SAP & ERP Consulting from the Customer Point of View

Business Systems

The day after I released my last post (SAP IT Governance – Achieve Business IT Engagement) techrepublic.com published a review of the CIO future direction. While I do not agree with all of the Gartner conclusions they published I certainly agree with the “new CIO manifesto” (TechRepublic: Get drastic: 15 IT best practices to kill). Reading through the comments left on the TechRepublic post was enlightening, most of the comments focused on the details of one or two points of disagreement while missing the focus of the entire message.

Denial of the purpose of any IT initiative, especially SAP business solutions, will only lead to significant levels of outsourcing. IT areas and functions that become more like “commodities,” or, as one commentator calls these functions “taxes” on the enterprise are quick to be outsourced. While these “taxes” are necessary infrastructure components (such as e-mail, phone, wide area networks, and even PCs or laptops), other areas are starting to be seen as commodities subject to significant cuts.

SAP Consultants Must Get Serious About Customer Focused Value (or find another career)

Unless more functional SAP application consultants get serious about understanding business and helping stop the fakes then enterprise applications will become a commodity as well. This isn’t just idle speculation. Those of us who have been around SAP for 10 years or more (and some of us approaching 20 years or more) remember the days when ABAP skills were sky high–, now they are a commodity which is frequently outsourced to India, Malaysia, or China. The same commodity status is true of SAP Basis–, it is outsourced overseas or to hosting providers. Without real value SAP (or Oracle, MS Dynamics, etc.) are soon to follow.

The Coming SAP Business Technology Revolution

The TechRepublic post hit on a key theme which is the focus of this site–, helping business realize (and recognize) value from their SAP projects. Under the subtitle “New CIO manifesto” TechRepublic notes:

“information [may be] more important than information technology” and the majority of IT spend will be used to “measurably improve… financial conditions of an enterprise” by supporting “revenue generating rather than expense related business processes.”

This manifesto is more aligned to sales, marketing, and innovation. These areas of the enterprise are in line with CEO priorities (see e.g. What is the Proper Relationship for the CIO, CEO, and CFO?). The TechRepublic post then goes on to note that:

“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…”

What Can Skilled SAP Consultants Do to Prevent Becoming Commodities?

FIRST do what you can to educate clients around consultant screening (for details see Protecting Yourself from SAP Consulting Fraud). For example, if you find out a client is looking for consultants ask them if they have received that candidate’s references from their last three projects and whether they directly asked for confirmation of experience from those references?

As clients continue to see marginal or substandard results from so many of these frauds they will consider you the same and rate pressure will quickly move you to commodity status. Worse still, you may be on a project where you have to do so much clean up and correction behind an incompetent consultant just to get your own area working that you do not have the time to deliver on real value that will set you apart.

SECOND make sure you focus your consulting efforts on delivering value to your clients. When I say value I mean in terms of business benefit and return on what you are being paid for. Don’t just do some configuration because that is what you are being told, or because that is what is in scope. Do it in such a way that it helps the client long term. For example, just because SAP supports a particular type of functionality the ongoing maintenance after go live may not be in the client’s best interests. Carefully consider the short and long term effects on your customer of what you do. If you take this approach you may lose out on a little extra billable time in the short term, BUT you will stand out to them as someone who looks out for their interests. When it comes time to upgrade or add on additional functionality a call from you could land you a direct client without the middle man staffing firm. You can avoid competing with so many of the frauds the staffing companies try to place which may destroy a client project and damage the value you can add.

The choice is yours. You can start working to be more client and customer focused to generate value or you can watch the marketplace move you to commodity status. In the end no matter how good you are as the marketplace erodes your value in it does as well. It’s time to start acting like a consultant, a paid advisor to give your client the best possible direction you can and in doing so you also help to protect your own future as well. For more insight on delivering SAP enterprise value focus on the components of ERP II or ERP III (see ERP vs. ERP II vs. ERP III Future Enterprise Applications).

Related Posts:

• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
• Using SAP to Improve Revenue and Profitability
• SAP IT Convergence Beyond Business to IT Alignment

Business - IT Convergence

In the new global business age it is more important than ever to leverage technology organization expertise for business benefit.  Too often technology organizations focus on technology for the sake of technology rather than for how it might improve products and services or how it might create more customer focus.

In today’s competitive global economy, filled with international economic instability, no part of the enterprise can afford to move very far from what pays the bills.  If your SAP or IT organization is focused completely on technology solutions you lose sight of what is important to the business.  And what is that?  Customers: customer retention, acquisition, loyalty, satisfaction, and experience.  Without customers there is no growth or revenue.  Without growth or revenue there is no need for that expensive SAP or IT investment.

Finding SAP IT Convergence in Innovation and Customer Focus

A dynamic shift away from “back office” or operational focus is needed to move the SAP organization toward genuine IT convergence.  To make the change requires a deeper and more meaningful understanding of business itself.  It requires a focus on the organization’s products or services (i.e. innovation, read Process Execution of Business and IT Innovation) and then how those products or services are marketed and sold.

This emphasis on IT convergence, especially in the SAP enterprise, is about preparing your organization for the changes which are beginning to shape the future of enterprise applications, or “ERP III” (for a detailed explanation of ERP, ERP II, and ERP III see ERP vs. ERP II vs. ERP III Future Enterprise Applications).  So what is ERP III?  ERP III is the next generation of enterprise applications which leverage social media (or other collaborative tools) in news ways to integrate customers into the borderless enterprise.

Without a clearer focus on customers as well as innovation in the enterprise, or “how business gets done,” the SAP and overall IT organization becomes a very expensive operational support layer.  Without the genuine business focus the organization becomes a commodity to be outsourced.

How Can You Transition to Full SAP IT Convergence?

By now the need for full convergence is clearer.  But if it’s still not clear enough consider another element or your SAP or IT organization–, look at the pay structure for your SAP skills.  Your SAP staff is likely paid equivalent salaries to very senior level employees at your company.  In some cases they may make as much as some of the junior executives.  And then remind yourself, this pay range is for non-management positions.  So we have to consider what it will take to change the organization to achieve convergence.

From the last few posts, as well as my own experience, here is my “short list” of important things to do to achieve convergence:

• Steering Committee Engagement and Roadmap Management
• Pursue business executive sponsorship but don’t wait for it to get started
• Engage at all levels of the organization
• MBA in the IT organization
• Conduct one or more pilot programs and capture lessons learned

Start a communication program

Exchange staff program to integrate the IT organization into the business

Hold IT staff accountable for participation

Don’t let available tools stifle participation or innovation

• Invest in NON-TECHNICAL IT training

Public speaking

Presentation skills

Meeting skills

Facilitation skills

Questioning and Negotiation

Conflict management and resolution

Managerial skills

There are two other areas that I will offer some insight on.  As a result of the explosion in mobile devices (literally hundreds of millions of them) there is a need to ensure that technology solutions are “device agnostic.”  In other words, as employees begin to provide their own smartphones be ready to support them.  If your organization is tasked with the cost for the plans and hardware, supporting employee provided mobile devices is cheaper even with the additional support overhead.  On the second front there are business direct buy purchases of technology.  As last week’s post pointed out, because of what the business perceives as a lack of responsiveness to their needs they are making more of their own direct technology purchases.  Learn to live with this and to engage in more of an internal consulting role so that the solutions are a better fit for the business and the SAP or IT organization.

How you approach the future for your technology organization–, isolation, alignment, or convergence; will determine how valuable you are to the business in the future.  And with today’s competitive landscape combined with the economic struggles it is more important than ever to demonstrate business value.

Related Posts:

• ERP vs. ERP II vs. ERP III Future Enterprise Applications
• ERP II & ERP III – SAP Business IT Revolution
• Steps to Achieve SAP IT Convergence
• Striving for a Customer Focused Approach to Innovation 3 of 3
• ERP III – Is the Integration of Collaboration the Future of Enterprise Applications

New IT Value Propositions – Moving from Operations to Customers and Innovation

Throughout everything I do as a consultant I try to categorize my activities into the three key value proposition areas of business–, operations, customers, or innovation.  Even though I have been working primarily in the supply chain areas of SAP since 1994 (SD – Sales and Distribution, MM – Materials Management, and PP – Production Planning) I have been focusing more and more on the key value areas of customers and innovation.  The big driver for my focus on customers and innovation is because that is where business is done.

By focusing only on processes, operations, and cost reductions business and IT efforts result in mass commoditization.

Certainly every company must contain, control, and reduce costs to stay competitive in the marketplace.  More and more however the companies who are able to ensure long term success are those with a more balanced focus on retaining and acquiring customers while innovating new products or services.

Where IT has been and Where IT is Going

The last 30+ years the business and technology “revolution” has focused on operations and done little to directly address the customer or innovation.  It is almost as if technology organizations only understand Henry Ford’s assembly line mentality with business processes.  The operations focus can be seen in ERP applications (like SAP), EDI or interfaces, machine logic controllers, wired and then wireless data transfer, the Internet, or any other number of technological advances.

Today’s leading companies are integrating their IT operations into the fabric of the business.  Today’s leading companies are focused on innovation and customers.

Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it’s about selecting and executing the right ideas and bringing them to market in record time.

In the 1990s, innovation was about technology and control of quality and cost. Today, it’s about taking corporate organizations built for efficiency and rewiring them for creativity and growth. [FN1 - excerpted from "The World's Most Innovative Companies," see the footnote link below.]

In announcing the recent list of innovative companies, MIT noted these companies are “setting the agenda in an increasingly important market, on the verge of disrupting an established market, or creating an entirely new market.” (BostInnovation Feb 22, 2011 citing an MIT study of innovative companies).

The Operations IT Focus Has Turned All Products Into Commodities

This better, faster, cheaper automation paradigm has worked well when processes were mostly manual and labor intensive.  As more and more processes have been automated and streamlined further technological advances provide less and less return at higher costs.  Along with that, the cost-cutting chase, and the speed of automation and process improvement has dramatically accelerated the rate of commoditization of products and services.

As just one example of how dramatic this transformation is, I personally own an iPhone.  On that iPhone I have a free application that: a) uses the phone camera to capture and process product bar codes, and then b) goes online to immediately price-compare that product to local and online sources.  My wife loves it.  She can be out shopping and do real-time price comparisons.  What does this mean? 

Every major product seller is now a commodity outlet.  Every product can be comparison shopped in real time making it a commodity also.

As a product supplier, your customer does not have the option of you re-numbering, or using a different SKU.  Why?  Because the very same ability to search for the lowest price is the same tool that finds your product to begin with.  Changing the SKU would be more counterproductive to sales than engaging in the commodity-based price wars.

The future of technology and business integration provides the two areas of business most neglected by IT or ERP or technology to focus on–, innovation and direct customer interaction.  While I personally believe we are in the early “Wild West” era of social media tools, their hype and popularity is proof enough that the marketplace as a whole recognizes a gap in customer interaction that must be filled.  The real question is what will tomorrow’s successful social media business models look like after all of the hype and snake oil sales are finished.

Next Generation Enterprises – Will They Transform Business?

Already we are beginning to see seeds of transformation being sown.  All around the globe companies are beginning to focus more directly on innovation and customer focus through technology integration.

The hype around social media and Web 2.0 is beginning to give way to a few practical applications.  The same can be said for “cloud” computing even though it is still heavily immersed in the “hype” phase.

These are all IT solutions.

What about business integration?

What are the details of how technology and social media will bring about a revolution in customer focus and innovation?

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[FN1]  The World’s Most Innovative Companies (Bloomberg)
http://www.businessweek.com/magazine/content/06_17/b3981401.htm

Related Posts:

• Striving for a Customer Focused Approach to Innovation 3 of 3
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
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• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP