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SAP Strategic Business Transformation

Lots of business ideas and paradigms have been proposed over the years.  Some of them turn out to be fads and other have enduring legacies.  While many have merit they all have one thing in common–, they are supposed to address the marketplace in some way.  Whether or not they stand the test of time depends on how well they help businesses compete in a globally competitive marketplace.

Enduring business ideas generally become part of an accepted business strategy.  One example is Michael Porter’s five competitive pressures (as the keys to strategy) for focusing on operational excellence, customer focus, vendor management, and competitor pressures.  The ability to address these competitive pressures is directly related to the quality of consultants your SAP system implementation partner provides.

The only thing that matters is the specific consultants they bring to your business to make a difference in how your business operates.

When changing the enterprise culture to one that is strategically focused and performance based several stages are required. These stages relate directly to the early, up-front work needed for an SAP implementation. Although the following quote is related to implementing a Balanced Scorecard initiative, the same change process applies to an SAP implementation and business transformation.

Initially, the focus is on mobilization and creating momentum, to get the process launched. Once the organization is mobilized, the focus shifts to governance, with emphasis on fluid, team-based approaches to deal with the unstructured nature of the transition to a new performance model. Finally, and gradually over time, a new management system evolves—a strategic management system that institutionalizes the new cultural values and new structures into a new system for managing (emphasis in original) (Kaplan and Norton, pg. 16, 1992)

The authors then note that the “various phases can evolve over two to three years.”

Over my SAP career beginning in 1994 I have seen this over and over.  What SAP causes is a cultural transformation that can be harnessed to achieve great things.  SAP, properly implemented and properly guided through the business transformation process provides front line managers with key information to move from day to day transaction management to longer term strategic management.  The idea would be to use SAP as a change enabler or change lever (Change How You Look at SAP to Create ROI).  By doing this successfully you can transform your business in the marketplace (Why SAP Projects Fail to Deliver ROI and How to Change IT).

This transformation process requires a phased approach that moves you through the process from go-live to competency to excellence (Series on SAP Competency Center or SAP Center of Excellence).  The reality is with an integrated ERP application like SAP it takes about 1 – 3 years to change the middle management culture from one of tactical day to day execution to strategic data analysis and competitive insight.

Mobilization – In SAP terms, the mobilization effort consists of the upfront business planning, strategy definition, goals and performance metrics definition.

Governance – The governance phase would include the necessary project tools to accomplish the organizational transformation. These are tools and resources not only for the SAP implementation itself, but also for the change management program within the enterprise.  In SAP, project governance begins from before the vendor contract is signed and continues on long after go-live to address ongoing business needs and requirements in the live system environment.

Strategic Management – The strategic management system occurs over time as the new metrics, resources, and tools available in your SAP implementation are used throughout the enterprise. It is the old business axiom “what gets measured gets done.”  After go-live new features or functions may be added to address marketplace competitive pressures.  As the actionable data is able to be analyzed by middle and lower level managers over time decisions can be made to more effectively address those competitive pressures.

SAP Organization Change is Ongoing

Depending on your timeline and organizational tolerance for change, by the time the SAP system is stabilized (anywhere from 3 – 12 months after go-live) your organizational transformation will be well underway. Within 12 – 24 months after go-live your organization should begin seeing real benefit from a properly implemented, business focused SAP implementation.

It takes about 1 – 3 years to change the middle management culture from one of tactical day to day execution to strategic data analysis and competitive insight.

My personal opinion is that because so much of the focus has been operational and “getting the system in” for an “on time and on budget” implementation that the upfront business work is little known and even less understood by the wealth of “technicians” that most consulting companies provide. Often times the consulting companies with established client relationships are eager to get as many consultants billing as they can. The several months of up front strategy work, even at super-premium rates, only engages two, and even in large far-flung enterprises, only 4 or 5 consultants. The SAP implementation itself will engage at least 5 – 10 TIMES that many consultants and so if a client does not insist on this up front strategy work, SAP vendors are reluctant to press a client in this direction from the RFP phase on.

That is not to say that consulting companies have not tried, only that customers or host companies, have focused so strictly on getting the existing transactional processes into SAP that they often fail to have the upfront business case for change created before the project begins.

To be successful, this upfront business design and change work must become the central focus of the SAP implementation.

SAP Business Transformation for Competitive Advantage

Business transformation with SAP is entirely possible even in massive enterprises if the business transformation effort begins by mobilizing your team at least a few months before an SAP RFP.  After the RFP you will need active change management throughout the SAP implementation.  For more information on various insight and ideas on SAP RFP strategies please see:

The RFP process is your first real opportunity to find the right vendor and the right consultants to transform your business.  By navigating this process successfully you can start out on solid footing.  One thing to always remember is that it is the quality of consultants on your project that makes the difference in the results of your implementation.  It is NOT the size of the company, the scope or reach of the consulting firm, how many offices they have, how much marketing material they put out, or how many fancy clients they can name.  The only thing that matters is the specific consultants they bring to your business to make a difference in how your business operates.

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Kaplan, R. and Norton, D. (1992), “The Balanced Scorecard – Measures that Drive Performance”, Harvard Business Review 70 (1).

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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
Bill Wood contact

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