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SAP Value Delivery

SAP Value Delivery

In my review of academic literature around SAP or ERP implementations I find some thought provoking items.  Recently I reviewed a study which helped me to form a more complete picture of important issues in IT delivery.  Even though I’ve been writing about it for years I gained a new clarity around evaluating some of the existing delivery models [FN1].  What it comes down to is are you looking for service delivery or business results for your SAP project?

SAP Service Delivery or Business Value Delivery – You Determine Your Future

Because my career started in business and later was exposed to SAP as part of the client core team, and then finally moved on to consulting, I have always recognized the importance of business value.  At the same time much of the System Integrator marketplace has been promoting the same old service delivery model they are familiar with. The biggest reason so many system integrators struggle with business value delivery is because they often focus on hiring a lot of really smart college graduates with little or no business experience.  Fresh out of college and heads filled with textbook ideas about how business works. 

If you just want services delivered then no matter what the sales pitch, all of the system integrators are the same

SAP, ERP, or Enterprise Application customers are looking for something more.  As a recent article I read noted, CIOs do not command the respect of the other key disciplines within the enterprise.  In fact, many of their “C” suite peers question whether or not the technology organization serves much of a useful purpose at all.  That my friends is a frightening and shocking perspective to me.  Stop and think about that a minute, many organizations question whether IT organizations serve a useful purpose in the enterprise.  Is it any wonder outsourcing and off-shoring have become so popular?

What Does This Mean for SAP Projects?

At the end of your SAP project are you satisfied that a project was delivered?  Hopefully on time and on budget, but delivered nonetheless?  If you are satisfied that your SAP project was delivered on time and on budget then you are focused almost exclusively on service delivery

Many senior level IT leaders and delivery folks just want something to get in as quickly as possible.  This is exclusively a service delivery oriented project.  The only thing you are concerned about are the skills needed to address the particular technology / application / solution need right now.  This will not however provide you any type of ROI (Return on Investment) or ROE (Return on Equity) because ROI and ROE (along with other measures) are pure business metrics.  These are not IT metrics and do not measure things like uptime, response time, # of service tickets closed, etc.  The idea of ROI, ROE, or Asset Turns are reflections of business activity and investor / owner value.  Although they may be seen as irrelevant by many in IT they are still useful to understand if any value was delivered for the investment that is made.

Do you want services delivered or business value delivered?

Truth is, if you just want services delivered then no matter what the sales pitch, all of the system integrators are the same.  For that matter, why even bother with a system integrator or SAP consultants at all?  Why not just go to your nearest college and recruit a bunch of really smart graduates for a temporary project and pay them about half what the system integrators charge for a temporary contract? 

Seriously, why even bother with experienced consultants at all? 

If SAP service delivery is your focus and not business results it is just a game of who can best make it through the sales process.  Whether it is IBM and their premium rates or Rajakrishna’s Consultant Shack and their all you can eat offshore rates.  If they can’t speak the local language it really doesn’t matter.  On the other hand if you are looking for business results that is entirely different.

If your only focus is on time and on budget then you are only looking for service delivery.  You are not looking for results, or business change, or IT transformation, or business strategy.

Let me make clear I am not suggesting on time and on budget projects should be ignored.  What I am suggesting is that if your only focus is on time and on budget then you are only looking for service delivery.  You are not looking for results, or business change, or IT transformation, or business strategy.  You are merely looking for resources to deliver services to get you to some date at some budget amount.  Any offshore or consulting shack fake will get you to a dollar amount (that is the brutal truth but they will deliver “services”).

Where is the SAP Value Proposition Focus on Business Results?

While SAP Implementation is an Investment NOT an Event many organizations fail to consider their enterprise application deployments as strategic assets designed to produce business results.  The good news is that is changing.  So the next question is Where do you Start with SAP Return on Investment or SAP ROI?  This goes right back to the basics, you must focus on the WHY of Achieving Business Value from SAP Investment.  Is the effort about technology replacement or is there some business reason behind the initiative?

A recent IBM study under the heading of “The CIO as change catalyst” noted:

As the executive working at the nexus of business and technology, CIOs are uniquely qualified to help their companies leverage available tools to meet current economic challenges and to exploit the opportunities that will arise during this crisis—and opportunity will arise for those businesses bold enough to disrupt competition and restructure their industries. CIOs can help transform their companies by better capitalizing on the value of information assets.  They can help manage and mitigate business risk through better, more timely information. They can improve service management. They can lower enterprise-wide operational costs—including IT’s—through automation. [FN2]

SAP and IT organization heads are gaining insight and experience but at the same time they are being squeezed to cut costs and find value.

Focusing on value entails cutting discretionary spending, deploying resources for the highest return, bolstering core competencies and redefining relationships. Cash flow is central to survival and strategic flexibility, which means businesses and business units need to do more with less. Corporations must conserve capital and cut spending where it produces minimal return. Funds must then be redeployed to activities, products and markets that generate growth, improve margins and truly differentiate one business from another. [FN3]

Make Sure You Are Headed Down the Right SAP Path

To make the transition your SAP project must begin with Creating a Knowledge Centered Learning Organization for Business Transformation for IT Leadership.  Whether you are already live with SAP, in the middle of a project, or just starting out, I would strongly encourage you to get serious about Organizational Change Management Inside the SAP IT Support Organization

What most customers do not know is that SAP has offered the “Value Delivery” methodology as part of the ASAP Methodology for many years

If you want to know Why Use the SAP ASAP Methodology? for your SAP project consider the fact that SAP has offered the “Value Delivery” methodology as part of the ASAP Methodology for many years.  Over the years it has taken many forms, all the way back to the early versions of the ASAP Methodology with the old “KPI” lists.  Today it is integrated into the ASAP Methodology structure. 

Isn’t it time to pursue the value delivery method regardless of whether your system integrator is capable of this or not?

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[FN1]  Kieninger, A. and Satzger, G., Risk-Reward Sharing in IT Service Contracts – A Service System View, 2011 Proceedings of the 44th Hawaii International Conference on System Sciences.

[FN2]  From fear to value: CIO strategies for propelling business through the economic crisis, pg. 5.  Retrieved 4/24/2012 ftp://ftp.software.ibm.com/common/ssi/sa/wh/n/ciw03057usen/CIW03057USEN.PDF

[FN3] Ibid. pg. 6.

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Bill Wood
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One Response to “SAP Service Delivery versus Value Delivery”

  1. […] service delivery tends to be the most price sensitive, after all, cost is the primary driver.  SAP Service Delivery versus Value Delivery provides some considerations for defining the two “goal posts” for a service […]

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