Studies have shown that there is a critical disconnect between projected benefits in business cases for IT investments and actual value achieved, because so many firms focus on going live with a project rather than its value delivery. An SAP / ASUG best-practice survey on the ability to capture the projected benefits of an IT project found that 73% of companies do not quantitatively measure value post-implementation. (SAP Executive Insight Series, pg. 7, 2009).
Critical business benefits for an SAP project require taking a hard look at the enterprise and its goals or direction [FN1]. The successful SAP project scope must encompass more than just operational considerations (process improvement and automation); they must include the critical components of focusing on the customer and product or service innovation (see e.g., Process Execution of Business and IT Innovation). This is a significant departure from current consulting and system integrator paradigms. Modern business no longer has the luxury of relying on static business processes that pay lip service to the customer or ignore the imperative for innovation.
Across the enterprise landscape, globalization, the Internet, disruptive innovation, and the threat of rapid commoditization have ignited the speed of change. It’s no longer a matter of keeping up, but rather of continuously reassessing, reinventing, and transforming operations on the fly. The pressure to adapt business processes—once thought of as airtight—at an ever-accelerating pace has never been greater… Rigid infrastructures and organizational models that hamper agility prevent businesses from growing or even coping (Bouhdary pg. 52, 2008). [T]he successful enterprise must think of its business as a holistic network, able to adjust and make changes on the fly and also able to free up resources for innovation rather than administration (Ibid. pg. 53, 2008).
This is obviously not a small task, but it is achievable. To make this happen takes a conscious, concerted, and sustained effort to link technology to business needs and not just to implement technology for the sake of technology.
Companies that implement enterprise resource planning (ERP) systems aligned with the overall business strategy enjoy performance gains unknown to firms who do not implement these solutions…
While many commentators would suggest this approach takes a new SAP Implementation Methodology, in reality the approach, tools, techniques, and requirements have been spelled out for several years in the SAP ASAP methodology. Unfortunately too few companies bother with following that methodology even though they routinely commit to it in all of their sales presentations and literature.
SAP Projects Must Produce Business Benefit, ROI, while Reducing Current TCO
Research indicates that ERP benefits require in depth discussion and strong coordination of goals and resources across business and IT personnel (Willcocks and Sykes, pg. 33-38, 2000). These benefits, or the measurement of ERP success, are at least partially dependent on managing requirements throughout the entire ERP lifecycle (Holland and Light, pg. 1630-1636, 1999), including acquiring and managing user requirements (Ginzberg, pg. 459-476, 1981).
To manage the ERP lifecycle, goals must be established along with the education and communication of the long-term impact of the goals on the organization (Chang, pg. 6, 2004).
The answer to any successful business transformation is the establishment of open communication channels woven throughout the firm and its network of partners…
Research conducted by faculty at New York University, Massachusetts Institute of Technology, and Georgia Institute of Technology shows that companies that implement enterprise resource planning (ERP) systems aligned with the overall business strategy enjoy performance gains unknown to firms who do not implement these solutions (SAP Executive Insight Series, pg. 4, 2009).
The next generation of technology alignment will require a much more collaborative environment where the business is able to extract critical information from all of the business stakeholders:
- vendors, and
- any marketplace or trade sources.
Economic pressures, global competition, changing political landscapes, and the explosion in information sources available to consumers have forever altered the competitive business landscape. While capital is not as easily available as in times past, it is still far more readily available across the globe, and in developing nations like never before in history.
The rise in consumer power, facilitated by easy access to capital and the Internet, is converging with technology to drive rapid commoditization, necessitating the continuous assessment, reinvention, and innovation of business models at greater speeds… The answer to any successful business transformation is the establishment of open communication channels woven throughout the firm and its network of partners, making it a hotbed of inventive ideas. An organizational structure must facilitate and nurture those ideas so they can quickly find their way to the top and become strategic assets (Bouhdary ppg. 54, 2008).
Tomorrow’s most successful enterprises will be able to harness the various sources of information and then quickly assimilate and distill the information into actionable objectives. These actionable objectives will be aligned to key goals and competitive pressures unique to that company or organization [FN2]
The Marketplace is Finally Seeking the Value SAP Implementation Methdology
The marketplace is beginning to show signs of demanding a new SAP Implementation methodology; a new guide or new implementation steps focusing more clearly on the two business value propositions of innovation and customer focus. The marketplace is finally beginning to demand the value portion of the SAP ASAP Implementation Methodology that has been around for over 10 years that I know of.
[FN1] KPI Development, Business to Technology Alignment, and getting real business benefit from technology investments.
- Why Indexed KPIs are Critical for Business Performance and Success
- Using Key Performance Indicators for Building a Strategy Focused Organization
- Business and IT Alignment – Integrating Technology and IT Spend with Business
- CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?
- ERP and SAP Business Case for ROI, Business Benefit, and Success
- Using SAP to Improve Revenue and Profitability
[FN2] The next generation of enterprise applications will rely heavily on the integration of collaboration. These next generation systems will focus on how a company can integrate and develop both collaboration and customer-centric products and services.
- What is the Proper Relationship for the CIO, CEO, and CFO?
- ERP vs. ERP II vs. ERP III Future Enterprise Applications
- Process Execution of Business and IT Innovation
- ERP III – Is the Integration of Collaboration the Future of Enterprise Applications
Bouhdary, C., (from SAP Fall / Winter 2008). Built to Adapt: High-Velocity Transformation and Integration. The Journal of the EDS Agility Alliance, Volume 3 Issue 3, http://www.eds.com/synnovation
Ginzberg, M. J. (1981). Early Diagnosis of MIS Implementation Failure: Promising Results and Unanswered Questions. Management Science, Vol. 27, Iss. 4.
Holland, C. and Light, B. (May / June 1999). Critical Success Factors Model for ERP Implementation, IEEE Software.
SAP Executive Insight Series (September 7, 2009). Accelerate Value Creation: The Virtuous Cycle of Using Technology to Maximize Business Value. http://www.sdn.sap.com/irj/scn/index?rid=/library/uuid/70fa08b0-cf81-2b10-a396-89d18932fbd0&overridelayout=true (retrieved 4/23/2010).
Willcocks, L. P. and Sykes, R. (2000). The Role of the CIO and IT Function in ERP. Communications of the ACM, Vol. 43, Iss. 4.
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