SAP & ERP Consulting from the Customer Point of View

SAP Vendor RFI and RFP

This is a followup from last week’s post on  Why SAP Vendor – Partner Selection RFI Processes are Stupid.  Next week’s post will provide insight, suggestions, and ideas on how to ensure your SAP RFI or RFP processes achieve the best possible results.

SAP is a COTS (Commercial Off The Shelf) business software application.  In the COTS world solid financial statements may indicate an SAP partner or vendor who has mastered the art of “squatting” or ”lock-in.”  They may routinely custom code non-mission critical “requests” from the business, where other more standard solutions might have worked. Less experienced consultants (with great margins for the consulting company) will often suggest customized solutions for areas that are not business critical because it is easier than the change management requirements.

Some of these SAP vendors do custom coding under the pretense of “customer satisfaction” and trying to “meet your needs.”  I feel all warm and fuzzy, don’t you?

Is Custom SAP Development Really Customer Service?

After these SAP Partners have “satisfied” your requests for custom coding they stay on to constantly nurse, fix, adjust, and maintain their prized custom work.  There are times when custom development is justified but it must be related to a critical business need and not a “convenience.”  After you go-live with the customized, frequently broken, painfully inadequate “solution” you wonder how did we get here?  You ask yourself, “I thought they said all of this was ‘standard’, and ‘easy’ during the SAP RFI and RFP sales cycles?”

If you are even remotely thinking these types of thoughts the SAP RFI and RFP processes may have been more of a “beauty pageant” and not focused enough on business requirements or items which generate ROI (i.e. Return on Investment) for your enterprise software project.

I don’t care how great an SAP implementation vendor or partner thinks they are, all I want to know is exactly how they will help my business!

SAP Vendors “Pick Me!  Pick Me!” We’ve Got Great Financial Strength and Have Been There FOREVER!

An SAP system partner’s ability to ”squat” at your company for years, collecting fees for software engineering, helps them to promote their “financial health” and “long term stability” to the next client –, leading me to ask, how again does this help your company realize the benefits of a Commercial Off-the-Shelf (COTS) solution.  Your application life-cycle costs, or the SAP TCO (Total Cost of Ownership) will go sky high and you may only see negative SAP ROI.

RFI processes have got to focus on just one thing–, business benefit.  Everything else is part of a “beauty pageant.”

Start leveraging the RFI process to ensure that you are focusing on success criteria that is important to you! In the end what matters is that you get the very best consultants, who have extensive application experience and strong change management skills (see Screening and Interview Methods to Find the Right Consultant – Part 2).

The key is to focus on making the SAP RFI and SAP RFP processes about education as much as it is about vendor selection (see Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP). Make the SAP partner or vendor focus on what they can do for you and your business right from the beginning.

Can the SAP Partner Show You Business Benefit?

That SAP partner or vendor must demonstrate how they have been able to provide real, lasting, and tangible business benefit.  What business value did they deliver?  If they can’t show this then maybe they are profitable in their ability to “game” you during the sales process.  To maintain their financial health and margins they likely have inexpensive “technicians” rather than experts to work on your project (Successful SAP Project Team Composition – Technicians or Experts?).

Stop accepting fast-food taste and ambiance at five star restaurant prices — DEMAND business benefit.

Let me warn you here however, because this demand for verifiable business benefits is fairly new to the marketplace you may struggle to find your implementation partner.  Or you may end up managing your entire project completely on your own by bringing in your own outside contractors.  But until you as a customer and part of the larger marketplace start demanding results SAP vendors and partners will not change.

Your customers demand results from you, shouldn’t you demand the same of your SAP partner or vendor?

Business Focus Produces a More Meaningful SAP Vendor RFI and RFP

What do you want the end results of your SAP system to do for your company? Are you focused on operational excellence?  Are you looking to produce innovative products or services?  Do you want to focus on business and marketplace growth?  What is the ultimate goal of your SAP implementation?

The RFI, RFP, and selection process must focus on the skill, experience, and qualifications of the project manager and consultants. STOP right here and let that sink in. Will ANY of those grinning sales people be there to deliver one single business solution?  Of course not, they are there to make the promises to convince you to pay them for their consultants and project manager.  So I will ask you, why isn’t the entire RFI and RFP process focused more on the consultants and project manager that will be responsible for delivering your enterprise software project?  Shouldn’t you be spending more time learning about, interviewing, screening, and grilling the consultants and project manager than about how “great” the SAP partner claims to be?

Related Posts:

• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Industry Specific SAP Consulting vs Deep SAP Application Experience
• Using SAP to Improve Revenue and Profitability
• FIXING Stupid SAP Vendor – Partner Selection RFI – RFP Processes
• SAP Success Factors for Vendor Selection – Responsibility Matrix 1

The first part of this series looked at What is the Proper Relationship for the CIO, CEO, and CFO?  The CIO role is already challenging and gaining in difficulty in today’s business environment.  And by all measures it looks as though things will continue to become more difficult and complex as time goes on.  Today’s CIO must not only keep up with technology, and business process improvement with automation, but must also become a “mini-MBA” in applying technology solutions to forward looking business strategies including customer acquisition, customer retention, revenue growth and profitability.  Although it is a monumental task it is possible.

Where technology can achieve solid ROI and breakthrough results in the enterprise are in the two key value areas that have not been well addressed: customer focus (beyond CRM) together with product or service innovation.

Want ROI?  The Next Wave in ERP Will Occur by Changing the Focus from Process to Customer

The heart of the business is the customer, without them there is no business. Today’s technology initiatives, whether they are with ERP products like SAP, various CRM offerings, or a whole host of other technologies and packages focus more on processes and on technology than they do on the heart of the business.  I’m a fan of visual models.  They help me to think through, adjust, and understand complex ideas in a simplified and high level manner.  For example, the simple model below represents today’s package application technology landscape in terms of the 3 key areas of business. 

• The large red bubble is the technology process focus on the value proposition of “operational excellence,”
• the orange block are the technology tools and systems that are typically applied,
• the smaller green bubble is the value area of “customer focus,”
• and the tiny center of intersection between business processes and customers in the blue block is the value area of “customer focused innovation”.

That is the sad state of today’s typical technology environment.

Customer Focused Innovation at the Process and Customer Intersection is the Ultimate Objective of a Change in Technology Focus

Successful package applications and technology application over the next couple of decades will dramatically alter this dynamic.  They will focus more aggressively on the customer and the innovation intersection between the customer and business processes.  Business processes will necessarily get closer to the customer and technology will be focused on the integration of the customer into business processes.  By doing so customers will have a greater influence over the types, quality, and availability of products and services.  The following model shows what I believe the next twenty years will develop as the winning technology landscape of the future:

• Although covered with technology, business processes become a secondary focus to the customer for technology.
• To enable this the technology landscape shifts to encompass more of the customer interaction with the business, potentially leading to ideas such as “mass customization.”
• The area of customer-centered innovation becomes much larger as businesses learn to integrate their customers deeper into their business processes.
• The customer naturally becomes much more important to the application of technology like never before.

The current state of the economy and global economic pressures have created a disruption in the classic technology model of process improvement and process automation.  Together with global competition and a potentially permanent change in customer purchasing characteristics winners and losers will emerge in the new technology arena.  As customers take center stage and innovation becomes more important just for business survival collaboration will become more and more important as well.  The transformation of business and technology will require new collaborative technology tools to build bridges between business, customers, and the product or service development areas.

Because of the pace of change, focusing on “best practices” and internal process improvement, or even extending processes is no longer enough. Business can rarely (if ever today) integrate, automate, and streamline to achieve marketplace success –, to one degree or another nearly every competitor is doing this or is quickly headed in that direction.

Business complexity and the breakneck pace of change turns yesterday’s breakthrough technology into today’s commodity; vendors are modestly integrated into the extended supply chain, all the way from raw materials to end customer delivery; customers are more sophisticated and have more options than ever through the Internet; competitors have worked to incorporate similar technology throughout their entire process chains by integrating, automating, and accelerating their processes.  As a result, business demand on technology simultaneously creates new opportunities and new struggles. 

Want BIG ROI for Your Technology Investment?

Part 1:  What is the Proper Relationship for the CIO, CEO, and CFO?

In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers.  From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic.  This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO.  This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house. 

Part 2:  CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape

The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer.  This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition.  Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change.  The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business.  Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it.  This is the area of technology market winners and losers of the next 20 years.

Part 3:  Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation

The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes.  A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses.  While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology.  During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart. 

Part 4:  Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

The final part of the series looks at the emerging technology landscape and what the future holds.  It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies.  A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored.  The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics.  The new technology model looks to change that dynamic.

Related Posts:

• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Where do you Start with SAP Return on Investment or SAP ROI?
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• The Real Reason Executive Participation Creates IT Project Success
• CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?

Aligning technology to business requirements is  based on a few underlying assumptions that are often lacking from SAP projects.  Those assumptions are that the: 1) business actually knows what their requirements are; 2) the project scope includes those requirements; 3) the right management and internal employees are committed and engaged; 4) the system integrator you select has consultants with the required experience.

After all of that the one thing that I often see lacking is the failure to look beyond “operational excellence” areas of the business and into what SAP or any other ERP application can do for innovation or customer focus.  Recently I was reading an article on CIO.com (where I also contribute).  The basic premise of the author was that IT is already integrated with business and all of the hype about business to IT alignment is overblown.  This is not entirely true.  As I commented:

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 as a Change Enabler