SAP Reimplementation

Some time ago I started a series on doing an SAP reimplementation for little more cost than a technical upgrade.  While I have done these, there were also a couple of interesting scenarios that added new complexities which needed to be addressed.  For example, how do companies deal with a seriously fragmented application landscape?  This is esepcially true in large enterprises where each company code, location, business unit, or other area decided to implement their own SAP applications independent of the others.  Then there are the companies with rollouts or upgrades underway.  For them the situation is a little different.  As a result I have decided to try to wrap this up with a focus on three key types of situations outlined below.

To review the previous posts on this topic, please see:

• Technical SAP Upgrade or SAP Reimplementation
• SAP Reimplementation For Little More Cost than a Technical Upgrade Part 1
• SAP Reimplementation for Little More Cost than a Technical Upgrade Part 2

This topic is difficult just because there are so many “dimensions” of options to consider. As a result I’ve narrowed the focus to a few key areas.

Primary SAP Reimplementation Approaches or Options

As I pondered it more, and looked at the re-implementations I’ve done, as well as some of the system assessments and options, I finally decided to “bracket” them with a few key approaches. Because the numbers of options for re-implementation are too significant to address here I decided to stay at the high level to cover the major approaches.

1. A reimplementation of a single SAP production instance.
2. Integrating a landscape with multiple SAP production instances onto a single global instance.
3. Rollout – whether it is an ongoing project that is not complete or a fully implemented system and you are considering an upgrade.

SAP Reimplementation Assumptions

As I wrote previously, one of the crucial considerations for a re-implementation is to move away from Software Engineering and toward business process engineering. First, let’s establish a few very basic assumptions about an SAP reimplementation:

1. After you went live, or as you continued to roll out your solution, you discovered several “if we had known “x” we would have done “y.”
2. Or, you may have incorporated a significant amount of custom code, or custom application development (inside or outside of SAP) and discovered that standard functionality would have met about ~90% (more or less) of your requirements (see SAP Implementation Focus, Software Engineering or Business Process Engineering?).
3. You’ve already worked through the hard stuff in your original SAP implementation (see the section by this same title in SAP Reimplementation For Little More Cost than a Technical Upgrade Part 1). In other words, the hard decisions around the processes, organizational structures and data types have already been made.
4. You may have additional functionality or other modules you want to implement and find that custom coded “solutions” are making them difficult to bring in.
5. The custom-coding is requiring significant amounts of time for break-fix testing, integration testing, regression testing, SOX or other regulatory compliance when any new change is added.
6. As new regulatory or other industry requirements are established, in whatever jurisdictions your company operates, you have to custom-code new solutions to meet them (rather than using SAP’s standard maintenance to add the new functionality).
7. The time to work around all of the customized “solutions” when you want to add new functionality, or new modules, takes a significant amount of time.
8. In some cases adding on brand new functionality is nearly impossible because of how much your system was “hacked together.”
9. You need to upgrade, but there are probably hundreds, and in some cases thousands of custom programs to evaluate, test, integrate, and update to the newer version of ABAP.

Coming up we will start to review the three key types of re-implementations: a single production instance, consolidating multiple instances into a single global instance, and a re-implementation rollout.

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• SAP Reimplementation for Little More Cost than a Technical Upgrade Part 2
• SAP Reimplementation For Little More Cost than a Technical Upgrade Part 1
• Key Design Considerations for SAP Reimplementation
• SAP Reimplementation Method Key Considerations
• Technical SAP Upgrade or SAP Reimplementation

SAP Project Leadership

SAP Project Management drives me crazy!  As I’ve often said, I don’t generally fault customers or clients who hire outside help for SAP project management.  If they believed they had the answers they wouldn’t bother with contractors for guidance.

Too often I see SAP project management treated as more project administration without much leadership.  Just about anyone can be a checklist administrator.  What is lacking from many SAP projects is the project management leadership to move things along.  

After managing a few SAP projects myself and the many projects I have participated in over the years I’ve learned an effective formula for SAP project success–, it takes a project manager who can actually lead the project.  What do I mean by leadership?  I mean someone who actually pitches in, rolls up their sleeves, gets busy, and gets their hands dirty.  They must be directly engaged with the project participants, they need to spend more time with their “ear to the ground” rather than serving as passive administrators. 

The key dimensions of SAP project leadership involves enough direct involvement in project coordination to:

1. Create a sense of urgency to build momentum.
2. To maintain that sense of urgency and maintain momentum.
3. To eliminate obstacles, roadblocks, and impediments which slow (or even stop) SAP project momentum.
4. To manage conflict (which WILL happen if sufficient momentum is gained).
5. To set, manage, and maintain expectations with both the project participants and the broader areas affected by the SAP project outcomes.

1.  Creating a Sense of Urgency

I’m still amazed at how often SAP project managers or program managers avoid using project plans with WBS structures, tasks, activities, and the assorted milestones, etc.  The only sense of urgency they create is reactive firefighting.  Everything will always be last minute, single-threaded, chaotic, disjointed, panicked, and difficult to follow.  Without a structured project plan any dates are just aspirations at best and timelines will continuously be missed.  This avoidance may be from a lack of ability, fear, or an attempt to evade accountability, whatever the reason it happens too often.  Maybe you should be asking yourself what deliverables, tasks, and execution activities your contracted leadership should be providing.

The Effective SAP Project Plan and Project Structure

The most appropriate method to create a sense of urgency is to have a fairly tight timeline but with very clearly defined milestones, tasks, deliverables, templates, and instructions on how to support project execution.  Those deliverables must help to measure project progress and they must be carefully managed.  Communicating and then supporting the message that as an SAP project manager your goal is to ensure the success of the project participants (then living it out) will bring badly needed leadership.

Without a project plan and proper templates any sense of urgency that is created is really reactive firefighting.

For each project phase or upcoming milestone an SAP project manager must have well defined presentations of what is coming, the timeline,  templates, instructions, and the resources to accomplish each set of tasks.

Nearly every contract SAP project manager somehow manages to put together steering committee presentations so why do they have such a hard time putting together critical project supports?  What are they really presenting to the steering committee if they aren’t providing meaningful project guidance?

If SAP Project Decisions Need to be Made Get Them Made Immediately!

Over the years I’ve been blessed to have several pretty decent mentors.  Back when I was an early manager in industry, long before consulting, I got a major schooling from our GM (and a senior VP).  We had a problem come up and the GM wasn’t around to consult so I did nothing.  I was the operations manager responsible for all shop floor production areas–, over a dozen leads and over 200 employees at the time.  My lack of decision-making brought large portions of the production floor to a halt. 

A “manager” who doesn’t make decisions isn’t managing or leading anything.

When the GM/VP got back he immediately set about to get things going and made a number of snap decisions and provided immediate direction.  After things got going again he called me into his office and we had a short discussion about my career.He was polite but firm and provided me a very valuable lesson. 

The GM expected me to make the decision I believed was correct even if it turned out wrong.  He said that 8 or 9 times out of 10 it would probably be right and that 1 or 2 that might be wrong or maybe not the best decision it was easier to correct than doing nothing.  He promptly let me know if I made a bad decision he would hold me accountable but it would not be as bad as making no decision at all.  He would hold me accountable for my decisions to help me learn to make better decisions but if I couldn’t make a management decision to keep things going he didn’t need me because I wasn’t managing anything.

That was a profound insight.  As an SAP project manager if you won’t make the tough decisions to get things going and keep them going then what are you managing?

Decisions must be made as quickly as humanly possible.  Delaying key decisions, or delaying any decision making, creates the appearance of indecisiveness, reduces confidence in your ability to lead, creates constant “swirl” around key issues, and slows the project.  It also creates an atmosphere where others avoid decision-making and become embroiled in analysis paralysis (or “swirl”) because that is the culture you as the project manager are creating.

Next week, more on building and maintaining momentum and the sense of urgency.

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• More SAP Project Leadership Tips for Managing Conflict
• SAP Project Manager – SAP Program Manager, Lessons from the Trenches
• SAP System Vendor Project Success Criteria 1
• Series on SAP ERP Project Success Factors
• 5 More Leadership Tips for Successful SAP Project Management

Business Systems

The day after I released my last post (SAP IT Governance – Achieve Business IT Engagement) techrepublic.com 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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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
• Using SAP to Improve Revenue and Profitability
• SAP IT Convergence Beyond Business to IT Alignment

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 / 5^th to 1 / 7^th 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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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• Where Does SAP Offshore Development Make Sense?
• Hidden SAP Offshore Development Costs
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Industry Specific SAP Consulting vs Deep SAP Application Experience
• Using SAP to Improve Revenue and Profitability

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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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• ERP vs. ERP II vs. ERP III Future Enterprise Applications
• ERP II & ERP III – SAP Business IT Revolution
• Steps to Achieve SAP IT Convergence
• Striving for a Customer Focused Approach to Innovation 3 of 3
• ERP III – Is the Integration of Collaboration the Future of Enterprise Applications

IT Convergence

The other day I was having a conversation with an IT executive from one of America’s largest companies.  I was really interested in his perspective as a hard working senior level IT insider.  We started talking about the role of IT and business as well as the future of business and technology while I relayed my passion for how IT needs to integrate with the business and how the future was going to change significantly (see e.g. What is the Proper Relationship for the CIO, CEO, and CFO?).

I gained a new appreciation for how difficult an IT executive’s job can be when the economy is in turmoil.  I’m sure my comments and perspective were challenging but here is part of what I gained from that conversation (my assumptions and my “read” may be wrong)…

The wider global technology discussion (inside and outside of the company) is putting real pressure on IT return on investment, IT Convergence, and full integration with the business (see Steps to Achieve SAP IT Convergence).  Even while all of this takes place there is still a critical need to stay on top of technology trends and be sure the organization does not stagnate.  To stay competitive what does he do with “cloud” processing, do they need different applications for some of their processes (CRM, APO,SRM, etc.), what about social media (does it even fit), virtualization, shared services, service excellence, outsourcing, in-sourcing, etc., etc., etc.

This executive’s IT organization is being challenged to do more with less.  As a result of cost-cutting pressures his organization is having to look at outsourcing while he also has to maintain a positive and upbeat appearance in the face of working through difficult cuts.  He has to continue encouraging and rallying the troops while some of them will not be there.

A Simple Response to the Nagging Problem of Business IT Convergence

With all of this background in mind one of his responses to me set me back a moment for its simplicity, candor, and most of all the underlying frustration.  It is certainly one of those very difficult struggles that many corporate technology leaders today face:

“What is the business responsibility for this?”

The business not only has responsibility but they have to help drive solutions and delivery. The various business stakeholders must see, understand, and then accept their role in developing the technology roadmap. And once it is developed they must help ensure its execution.

The Business to IT Convergence Solution That Was There All Along

The IT Convergence approach in the SAP enterprise is partially based on best practices around IT Governance.  By creating a governance structure that involves and integrates both the business and IT stakeholders you gain business buy-in and involvement.  I have written a solution brief on this approach and provide a free, no-obligation MS Access application to build technology roadmaps (see the Solution Brief, governance process, and application overview here:  Beyond Technology Alignment )

The basic takeaway here is that business involvement is critical.  They are already making technology investments, with, or without your involvement. So it is critical to gain that convergence so that technology investments are performed as a partnership and not in isolation.  As a recent Harvard Business Review post by Ray Wang notes:

“[O]verall corporate tech spending is up by 17 to 20% in our latest data, spending by IT departments is flat at best. It’s business leaders, not their IT colleagues, who are driving purchasing decisions.”

Coming to Terms with the Consumerization of IT, http://blogs.hbr.org/cs/2011/07/coming_to_terms_with_the_consu.html and a followup with more details on his site at:  http://blog.softwareinsider.org/2011/08/22/mondays-musings-balancing-the-six-ss-in-consumerization-of-it/ (both retrieved 8/23/2011)

So the key here is to integrate the business into the IT and application infrastructure.  One way to do that is through leveraging SAP steering committee skills and business connections to ensure meaningful involvement by IT.

Additional Steps to SAP IT Convergence – Creating the Center of Excellence

Last week’s post provided a few high level steps to achieve SAP IT Convergence, and this week I am adding to that list the following items.

• Pursue business executive sponsorship but don’t wait for it to get started.
• Start a communication program
• Engage at all levels of the organization
• Conduct one or more pilot programs and capture lessons learned
• Hold IT staff accountable for participation
• Don’t let available tools stifle participation or innovation

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

=========================

Related Posts:

• Steps to Achieve SAP IT Convergence
• SAP IT Convergence is About Business Focused Integration
• SAP Program Management Requires a Type of CMMI
• SAP IT Convergence Beyond Business to IT Alignment
• SAP Project Manager – SAP Program Manager, Lessons from the Trenches

SAP IT Convergence Practices

Last week’s post on SAP IT Convergence is About Business Focused Integration provided an overview of IT Convergence and why it is important.  This week we look at some of the key principles around creating SAP IT Convergence including some steps on the path to convergence.

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There is an important distinction between convergence and alignment. Business to IT alignment works to mature the IT organization to a point where there is synergy in applying technology to business goals.  Convergence on the other hand seeks to blur the lines between IT and business.  The alignment seeks to get IT and the business to work together, convergence seeks to fully integrate the IT organization into the business.

Business & IT Alignment is the degree to which the IT applications, infrastructure and organization, the business strategy and processes enables and shapes, as well as the process to realize this (Silvius and Smit, pg. 2, 2011 citing Silvius, 2007).

In the last several years there has been progress in Business to IT Alignment through employing the “SAM” (Strategic Alignment Model) (Silvius and Smit, pg. 2, 2011 citing Luftman, 2000) but there is still much further to go.  The real domain of IT Convergence is around business value and one widely accepted academic definition around this is “[b]usiness value can only be derived from the efficient and effective utilization of information” (Hedman pg. 2, 2010 citing research from 2000).

What is Wrong with Business to IT Alignment?

As I continue to explore these topics a consistent theme continues to emerge–, SAP, IT, or the technology organization are supposed to “work with” the business toward alignment.  So what’s wrong with that?  This approach allows your technology organization to stay separate from the business –, true integration or convergence never really occurs.

IT Convergence occurs where business and technology grow together causing business opportunities to expand

Business to IT Alignment still allows for too many information silos but frequently fails to move the enterprise into efficient and effective utilization of information.  Because of the lack of IT Convergence the separation of the technology organization from the business causes them to specialize in providing information, they leave the business portion of the “utilization” of the information up to the business.  Some of the symptoms of this are when IT waits for the business to tell them “we need x report in y format” or “we need to do z type of processing.”

SAP IT Convergence Integrates the Technology Organization and Busines

During your SAP project one of the key benefits to the business is the process oriented integration of all departments.  The whole business comes into a single database with opportunities for both improvement and standardization.  Organizational silos are broken down and dependence across the entire process chain is created.  Throughout this difficult transition  (and after the SAP go-live) the SAP or IT organization remains separated.  Beyond reactive support (help desk, enhancement requests, bug fixes, etc.) there is little done to create IT Convergence between the business and IT functions.

SAP IT Convergence is Focused on Business Integration and IT Innovation

Stop and think about this recent quote by Mark Dean, Engineer of the original IBM PC:

Innovation flourishes best, not in applications or hardware but, in social places where people and ideas meet and interact…

This is what SAP IT Convergence is about.  How does this apply to your SAP or IT organization?  This whole idea goes beyond technology and integrates the interaction of business and IT to converge the organizations.

A converged SAP organization uses technology as a change lever for business competitive advantage.  The primary focus is on innovation and customers by leveraging SAP, IT support staff, and other technology investments to achieve measurable business outcomes.

SAP IT Convergence occurs when IT is part of the business and not just SAP, IT support, or the IT organization.  A few of the characteristics of what an SAP IT Converged organization looks like:

• SAP and IT staff communications, internally and externally, are more in business language rather than technology.
• Proactively seeks out new business opportunities.
• Able to interpret, and then implement, business marketplace requirements by turning them into technology solutions.
• Adapts to business market conditions.
• Not worried about the latest “techie buzz” like social media (Twitter, Facebook), cloud, etc. unless there is a direct business marketplace connection.

I describe this full SAP IT Convergence as an SAP Center of Excellence–, if you would like more understanding around the SAP Center of Excellence concept please see this SAP ASUG presentation on SAP & Business Convergence.

Conclusion on Steps to Achieve SAP IT Convergence

As time goes on I will address many of the items below in more detail.  Here are some of the key things to consider for creating IT Convergence within your SAP organization:

• KPI full court press
• Steering Committee Engagement
• MBA in the organization
• Mobile BYOD
• Internal consulting on business direct buy technology solutions
• “Exchange staff program” to integrate the IT organization into the business
• Invest in technical and NON-TECHNICAL IT training
  • Facilitation skills
  • Questioning and Negotiation
  • Meeting skills
  • Conflict management and resolution
  • Managerial skills

This approach helps your organization develop business skills and business understanding which naturally leads to the better utilization of technology and information.  SAP IT Convergence is impossible if you can’t both speak the same language and have a similar cultural understanding.  Since it is unlikely that the business is going to learn ABAP, Java, SQL, or how to make settings in the IMG, it is up to you to be the Business IT ambassador to bridge the gap.

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For more information and background on the concept of IT Convergence in the SAP enterprise you might want to consider the following posts:

• Using Your SAP Steering Committee for Business Transformation
• SAP ROI through Strategic Business Transformation
• 3 Keys to Reduce SAP TCO & Move to SAP ROI
• Steering Committee Governance for an SAP Center of Excellence
• A New SAP Implementation Methodology and Implementation Steps

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Hedman, J. (2010), ‘ERP Systems: Critical Factors in Theory and Practice’, Center for Applied ICT, Copenhagen Business School.

Luftman, J. (2000), ‘Assessing Business-IT Alignment Maturity’, Communications of the Association for Information Systems, Vol 4, Article 14.

Silvius, A. (2007), ‘Business & IT Alignment in Theory and Practice’, 40th Hawaii International Conference on Systems Sciences (HICSS-40).

Silvius, A. and Smit, J. (2011), ‘Maturing Business and IT Alignment Capability; the Practitioner’s View’, 44th Hawaii International Conference on System Sciences (HICSS-44).

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• SAP Program Management Requires a Type of CMMI
• Why SAP Projects Fail to Deliver ROI and How to Change IT
• SAP IT Convergence Beyond Business to IT Alignment
• Steering Committee Governance for an SAP Center of Excellence
• The Real Reason Executive Participation Creates IT Project Success

SAP IT Convergence

The problems with Enterprise SAP IT organizations are they are focused on SAP and IT.  They lose sight of their purpose which is to support and promote the broader objectives of the enterprise.  In an SAP centered IT organization this means your whole existence is about ensuring business benefit, focusing on enterprise goals, strategies, and objectives.

Somewhere between the SAP sales cycle and the SAP go-live the concept of business benefit gets lost and is never found again.  By the time you go live with the SAP application the entire IT organization becomes narrowly focused on the care and feeding of the new system.  Everything is all about the “new” ERP application and the business is left holding an empty bag –, the money is gone but the business now has to struggle through getting their operations stabilized just to continue doing business.

The entire IT organization’s existence must focus on enabling business.

Today’s enterprises will no longer pay the premium prices for SAP or IT organizations which exist in a silo.  To continue with this old way of doing SAP or IT support will turn those internal services into very expensive commodities to be outsourced to the lowest cost provider(s).  If you want to do more than survive, but rather to thrive, you must build a converged SAP or IT organization.  Without IT convergence you can expect budget cuts and more outsourcing pressures.

Research Shows a Business Focus Produces SAP Results Needed for IT Convergence

Successful SAP projects require the management and measurement of expected benefits and the purpose for the project throughout the entire SAP life-cycle (Holland and Light, pg. 1630-1636, 1999).  To gain business benefits from an ERP package like SAP you will need serious discussion of goals, direction, objectives, and what the business software can do in those areas.  After that, coordination of key resources from both business and IT is also required to create business to IT alignment (Willcocks and Sykes, pg. 33-38, 2000).  This business to IT alignment produces some great results but is just the beginning.

[F]irms that invested more heavily in business process redesign and devoted more of their IT resources to increasing customer value (e.g. quality, timeliness, convenience) had greater productivity and business performance (Hitt, Wu, and Zhou, pg. 3, 2004 citing Brynolfsson and Hitt)…   [A 1999 study on] the impact of ERP systems on self-reported company performance based on a survey of 101 US implementers of SAP R/3 packages [showed]… companies reported substantial performance improvement in several areas as a result of their ERP implementation, including their ability to provide information to customers, cycle times, and on-time completion rates (Hitt, Wu, and Zhou, pg. 5-6, 2004).

In the 2004 study just cited they also referenced compiled research by Gattiker and Goodhue (2000) which identified four broad categories of ERP benefits including (1) better information flows, standardization, integration, communication and coordination; (2) centralization of administration activities like, AP, payroll, etc. (i.e. “shared services”); (3) reduced IS maintenance costs and improved ability to deploy new IS functionality; (4) a move to “best business practices” around business processes.

Some of the additional and very interesting findings (Hitt, Wu, and Zhou, pg. 18, 2004) include:

• Greater sales employee performance
• Higher profit margins
• Better return on assets including greater asset utilization
• Higher inventory turns
• Greater receivables management (including better “cash to cash” cycles)
• More revenue generated per unit of input

This is impressive but notice these benefits are nearly all operational business performance results.  They certainly appeal to the CFO and improve market valuation making them meaningful. However, as operational benefits they are nearly all focused on lagging indicators of business success.  Shareholders like them with the valuations of companies who implement ERP systems like SAP being “worth approximately 13% more than their non-adopting counterparts, controlling for assets, time and industry” (Hitt, Wu, and Zhou, pg. 20, 2004).  So implementing SAP has a positive impact on stock values.

Today’s SAP Enterprise Can Realize Even More Through SAP IT Convergence

All of these benefits and gains from roughly a decade ago are not enough today.  While the study from Hitt, Wu, and Zhou (as well as the others reviewed here) showed tremendous benefits for SAP they were based on studies at least 10 years old.

In the last decade the entire global landscape has dramatically changed –, the Internet and the pace of technology change has disrupted every value proposition model relied upon by business.  No area of the enterprise is off limits–, business is in the midst of a global and dynamic transformation of operations, innovation, and customer focus.  To thrive in our modern business era we will all have to move past the IT to business alignment model and push into IT convergence.

Your SAP Enterprise Can No Longer Avoid Full Business to IT Integration (i.e. “Convergence”)

The business benefit focus has been difficult for SAP or IT leaders trying to quantify returns from their investments.  Even though SAP has been at the forefront of addressing this message it is slow to catch on.  Over a year ago I highlighted SAP’s “value delivery” and value focus to implementing their software:

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…  (see A New SAP Implementation Methodology and Implementation Steps).

And while all of this is critical for realizing SAP ROI from your investment there is still more to do.  With this groundwork focusing on the need for business benefit, or measurable ROI, we can take the next step and start to explore full IT convergence around your SAP endeavors.

Next week we will look at some methods to create SAP IT convergence.

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Gattiker, T., and Goodhue, D. Understanding the plant level costs and benefits of ERP: Will the ugly ducking always turn into a swan? In: R. Sprague, Jr. (Ed.), Proceedings of the 33rd Annual Hawaii International Conference on System Sciences ( CD-ROM), Los Alamitos, CA: IEEE Computer Society Press, 2000.

Hitt, L., Wu, D.J., and Zhou, X. ERP Investment: Business Impact and Productivity Measures.  Wharton School at U of P (2004).

Holland, C. and Light, B. Critical Success Factors Model for ERP Implementation.  IEEE Software. May / June (1999).

Willcocks, L. P. and Sykes, R. The Role of the CIO and IT Function in ERP.  Communications of the ACM, Vol. 43, Iss. 4 (2000).

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• Integrating Business Stakeholders as Part of SAP IT Convergence
• Steps to Achieve SAP IT Convergence
• What are SAP Best Business Practices Anyway
• Why Indexed KPIs are Critical for Business Performance and Success
• Using SAP to Improve Revenue and Profitability

SAP consulting services best practices

Last week’s post took a hard look at the types of consulting services you need for a high speed SAP project (see SAP Consultants for High Speed SAP Projects).  Consultants who work on SAP projects in the small and mid-sized business space develop great breadth of SAP experience across an entire area.  This week we will look at the other side of that coin, consultant skills from large, long-term type SAP projects and what their experience provides.

Consultants on the larger, longer-term SAP projects may not develop the breadth of experience gained through smaller company experience but they develop depth of experience.   Small and mid-sized SAP implementation projects create breadth of experience while large projects create depth of experience.

How is Consulting Service Delivery Impacted by Large SAP Project Skill Development

On larger SAP projects the projects are usually broken out into sub-teams within a module or area.  These SAP consultants may cover a small subset of a module, or of the overall solution within a small subset.  As a result they spend much more time digging into the details of the functionality around that small subset of SAP setup.  That type of focus creates a high degree of narrowly focused specialization.

For example, a consultant who focuses on just the SAP GL Account setup will easily become an expert at every setting and every option related to its setup.  They will learn about the different posting possibilities, account settings, document types, how to deal with taxes, reporting issues, data elements that can be stored in the GL, etc.  An SAP SD consultant who focuses on order setup might become an expert at all of the copy rules around moving the data from an order to a delivery or to billing.  Depending on how the responsibilities are broken out they might focus on the different types of item categories and all of the functionality they drive.

Small and mid-sized SAP implementation projects create breadth of experience while large projects create depth of experience

Big SAP project consultants gain great depth of experience with very narrow areas of the application.  Those with many years of experience are great for projects that require specialized focus for complex processing around a very specialized area.  So if you are having a particular problem, in a very narrow area of the application, these SAP consulting skills may provide value.

SAP Consulting Services to Produce Business Value and Achieve ROI

Depending on what you are trying to achieve different types of consulting skills are required.  When you need SAP architecture, complex process design, involved SAP custom development, or other unique requirements you will want an SAP consultant with many years of all around experience.  That type of consultant needs both depth and breadth of experience with a well-rounded background in small, mid-sized, and large company SAP implementations.

The obvious but often overlooked fact is SAP consulting service delivery is directly related to the type of consulting experience you are provided

This type of experience will generally take around 10 or more years of experience.  I’ve written about this previously in Expert SAP Consulting to Reduce SAP TCO and Improve SAP ROI where the academic studies lay out the path to “expert performance.”  Unfortunately for most SAP customers they will rarely find this level of skill with any of the consulting firms or system integrators unless those integrators use contractors.  Few consulting companies provide these types of consulting services because as I’ve pointed out, if you haven’t moved up “through the ranks” after 10 years in a consulting firm, your future is pretty dim.

Where Can Customers Find These Skills or High Quality SAP Consulting Services?

One of the most important areas where you can make a difference in your solution results is to hire solution experts (see Industry Specific SAP Consulting vs Deep SAP Application Experience).  They are not easy to find, but they are out there.

If your SAP project is large enough to have more than one consultant per module then demand that at least one of those consultants has both depth and breadth of experience.  If they are the only consultant for an entire module you may wish to insist that they have a significant amount of small and mid-sized project experience.  If you need specialized skills then you will certainly want to consider large project experience in that particular sub-area of expertise.

As an SAP customer you have to insist on the level of skill and experience that a consulting company provides in their initial proposal.  In other words, your SAP RFP must call out what level of skill and experience you expect.  You must insist in writing on this and build it into your SAP consulting service contract with the vendor you choose.  Until SAP customers begin demanding this from the marketplace nothing will ever change, results will continue to be sub-par, and ROI from your SAP investment will continue to be lacking.

One last consideration is to be very, very careful of the consultants you or your SAP consulting firm hires.  There are so many frauds, fakes, and con artists out there it is frightening.  And I don’t mean just exaggerated either, but outright fabrication and fraud.  Unfortunately many of the staffing firms knowingly allow the fraud to continue (see Screening and Interview Methods to Find the Right SAP Consultant and Screening and Interview Methods to Find the Right Consultant – Part 2).

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• SAP System Vendor Project Success Criteria & Factors 4
• SAP System Vendor Project Success Criteria 1
• Reduce SAP, ERP, or Technology Project Stress: Part 2
• Series on SAP ERP Project Success Factors
• How the SAP Consulting Peter Principle Works

SAP Center of Excellence Governance

This post is based on information from my recent ASUG presentation in Atlanta…  Beyond Technology Alignment – Building a Center of Excellence @ http://bit.ly/jJefxP

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At the intersection of business and IT you have convergence.  At the place of convergence is where the Center of Excellence exists.

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One of the key SAP project success factors is to use a steering committee made up of key business stakeholders.  They can meet once a week or once a month, but generally they are involved to provide business level guidance to an SAP project or IT programs.  The most effective steering committees include at least one executive and several senior leaders from throughout the business (see The Real Reason Executive Participation Creates IT Project Success).

That steering committee performs a critical function over large projects like SAP implementations.  This group is critical to your project’s success because of the amount of time from company employees, capital from the organization’s coffers, and decisions which change the business.

Some of the key functions a steering committee carries out during the course of your SAP project include:

• Set SAP project scope and then help manage it.
• Define project objectives and evaluation criteria.
• Monitor project progress, including key milestones and deliverables progress.
• Oversee Quality reviews at key check points.
• Evaluate and mitigate organizational impact of business changes.
• Promotes the project throughout the organization.
• Coordinates staffing and resource levels from key business areas.
• Makes critical decisions which the project team is unable to resolve (escalations or key business decisions).

The ongoing functions and tasks of the SAP steering committee cannot be underestimated. During the course of their duties they gain that list of unique and critical skills related to applying technology to business issues and problems (see Using Your SAP Steering Committee for Business Transformation).

You go live and WHY do you disband your steering committee???

Integrating the SAP – IT Organization Into the Business

In an SAP Center of Excellence, after your SAP implementation goes live, the steering committee functions change to one of developing and managing technology road-maps.  Their skills with scope, schedule, cost, performance, prioritizing, and evaluating risks / rewards are ideally suited to their continued involvement in the application of technology to the business.  But the underlying issue here is that they must continue to function –, they should not be disbanded.

One of the key benefits of continuing to leverage the SAP Steering Committee after the SAP business software goes live is you continue to build on their experience and unique skills.  Even as they rotate out of the steering committee role these individuals move through the ranks of the larger enterprise and take that technology to business integration experience with them.  If they have served on a steering committee long enough to see the benefits technology can bring to the larger enterprise their exposure is invaluable to building a long term Center of Excellence –, an organization dedicated to converging business and technology to meet business marketplace requirements.

These individuals have worked through many key business decisions, budget decisions, scope and schedule decisions, and how to move to technology integration project success.  As a result of their experience applying technology solutions to the business they develop critical skills for the converged and integrated organization, these skills are difficult to replicate.  In a nutshell this steering committee develops a convergence of three critical skills for tomorrow’s powerhouse enterprises: they understand management, technology, and business integration.  Those are the key ingredients to the converged SAP enterprise.

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175

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Related Posts:

• SAP Program Management Requires a Type of CMMI
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
• Change How You Look at SAP to Create ROI
• Why Use the SAP ASAP Methodology?