SAP & ERP Consulting from the Customer Point of View

“If the software functionality does not do what we need it to do, nothing else really matters.”

Back in the 1980’s, IT department preferences or mandates to use specific proprietary mainframe technologies drove many ERP software decisions. This was about the technologies the IT department could (or would) support not the mainframe software that best satisfied business needs.

Later in the 1990’s the mainframe vs. “open system” (client/server) wars caused many to take a blind leap of faith into open systems only to find out later the ERP software functionality in this arena was not as mature as their mainframe counterparts. Though open systems eventually won, many jumped head first into this brave new world simply at the wrong time.

Today “open source ERP”, upstart internet based application services (SaaS), “cloud computing” and other paradigms represent the same fork in the road. It is guaranteed tomorrow there will be a new one. The point is not to generalize regarding any particular direction; but the lessons of the past must not be ignored…. If the software functionality does not do what we need it to do, nothing else really matters.

When this occurs everyone will forget all the seemingly valid reasons a package was selected in the first place (cheaper, newer technology or everyone else is starting to do it). They will focus on the lousy functionality and lack of project benefits.

In the real world budgets are not unlimited, technology can be a strategic enabler, and there are other important trade-offs. However, nine times out of ten if the software functionality is a bad fit, eventually the project is deemed a failure. This means software decisions that do not weigh functionality the most can defeat the purpose of a new ERP system.

The Future of ERP?

The message above seems simple enough (and almost elementary), but many smart people allow themselves to get caught up in the industry hype.  Let the academics and consultants who really care debate the future of ERP because in the meantime you have a business to run. Unless you are interested in becoming a guinea pig. Believe me, a lot of software vendors are looking for them.

The Right Side of ERP History

Selecting software is not just a quantitative process. It ultimately boils down to a business decision and you want to be on the right side of history. As long as the cost of ownership is affordable, the technology stable, the package is supported, and many other companies are using it; go with the software that best meets business needs. 

If the organization cannot find a package that satisfies at least 85% of the overall software requirements (and almost all of the important ones), it is time to either look at higher-end packages or redesign your business processes.

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Editor’s commentary - Steve Phillips runs a great blog which is linked here:

http://it.toolbox.com/blogs/street-smart-erp

Be sure to visit his site and support his efforts!

Related Posts:

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• Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
• SAP Implementation Projects: Still Crazy After All These Years
• SAP Implementation Partner or Company Selection Criteria

In reading through a post on the CIO Magazine blogs (“ERP Costs: 3 Signs Companies Are Wasting Less Money” [FN1]) on Panorama’s comparison of Saas with tranditional ERP it would appear that Saas is not all it is cracked up to be.  SAP has completely missed the boat here on not capitalizing on the GENUINE shortcomings of Saas ERP compared to on-premise ERP solutions like SAP.

Saas ERP is implemented over 35% quicker (11.6 mo v. 18.4), but cost only 10% less to implement (6.2 v. 6.9 ann. rev), and even though CEOs may be slightly more satisfied (< 3% difference, may be margin of error?), business is more disappointed (23.5 sat v. 42.9) and Saas is more often over budget (70.6% vs. 59%).  If this were a head to head comparison by the SAME measures on premise ERP applications have been measured by, the Saas cloud computing results would be considered an utter failure and an unmitigated disaster.  But the technology trade publications tend to be eerily silent on this.  Where is SAP’s market leadership in pointing this out?  And on top of that, what about the security issues involved as well?

• It is implemented over 35% faster but only costs 10% less?
• CEO satisfaction difference is marginal so that unless the sampling size is massive (which is doubtful) it falls within a margin of error.
• Businesses are about HALF as satisfied with Saas solutions as they are with on-premise solutions?
• Saas blows the budget about 17% – 20% MORE often than on-premise ERP?  (The % difference between 59% and 70.6% as a proportion of the 59% on-premise budget score).
• Off site (off premise) access and security troubles plague Saas and “Cloud computing” models.
• Another layer and level of contracts and service level agreements which must be correctly navigated.

When you look at the facts and strip away the hype on-premise ERP solutions win hands down.  Even with the on-premise ERP results, by comparison to Saas they look wonderful.

And SAP has done nothing to address this in the marketplace.  SAP has also done little to really address the usability of their software other than to provide a technical toolkit (GUI XT) to allow customers to create their own front ends.  MUCH more could be done. I’ve written about some fairly ”easy” ways SAP could innovate their application environment with little cost or difficulty as well.  That article, entitled “Opportunities for INNOVATION SAP, HELLO?” provides insight from what I believe is a customer perspective on application usability and simplification. 

SAP could today “apple-ize” their user interface and end user experience to be more intuitive and more responsive to end users.  I’m not referring to an IPod, or IPad touch interface, but more of an intuitive look and feel that would make a user’s daily tasks simpler and less confusing.

What Does the Future of SAP Look Like?

• SAP will need to define and articulate to the marketplace a clearer message about its value proposition and its differences. 
• SAP should focus on end-user experience and a more intuitive user interface to help reduce the change management, adoption, and transition pain.
• SAP should refocus its application landscape messages, its sales messages, and its strengths on business solutions rather than package solutions.[FN2]  Too much time and attention is spent on application features by the SAP literature and sales force and not enough on what those features mean to business.
• SAP MUST develop an internal reference database of EVERY consultant who has ever taken a course, or been certified with them.  For far too long the company has allowed fakes, frauds, and cons to lie about certifications or training and SAP has not provided any way to verify these claims.  It is long past time for SAP to provide a “transcript” of courses and certifications for end-customer use when a potential employee or contractor comes to them.

This last issue of having some type of transcript or other reference service for consultants who claim to have taken SAP training can not be underestimated.  This has a direct impact on the quality of the implementations and the marketplace perceptions of the application.  Because of the widespread fraud in the marketplace and the constant claims of “certification” or training classes by those with fake resumes the value of the training is destroyed, and the quality of implementation solutions is damaged.  No wonder so many companies are frustrated with a lack of ROI. 

These and many other straight forward solutions would help to generate marketplace buzz about SAP’s enterprise application suite and provide customers reasons for a purchase or upgrade.

[FN1]  http://www.cio.com/article/531863/ERP_Costs_3_Signs_Companies_Are_Wasting_Less_Money

[FN2]  Over the years I have heard so many SAP sales reps and sales presentations that focus on this or that SAP application rather than addressing a business need or actual business requirements.  This is a classic sales No, No.  All these sales people do is describe features rather than explaining to the business what these features mean to the business in terms of benefit.  For way too long many in the SAP sales force have relied on the SAP name.

Related Posts:

• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• SAP Implementation Partner or Company Selection Criteria
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Purpose

Even though the timing of Apotheker’s departure is a little unusual I can not say I am surprised by it.  If I look over the landscape of a CEO’s job responsibilities (sales, strategy, etc.) and compare that to Leo’s short tenure I don’t see any direction coming from the top.  Leo Apotheker came in at a difficult time, but even in the midst of a global economic downturn it is still possible to succeed.

Setting aside some of SAP’s maintenance fee mis-steps there just hasn’t been a compelling forward-looking vision for SAP.  SAP has done little to inspire the marketplace, and the introduction of alternative maintenance players like Rimini Street means that SAP MUST innovate and create a compelling message.  And even if some argue that SAP has provided some compelling message, I’m an SAP insider, working on SAP projects since 1994 and *I* don’t know what that message is.

To that end, I even penned a plea to SAP calling for innovation and market leadership.  That posting, entitled “Opportunities for INNOVATION SAP, HELLO?” [FN1] laid out some clear, but relatively simple application changes to the ERP flagship product from SAP.  Although well received by a number of SAP insiders it is doubtful that those in key decision making roles will adopt much, or even any of the application improvement ideas.

Where SAP is Missing a Key Business and Market Opportunity for Leadership

In reading through a post on the CIO Magazine blogs (“ERP Costs: 3 Signs Companies Are Wasting Less Money” [FN2]) on Panorama’s comparison of Saas with tranditional ERP it would appear that Saas is not all it is cracked up to be.  SAP has completely missed the boat here on not capitalizing on the GENUINE shortcomings of Saas ERP compared to on-premise ERP solutions like SAP.

Saas ERP is implemented over 35% quicker (11.6 mo v. 18.4), but cost only 10% less to implement (6.2 v. 6.9 ann. rev), and even though CEOs may be slightly more satisfied (< 3% difference, may be margin of error?), business is more disappointed (23.5 sat v. 42.9) and Saas is more often over budget (70.6% vs. 59%).  If this were a head to head comparison by the SAME measures on premise ERP applications have been measured by this would be considered an utter failure and an unmitigated disaster.  But the technology trade publications tend to be eerily silent on this.  Where is SAP’s market leadership in pointing this out?  And on top of that, what about the security issues involved as well?

• It is implemented over 35% faster but only costs 10% less?
• CEO satisfaction difference is marginal so that unless the sampling size is massive (which is doubtful) it falls within a margin of error.
• Businesses are about HALF as satisfied with Saas solutions as they are with on-premise solutions?
• Saas blows the budget about 17% – 20% MORE often than on-premise ERP?  (The % difference between 59% and 70.6% as a proportion of the 59% on-premise budget score).
• Off site (off premise) access and security troubles plague Saas and “Cloud computing” models.
• Another layer and level of contracts and service level agreements which must be correctly navigated.

When you look at the facts and strip away the hype on-premise ERP solutions win hands down.  Even with the on-premise ERP results, by comparison to Saas they look wonderful.

And SAP has done nothing to address this in the marketplace.  SAP has also done little to really address the usability of their software other than to provide a technical toolkit (GUI XT) to allow customers to create their own front ends.  MUCH more could be done. 

SAP could today “apple-ize” their user interface and end user experience to be more intuitive and more responsive to end users.  I’m not referring to an IPod, or IPad touch interface, but more of an intuitive look and feel that would make a user’s daily tasks simpler and less confusing.

What Does the Future of SAP Look Like?

• SAP will need to define and articulate to the marketplace a clearer message about its value proposition and its differences. 
• SAP should focus on end-user experience and a more intuitive user interface to help reduce the change management, adoption, and transition pain.
• SAP should refocus its application landscape messages, its sales messages, and its strengths on business solutions rather than package solutions.[FN3]  Too much time and attention is spent on application features by the SAP literature and sales force and not enough on what those features mean to business.
• SAP MUST develop an internal reference database of EVERY consultant who has ever taken a course, or been certified with them.  For far too long the company has allowed fakes, frauds, and cons to lie about certifications or training and SAP has not provided any way to verify these claims.  It is long past time for SAP to provide a “transcript” of courses and certifications for end-customer use when a potential employee or contractor comes to them.

These and many other straight forward solutions would help to generate marketplace buzz about SAP’s enterprise application suite and provide customers reasons for a purchase or upgrade.

[FN1]  http://www.r3now.com/opportunities-for-innovation-sap-hello

[FN2]  http://www.cio.com/article/531863/ERP_Costs_3_Signs_Companies_Are_Wasting_Less_Money

[FN3]  Over the years I have heard so many SAP sales reps and sales presentations that focus on this SAP application or that SAP application rather than addressing a business need or actual business requirements.  This is a classic sales No, No.  All these sales people do is describe features rather than explaining to the business what these features mean to the business in terms of benefit.  For way too long many in the SAP sales force have relied on the SAP name.

Related Posts:

• The Real Reason Executive Participation Creates IT Project Success
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation