SAP ROI — Enterprise Architecture & Business Solutions

SAP Success Criteria Formula

Some time ago I put together a synthesis of SAP success criteria based on academic literature and my own personal experience.  The table below is part of the list of SAP Success Factors for Vender Selection – Responsibility Matrix. For a more detailed explanation of each of the vendor related items see the posts listed in the Series on SAP ERP Project Success Factors.

In the prior series we went through SAP success factors with shared responsibilities between the company adopting the SAP application and the integrator they use for the implementation (listed below) but today we will briefly review customer-specific success items (further down).

Legend

A = Primary responsibility
z = Secondary responsibility (can influence success but limited control over success)

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The previous series did not address several of the customer-specific items where organizations should focus internal efforts.  As part of the recent series on Organizational Change Management Inside the SAP IT Support Organization it is time to consider the SAP customer specific items now.  That list of items includes:

1.  SAP Project Senior Management Support – 2. SAP Project Champion

You just can’t overlook strong senior leadership support and a strong project champion for SAP project success.  If the wider organization perceives it is important enough for executive leadership they will see that it is a key initiative to focus on.  The Real Reason Executive Participation Creates IT Project Success is related to the nature of their position which deals with corporate strategy. The enterprise also needs an SAP project champion to help cut through red tape, encourage organizational support, and marshal additional resources when needed.  The best project champion would be at least one NON-IT executive so this isn’t seen as “just another IT thing.”  The contribution of a well respected and strong internal leader can not be overlooked.

3.  Empowered Business Process Team Members to Make Key Business Decisions About SAP Setup

If you want your SAP project to make any progress then it is absolutely critical to ensure core team members from the business are able to make many of the important process decisions. There will be some decisions that have more widespread organizational impact and the business users will need more senior level managers to make some decisions.  For example one of the key reasons for Using Your SAP Steering Committee for Business Transformation is to help mentor, guide, and direct business project participants in designing the future state business.  This would include making “critical decisions which the project team is unable to resolve (escalations or key business decisions).”  On the other hand if they are so compliant or risk averse that they will not make any decision without gaining consensus you may be headed for problems with the project timeline and budget.  This doesn’t mean you need an autocrat either, just someone who has enough organizational insight and connections to make the right decisions, escalate the ones that should be escalated, and has an open line of communication to keep interested stakeholders in the loop.

4.  Business Process Team Members who are DEDICATED to the SAP Project Delivery and Success

Too often I see core SAP project team members, whether from the business or the internal IT organization, who are not assigned exclusively to the SAP project.  While they are given the new role they often still have their “day job” to continue overseeing and managing.  This is a significant distraction from a very serious undertaking.  When an SAP project is done effectively, and what I call “correctly,” there is significant business change that takes place.  To help manage that change and to ensure business users have their needs most properly represented requires a full commitment to the SAP project.

Unfortunately there are a lot of system integrators who are happy to have your business users commit to just “part time” on the project.  It helps the system integrator increase their billing, allows for lots of excuses for missing dates, and provides them the opportunity to push any solution they deem you should have.  Because core team members from the enterprise have divided attentions they can not ensure the same level of quality if the SAP project were their only focus.

6.  SAP project goals and success criteria

I was recently reading an article where a study of several hundred companies who had implemented enterprise applications were asked about having defined business related goals and success criteria.  The referenced study suggested only 4% of companies who implement enterprise applications complete the entire process of defining goals and success criteria and then actually follow up on seeing that they achieved the promised benefits. 

To achieve Sustained Business Value from SAP Business Software it is important to incorporate a Change Management Program within the SAP / IT Organization itself which is focused on Achieving Business Value from SAP Investment.  Another key part of the goals and success criteria is to Change How You Look at SAP to Create ROI because SAP Implementation is an Investment NOT an Event.

14.  Business process engineering – interdepartmental cooperation

 This is directly related to the first 3 items in this list:

• Senior Management Support (and steering committee makeup)
• SAP project champion
• Empowered business project team decision makers

Because of the nature of the integration in SAP some of the data entry responsibilities change, for both upstream and downstream process steps which may be in different departments.  There are also significant process changes and responsibility changes as a result of the SAP implementation.  All of these require a focus on processes, communication, and cooperation.  Because this can also be an area of political “friction” between departments or leaders it is critical to have a strong executive SAP project champion. That executive sponsor can help to reduce a some of the inter-departmental “border wars.”

24.  Company end-user involvement and end-user testing

Even a great implementation effort can turn into a painful disaster at go-live if end users are not prepared to use the new system, security and authorizations are a mess (VERY typical), and testing was not thoroughly performed.  Unlike other systems which were built in silos and without the level of integration a data or process mistake that is not uncovered during testing can have significant up and downstream effects.  Unwinding and correcting the error can prove to be very challenging.

For all of these items I only touched the surface, but none of these items can be ignored and are important for a successful SAP project.  Every one of these items is completely within the control of the enterprise or organization who implements SAP.  Good luck on your SAP journey but be sure to pay special attention to all of these success criteria for your SAP project which are provided in more detail in the Series on SAP ERP Project Success Factors.

Related Posts:

• SAP System Vendor Project Success Criteria 1
• Achieving Business Value from SAP Investment
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• How To Navigate the SAP Business Transformation Journey
• Steering Committee Governance for an SAP Center of Excellence

SAP Business Transformation

Continuing the Journey to the SAP-Business-Converged Center of Excellence

Recently I was doing research on senior IT leadership and how they can start the business convergence journey of their technically focused organizations.  Some interesting approaches and maturity models are available for senior executives but little direction for the delivery organization.

What I found is that CIO magazine established a CIO Executive Council for doing research on challenges faced by senior IT leaders.  As a result of this research they developed a great senior IT leader competency model which is easily applied to transforming the SAP enterprise.  Better still, their CIO competency also correlates well to SAP’s RUN methodology (part of the new integrated SAP ASAP Implementation Methodology).

The competency model which can be adapted to SAP transformation consists of three stages:

• Internal IT Focus
• Enterprise Integration
• External Business drivers

The Chevron CIO Journey Through the States of Internal to Enterprise to External

As Louie Ehrlich, President, Chevron Information Technology Company, and CIO, Chevron Corp described his journey of discovery around the first two key areas:

The hard lesson I learned as a CIO looking to advance my role and serve as a business strategist is that one must recognize that there is likely to be a capability/expectation gap, and that this gap doesn’t go away by itself. It’s something that we as [senior IT leaders] have to close.

In my view, the expectation gap is influenced by three factors. The first factor is the state of the fundamentals of your IT environment. Is it cost effective? Is it reliable? If it isn’t, then by definition your role needs to be one of IT function leader. Without that foundation, nothing else is possible.

The second factor is the capabilities and business knowledge of the IT function. Do you have an IT employee base with the experience and ability to bring strategic business value to the company?  If not, then again – much of your focus should be as the IT function leader. The first and second factors are within our control.  [FN1]

Ehrlich’s experience, insight, and direction is part of The Real Reason Executive Participation Creates IT Project Success.  The executive guidance provides invaluable insight which ultimately aligns to business needs and requirements.

The Current State of SAP Business Transformation Needs Serious Attention

You know you’ve got a serious problem when the user community expresses these (all to common) frustrations: “the IT group just doesn’t get it!” or “they think they know what I deal with but they have no clue,” or worse still “I’m sick of them putting something in and just throwing it at me and saying here it is…”

Too often many SAP enabled enterprises have IT organizations who genuinely do not appreciate their role in the enterprise.  Many SAP IT organizations seem to lack the critical understanding that technology in the enterprise is there to further business needs.

If you really want to find out the business perspective of your IT organization why don’t you do an internal poll asking how true those user statements are on a scale of 1 – 5.  You might be shocked by the answer.

A Change Program for the SAP Organization is Needed

You can use SAP as a Change Enabler to achieve tremendous benefits throughout the enterprise with the right approach.  But as my former colleague and friend Michael Doane has suggested by using a marriage vs. wedding analogy, SAP Implementation is an Investment NOT an Event!

Often the consultants who have done SAP for any period of time focus on how to help the business make the transition to the new system.  Unfortunately in the course of the project we rarely focus on helping the SAP support organization make the transition to business partner.  Instead we focus on setting up help desks, support, data management, etc.

To achieve Sustained Business Value from SAP Business Software it is important to incorporate a Change Management Program within the SAP / IT Organization itself which is focused on Achieving Business Value from SAP Investment. 

The SAP Enabled IT Organization’s Perspective Needs Internal Change Management

As part of the approach to gain real competitive advantage in the business marketplace you must Change How You Look at SAP to Create ROI because SAP Implementation is an Investment NOT an Event.  Some organizations are taking this approach as they seek employees who are “business analysts” rather than merely functional consultants.  In other words they are looking for employees who clearly have a business background as well as SAP experience.

It is important to incorporate a Change Management Program within the SAP / IT Organization itself

The SAP organization MUST focus on developing depth of business skills and business collaboration.  Failing to do this will only result in a loss of credibility for the SAP enabled IT organization.  As long as that is the perception of the broader user community, and especially of business leadership, the SAP / IT organization will not be seen as a business peer.  In fact, until this internal frustration and distrust is addressed there will be a natural resistance on the part of the broader business community to allow IT to become a business partner.

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Next week we will start to look at some steps IT leaders can take to change their technically focused culture.

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[FN1] Closing the Expectations Gap, CIO Dashboard

Related Posts:

• How To Navigate the SAP Business Transformation Journey
• Achieving Business Value from SAP Investment
• SAP Service Provider to Business Peer Through Center of Excellence Maturity
• SAP Service Delivery versus Value Delivery
• Steering Committee Governance for an SAP Center of Excellence

SAP Business Value & ROI

As a follow up to last week’s post on Sustained Business Value from SAP Business Software I did a little research on the study authors and discovered their continued focus on this issue.

Recently Peppard (one of the authors) and a couple of other colleagues provided real business value success findings in an upcoming journal article called “Factors Affecting the Successful Realization of Benefits from Systems Development Projects: Findings From Three Case Studies” [FN1].

While I read through and reviewed the draft 35 page study I couldn’t help but notice the striking similarity to my nearly 5 year old post on the subject of SAP as a Change Enabler. What SAP as a Change Enabler summarized in a few pages appears to have been empirically tested by comparing and contrasting a few case studies of live software implementations.

Following my personal experience around SAP since 1994 I’ve added additional insight on how to gain SAP ROI through Strategic Business Transformation by also Using SAP to Improve Revenue and Profitability.  It’s great to see the academic community more fully addressing the “how-to” instructions, and detailed guidance I’ve been writing about for several years. To amplify their initial research I’ve cross-linked many posts throughout this one to bring significant substance to the high level conclusions they are just beginning to research.

Changing from SAP System Delivery to Business Benefit Delivery

Before anything else a benefits focus must be the guiding framework for your SAP project. Every major business software project must begin with some clear guidance on the “why” of the project.

Business Centered SAP Change Management is Required

The authors highlighted several key observations around organizational change management and the need for user participation but missed one of the key areas of success–, knowledge transfer (see Change Management and Knowledge Transfer Part 1, and Part 2). Not just end user training, but more holistic knowledge transfer about the new system, its capabilities, and how to maintain them.

SAP business transformation (not to be confused with the SAP Business Transformation group) is an ongoing effort. It takes time to capture project and program lessons learned, and then develop the organizational maturity to manage additional change over time. To achieve this one of the goals of SAP projects has got to be to create a learning organization. An organization where knowledge exchange and benefits centered collaboration is key to SAP program success (see ERP III – Is the Integration of Collaboration the Future of Enterprise Applications).

WHY do an SAP Project?

So, what is the basic idea here? Their findings indicate that a large scale software program requires a business benefits focused approach. An approach which addresses the “WHY?” of the project.

[A] project might be successful in meeting its internal targets, yet not deliver beneficial business outcomes. [FN2]

For too long enterprise software vendors and SAP system integrators have focused on everything but the genuine business “WHY?” of the 5 W’s and the H of SAP projects. For too long companies have addressed:

• “WHO” (who will implement, who will support, who will the core team be, etc.)
• “WHAT” (what is the scope, what technology, etc.)
• “WHERE” (both project logistics as well as the organization structure that is impacted)
• “WHEN” (project timeline, business timelines, milestones, etc.)
• “HOW” (use our custom methodology [i.e. make it up as we go], or use ASAP)

But sadly few companies get down into the details of the “WHY?”

WHY is Management Engagement and User Participation Lacking?

It is the “WHY” which will engage the larger business community and senior leadership and that is The Real Reason Executive Participation Creates IT Project Success. It is the “WHY” that will bring about badly needed business process changes from the user community. Unfortunately it is my opinion that because the compelling “WHY” part of the business case has been missing for so long senior leadership and ultimately the user community is generally disengaged from the project delivery process. Yet a large enterprise software project like SAP is supposed to be all about the business.

Think about it, how many multimillion dollar investments, with such wide organizational impact, do management stakeholders and end users take such as “hands off” approach to?

If you want your SAP project to be a business project, GET THE BUSINESS ENGAGED! If you want it to be a technology project, nothing else is required. Just put the system in and when people complain tell them to shut up. It was never really about the business anyway!

Do Your SAP System Integrator Consultants Have Business Knowledge or ANY SAP Experience?

This leads to the next issue. If the business is engaged and you decide to bring in a system integrator then define BUSINESS expectations from your system integrator up front. If they only speak to the business in techie terms then get rid of them because do you need “consultants” who can’t even consult? (see Screening and Interview Methods to Find the Right Consultant – Part 2).  And if you think this sounds crazy and you are an SAP customer, I DARE you to read through some of the posts at http://sapmesideways.blogspot.com which is frightening because of how TYPICAL these horror stories are and why Protecting Yourself from SAP Consulting Fraud is critical.

Think about this a minute and let it sink in. If you hired a system integrator for an SAP business application project then shouldn’t they be focusing on business things? If they can’t speak to you in business terms then why again did you hire them? After all, are they really consultants? To gain real competitive advantage in the business marketplace you must Change How You Look at SAP to Create ROI because SAP Implementation is an Investment NOT an Event.

During the sales cycle you as an SAP prospective customer have GOT to ensure there is a clear business vision. Again I ask, if not, then why are you even doing this?

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[FN1] Doherty, N., Ashurst, C., and Peppard, J. (2011) Factors Affecting the Successful Realization of Benefits from Systems Development Projects: Findings from Three Case Studies. Journal of Information Technology (upcoming).

[FN2] Sauer, C. and Davis, G. B. (2010) – Information Systems Failure, Encyclopedia of Library & Information Sciences, Third Edition, pp 2643-2652.

Additional Resources for Successful SAP Implementation

Check out these posts for specific ideas, thoughts, and experience on achieving real results from your SAP project or other enterprise software projects:

• Why SAP Projects Fail to Deliver ROI and How to Change IT
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Series on SAP Competency Center or SAP Center of Excellence

Related Posts:

• How To Navigate the SAP Business Transformation Journey
• Series on SAP Competency Center or SAP Center of Excellence
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• SAP Service Delivery versus Value Delivery
• SAP Customer Responsibility for SAP Project Success