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Using Your SAP Steering Committee for Business Transformation

March 14th, 2011 by

Using SAP Business Technology Convergence for competitive advantage

SAP Business Technology Convergence

 

How Long Term SAP Steering Committee Integration Changes the Enterprise

One of the biggest benefits of an SAP implementation is the business transformation it can bring.  At first the changes and challenges are uncomfortable, even downright painful.  But in the mid to long-term SAP brings about a business culture transformation.  When that transformation is enabled by ongoing steering committee involvement then business to IT convergence occurs.  Over time this convergence of business and technology produces financial and marketplace improvements.

Use the Steering Committee’s Experience for Ongoing Governance

An SAP best practice is to form a steering committee before the project even begins.  In other words this group should be together before the first RFI is issued.  They (the steering committee) should be key members of senior leadership who have the ability to make business altering decisions.

The most effective SAP steering committees typically:

  • Set SAP project scope and then help manage it.
  • Define project objectives and evaluation criteria.
  • Monitor project progress, including key milestones and deliverables progress.
  • Oversee Quality reviews at key check points.
  • Evaluate and mitigate organizational impact of business changes.
  • Promotes the project throughout the organization.
  • Coordinates staffing and resource levels from key business areas.
  • Makes critical decisions which the project team is unable to resolve (escalations or key business decisions).
  • Etc.

Even on a relatively short duration project of six months, many of these steering committees will have worked together in this fashion for a year or more.  Going through the initial business needs analysis, software selection, vendor selection, the project execution, and then go-live support for some period brings this group together for some time.

Gaining Competitive Advantage through the Ongoing Integration of SAP into the Business

As a steering committee works together over the course of a year or two they develop a unique and key skill set that is well-suited to ongoing technology integration into the business (called “convergence”).  As the SAP project goes live and some stabilization occurs the SAP steering committee has learned more about the enterprise from a leadership perspective than anyone in the company.

While the project team is gaining the focused process skills within an SAP module the steering committee is gaining invaluable insight into the overall operations of the business from a leadership perspective.  This steering committee is also exposed to technology and how it applies to business, solving problems, its capabilities, and its limitations.  They have become the most capable future leaders of business transformation and of competitive advantage in the marketplace.  They have worked through the hard things in an interconnected and integrated way.  They have set the stage for future advances.

What happens next?

Your company moves into maintenance mode and the steering committee disbands!

That my friends is a crime!

Do NOT Disband Your SAP Steering Committee After Go-Live

The ideal solution is to retain the SAP steering committee and convert their role to one of managing technology to business integration.  The skills they gain during the course of their duties cannot be underestimated.  They are invaluable to future IT initiatives of expanding the SAP footprint in the enterprise or other key business centered technology projects. This is a role and a function that is seriously lacking from today’s businesses.

In 2007 the BTM Institute (or Business Technology Management) published research indicating that companies who focused on converging business and technology enjoyed greater revenue growth and net margins than their competitors.  They were also found to have consistently greater returns on their investments than their competitors. [FN1]  The BTM Institute defines four broad categories for analysis of business and technology convergence which are:

  • Strategy & Planning
  • Strategic Investment Management
  • Governance & Organization
  • Strategic Enterprise Architecture

Think about it, your SAP steering committee has engaged in all of these broad dimensions throughout their existence.  Assuming the SAP steering committee was in place before the project for RFI and RFP preparation they would determine business objectives, priorities, strategic direction, and then develop scope.  These are clearly strategy, planning, and strategic investment activities.  As the project progresses they would engage in oversight, decision making, high level technical architecture analysis, and organizational requirements.

The steering committee must continue to function but take on a new role as the SAP project goes live and you move into stabilization.  Don’t kill the strategic engine of business transformation just as it is finished being built.  They are a critical component of the conversion to an SAP Center of Excellence after your SAP system goes live.

Steering Committees can ensure SAP or IT to business convergence to move from project, to competency center, to center of excellence.

The idea of a center of excellence is the integration or convergence of technology, leveraged in a powerfully competitive way, to ensure business benefit.

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For more information on developing an SAP Center of Excellence please see:

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[FN1] Business Technology Convergence Index, The Role of Business Technology Convergence in Innovation and Adaptability and its Effect on Financial Performance, BTM Institute, June 2007




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SAP ROI through Strategic Business Transformation

January 31st, 2011 by
SAP ROI

SAP Strategic Business Transformation

Lots of business ideas and paradigms have been proposed over the years.  Some of them turn out to be fads and other have enduring legacies.  While many have merit they all have one thing in common–, they are supposed to address the marketplace in some way.  Whether or not they stand the test of time depends on how well they help businesses compete in a globally competitive marketplace.

Enduring business ideas generally become part of an accepted business strategy.  One example is Michael Porter’s five competitive pressures (as the keys to strategy) for focusing on operational excellence, customer focus, vendor management, and competitor pressures.  The ability to address these competitive pressures is directly related to the quality of consultants your SAP system implementation partner provides.

The only thing that matters is the specific consultants they bring to your business to make a difference in how your business operates.

When changing the enterprise culture to one that is strategically focused and performance based several stages are required. These stages relate directly to the early, up-front work needed for an SAP implementation. Although the following quote is related to implementing a Balanced Scorecard initiative, the same change process applies to an SAP implementation and business transformation.

Initially, the focus is on mobilization and creating momentum, to get the process launched. Once the organization is mobilized, the focus shifts to governance, with emphasis on fluid, team-based approaches to deal with the unstructured nature of the transition to a new performance model. Finally, and gradually over time, a new management system evolves—a strategic management system that institutionalizes the new cultural values and new structures into a new system for managing (emphasis in original) (Kaplan and Norton, pg. 16, 1992)

The authors then note that the “various phases can evolve over two to three years.”

Over my SAP career beginning in 1994 I have seen this over and over.  What SAP causes is a cultural transformation that can be harnessed to achieve great things.  SAP, properly implemented and properly guided through the business transformation process provides front line managers with key information to move from day to day transaction management to longer term strategic management.  The idea would be to use SAP as a change enabler or change lever (Change How You Look at SAP to Create ROI).  By doing this successfully you can transform your business in the marketplace (Why SAP Projects Fail to Deliver ROI and How to Change IT).

This transformation process requires a phased approach that moves you through the process from go-live to competency to excellence (Series on SAP Competency Center or SAP Center of Excellence).  The reality is with an integrated ERP application like SAP it takes about 1 – 3 years to change the middle management culture from one of tactical day to day execution to strategic data analysis and competitive insight.

Mobilization – In SAP terms, the mobilization effort consists of the upfront business planning, strategy definition, goals and performance metrics definition.

Governance – The governance phase would include the necessary project tools to accomplish the organizational transformation. These are tools and resources not only for the SAP implementation itself, but also for the change management program within the enterprise.  In SAP, project governance begins from before the vendor contract is signed and continues on long after go-live to address ongoing business needs and requirements in the live system environment.

Strategic Management – The strategic management system occurs over time as the new metrics, resources, and tools available in your SAP implementation are used throughout the enterprise. It is the old business axiom “what gets measured gets done.”  After go-live new features or functions may be added to address marketplace competitive pressures.  As the actionable data is able to be analyzed by middle and lower level managers over time decisions can be made to more effectively address those competitive pressures.

SAP Organization Change is Ongoing

Depending on your timeline and organizational tolerance for change, by the time the SAP system is stabilized (anywhere from 3 – 12 months after go-live) your organizational transformation will be well underway. Within 12 – 24 months after go-live your organization should begin seeing real benefit from a properly implemented, business focused SAP implementation.

It takes about 1 – 3 years to change the middle management culture from one of tactical day to day execution to strategic data analysis and competitive insight.

My personal opinion is that because so much of the focus has been operational and “getting the system in” for an “on time and on budget” implementation that the upfront business work is little known and even less understood by the wealth of “technicians” that most consulting companies provide. Often times the consulting companies with established client relationships are eager to get as many consultants billing as they can. The several months of up front strategy work, even at super-premium rates, only engages two, and even in large far-flung enterprises, only 4 or 5 consultants. The SAP implementation itself will engage at least 5 – 10 TIMES that many consultants and so if a client does not insist on this up front strategy work, SAP vendors are reluctant to press a client in this direction from the RFP phase on.

That is not to say that consulting companies have not tried, only that customers or host companies, have focused so strictly on getting the existing transactional processes into SAP that they often fail to have the upfront business case for change created before the project begins.

To be successful, this upfront business design and change work must become the central focus of the SAP implementation.

SAP Business Transformation for Competitive Advantage

Business transformation with SAP is entirely possible even in massive enterprises if the business transformation effort begins by mobilizing your team at least a few months before an SAP RFP.  After the RFP you will need active change management throughout the SAP implementation.  For more information on various insight and ideas on SAP RFP strategies please see:

The RFP process is your first real opportunity to find the right vendor and the right consultants to transform your business.  By navigating this process successfully you can start out on solid footing.  One thing to always remember is that it is the quality of consultants on your project that makes the difference in the results of your implementation.  It is NOT the size of the company, the scope or reach of the consulting firm, how many offices they have, how much marketing material they put out, or how many fancy clients they can name.  The only thing that matters is the specific consultants they bring to your business to make a difference in how your business operates.

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Kaplan, R. and Norton, D. (1992), “The Balanced Scorecard – Measures that Drive Performance”, Harvard Business Review 70 (1).




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SAP Success Factors for Vender Selection – Responsibility Matrix 2

October 18th, 2010 by

Top ERP Success Factors

Based on a combination of the academic literature [FN1] and my personal experience I have put together the following SAP and ERP Critical Success Factor Responsibility Matrix. The large “A” indicates a primary responsibility, a small “z” indicates a secondary responsibility, and a blank field indicates no direct responsibility.

This is part of the continuing series on managing the SAP vendor relationship to help ensure SAP project success.  This can be achieved by reviewing the SAP critical success factors, how responsibility is divided, and tactics for managing them.

You want success, they want your money, MAKE SURE THEY EARN IT!

The small “z” indicates that the party has a very strong influence over that factor but may not be in the position to ensure that it is successful. These small “z” areas are often the key areas where parties with more of a primary responsibility tend to try to lay blame on the other party when a project runs into trouble.

No. SAP or ERP Critical Success Factor Company Integrator
1 Senior Management Support (and steering committee makeup) A  
2 SAP project champion A  
3 Empowered business project team decision makers A  
4 Company SAP project team (quality and time allocated) A  
5 Experienced SAP consultants   A
6 SAP project success criteria, goals and objectives A  
7 SAP implementation strategy z A
8 SAP project management A z
9 SAP tools, templates, and resources   A
10 SAP scope development z A
11 SAP scope management A z
12 Strong SAP project and business communication (inward and outward) A z
13 SAP change management A z
14 Business process engineering – interdepartmental cooperation A  
15 Sufficient SAP training (user and project team training) A A
16 SAP system vendor and customer trust   A
17 SAP system design decisions  z A
18 Amount of custom ABAP or other SAP coding  z A
19 Appropriate SAP software configuration (system settings)  z A
20 SAP system change control process   A
21 SAP data analysis and conversion A z
22 SAP test planning A z
23 SAP test development z A
24 Company end-user involvement and end-user testing A  

Legend

A = Primary Responsibility for the success factor
z = Shared but secondary responsibility for success

During your SAP or other ERP project it will be critical to pay very careful attention for you as a customer to those areas where the system integrator or consultants have a primary responsibility (the “A” areas) and where you share the responsibilities (the “z” areas). Those are generally the activities that many of the “con”sulting companies and unscrupulous integrators will take advantage of you and lay blame on you for activities they should be more carefully managing. If your project really goes wrong you can bet that in one way or another, you as a customer, will be shown to be somehow responsible for their primary area of responsibility.

SAP Vendor or System Integrator Responsibilities

On the other hand, you as a customer also need to be aware of, and careful about, the areas where you have the primary responsibility. And especially the areas where there is a shared responsibility with the system integrator and they only have a limited ability to influence your activities and success. Those areas should not be blamed on an SAP consulting firm or the consultants if it can be shown they tried to encourage you to do the important tasks to ensure success.  Keep in mind, at the end of the day, as the customer, you are always primarily responsible for your own success.  If risks, problems, or other issues arise and you as the customer do not take corrective action then no system integrator or consultant can change that.

SAP Customer or Client Responsibilities

For those shared responsibilities where the system integrator is tagged as a “z”, if they failed to let you know ahead of time, in a timely manner, a) what to expect, b) how to deal with it, and c) the risks involved, they may not have the experience they sold to you. Keep in mind that does not mean they will be able to spot every issue, every time, ahead of time or have the answer for every situation. But if that foresight is consistently lacking then caveat emptor, or, buyer beware in your engagement with that vendor.

List of ERP or SAP System Vendor Request for Information (RFI) Requirements

One great area to start out your SAP vendor selection process is with an RFI, or Request for Information from the vendors you are considering. I suggest you ask them to respond on how they will handle any and all of the key shared responsibility areas. In the table below you might want to reproduce it and remove the responsibility assignments (see the example below).

At the end of the day, as the customer, you are always primarily responsible for your own success

SAP system vendor RFI’s should include a list of each shared responsibility from the list above, who the vendor believes should “own” that responsibility (the large “A” or primary), and what resources they have to facilitate success.

No. SAP or ERP Critical Success Factor Company Integrator
5 Experienced SAP consultants   A
7 SAP implementation strategy z A
8 SAP project management A z
9 SAP tools, templates, and resources   A
10 SAP scope development z A
11 SAP scope management A z
12 Strong SAP project and business communication (inward and outward) A z
13 SAP change management A z
15 Sufficient SAP training (user and project team training) A A
16 SAP system vendor and customer trust   A
17 SAP system design decisions z A
18 Amount of custom ABAP or other SAP coding z A
19 Appropriate SAP software configuration (system settings) z A
20 SAP system change control process   A
21 SAP data analysis and conversion A z
22 SAP test planning A z
23 SAP test development z A

Legend

A = Primary Responsibility for the success factor
z = Shared but secondary responsibility for success

You can use this table as a first pass method to disqualify ANY system integrators that are non-responsive and those vendors that attempt to avoid any accountability for what they deliver. If any SAP system integrator is going to try to make you solely responsible for the success of every facet and phase of the project what do you need them for? In other words, if they are not willing to “own” any of the responsibility for your project’s success maybe you should be looking for different vendors.

How to use the SAP Vendor RFI Shared Responsibility Matrix

Use this table for gaining insight into a vendor’s operations and project approach. For example you might wish to use it in the following way:

    1. Send the proposed system integrator a list, similar to the one below, with BLANKS under the responsible party column and ask them to fill out who should be responsible for each success factor.
    2. SAP ERP Critical Success Criteria Table for Vendor RFI processing.

     

    Resource
    Y / N
    SAP or ERP Critical Success Factor Company Integrator
      Experienced SAP consultants    
      SAP implementation strategy    
      SAP project management    
      SAP tools, templates, and resources    
      SAP scope development    
      SAP scope management    
      Strong SAP project and business communication (inward and outward)    
      SAP change management    
      Sufficient SAP training (user and project team training)    
      SAP system vendor and customer trust    
      SAP system design decisions    
      Amount of custom ABAP or other SAP coding    
      Appropriate SAP software configuration (system settings)    
      SAP system change control process    
      SAP data analysis and conversion    
      SAP test planning    
      SAP test development    
            Additional Vendor SAP Success Criteria 1    
            Additional Vendor SAP Success Criteria 2    
            Additional Vendor SAP Success Criteria n…    

     

    1. Pay special attention to those vendors that might offer ADDITIONAL success criteria from what you send them. These vendors may understand and appreciate your focus on project success. If nothing else it will at least indicate they are giving it serious thought.
    2. Indicate in your RFI that failure to adequately address the critical success criteria section of the RFI will automatically disqualify that vendor. Why deal with ANY integrator, no matter how cheap or how supposedly “experienced” they may be if they are not willing to focus on your project success?
    3. Under the “Resources” column ask the vendors to indicate if they have specific approaches, tools, methods, or other resources to help ensure success.
    4. In your RFI ask them to include in a separate sheet any of the “Y” answers, and to be ready to demonstrate those approaches, tools, methods, etc. during any future sales presentation.
    5. For any Resource answer with an “N” (no resources) ask the vendor in their RFI to propose some method to manage the risk associated with not achieving that success factor.

    In other words, this exercise does a number of things that are helpful to you as an ERP services buyer from an SAP system integrator or SAP implementation vendor:

    • It focuses every vendor on project success criteria even before they engage in their sales pitches.
    • It helps to separate some of the less reputable vendors from the process by exposing the vendors who do not believe they have any stake in your project’s success.
    • This approach ensures that the prospective SAP system vendor or SAP consulting company provides tools, resources, methods, and approaches to mitigate risks associated with not addressing each of the success criteria.

    As we continue through this evaluation of SAP software critical success factors in future posts we will look at methods, tactics, and strategies for managing each of them to promote success. After all, you want project success, ROI, and business benefit, they want your money so they should earn it. Take some time and review the following posts for more background on vendor selection and vendor evaluations.

    =======================

    [FN1] This table was developed from a combination of factors found in a graduate student’s submission, from peer-reviewed academic literature I’ve previously written about, and from my own experience with SAP since 1994 and business systems since the mid 1980’s.

    Bhagwani, A. (2009). Critical Success Factors In Implementing SAP ERP Software, University of Kansas Graduate School. http://www.r3now.com/literature/2009-Bhagwani-SAP-Project-Success.pdf .Somers, T., and Nelson, K., (2001) The Impact of Critical Success Factors (CSF) across the Stages of Enterprise Resource Planning Implementations. Proceedings of the 34th Hawaii International Conference on System Sciences. Somers, et. al., has been reviewed in detail on this site at:

    The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors
    http://www.r3now.com/the-top-5-erp-success-factors-by-project-stage-from-22-critical-success-factors




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