departmental integration
  • unified reporting data
  • improved inventory management
  • better planning capabilities
  • greater supply chain efficiencies
  • faster, more accurate financial closes and statements
  • better operational decision making tools

As you can guess, the list goes on.  The difference here is the focus is on direct engagement and active participation with the business.  This is the real challenge.  A business partnership in your SAP project requires more change management, greater flexibility, and a clear understanding that some business needs will override IT drivers and IT goals.  The goal of well executed SAP project governance is to achieve measurable benefit –, it is more about delivering business objectives and strategic direction. 

IT Governance of the SAP Enabled Organization

When the SAP enabled IT organization is able to deliver on business objectives and focus on strategic direction their role in the enterprise changes.  This SAP change moves the IT organization from being a mere “service provider” (a very expensive cost center) to a critical “value added” business partner. When the SAP IT department is seen as a “service provider” you quickly encounter budget and cost cutting pressure.  As I have previously noted:

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…

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 (see SAP IT Convergence Beyond Business to IT Alignment).

SAP Governance Includes Business to IT Convergence

The whole area of governance and convergence is very closely related.  For effective governance the business direction and integration must be a key component of all SAP or IT initiatives.  When you have that involvement, over time, and with some effort, convergence happens.  It isn’t automatic but the environment for it to occur begins with direct business engagement. 

If the business isn’t in the SAP co-pilots seat you may be headed for a IT crash landing.

If you’re thinking to yourself this “doesn’t apply to me” then you might want to think again.  A recent IBM study found that many corporate lines of business are beginning to make their own independent technology purchase decisions.  And they are doing this outside of the SAP or IT organization.  Add to that Ray Wang’s recent Harvard Business Review Blog Post about the consumerization of [business] IT (see Integrating Business Stakeholders as Part of SAP IT Convergence) and you have a serious issue to contend with.  As his research noted, “corporate tech spending is up by 17 to 20%… [but] spending by IT departments is flat.. business leaders, not their IT colleagues… are driving purchasing decisions.”

Business decision makers are starting to use their own budgets to make their own IT decisions rather than making the contribution to what they see as a very expensive “service provider.” That integration or “convergence” with the business is more important than ever because in the end they have more influence over your budget than you may realize.

For more information on this topic please see these additional posts:

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Protecting Yourself from SAP Consulting Fraud

October 17th, 2011 by
SAP fake consultant

SAP fake consultant

One of the most pervasive problems with SAP or any other ERP project is the sheer amount of fraud.  It is so rampant with such huge financial effects in any other area it would be seen as organized crime.  I’ve previously written about SAP consulting screening methods and required skills, but there is one key method to filter through the huge number of frauds–, simple experience verification.

Few Staffing Firms Do ANY Type of Skills or Experience Verificaiton

Many organizations that have SAP periodically need experienced consultants to help with specialized requests, requirements, new functionality, or to occasionally backfill employees.  Because contract staffing is not a key portion of their business they turn to staffing firms or recruiters.  Unfortunately too many of the staffing firms and recruiters have only one interest–, to collect a paycheck.  Very few of these recruiters care about how they get that payday so it is up to you as the customer to ensure you are not getting ripped off. 

There is no incentive for them to carefully screen candidates–, no background checks, no former project verifications, nothing.  A recruiter’s goal is to get them through the interview and have your organization hand over the cash.  The cheaper the resource they can find (i.e. read “fake”) the fatter their margin if they can convince you to use them.

The consulting fraud in the SAP arena (and ALL of the business application space) is widespread and out of control.  For more background and information on some of my experiences with this you may wish to see some of the following posts:

Think I’m joking about the fraud and the negative impacts on you comapny?  Take a look at an actual timeline of consulting horror stories at a real company where an internal employee periodically posts some of the horror stories  Although the employee at that company does not say they are dealing with frauds, con artists, fakes or “SAP freshers,” I’ve seen this so many times that if that company checked these “con”sultant’s backgrounds I could guarantee a very high percentage of SAP fakes or “freshers.”

There is no incentive for staffing firms to carefully screen candidates–, no background checks, no former project verifications, nothing.

Protecting Your Organization from the SAP Fakes and SAP Frauds

You can do at least one small thing to protect yourself.  AFTER a staffing or recruiting firm has submitted a candidate demand they include references, from the last 3 projects listed on that consultant’s resume.  The ONLY references I accept are client resources, still at those organizations, and on an e-mail address that is clearly at that organization If they cannot provide these then my immediate assumption is they are a fake.  If the staffing firm doesn’t get the message you will not accept fakes then do not do business with them EVER!

The ONLY references I accept are client resources, still at those organizations, and on an e-mail address that is clearly at the organization.

Think about that a minute, even if you miss out on someone who has the actual experience you are looking for, do you really want to pay those kinds of rates for someone who was so uninspiring that no one even remembers them?  What about their consulting skills?  Were they a bump on a log that hid in the background and made little or no contribution to the direction or success of the SAP project?

Step by Step to Find the Real SAP Consultants

If you decide to use a staffing or recruiting firm, make it a hard requirement that they provide ONLY candidates who can provide an e-mail reference STILL EMPLOYED at each of that consultant’s last 3 clients.  This is basic employment verification stuff but few if any of the staffing firms do this unless you insist it is a requirement.  And nothing less than a direct verification from someone who is still at that organization will work.  I have heard many “stories” about how they have some other reference, or the person left and are now working at “XYZ” company instead.  Would you accept that from a permanent employee candidate?

The next step, AFTER the 3 prior project references still at those companies (on the company e-mail address / domain) is copy that portion of the resume listing that consultant’s experience at that company into an e-mail message to their reference.  Send the message with a notice they used this information on their resume to indicate their experience and you would like to know if they can verify that the candidate’s experience is consistent with what is listed.  If they can not, or will not, then that is the end of the screen for that person.  I do not bother to waste any time with a phone screen until that verification step is complete.

What are some of your thoughts or suggestions for screening out the fakes, frauds, charlatans and con artists?

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