SAP ROI — Enterprise Architecture & Business Solutions

SAP Business Value & ROI

As a follow up to last week’s post on Sustained Business Value from SAP Business Software I did a little research on the study authors and discovered their continued focus on this issue.

Recently Peppard (one of the authors) and a couple of other colleagues provided real business value success findings in an upcoming journal article called “Factors Affecting the Successful Realization of Benefits from Systems Development Projects: Findings From Three Case Studies” [FN1].

While I read through and reviewed the draft 35 page study I couldn’t help but notice the striking similarity to my nearly 5 year old post on the subject of SAP as a Change Enabler. What SAP as a Change Enabler summarized in a few pages appears to have been empirically tested by comparing and contrasting a few case studies of live software implementations.

Following my personal experience around SAP since 1994 I’ve added additional insight on how to gain SAP ROI through Strategic Business Transformation by also Using SAP to Improve Revenue and Profitability.  It’s great to see the academic community more fully addressing the “how-to” instructions, and detailed guidance I’ve been writing about for several years. To amplify their initial research I’ve cross-linked many posts throughout this one to bring significant substance to the high level conclusions they are just beginning to research.

Changing from SAP System Delivery to Business Benefit Delivery

Before anything else a benefits focus must be the guiding framework for your SAP project. Every major business software project must begin with some clear guidance on the “why” of the project.

Business Centered SAP Change Management is Required

The authors highlighted several key observations around organizational change management and the need for user participation but missed one of the key areas of success–, knowledge transfer (see Change Management and Knowledge Transfer Part 1, and Part 2). Not just end user training, but more holistic knowledge transfer about the new system, its capabilities, and how to maintain them.

SAP business transformation (not to be confused with the SAP Business Transformation group) is an ongoing effort. It takes time to capture project and program lessons learned, and then develop the organizational maturity to manage additional change over time. To achieve this one of the goals of SAP projects has got to be to create a learning organization. An organization where knowledge exchange and benefits centered collaboration is key to SAP program success (see ERP III – Is the Integration of Collaboration the Future of Enterprise Applications).

WHY do an SAP Project?

So, what is the basic idea here? Their findings indicate that a large scale software program requires a business benefits focused approach. An approach which addresses the “WHY?” of the project.

[A] project might be successful in meeting its internal targets, yet not deliver beneficial business outcomes. [FN2]

For too long enterprise software vendors and SAP system integrators have focused on everything but the genuine business “WHY?” of the 5 W’s and the H of SAP projects. For too long companies have addressed:

• “WHO” (who will implement, who will support, who will the core team be, etc.)
• “WHAT” (what is the scope, what technology, etc.)
• “WHERE” (both project logistics as well as the organization structure that is impacted)
• “WHEN” (project timeline, business timelines, milestones, etc.)
• “HOW” (use our custom methodology [i.e. make it up as we go], or use ASAP)

But sadly few companies get down into the details of the “WHY?”

WHY is Management Engagement and User Participation Lacking?

It is the “WHY” which will engage the larger business community and senior leadership and that is The Real Reason Executive Participation Creates IT Project Success. It is the “WHY” that will bring about badly needed business process changes from the user community. Unfortunately it is my opinion that because the compelling “WHY” part of the business case has been missing for so long senior leadership and ultimately the user community is generally disengaged from the project delivery process. Yet a large enterprise software project like SAP is supposed to be all about the business.

Think about it, how many multimillion dollar investments, with such wide organizational impact, do management stakeholders and end users take such as “hands off” approach to?

If you want your SAP project to be a business project, GET THE BUSINESS ENGAGED! If you want it to be a technology project, nothing else is required. Just put the system in and when people complain tell them to shut up. It was never really about the business anyway!

Do Your SAP System Integrator Consultants Have Business Knowledge or ANY SAP Experience?

This leads to the next issue. If the business is engaged and you decide to bring in a system integrator then define BUSINESS expectations from your system integrator up front. If they only speak to the business in techie terms then get rid of them because do you need “consultants” who can’t even consult? (see Screening and Interview Methods to Find the Right Consultant – Part 2).  And if you think this sounds crazy and you are an SAP customer, I DARE you to read through some of the posts at http://sapmesideways.blogspot.com which is frightening because of how TYPICAL these horror stories are and why Protecting Yourself from SAP Consulting Fraud is critical.

Think about this a minute and let it sink in. If you hired a system integrator for an SAP business application project then shouldn’t they be focusing on business things? If they can’t speak to you in business terms then why again did you hire them? After all, are they really consultants? To gain real competitive advantage in the business marketplace you must Change How You Look at SAP to Create ROI because SAP Implementation is an Investment NOT an Event.

During the sales cycle you as an SAP prospective customer have GOT to ensure there is a clear business vision. Again I ask, if not, then why are you even doing this?

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[FN1] Doherty, N., Ashurst, C., and Peppard, J. (2011) Factors Affecting the Successful Realization of Benefits from Systems Development Projects: Findings from Three Case Studies. Journal of Information Technology (upcoming).

[FN2] Sauer, C. and Davis, G. B. (2010) – Information Systems Failure, Encyclopedia of Library & Information Sciences, Third Edition, pp 2643-2652.

Additional Resources for Successful SAP Implementation

Check out these posts for specific ideas, thoughts, and experience on achieving real results from your SAP project or other enterprise software projects:

• Why SAP Projects Fail to Deliver ROI and How to Change IT
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Series on SAP Competency Center or SAP Center of Excellence

Related Posts:

• How To Navigate the SAP Business Transformation Journey
• Series on SAP Competency Center or SAP Center of Excellence
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• SAP Service Delivery versus Value Delivery
• SAP Customer Responsibility for SAP Project Success

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:

• Organizational Change Management Inside the SAP IT Support Organization
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Creating a Knowledge Centered Learning Organization
• How To Navigate the SAP Business Transformation Journey
• Competitive Pressures and Value Propositions, Is Lean the Answer?

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:

• Organizational Change Management Inside the SAP IT Support Organization
• Creating a Knowledge Centered Learning Organization
• How To Navigate the SAP Business Transformation Journey
• ERP vs. ERP II vs. ERP III Future Enterprise Applications
• SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration