SAP & ERP Consulting from the Customer Point of View

Stop the Sales Tactics

This week we will look at more aggressive ERP sales tactics used to manipulate you into signing over your checkbook to these ERP system integrators.  Moving through the process the tactics used are starting to get more interesting–, we’ve gone from manipulation (Overcome SAP-ERP System Integrator Sales Tactics 2) to more aggressive tactics.

Often software vendors with inferior products resort to many underhanded or dirty tactics and scams.  And if you stop and think about it, it makes perfect sense.  When business software vendors are up against a competitor with a superior product they can only hope to prevent you from making an objective comparison of their product to the competitors.  When you add in the massive payday; tens of thousands, hundreds of thousands, or in large sales millions of dollars on the line it should be expected.  And don’t get me wrong, it only gets more intense when it comes to the services offerings.  At least you have a greater chance to gain a more objective evaluation of the software than you do vendor service claims.  Tactics can get downright nasty, but always with a smiling patina that the sales person is just “trying to help.”

Once you know the tactics you can identify them and discount their effectiveness.  Always remember the sales person’s goal is to sell to you.  Your goal is to make sure you get benefit for your company and see a return on your SAP investment.

Deep into the SAP-ERP System Integrator Sales Cycle

• Introduction of doubt
  • “Try to discredit your competition without being obvious – pointing out bad press (where it may not be warranted, although at times it is), providing “rumors” or “special insight” that they really don’t have, anything that distracts from a practical / objective decision on the ACTUAL functionality should be viewed with suspicion.
• The “Survey Demo”
  • Need + Feature = Benefit.  They will try to “discover” requirements not in the RFP to show you “cool” things you didn’t request.  It’s all about trying to create an impression with you.  Counteract this by simply asking, “what RFP section does this address?”
• My manager must meet  your manager
  • IBM study…
    • Sales person with the most “face time” wins
• Unload the bus – a “mob” shows up to “work” the room and every client or ERP RFP participant.  Resolve this by restricting the number of on-site vendor participants.
• Crocodile salesmen – All mouth and no ears.  They are too busy telling you everything they think you want to hear, whether it is true or not, so they can make you their next meal.
• The magic number game – We saved your competitor $$$…  You can gain up to x% market / revenue / margin / cost reduction…  You name it.  They throw numbers around as if they are the masters of entire markets and industries.   They baffle you with statistics and financial claims.  Or they might ask you where you “need to be” to make a deal.

Want to change it?  EVERY TIME they make some claim ask them if they can put that claim in their contract with the penalty clause!  WATCH THEM SLITHER AWAY FROM THE CLAIMS!

Deep into the Sales Cycle – Product Demos

In the previous section the focus was on the sales approach used by the sales people themselves.  This section is an overview of product demos and the various tactics and strategies used here.

• Provide your data for demonstrations
• Create “day in the life” scripts
• Give the supplier time to prepare
  • Differences in prep time could indicate complexity
• Hold-back some exceptions
  • See if the vendor says “No” or makes excuses for why the exception can’t be done
  • Test flexibility in the solution and in their skill by asking them to demonstrate these exceptions in their solution.  Let them know at the beginning of the demo what they are and ask them to have it prepared by the end.
• Make sure they include sample implementation plans, templates, resources, tools, etc.
• If your supplier does well, tell them but DO NOT commit (at this point a decent sales person will “move in” for the close).

There is one last sales type to consider here, that is the effective sales person.  Notice I didn’t say “good” sales person but effective.  They have been carefully trained, they know how to “work” the room, and they know how to move you along in the process.  They are polished, understand listening skills, and they will relay back to you exactly what you want to hear.  These are the “vaporware” aficionados – they  will slyly sell you on something that does not exist.  They will sell you on their “A” team when the best they can provide is a “B” team.  They will sell you on how well their software or solution fits your needs without actually showing you any proof it does.

These sales people want you to fall in love with their amazing “story” about how they will somehow produce amazing results for you.  Like a magician with their smoke and mirrors to hide their real actions they carefully find out what you want to hear and tell it to you whether it is true or not.  What proof do they have that they can deliver these results for you?

They sell you a vacation with the intention of delivering you a bucket of sand for the full vacation price.  They sell you a vacation home but after you sign the contract they hand you a doll house box full of parts and a hot glue gun.

They will convince you that using them will cost you less without committing to anything that might actually put a real limit or box around their fees.  The will promise you will get the results you want without actually providing any way of achieving them.  These are the dangerous sales people.

Related Posts:

• Overcome SAP-ERP System Integrator Sales Tactics 7
• Overcome SAP-ERP System Integrator Sales Tactics 6
• Overcome SAP-ERP System Integrator Sales Tactics 5
• Overcome SAP-ERP System Integrator Sales Tactics 4
• Overcome SAP-ERP System Integrator Sales Tactics 1

Use SAP Best Business Practices For Commodity Processes But More Carefully Evaluate Competitive Processes

The debate and discussion around SAP best business practices usually assumes an “either-or” mindset.  Either you use the SAP best business practices as they are or you abandon them (for more background on SAP’s “Best Business Practices” see What are SAP Best Business Practices Anyway).  Several commentators suggest you should not do a software vendor’s “best practices” because you are adopting the “herd” mentality and will not be competitive in the marketplace.  They completely ignore the reality that some processes do not need huge development investments.  SAP provides a number of tools and resources to evaluate its solutions for your enterprise’s business processes (see Using SAP Solution Composer for SAP Scope – Process Alignment).

Commentators who are broadly against “best practices” have failed to recognize that there are different types of business processes.  One type are what I call “commodity processes” or the things you must do to run business, that everyone does, but adds little or no value to reducing cost, increasing revenue, or improving margins.  The other type are “value added” processes where the process itself (not ancillary manual steps) directly aid in reducing cost, increasing revenue, or improving margins.  Some business processes justify custom development when a standard solution will not do certain business critical processes (see e.g. Lower SAP Application Support Costs – TCO – by Reducing Custom Solutions).

Value added processes must directly contribute to market share or address a specific pressure from a competitor or they are commodity practices which are good candidate for “best practices.”  By reducing costs or increasing revenue and margins you are directly affecting your competitive posture in the marketplace.

What Are Value Added Processes in the SAP Organization?

Let me clarify one thing here, a “value added” process can be any process in a company.  In one company or environment a process may be a commodity process, however in another company, or industry, that same process may be a value added process.  The test for a “value added” process is whether or not it adds to your business marketplace competitive advantage.  That generally means it has to reduce cost or increase revenue in more than a minimal way.  As an illustration ask yourself, if you significantly increase your margins on a slow moving, outdated, low volume product or service is it worth a huge amount of time and effort?  Was the investment worth it?

Management’s primary responsibilities are to increase revenue, reduce cost, and improve margins

A value added business process will generally have some type of reporting requirement attached to it.  Some way to measure its performance because the process is critical to the organization’s mission.  If you have developed KPI’s, goals, metrics, or reports for a particular portion of your business processing you can be sure it is a good candidate for special attention as a “value added” process (see Why Indexed KPIs are Critical for Business Performance and Success and Using Key Performance Indicators for Building a Strategy Focused Organization).

What are Commodity Processes in the SAP Organization?

In most companies “commodity” processes would include purchasing, warehousing, inventory, distribution, or other routine processes.  Commodity processes and those business functions that do not have a direct impact on your competitive position.  If you are a third-party logistics provider then your competitive processes would include warehousing and distribution.  It is the core of your business and what you do.  However in other businesses those would be commodity processes.  If you are a consumer products company then sales and marketing processes would be value added where purchasing and inventory would be more commodity processes.

Worse still, in recent years IT has been seen as a “commodity” resource to be outsourced.  As IT and technology functions have become more and more focused on cutting costs and shaving pennies from a few process areas they are finding smaller and smaller returns at more and more cost.  As new technology is rolled out and it stabilizes the business and senior management see IT as more and more of an expensive cost center with functions that can be performed elsewhere at a lower cost.  IT organizations everywhere must begin to aggressively focus on business integration and value realization or become prey to outsourcing themselves (see IT Outsourcing, Off Shore Support, Cost Cutting and IT Department Changes).

SAP Software Best Business Practice Processes

While I have long advocated for business process engineering rather than software engineering there are times when custom development is justified.  The key to understanding when you might choose one approach or the other is related to whether a process (or sub-process) is a “commodity” process or a “value added” process.

Considering cost, revenue, and margins separated from marketplace competitiveness is misplaced.  Unless there is some significant competitive advantage or directly aligned business driver then only standard functionality should be used.

When you consider your SAP software investment it would provide the greatest business benefit to pay special attention to value added processes. Do not waste time or development effort on commodity processes.  Spend the time, effort, and money on change management for commodity processes because after the initial change cost ongoing Total Cost of Ownership (TCO) for these SAP processes will be the least expensive (see Where do you Start with SAP Return on Investment or SAP ROI?).  Regression testing, patches, fixes, new functionality, and all of the other things you do with SAP business applications will be easier and less expensive for the commodity processes.

Related Posts:

• Using SAP to Improve Revenue and Profitability
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Aligning SAP Scope to Meaningful Business Requirements
• ERP Business Case: Do You Really Need a New System?
• SAP Development Landscape and Systems: Misguided Practices Carry Huge Costs

Business to IT Convergence

This is part of an ongoing exploration of creating an SAP or Technology “Center of Excellence” within your enterprise.  For the background and key insights on this approach see the Series on SAP Competency Center or SAP Center of Excellence .

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The real future of technology is for IT to integrate with business, or in other words to “converge” business and technology.  The idea of “aligning” with business is too weak of a statement to define what IT and SAP must do within the enterprise to generate significant ROI.

Think about it, during the course of an SAP project the focus is on integrating the enterprise into a single data repository with dependent process chains.  Somehow that same level of integration is not required of the business and IT after you go live.

Product Convergence Lessons for Next Generation SAP Organizations

Convergence, convergence, convergence, what do I mean by convergence?  The idea behind convergence is the enabling of business with technology so that the two can not be distinguished from each other.  It means the lines between business and IT departments must be deliberately blurred.

Although the following examples are about product convergence they are great illustrations for how business and IT should integrate, or “converge” their functions.

• ARPAnet which was created by the U.S. Defense Department’s Advanced Project’s group eventually became the Internet.  This was originally an advanced data and communications “fabric” that could withstand a nuclear war and route both data and communications in the event whole areas of the network were unavailable.  That back-end technology was later combined with early graphical software to create the public Internet as a global information resource never seen before in human history.
• E-mail was a convergence of network technology with hardware, communication protocols, and then combined with software applications.  These combined to create a new form of communication which has transformed both business and social structures.  That convergence has extended to the Internet for various forms of “webmail.”
• The advent of the personal computer and its increasing power made the way for decentralized processing in the form of “client-server” based applications.  Central business functions and tools could run on a server but each user’s experience and application needs could be tailored at their individual workstations.
• ERP applications such as SAP’s ERP suite were made possible by the need for a centralized source of data, at the intersection of databases, network technology, and software user interfaces.  “Cloud” based applications or Software as a Service (SaaS) were an extension of that convergence to include remote hardware sourcing and access through the Internet.
• Social media was the next “extension” of collaborative technologies.  They converged the Internet’s ability to connect people with software applications that allowed people to communicate in new ways. LinkedIn, Twitter, Facebook, and others are moving forward by connecting people to share more information in real time.

Look at most of Apple’s products.  For many years the Mac PCs and laptops only had marginal market share, while it is increasing it was their other products, their “convergent” products which produced explosive market penetration.  What was the difference?  It was convergence, the convergence of the customer experience with the things people use (see Business Strategy and IT Strategy to Reproduce Apple Innovation ).

What is Really Different About Apple Anyway?

Since Apple is so successful today we will look at their example.  The iPhone, iPad, iPod, all have one thing in common–, they took the idea of usability around the convergence of several technology streams to the next level.  Apple leveraged technology, communication, and entertainment to create something MORE than just a Graphical User Interface (or GUI), they created something useful for entertainment.  Apple products are a pleasure to use–, they created a “user experience.”  In the iPhone, even with its irritating lack of integrated e-mail calendar integration, it is a powerful business and personal communications tool which would have been considered a miniature PC a few years ago.

Apple didn’t really invent anything new.  Apple found that place of “convergence” with quality technology products and user experience

Apple didn’t invent the cell phone, portable music (remember Sony’s Walkman?), Internet data delivery (think, music sharing streaming software).  What Apple did was converge these technologies with a great front-end and delivery system.  Or as Steve Jobs has said, they “put a Mac in a cell phone.”  Apple also went one step further, they sought to own the entire content delivery infrastructure and the hardware architecture for their devices.  For the iPod it was the music delivery system (think iTunes), for the iPhone and iPad it was the extension of iTunes to add an Application store, etc.

That is an example of a product convergence that has had huge market impact.

Business and IT Convergence Can Transform Your Company

If we take this product concept one step further and apply it to IT and Business there are ways to bring about “convergence” in the IT enabled enterprise.

Business-technology convergence and business-technology management are terms that spring from a simple idea: Technology is a means for achieving business objectives; therefore, managing business and technology together provides significantly better results than managing them in separate silos. By converging business and technology management, enterprises can nimbly respond to changing marketplace dynamics, technology evolutions and competitive pressures—capabilities that are especially important during an economic downturn. [FN1]

[C]onverged enterprises know when to change the rules to maintain a strategic advantage over their competitors—and to sense and respond to changes in the marketplace.

I am a strong advocate for the convergence of roles between business and IT–, how will the IT organization know and understand the business “rules” without participating directly in business?

The best convergence candidates are likely your power users or super users who participated in your SAP project.  They come from the business but have exposure to the system and the challenges around IT.  The IT folks should also work in the business areas to become “super analysts.”  They need to know and understand how business actually gets done so they can figure out the best way to apply technology for business objectives to be addressed.

Completing the SAP Convergence

On top of the business users being integrated into IT and IT integrated into the business, the steering committee must not be disbanded.  This need cannot be stressed strongly enough.  That group of senior level business individuals are a key part of the “glue” for a successful and ongoing transformation of the business.  They are one of the critical ingredients for convergence to occur.

If you continue to develop your key business users and maintain your steering committee you have a power organization structure in place to build on convergence of business technology. For more information on the importance of continuing involvement by the steering committee long after the SAP project has gone live see my previous post on Using Your SAP Steering Committee for Business Transformation .

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[FN1]  http://www.baselinemag.com/c/a/Business-Intelligence/The-Value-of-Convergence-236013/

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• Business Strategy and IT Strategy to Reproduce Apple Innovation
• CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP