SAP & ERP Consulting from the Customer Point of View

Business - IT Convergence

Proper SAP project governance is a function of the business in partnership with IT.  With the exception of a few of SAP’s technical applications (like parts of Solution Manager, HANA, etc.) the entire application suite is about business; business transaction processing and business processes. If key business resources are not directly engaged in SAP project governance you may never realize the SAP benefits you expect.

This brings me to the point of what benefits you expect from an SAP implementation?

From what I have seen there are generally 2 broad “buckets” of benefits on SAP projects.  The first “bucket” is focused on consolidating and eliminating systems while the second is all about transactional business execution.  Or, IT benefits and business benefits.

SAP Project Drivers in IT

The first benefit “bucket” is related to pure IT cost reduction with a focus on consolidating and eliminating legacy systems for many of the following reasons:

• reducing numerous applications’ license costs
• narrowing technical infrastructure needs
• simplifying technical architecture
• reducing system maintenance costs
• reducing legacy staffing needs
• standardizing on a single development platform

If your SAP project is more of a pure landscape play, around replacing legacy systems, then SAP project governance would fall more clearly under IT.  However these types of projects usually end up having the business user community demand that all legacy system functionality be meticulously reproduced in SAP.  In the end you will likely achieve some measure of savings but far less than you originally anticipated.  Any expected savings will generally be consumed through mountains of custom coded solutions which will need continual care, maintenance, and feeding after go-live.  These custom coded “solutions” are not supported by your SAP maintenance agreement and can eat you alive in post-production support costs.

SAP Project Drivers in the Business

The second benefit “bucket” is related to business processes and business transaction execution producing results such as:

• improved cycle times
• greater process automation
• inter and intra departmental integration
• unified reporting data
• improved inventory management
• better planning capabilities
• greater supply chain efficiencies
• faster, more accurate financial closes and statements
• better operational decision making tools

As you can guess, the list goes on.  The difference here is the focus is on direct engagement and active participation with the business.  This is the real challenge.  A business partnership in your SAP project requires more change management, greater flexibility, and a clear understanding that some business needs will override IT drivers and IT goals.  The goal of well executed SAP project governance is to achieve measurable benefit –, it is more about delivering business objectives and strategic direction. 

IT Governance of the SAP Enabled Organization

When the SAP enabled IT organization is able to deliver on business objectives and focus on strategic direction their role in the enterprise changes.  This SAP change moves the IT organization from being a mere “service provider” (a very expensive cost center) to a critical “value added” business partner. When the SAP IT department is seen as a “service provider” you quickly encounter budget and cost cutting pressure.  As I have previously noted:

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…

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 (see SAP IT Convergence Beyond Business to IT Alignment).

SAP Governance Includes Business to IT Convergence

The whole area of governance and convergence is very closely related.  For effective governance the business direction and integration must be a key component of all SAP or IT initiatives.  When you have that involvement, over time, and with some effort, convergence happens.  It isn’t automatic but the environment for it to occur begins with direct business engagement. 

If the business isn’t in the SAP co-pilots seat you may be headed for a IT crash landing.

If you’re thinking to yourself this “doesn’t apply to me” then you might want to think again.  A recent IBM study found that many corporate lines of business are beginning to make their own independent technology purchase decisions.  And they are doing this outside of the SAP or IT organization.  Add to that Ray Wang’s recent Harvard Business Review Blog Post about the consumerization of [business] IT (see Integrating Business Stakeholders as Part of SAP IT Convergence) and you have a serious issue to contend with.  As his research noted, “corporate tech spending is up by 17 to 20%… [but] spending by IT departments is flat.. business leaders, not their IT colleagues… are driving purchasing decisions.”

Business decision makers are starting to use their own budgets to make their own IT decisions rather than making the contribution to what they see as a very expensive “service provider.” That integration or “convergence” with the business is more important than ever because in the end they have more influence over your budget than you may realize.

For more information on this topic please see these additional posts:

• Steps to Achieve SAP IT Convergence
• SAP IT Convergence is About Business Focused Integration
• Steering Committee Governance for an SAP Center of Excellence
• Using Your SAP Steering Committee for Business Transformation
• SAP & Business Convergence

Related Posts:

• Steering Committee Governance for an SAP Center of Excellence
• SAP Program Management Requires a Type of CMMI
• Steps to Achieve SAP IT Convergence
• Toward an SAP Center of Excellence or SAP Competency Center – PART 2
• Series on SAP Competency Center or SAP Center of Excellence

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

Part 2 of 3

SAP Competency Center – Doing Things Right

SAP Center of Excellence – Doing the Right Things

The SAP Center of Excellence approach assumes a dynamic organization that is experiencing a fair amount of change, at a pace that causes the organization to stretch.  This is usually the case with growth oriented companies who are seeking to find new competitive methods and ways of operating in a challenging global climate.

The SAP Competency Center approach assumes a fairly stable business model, without significant market disruptors, and a mature marketplace.  This is generally seen with older companies who compete in commodity spaces.  The SAP Competency Center is sometimes called an SAP Center of Expertise, but without more direct and clearly aligned business integration the organization name does not make it a true center of excellence.

The SAP Center of Excellence Structure and Purpose

For purposes of this post we will focus primarily on the SAP Center of Excellence structure or model (where IT organizations focus on business to SAP alignment).  This Center of Excellence structure first requires building out some of the stability infrastructure that comes from developing an SAP Competency Center.  The SAP Competency Center Framework is used to stabilize the application and business processes immediately after go-live.  The  SAP Competency Center becomes the foundation for the Center of Excellence structure (to aggressively focus on market and competitive pressures).

The basic differences between an SAP Competency Center and an SAP Center of Excellence are related to maturity and function.

The competency center seeks to employ change management strategies to regain system and business stability; the center of excellence seeks to integrate application support staff and support technology into the business for competitive advantage.

SAP Competency Centers are REACTIVE to any business need, waiting for unsolicited help desk tickets or business input.  Competency Centers react to requirements.

SAP Centers of Excellence on the other hand are PROACTIVE and try to find ways to apply technology and resources to value propositions and competitive pressures in an ongoing manner.  Centers of Excellence actively look for value opportunities.

SAP Competency Center – Doing Things Right

From an SAP Competency Center approach there is a strong focus on:

• resolving day to day activities,
• preserving existing market share (customer retention),
• managing help desk requests,
• and a general focus on stability and structure.

The Competency Center approach is needed for some time after a new SAP implementation goes into production, and it is a good place to start for companies who want to build a true Center of Excellence.  However, as Peter Drucker has noted there is a difference in philosophy around doing things right or doing the right things.  SAP Competency Center management does not seek to achieve a strong, changing, vibrant dynamic within the business.

The Competency Center framework and approach seeks stability, predictability and short to mid-term incremental improvements.  Not too much change and not too much disruption.  The goal of a competency center is to maintain smooth operations after the period of system stabilization.  Long term adoption of an SAP Competency Center framework is for those companies who have a business model that is both change and risk averse.  Otherwise the SAP Competency Center framework should become the foundational building blocks for an SAP Center of Excellence Structure shortly after achieving stable production operations.

SAP Center of Excellence – Doing the Right Things

The SAP Center of Excellence approach assumes a more aggressive business model, one that is dynamic and pursuing market opportunities.  This model and approach are well suited to growth oriented companies no matter what their size.  The idea of doing the right things means that in the process of change some things may not always be done at their optimal level.  Business is not perfect, markets are not perfect, no matter how hard companies may try, products and services are not perfect.  This does not mean they are sloppy, it just means you don’t have the luxury of pursuing the last mile of perfection.

The SAP Center of Excellence structure tries to find the right things to do to continue to be a market maker or a market mover.  This usually means creating a very dynamic and fluid SAP support organization that is more closely integrated into the business (and not just aligned to it). Because of the pace, and the struggles involved in being a market maker or market mover some things can not always be anticipated.

Is Your Company a Good Fit for an SAP Center of Excellence?

Companies that are good candidates for an SAP Center of Excellence are (or want to be) able to change and adapt quickly because of market necessities or because it is part of their business model. Together with many of the items listed for Competency Center focused companies, those who want to implement an SAP Center of Excellence structure have a strong focus on:

• wanting to gain market share, or wanting to protect market share in a volatile marketplace
• customer retention and customer acquisition,
• market intelligence,
• innovation,
• market responsiveness (the ability to quickly adapt and change).

The SAP Center of Excellence requires new methods, tools, and approaches for companies to achieve this level of business performance.  The SAP Center of Excellence at its heart and soul is more about business than it is about applications.  So, with a firm SAP Competency Center framework and management foundation,

“a true SAP Center of Excellence seeks to do the right things the right way.”

In the next post we will look at a first pass at a very high level SAP Center of Excellence framework and model.  Many of these components would also be in the Competency Center, but in a Center of Excellence the ability and need for collaboration and change is much more aggressive.

———————————

Toward an SAP Center of Excellence or SAP Competency Center – PART 1

Explaining the differences between an SAP Competency Center or sometimes referred to as an SAP Center of Expertise and an SAP Center of Excellence.  As Peter Drucker wrote either Do Things Right or Do the Right Things.

Toward an SAP Center of Excellence or SAP Competency Center – PART 2

A more complete and thorough explanation of the differences between the SAP Competency Center (or Expertise Center) and the SAP Center of Excellence (or the Business Transformation Center).  An understanding the operating differences and how the Competency Center is focused on reactive processing of things like help desk tickets, problem resolution, data correction, and knowledge transfer.

Toward an SAP Center of Excellence or SAP Competency Center – PART 3

Business model application of steps, techniques, and methods to produce an SAP Center of Expertise or an SAP Business Transformation Center.  The major business transformation steps on moving from an SAP Competency Center to an SAP Center of Excellence.

Related Posts:

• Using SAP to Improve Revenue and Profitability
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Planning For a Smooth Go-Live: Part 3
• The Real Reason Executive Participation Creates IT Project Success