SAP ROI — Enterprise Architecture & Business Solutions

Deliver Business Value with SAP CoE

One key pillar of moving Beyond Technology Alignment requires Organizational Change Management Inside the SAP IT Support Organization (OCM inside IT).  A key component of that OCM within IT relies heavily on Creating a Knowledge Centered Learning Organization.  And within that learning organization, especially with enterprise applications like SAP, you need to build organizational maturity.  There is a three-tier approach to building that organizational maturity as part of the Series on SAP Competency Center or SAP Center of Excellence.

The SAP IT Organization Challenge

Being an “IT Organization” is where the challenge for change begins.  IT has been so focused on delivering technical solutions that business integration was missed along the way.  Adding to this is the “youth” of IT as a business discipline.  Think about it, people have been doing business for thousands of years.  Technology, bits, bytes, interconnected systems, data transmissions, and information age “knowledge” workers are a new phenomenon within the last 2 – 3 decades.  Compared to the age of business they haven’t even hit puberty!

So, the real issue here is how to quickly mature the SAP or IT organization from simple service provider, to business partner, and then to business peer.  This requires far more than the traditional domain and technology management in so many IT organizations today.  The problem comes down to SAP Service Delivery versus Value Delivery. 

The Answer: Develop Organizational Maturity, both Aligned and then Integrated With the Business

For SAP Enabled Business Transformation for IT Leadership we started with CIO Magazine’s CIO Maturity Model and applied it to the IT delivery organization.  The delivery organization maturity model consists of three key levels of organizational maturity or competence; they are internal, enterprise, and external focus.  These are reflected in the concentric circles below.  When considering SAP Service Delivery versus Value Delivery it is important to understand how to develop that maturity.  The service delivery domain is technical in nature and the value delivery domain is focused on enabling business.  The value domain is related to customers, marketplace, and improved products or services.

SAP IT Convergence Maturity Model

SAP IT Organization Maturity: Growing Pains

Within each of these three concentric circles a particular delivery competence is required.  This delivery competence roughly equates to the skills and experience needed to address each of the key business support areas.  There will also be “growing pains” within each of these maturity stages as you:

1. Plan
2. Execute
3. Adjust and stabilize
4. Transition part of the organization to the next maturity level

This is a hierarchical maturity model.  While the diagram I use shows the concentric circles they should be thought of as circles of influence, skill development, and promotion.  Not everyone will move from the Internal Support area to the Enterprise Integration domain.  Likewise not everyone will move from Enterprise Integration to Marketplace Development either.  These should be considered as key career milestones for the SAP or IT employee.

For insight on How To Navigate the SAP Business Transformation Journey you will need to re-think the SAP IT organization’s role in the enterprise.  Are you satisfied with being just a service provider?  Do you want to do more?  To make the transition you will have to evaluate the constraints and then do what is necessary to remove them. 

Dealing with SAP IT Organizational Constraints

Whether those constraints are time, resources (budget, technical infrastructure, etc), or people it is important to do a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of each area as you engage.

One other key thing to note here is if you have relatively small SAP or IT support organization then the Level 1 and Level 2 maturity areas can be merged and use less extensive development efforts.  There are practical budget, time, and resource limits that many have to work with.

The Three Part SAP Organization Change

The first two levels of the maturity model involve SAP Service Delivery versus Value Delivery. The second and third levels are about SAP IT Convergence Beyond Business to IT Alignment.

The three maturity areas are:

1. Technical service delivery
2. Cost and process value delivery
3. Customer and marketplace integration

As senior IT leaders everywhere struggle with growing budget pressures it has never been more important to focus more aggressively on business value.  This will require Organizational Change Management Inside the SAP IT Support Organization with a strong focus on Creating a Knowledge Centered Learning Organization.  By developing both the infrastructure to support a learning organization, as well as the mentoring, coaching, and development you will be well on your way to transforming your IT efforts and move toward becoming a business partner.

Next week’s post (which has already been written) will evaluate the specific maturity and development details for each stage in creating a genuine IT Converged SAP Center of Excellence!

Related Posts:

• Organizational Change Management Inside the SAP IT Support Organization
• How To Navigate the SAP Business Transformation Journey
• 3 Development Phases for SAP Center of Excellence Maturity
• Achieving Business Value from SAP Investment
• Series on SAP Competency Center or SAP Center of Excellence

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.  To that end something has to change.  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 offshoring 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 USEFUL reflections of business activity and investor / owner value.  Although they may be seen as “relics” by IT folks they are still useful to understand if any value was delivered for the investment that is made.

Do you want services delivered or business benefits delivered?

Truth is, if you just want services delivered then no matter WHAT the sales pitch is 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 are not important.  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 (maybe not what you expect, 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.

Related Posts:

• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Using SAP to Improve Revenue and Profitability
• How To Navigate the SAP Business Transformation Journey
• Achieving Business Value from SAP Investment
• Phase 6 RUN SAP ASAP Methodology

SAP Business IT Convergence

The last few weeks have focused on the path for IT leaders to become strategic business partners.  Academic research shows that for Sustained Business Value from SAP Business Software you must focus technology implementation efforts on business benefits.  This includes metrics to determine if business goals were achieved by the software implementation effort.

Achieving Business Value from SAP Investment was about case studies which evaluated organizations which applied a business benefits approach.  These case studies determined the business benefits focus also requires organizational change management.  Several years before these case studies I wrote about SAP as a Change Enabler which provides a good summary of what the authors found in their 35 page study. 

On this journey to SAP Enabled Business Transformation for IT Leadership we reviewed some of the senior leadership work by CIO Magazine and their 3 stage competency model of:

• Internal Focus
• Enterprise Focus
• External Focus

Insight and activities to address the Internal Focus area were provided in the How To Steps in the SAP Business Transformation Journey and the Phase 6 RUN SAP ASAP Methodology.  This post will offer insight on taking your SAP or IT organization to the next level.  The focus now is on the Enterprise area with additional efforts to prepare your SAP IT support organization for External focus.

Making SAP About Business Transformation and Business Benefit

To move your SAP organization to the next level means your efforts must take SAP IT Convergence Beyond Business to IT Alignment.  As previously discussed, the Internal Focus in this maturity model is about “keeping the lights on” with your enterprise systems.  The next level requires a deliberate focus on convergence by IT leadership because SAP IT Convergence is About Business Focused Integration–, it is NOT about IT!

IT leaders must be deliberate about working through a full IT competency model–, there are no shortcuts! 

There is no “magical formula” for suddenly transforming your SAP or IT organization into a market and customer focused powerhouse.  It is a methodical path driven by an internal (senior level) champion to move the entire IT organization through the preliminary steps before arriving at the external market / customer / business competitive pressure focus.  Here is the ugly reality, no matter how smart, talented, diligent, hardworking, dedicated, or committed your IT staff are, or how hard you work as a leader, until you gain a trusted peer relationship with the business any externally focused efforts will not be well received.  The good news for many SAP organizations who provided great business resources for your SAP project is that you have a lot of talent to tap into to help bridge the business gap for an Enterprise Focus.

Some of the Steps to Achieve SAP IT Convergence require deliberate efforts at internal SAP support organization transformation.  A few maturity characteristics of that enterprise focus are:

• SAP and IT staff communications, internally and externally, are more in business language rather than technology.
• Proactively seeks out new business opportunities.
• Able to interpret, and then implement, business marketplace requirements by turning them into technology solutions.
• Adapts to business market conditions.
• Not worried about the latest “techie buzz” like social media (Twitter, Facebook), cloud, etc. unless there is a direct business marketplace connection.

To be effective you must work at Integrating Business Stakeholders as Part of SAP IT Convergence.  I call a “converged” SAP or IT organization a “Center of Excellence” because it goes far beyond the SAP Center of Expertise.  The SAP Center of Excellence concept should not to be confused with SAP’s “borrowing” of the term in some of the sales literature.  Generally when SAP refers to a “Center of Excellence” they are talking about their “lights on” support oriented “Center of Expertise” where you as the customer take care of some of the support you pay them for.  To achieve this you need continued and ongoing Steering Committee Governance for an SAP Center of Excellence.

Organizational Change for the SAP and IT staff

One of the key arrangements I have seen over the years, which some of the commentators are beginning to explore, is a dual IT organization.  One part focuses on day to day support (“lights on”) while the other part addresses key business needs in the business environment.

1) Create a solid internal “anchor” focus with emphasis on bridging the business perception of any “capability/expectation gap” (Louie Ehrlich, President, Chevron Information Technology Company, and CIO, Chevron Corp).

That capability / expectation gap is related to taking care of the “lights on” IT functions in such a way that IT is effective and reliable.  The internal focus is where IT operates almost like a utility, the electricity is on but we really don’t think about it unless it goes out and then it is a big disruption because it is generally so reliable.

2) Try to develop more internal employee “exchange programs”.  This is an effective approach to build bridges between business and IT.  But it really should go both ways.  Not just IT embedded into the business, but certain business stakeholders embedded into IT.  This is one way to “be deliberate” integrating your IT organization into the business.

Work to create a “converged” IT organization RATHER than an “aligned” IT organization. 

As my previous post on ERP II & ERP III – SAP Business IT Revolution, from a TechRepublic.com article:

“IT has to stop thinking of itself as a business utility and start seeing itself as a business catalyst. In order to do that, it’s going to have to think in business terms and economic impact for everything it does…”

Creating a Learning Organization Through Collaboration and Knowledge Management

Another key phase which we may visit in the future is about creating a “learning organization” first within the circles of the SAP IT organization, and then within the broader business community.  This collaboration network will serve as a critical foundation for the third stage, or the “external” focus.  In ERP III – Is the Integration of Collaboration the Future of Enterprise Applications we take a look at Learning Organizations, Knowledge Transfer, and Knowledge Management (rather than information management). 

Related Posts:

• How To Navigate the SAP Business Transformation Journey
• Creating a Knowledge Centered Learning Organization
• SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration
• 3 Development Phases for SAP Center of Excellence Maturity
• SAP Service Provider to Business Peer Through Center of Excellence Maturity