SAP & ERP Consulting from the Customer Point of View

ABAP Development Revolution

Some time back I wrote about Opportunities for INNOVATION SAP, HELLO? At the time I wasn’t really expecting a lot and I’m guessing I didn’t have a lot of influence but I do find it coincidental that many of the suggestions I offered have been adopted. Some of them, like the switched framework to improve order management processing is included in ECC 6.0 EP4.

So, one thing that I have been chewing on for a long time is how to dramatically improve ABAP development and overall application enhancements.  My own requirements were to find a way to make ABAP coding simpler, improve code quality, provide better overall system performance, and make it easier to troubleshoot. Tall order I know. Impossible? No!

Welcome to the “Big Data Revolution”

This post is more about a technical issue which SAP can “easily” address that would completely revolutionize its own internal development as well as external customer development.

The New SAP Development Revolution

I’m not an SAP ABAP coder but over the years I’ve had enough exposure to it to see some great tools, resources and improvements. This development effort has been mostly on the usage side of the existing syntax.

• What if there was a way to revolutionize the way ABAP is coded that is 100% compatible with current syntax ?
• What if it dramatically improved coding quality and solution development?
• What if it improved the performance and consistency of customized ABAP solutions?
• What if it simplified the entire coding process AND made troubleshooting easier?
• What if it opened up a whole new world for coders to develop dramatically improved solutions?

You say that sounds crazy? Not only is it possible it would propel SAP’s place in the entire business application space to new levels.

Where Did This Crazy Idea Come From? And WHAT IS IT?

After many years working in SD (along with other modules) I had a client who needed help creating a new “smart” trade promotion execution solution. The solution had to do a LOT of things no standard SAP process handles. It needed to dynamically determine complex offers, with discounts, free goods, limits, caps, quotas, perform dynamic best price processing, provide loyalty points, etc. –, all while dynamically evaluating the customer segment and strata for offer eligibility.   The solution had to be done across a large population of order items, with multiple promotions based on the mix of products and the number of discounts or promotions that had already been given to a customer over time. The mix of products or offers could bundle multiple free goods, multiple offer discounts, or other special items, in a many to many relationship, based on the customer purchase and purchase history.  And performance HAD to be good because of the huge order volume.

The client had been asking for someone to deliver this for some time. A previous system integrator who did their upgrade couldn’t do it. I ended up spending 6 months working on a new custom coded ABAP “mini-module” in SAP that allowed them to achieve their goals by using mostly master data.

That process taught me more about ABAP programming and SAP coding than I ever anticipated. As I went through this process I was amazed at one simple thing that was completely lacking from all of this coding effort –, the amount of “VIRTUAL” SQL syntax for internal data processing in the form of loop, sort, read table (with key), append, move, move corresponding, index, etc.

Why not develop the syntax to handle all of this in the background through “virtual” select statements?  Create a new “iSelect” syntax which performs all of these functions that can be exploded.

SAP already uses internal tables in memory for processing data during the transaction stream.  By creating a new “iSelect” syntax much of this coding, looping, moving, etc., could be masked by fairly common SQL type commands. Since this would be compiled syntax the performance would likely be better and the quality would be FAR better while needing fewer lines of code to accomplish the same thing. For simplicity I will call it “internal SQL” or, iSQL.

This would be the perfect complement to SAP’s HANA in memory processing, and would help with reporting extractor and programming development of all kinds.

This type of iSQL could be developed to allow inner or outer joins on internal tables, external tables, or any combination of them. The normal SQL statements like Select Sum, Select Distinct, etc., etc., etc., could be employed throughout the entire ABAP processing stream. With internal tables in memory as well as the tables read from the database.  Still more interesting would be the ability to “explode the code” underneath this new iSQL syntax. When finer detailed control, processing, or calculations are needed, within or across joins, the underlying loop, sort, append, etc., could be exploded out and adjusted to fit the specific need. This would speed up development efforts by being able to quickly rough-out a data processing framework and then explode the code to make more detailed adjustments.

By focusing on syntax that is like SQL for the internal loops, sorts, reads, sums, append to table, move, etc., the coding complexity is reduced WHILE also providing more flexibility and options. SAP would have greater control over the development of the internal / external table processing standards and programming knowledge around actual data processing would improve.  This would be the perfect complement to SAP’s HANA in memory processing.

It would allow for faster, more reliable coding efforts with a higher performance result. Small performance tweaks or changes to the underlying compiled iSQL statements, along with that ability to explode the underlying code would create a revolution in the ability to more quickly and consistently deliver SAP solutions.

What is most important of all is this could be rolled out piecemeal and stay 100% backward compatible with no negative downstream effects. As new iSQL syntax is developed the original coding standards could remain in place without change. It would just add an additional set of power processing options. Think about all of the areas this would radically affect, custom coding, data conversion, SOA development, report development, function module creation, you name it. This could create HUGE customer benefits for outstanding development.

I’m tired of crappy, poor performance, system choking code from poor development, aren’t you? Come on SAP, YOU CAN DO THIS!!!!

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New IT Value Propositions – Moving from Operations to Customers and Innovation

Throughout everything I do as a consultant I try to categorize my activities into the three key value proposition areas of business–, operations, customers, or innovation.  Even though I have been working primarily in the supply chain areas of SAP since 1994 (SD – Sales and Distribution, MM – Materials Management, and PP – Production Planning) I have been focusing more and more on the key value areas of customers and innovation.  The big driver for my focus on customers and innovation is because that is where business is done.

By focusing only on processes, operations, and cost reductions business and IT efforts result in mass commoditization.

Certainly every company must contain, control, and reduce costs to stay competitive in the marketplace.  More and more however the companies who are able to ensure long term success are those with a more balanced focus on retaining and acquiring customers while innovating new products or services.

Where IT has been and Where IT is Going

The last 30+ years the business and technology “revolution” has focused on operations and done little to directly address the customer or innovation.  It is almost as if technology organizations only understand Henry Ford’s assembly line mentality with business processes.  The operations focus can be seen in ERP applications (like SAP), EDI or interfaces, machine logic controllers, wired and then wireless data transfer, the Internet, or any other number of technological advances.

Today’s leading companies are integrating their IT operations into the fabric of the business.  Today’s leading companies are focused on innovation and customers.

Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it’s about selecting and executing the right ideas and bringing them to market in record time.

In the 1990s, innovation was about technology and control of quality and cost. Today, it’s about taking corporate organizations built for efficiency and rewiring them for creativity and growth. [FN1 - excerpted from "The World's Most Innovative Companies," see the footnote link below.]

In announcing the recent list of innovative companies, MIT noted these companies are “setting the agenda in an increasingly important market, on the verge of disrupting an established market, or creating an entirely new market.” (BostInnovation Feb 22, 2011 citing an MIT study of innovative companies).

The Operations IT Focus Has Turned All Products Into Commodities

This better, faster, cheaper automation paradigm has worked well when processes were mostly manual and labor intensive.  As more and more processes have been automated and streamlined further technological advances provide less and less return at higher costs.  Along with that, the cost-cutting chase, and the speed of automation and process improvement has dramatically accelerated the rate of commoditization of products and services.

As just one example of how dramatic this transformation is, I personally own an iPhone.  On that iPhone I have a free application that: a) uses the phone camera to capture and process product bar codes, and then b) goes online to immediately price-compare that product to local and online sources.  My wife loves it.  She can be out shopping and do real-time price comparisons.  What does this mean? 

Every major product seller is now a commodity outlet.  Every product can be comparison shopped in real time making it a commodity also.

As a product supplier, your customer does not have the option of you re-numbering, or using a different SKU.  Why?  Because the very same ability to search for the lowest price is the same tool that finds your product to begin with.  Changing the SKU would be more counterproductive to sales than engaging in the commodity-based price wars.

The future of technology and business integration provides the two areas of business most neglected by IT or ERP or technology to focus on–, innovation and direct customer interaction.  While I personally believe we are in the early “Wild West” era of social media tools, their hype and popularity is proof enough that the marketplace as a whole recognizes a gap in customer interaction that must be filled.  The real question is what will tomorrow’s successful social media business models look like after all of the hype and snake oil sales are finished.

Next Generation Enterprises – Will They Transform Business?

Already we are beginning to see seeds of transformation being sown.  All around the globe companies are beginning to focus more directly on innovation and customer focus through technology integration.

The hype around social media and Web 2.0 is beginning to give way to a few practical applications.  The same can be said for “cloud” computing even though it is still heavily immersed in the “hype” phase.

These are all IT solutions.

What about business integration?

What are the details of how technology and social media will bring about a revolution in customer focus and innovation?

——————————-

[FN1]  The World’s Most Innovative Companies (Bloomberg)
http://www.businessweek.com/magazine/content/06_17/b3981401.htm

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See PART 1 – SAP Implementation is an Investment NOT an Event

How much is it going to cost and how long is it going to take?  That is the classic approach to SAP implementations.  Today it’s not enough and the marketplace is demanding more from their IT dollars.  Now there are questions about measuring cost reductions, process improvements, as well as customer retention and customer acquisition. These are all important discussions.

Your money has to work for you in your business and it should work for you in your SAP investment as well.

If you’re looking to buy a new stock, or mutual fund, or some other investment you do your homework.  If you’re looking at a capital purchase in your business you want to understand the justification and the payback so you build a business case.  If you’re looking to implement SAP then define the business reasons for the implementation and do your homework! 

Take the time and do some research to understand how to avoid many of the sales scams, pitfalls, and ridiculous system integrator tactics.

SAP Cost Based Indicators, Total Cost of Ownership, and Return on Investment

Lagging Indicators and SAP Supported Process Cost Reduction

Using the stock investment analogy, the cost-based ROI component can be seen as the dividends paid by a stock–, generally known, stable, reliable payback, quantifiable and tangible.   In an SAP implementation the “dividends” would represent lagging indicators of performance.  There is a fairly reliable history to consider for the dividend payout. You have a pretty good idea of a number of your costs (or can find out what they are), such as:

• current legacy systems cost,
• you know what your man hours are (staffing, personnel, benefits, overhead, etc., etc., etc.),
• process cycle times,
• per transaction costs for things like purchase orders, sales orders, production orders, etc.,
• competitor transaction cost benchmarks,
• current application license and maintenance costs,
• etc., etc., etc.

These are all lagging indicators and they are all cost based, cost improvement focused portions of an SAP implementation.

Same Old, Same Old, Everyone at Least Pays Lip Service to Cost Based Process Measures

EVERYONE tries to do this to some extent.  It is not always structured, clearly defined, and then measured after the system is live, but there is a general expectation of improvement.  Even for those companies who buy into this paradigm during the sales process but never see it realized, it is still part of the system integrator pitch.  You are always promised “improvements” by the system integrators.  You always expect processes to speed up and process costs to go down.

The process improvement, automation, and cost reduction approach is no different than everyone in the marketplace who does SAP or some other ERP application–, it is the old “operational excellence” model of business.  It does little or nothing to address the key components that grow business or improve revenue.  And after an initial cost reduction boost it does little to increase profits.  

Leading Indicators, SAP Value Proposition and SAP Value Realization

Unless you are in a commodity market, or have clearly “broken” or significantly inefficient processes, the cost reduction or operational excellence approach to ERP should not be your only focus.  Considering your SAP implementation as an investment for ROI purposes you would understand that this is the first step in a long term system investment program.  After you get the system in, you should press your IT organization to move from an operational excellence paradigm into how to use the system to support corporate innovation and sales growth.

If you want value realization from your SAP or other business application implementation it takes a more rounded and tangible business centered approach or, a real SAP value proposition.  Using the stock analogy, the value realization comes from stock appreciation together WITH the cost saving dividends that are paid.  In your SAP implementation both lagging and leading indicators are used to finally realize value.

This new investment paradigm must focus a significant amount of attention on the end state after the business has started operating in the new SAP world.  And that “end state” focus on value realization from your SAP implementation should begin  before you write your RFP.  This entire site is dedicated to help you transfer critical knowledge needed for success from SAP value proposition all the way through value realization.

Marketplace Winners and Losers in SAP and ERP Investment

Innovation is one of the key and critical value proposition areas that separates winners from losers in the marketplace.  And even though your initial implementation may only consider the initial operational excellence areas that is just the beginning of the journey.

Does your system integrator have any ideas or methods for improving engineering, design, and delivery collaboration efforts?  Maybe you are not there yet, and that is fine, but it must be considered as part of your initial assessment of the path you are on with SAP.

Ask your system integrators how to use your SAP implementation to improve concept to market cycle times and for other innovation methods that will impact your marketplace.  Drill into the details, don’t accept “sales fluff,” ask for specifics and don’t settle for less. 

SAP Implementation Measurement of Return on Investment

To this day I am still surprised by how few companies define success criteria for their SAP implementations.  Fewer still do the up front due diligence to determine where they will have business benefit in terms of cost based lagging indicators:

• process improvements,
• cost reductions,
• automation,
• reduced transaction processing costs,
• reduced licensing for legacy systems,
• reduced system maintenance for legacy systems,
• improved cycle times,
• etc.

Even if there is some consideration of these categories or classes of cost savings, few companies quantify them and try to understand current costs and how they might be improved BEFORE bringing in a system integrator. 

During the selection process few companies ask the tough questions and demand the details of their integrators to validate their saving assumptions, and then even fewer hold the integrator accountable for them.  Few businesses attempt to tie incentives, compensation, or other means of achieving these results to their system integrator contracts. 

Talk about caveat emptor, or buyer beware!

Some companies consider legacy systems, and the cost savings for eliminating them, but beyond that there is not a lot of due diligence done to support long term cost reductions.  Key details are generally lacking.

Few companies, and fewer system integrators ever consider leading indicators of business performance such as:

Customer retention

• service processing
  • reducing overall service requests / requirements,
• repair and response turnaround times,
• first time fixes,
• solution databases,
• interactive response forums,
• etc., etc., etc. (come on, you didn’t expect me to tell you ALL the secrets of an ERP customer retention program did you?)

Customer acquisition

• target markets
  • by geography,
  • product line,
  • customer strata,
  • customer segment,
• promotion options
  • special product mixes,
  • offers,
  • promotion execution,
  • promotion cost tracking,
  • buy “x” get “y” at a discount or free,
  • buy “xyz” product mix and get “abc” mix at discount or free or both,
  • etc., etc., etc. (again, feel free to contact me if your system integrator has NO IDEA how to do all of this is the BASE SAP ERP system ;)  It is possible!)
• Customer analysis
  • stratification,
  • buying analysis,
  • product mix / popular combinations,
  • promotion integration,
  • segmentation
    • by region,
    • dollar value,
    • product mix,
    • product line,
    • customer group or product line profitability
  • overall profitability,
  • etc., etc., etc.  (again, feel free to contact me if your system integrator has NO IDEA how to do all of this is the BASE SAP ERP system ;)  It is possible!)
• And MANY more options…

Why is this lacking?  Because you, as the customer, do not demand it of the system integrators.  As a result the system integrator develops technicians.  And the cheaper they can develop those “technicians” rather than experts the greater their margins are. 

System integrators generally have little interest in promoting the idea that you should actually see a genuinely measurable business improvement.  If they did, those system integrators would be forced to bring in more competent, more highly skilled, and more seasoned veterans who understand business as well as the technology.  See for example, CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?  Using mostly a CRM example for illustration, that post helps you gain some insight on the types of consultants and insight you need for business success.

Short Term (operational excellence), Mid-Term (innovation), Long-Term (customer focus)

Relying on the investment analogy, your SAP portfolio should include several items or components of the application to implement.  And just like stock market investments, there must be some short-term, mid-term, long term, and business hedges built into a healthy implementation. 

Some items, such as “Wave II” or add-on functionality may be planned for at a later date but should be considered from the beginning.

For a long term successful SAP implementation it must become part of a business program, not just a system installation.

What does this mean?  This means that your thinking about SAP and its role in your enterprise must change.  As I’ve written before, Change How You Look at SAP to Create ROI.  SAP must be seen as a tool that enables the enterprise to change, to grow, and to spot opportunities and execute on those opportunities sooner than your competitors.  To do so requires a change in culture and thinking that companies often struggle with, however, SAP can enable these changes when SAP is seen as a business investment requiring regular adjustment, focus, balancing and change.  Just like your stock portfolio.

Use a Business Focused SAP Implementation for Business Transformation

If you want to see true competitive advantage it will take adding a real business imprint, real business insight, and key success metrics to create a long term business program.  That long-term business program is business transformation with SAP enabling the enterprise to be more competitive, more agile, and more robust.

At the the end of the day if you do not define what you want from SAP to consider it a SUCCESS, and if you do not have a focus on business drivers you will NEVER see the success you want from your implementation.  Worse still, if you don’t focus on these items from the beginning you will not have a good baseline to evaluate your system integrator or SAP implementation partner in the early RFI or RFP project stages.  Without that critical evaluation you may end up sinking your budgets in a “money pit” where you will NEVER see a return on investment.  Worse still, without these critical measures you may end up having a long term negative return that is dangerous for your long term prospects.  And it is NOT a shortcoming of the software!

Related Posts:

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