SAP Best Business Practices
Over the last couple months I’ve seen a few posts developing a debate around the use of software “best business practices.” The basic takeaway is that if everyone uses the standard delivered “practices” there is no competitive advantage. While this may be true for many software applications there are two things with SAP which causes this idea to be misleading.
Many of these commentators fail to recognize that SAP refers to different things as “best business practices.” The key types of SAP best business practices involve the processes included in the SAP software itself– software supported business processes. Then there is the management and integration practices around software alignment to business — or the whole Business to IT Alignment dynamic which focuses on business value. [FN1]
The posts and comments complaining about “best business practices” I refer to are the ones where the authors complain about software supported business processes. The common denominator I find in all of these authors’ complaints is they have little or no exposure (let alone experience) with SAP. Their commentary is a bit misleading because of the depth and breadth of options available to any SAP customer.
SAP Best Business Practices for Business Software Integration
Few of the “best business practice” detractors are aware that SAP best business practices are far more than just the software business processes you put in scope and implement. SAP’s best business practices include structured decision making and governance around applying software solutions to business (shocking isn’t it!) [FN2]. The whole idea behind these types of “best business practices” are to find ways to gain tangible benefits from the application of technology. By identifying value based governance and project criteria you can achieve measurable Return on Investment (ROI).
Use of SAP’s Best Practices for Speeding Time to Benefit [FN3]
Best-practice value identification, transformation, and measurement approaches include:
– Incorporation of business case objectives throughout the project lifecycle
– Communication and documentation of process objectives and project success criteria
– Use of both existing and new program-specific financial and operational key performance indicators, based on the business case objectives, to measure project success.
The points above come from the SAP literature. If you look at what SAP is proposing in those points you will see a company that is encouraging accountability to the business in the implementation and integration of its software. Unfortunately few of the SAP implementation vendors or partners encourage this type of accountability.
SAP as a business software company spends over $1 BILLION Euros a year on Research and Development (R&D) (or over $1 Billion US). That is to support both types of “best business practices” and is more than nearly all of SAP’s competitors generate in gross revenue each year [FN4]. Is it any real surprise that most of these complainers do not work with SAP? Many of them are from competitors.
SAP Software Supported Best Business Practice Process Design and Setup
The SAP software supported best business practice processes generally refers to a broad type of functionality that the application contains. For example, in the automotive sector, on the materials management side, it means that you have special functionality for JIT (Just in Time) or Forecast schedule agreements. Along with that it also includes “sequencing” for automotive manufacturers and suppliers to guarantee that components and assemblies are delivered to the production line in exactly the order the OEM manufacturer builds them. This is industry specific business process functionality.
In that one small example, what is not “understood” by many of the best business practice software process detractors is that there are literally dozens, if not hundreds of individual and granular system setup options for how each step of that process works. On top of that there are also dozens, if not hundreds of master data points between the vendor, materials, pricing, and other possibilities that directly influence how the steps of that process are carried out. So in a generic sense you have SAP “best business practices” processes in the form of industry accepted JIT and Forecasting along with automotive specific sequencing. The details of how you execute that functionality can be finely controlled along the way without custom coding.
Conclusion on SAP Best Practices for Business Processes
The example just provided above is one small processing example of hundreds of processing options, within one single industry vertical. SAP supports over 20 major industry verticals covering industries as diverse as Chemicals, Public Sector (government), Retail, Pharmaceuticals, Consumer Goods, Healthcare operations, Hi-Tech, Services, Aerospace and Defense, etc.
Even though SAP offers a “best practice” setup library with documentation on system settings to support specific business processes, they are a starting point. The SAP documentation and resources do not cover all of the fine details of setup that only experience brings.
The ability to finely tailor or “tweak” system settings to meet a particular need or requirement, with hundreds, and in some cases thousands of variations, means that two companies using the exact same functionality can create entirely different processes to support different business strategies. Together with that you have dozens or even hundreds of master data settings which rely on this system setup to create a virtually unlimited set of options. And then before building some completely separate, stand-alone application there are user exits (or enhancement points in ECC versions) to program very specific requirements.
In the end an experienced consultant can guide you through the process of making the finely detailed adjustments to handle nearly any requirement with a minimal amount of custom coding. And that is where true “best business practices” intersect with IT. Combine the right consultants with proper project or task governance and you have an optimal solution for the least Total Cost of Ownership (TCO). Together with reduced TCO you gain real Return on Investment (ROI) with the application of “best business practices” surrounding good governance to create business solutions with IT (rather than IT solutions for business).
[FN1] This site focuses more on “best business practices” related to business and technology alignment. There are any number of great resources for the business process related topics so another site would add little benefit. In fact I’m not sure anyone could compete with SAP’s own “SAP Community Network” (or SCN, http://scn.sap.com ).
[FN2] SAP Executive Insight Series (September 7, 2009). Accelerate Value Creation: The Virtuous Cycle of Using Technology to Maximize Business Value. http://www.sdn.sap.com/irj/scn/index?rid=/library/uuid/70fa08b0-cf81-2b10-a396-89d18932fbd0&overridelayout=true (retrieved 4/23/2010).
[FN3] SAP Executive Insight Series, pg. 6, 2009.
[FN4] SAP Annual Report for 2009. Review of R&D Operations. http://www.sapannualreport.com/2009/en/annual-report-2009/review-of-operations/research-and-development.html (retrieved 3/05/2011).