I’ve learned many lessons over the years after participating in many ROI focused projects–, a few of them achieved great results, but unfortunately many more were mediocre. I’m going to begin a series of articles and “how – to’s” on achieving value and ROI from an SAP implementation.
For many years there has been a lot of literature, guidance, case studies, success stories and methods for using SAP to automate processes and reduce costs. Unfortunately there is little to help a company achieve revenue and profitability increases using SAP. This site explores ways of using SAP to improve revenue and profitability as well as achieving process efficiencies and cost reductions.
We have to get beyond TCO, or a pure cost focus and start looking at ROI, or what you actually expect SAP to help you do in your business. What actionable information or operational helps are you expecting from the system?
TCO, Cost Reduction, and the SAP Business Case
Reducing implementation costs, process costs, transactional costs, operational costs, or other cost-based ROI measures is an important part of the business case for implementing ERP systems like SAP. But it is only one side of the implementation coin. It seems to be the only side of the coin that most SAP implementations ever realize. The way to change this is by beginning your SAP project right from the beginning with a value-oriented and benefits-focused approach. With that as the starting point you can then incorporate that mindset into the project right from the beginning; you can develop project success criteria for your SAP implementation or upgrade that will drive those results, and transform your enterprise or organization.
There are plenty of companies and literature from vendors who promote TCO (total cost of ownership) models, and claim to be able to help you leverage your SAP implementation to realize a reduction in TCO. Rather than adding another voice to the “easy” area of finding ways to measure cost reductions in processes, operational efficiencies, and other cost-based measurements, it’s time to focus on using SAP for channeling organizational efforts into winning in the marketplace. Avoiding the focus on operational cost reductions, cost-based ROI or TCO does not mean they aren’t important, only that this is not new ground and not necessary for me to add my voice to the loud chorus singing today.
The New ROI Focus for an SAP Implementation
By focusing only on cost-based ROI measures businesses rarely realize the real promise and value of enterprise applications like SAP. The real strength of SAP is to transform the enterprise by providing new ways to look at, analyze, evaluate, and then strategize in the marketplace. Without your SAP project focusing heavily on the value-based business drivers for the SAP project justification, it will become little more than another IT system. Sadly over the years I’ve seen too many SAP implementations become little more than another IT transaction system.
Where do you start? Change your thinking!
SAP Project Thinking Must Focus on the Business and the Future
Focus on how to perform a successful SAP value-based project, with real ROI value realization, no matter what type of partner or implementation method you choose. To do this your IT and SAP project thinking has to change. And the change in thinking, or the paradigm shift, requires the implementation mindset to focus on how to use SAP technology to propel your company forward. To succeed in this area you must stop looking at SAP or IT as just a tool to enable process automation or process efficiency. SAP and all technology must become a lever for change, with the application being the vehicle to help manage that change.
Your change in thinking about SAP or any other large IT project should begin by asking yourself what do you want the system to enable you to do?
What actionable information or automation should it provide?
What marketplace competitive pressures should it provide you the data to address?
What data is needed to address those pressures?
How will process automation or actionable reporting help to enhance your marketplace value proposition?
SAP’s value proposition lies in its ability to integrate the enterprise with a common set of data which becomes the critical information for strategic business management. By designing SAP right from the beginning to support the key information you need to strategically analyze your business you will be well on your way to realizing the value of an SAP implementation.
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