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Building an Effective SAP ERP Delivery Organization

November 5th, 2012 by
Effective SAP Delivery

Effective SAP Delivery

There are generally 3 big components for improving SAP delivery.  These 3 components have the capability of improving SAP and technology delivery in general while impacting corporate business performance and marketplace success.

  • Delivery Approach
  • Delivery Methodology
  • IT Organizational Development

The following content is written with a focus on SAP, however it can be completely generalized to virtually any IT organization.

  1. A careful focus on the delivery approach is needed.  Here there are 2 key paradigms to focus on.  The first paradigm is service delivery vs. value delivery (SAP Service Delivery versus Value Delivery), and the second paradigm is software engineering vs. business process engineering (SAP Implementation Focus: Engineer Software or Business Processes?).
  2. A formal, structured, internal delivery methodology.  This should include a “checklist” of all project requirements including templates, tools, and resources for project delivery.  Because I know SAP I use it, however they have a powerful methodology which can also be generalized to virtually any IT project.  For more information see Why Use the SAP ASAP Methodology?
  3. A strong focus on IT organizational development.  The current “best practices” around IT Organizational Development includes a 3 tiered maturity structure:  Service provider, Business Partner, and Business Peer (Organizational Change Management Inside the SAP IT Support Organization).  The second part of that is a structured approach to creating the premier IT “Center of Excellence,” converged business-IT delivery organization (see SAP Service Provider to Business Peer Through Center of Excellence Maturity).  You can use 3 Development Phases for SAP Center of Excellence Maturity as a completely structured organizational outline.  It includes key activities and maturity steps.

Adopting these three pillars will create a great foundation for your company or organization for the long term.  They will also help immediately and transform your enterprise in the mid-term.




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Agile Project Methods for SAP ERP Projects?

October 29th, 2012 by
Agile or Waterfall on SAP ERP projects?

SAP Project Guidance

 

Looking at the “Agile Manifesto” and how Agile methods are applied generally involves small, discrete, “digestible” work and task components. 

Trying to juggle the number and complexity of dependencies on a full scale SAP ERP project involves management and coordination efforts which completely go against the idea of Agile methods.   

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ERP projects tend to have too many moving parts for Agile–, there are too many dependencies and Agile provides too little control and coordination.  The level of coordination required for a large business package implementation flies in the face of “Agile” methods and techniques.  For example, you have to coordinate:

  • process configuration teams,
  • custom code development teams,
  • data conversion,
  • change management,
  • training,
  • testing,
  • governance,
  • infrastructure, etc. 

On complex projects like this all those “sprints” that are not carefully coordinated and planned (which goes against the “Agile Manifesto” listed below) become completely disjointed disasters.  There are too many work streams with dependencies that can not be going in “their own direction” regardless of the impact to other work streams.

Agile Manifesto Activities

The following chart, from the Agile Manifesto, illustrates serious trouble spots for ERP projects like SAP.

Valued

DE-Valued

Individuals and interactions

Processes and tools

Working software

Comprehensive documentation

Customer collaboration

Contract negotiation

Responding to change

Following a plan

Notice, 3 out of 4 of those items on the RIGHT side are often precursors to ERP implementation failures according to the academic literature.  Numerous case studies prove Agile “De-Valued” areas are the places ERP projects fail.  For example:

  • Failure to follow good processes and have solid tools.
  • Failing to have adequate documentation (training materials, help, etc.)
  • NOT following a well laid out plan (i.e. SAP’s PROVEN ASAP implementation methodology, including sample project plans, templates, etc.).

The only Agile Manifesto item that might have strong need to be followed in the ERP space is the focus on the customer over the system integrator contract.

All of those Competing Stakeholders and Constituents

Not only are the project related dependencies and work streams significant, there are numerous competing constituencies which must also be coordinated:

  • business stakeholders or organization,
  • IT,
  • external business customers,
  • external vendors,
  • system integrators (when you use consulting companies),
  • internal business senior management,
  • business department heads who don’t always agree with each other, etc.

While Agile methods might work well for small, discrete, component areas of an SAP or other ERP project the academic literature proves it is a disaster for ERP implementations. 

Agile is not a waste of time, it must just be understood and used in the PROPER CONTEXT of an overall SAP project.  Even the ASAP Methodology includes an “Agile” overlay.  This is an overlay of the existing ASAP Methodology–, it does not replace more traditional waterfall methods and does NOT adopt the “de-vauled” Agile Manifesto areas.

Does Agile Have a Place in ERP Projects?

It might. 

Agile is not suitable for projects with multiple, overlapping / parallel activities with dependencies between them.  The parallel and overlapping dependencies create a requirement that is more suitable to traditional project management methods with:

  • full project plans,
  • discretely defined tasks and responsibilities (to avoid “border wars” at transition points),
  • clearly defined deliverables,
  • management of parallel work-streams and parallel critical paths, etc.

Applying Agile principles to an overall SAP project creates a high likelihood of blown timelines, blown budgets, and collapsed scope — delivery  suffers while  stress balloons.

Agile in SAP ERP Project Examples

I know about the struggles, stresses and messes of Agile SAP projects.  I’ve been on three of these types of projects and none of them went well.

On one SAP project they tried to manage it with “Agile” and it was a complete mess –, the coordination and responsibility struggles forced  a change to the more traditional waterfall approach.  Using Agile methods the project had an unsustainable burn rate for the budget,  dates were ALWAYS slipping, inter-team coordination and planning were a complete disaster, and before the mid-course correction this project was not  going to go live. 

Worse still because of the “Agile” methods of only planning small, discrete work components just before they are due, each dependent group tried to minimize their own work and risk by dumping many of their traditional responsibilities and tasks onto any other group.  With Agile they were allowed to “self define” much of their own effort and naturally tried to minimize their effort while maximizing their success (at the expense of other project participants and work streams).

I do NOT place this responsibility on the clients who hire outside help, they obviously recognized a capability gap or a need they are willing to pay for.   I hold the outside project managers responsible for this and if you ever encounter one of these snake oil salesmen then you should FIRE THEM!

My Conclusion on SAP and Agile Deployments?

Wide application of Agile is a disaster  on any major SAP, ERP, or business software implementation project.  I can absolutely guarantee you that any Agile SAP project delivery “success” claim violated the Agile Manifesto to get there.   There are too many moving parts and too many constituents to use pure Agile on a full blown SAP project.




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SAP Service Delivery versus Value Delivery

April 30th, 2012 by
SAP Value Delivery

SAP Value Delivery

In my review of academic literature around SAP or ERP implementations I find some thought provoking items.  Recently I reviewed a study which helped me to form a more complete picture of important issues in IT delivery.  Even though I’ve been writing about it for years I gained a new clarity around evaluating some of the existing delivery models [FN1].  What it comes down to is are you looking for service delivery or business results for your SAP project?

SAP Service Delivery or Business Value Delivery – You Determine Your Future

Because my career started in business and later was exposed to SAP as part of the client core team, and then finally moved on to consulting, I have always recognized the importance of business value.  At the same time much of the System Integrator marketplace has been promoting the same old service delivery model they are familiar with. The biggest reason so many system integrators struggle with business value delivery is because they often focus on hiring a lot of really smart college graduates with little or no business experience.  Fresh out of college and heads filled with textbook ideas about how business works. 

If you just want services delivered then no matter what the sales pitch, all of the system integrators are the same

SAP, ERP, or Enterprise Application customers are looking for something more.  As a recent article I read noted, CIOs do not command the respect of the other key disciplines within the enterprise.  In fact, many of their “C” suite peers question whether or not the technology organization serves much of a useful purpose at all.  That my friends is a frightening and shocking perspective to me.  Stop and think about that a minute, many organizations question whether IT organizations serve a useful purpose in the enterprise.  Is it any wonder outsourcing and off-shoring have become so popular?

What Does This Mean for SAP Projects?

At the end of your SAP project are you satisfied that a project was delivered?  Hopefully on time and on budget, but delivered nonetheless?  If you are satisfied that your SAP project was delivered on time and on budget then you are focused almost exclusively on service delivery

Many senior level IT leaders and delivery folks just want something to get in as quickly as possible.  This is exclusively a service delivery oriented project.  The only thing you are concerned about are the skills needed to address the particular technology / application / solution need right now.  This will not however provide you any type of ROI (Return on Investment) or ROE (Return on Equity) because ROI and ROE (along with other measures) are pure business metrics.  These are not IT metrics and do not measure things like uptime, response time, # of service tickets closed, etc.  The idea of ROI, ROE, or Asset Turns are reflections of business activity and investor / owner value.  Although they may be seen as irrelevant by many in IT they are still useful to understand if any value was delivered for the investment that is made.

Do you want services delivered or business value delivered?

Truth is, if you just want services delivered then no matter what the sales pitch, all of the system integrators are the same.  For that matter, why even bother with a system integrator or SAP consultants at all?  Why not just go to your nearest college and recruit a bunch of really smart graduates for a temporary project and pay them about half what the system integrators charge for a temporary contract? 

Seriously, why even bother with experienced consultants at all? 

If SAP service delivery is your focus and not business results it is just a game of who can best make it through the sales process.  Whether it is IBM and their premium rates or Rajakrishna’s Consultant Shack and their all you can eat offshore rates.  If they can’t speak the local language it really doesn’t matter.  On the other hand if you are looking for business results that is entirely different.

If your only focus is on time and on budget then you are only looking for service delivery.  You are not looking for results, or business change, or IT transformation, or business strategy.

Let me make clear I am not suggesting on time and on budget projects should be ignored.  What I am suggesting is that if your only focus is on time and on budget then you are only looking for service delivery.  You are not looking for results, or business change, or IT transformation, or business strategy.  You are merely looking for resources to deliver services to get you to some date at some budget amount.  Any offshore or consulting shack fake will get you to a dollar amount (that is the brutal truth but they will deliver “services”).

Where is the SAP Value Proposition Focus on Business Results?

While SAP Implementation is an Investment NOT an Event many organizations fail to consider their enterprise application deployments as strategic assets designed to produce business results.  The good news is that is changing.  So the next question is Where do you Start with SAP Return on Investment or SAP ROI?  This goes right back to the basics, you must focus on the WHY of Achieving Business Value from SAP Investment.  Is the effort about technology replacement or is there some business reason behind the initiative?

A recent IBM study under the heading of “The CIO as change catalyst” noted:

As the executive working at the nexus of business and technology, CIOs are uniquely qualified to help their companies leverage available tools to meet current economic challenges and to exploit the opportunities that will arise during this crisis—and opportunity will arise for those businesses bold enough to disrupt competition and restructure their industries. CIOs can help transform their companies by better capitalizing on the value of information assets.  They can help manage and mitigate business risk through better, more timely information. They can improve service management. They can lower enterprise-wide operational costs—including IT’s—through automation. [FN2]

SAP and IT organization heads are gaining insight and experience but at the same time they are being squeezed to cut costs and find value.

Focusing on value entails cutting discretionary spending, deploying resources for the highest return, bolstering core competencies and redefining relationships. Cash flow is central to survival and strategic flexibility, which means businesses and business units need to do more with less. Corporations must conserve capital and cut spending where it produces minimal return. Funds must then be redeployed to activities, products and markets that generate growth, improve margins and truly differentiate one business from another. [FN3]

Make Sure You Are Headed Down the Right SAP Path

To make the transition your SAP project must begin with Creating a Knowledge Centered Learning Organization for Business Transformation for IT Leadership.  Whether you are already live with SAP, in the middle of a project, or just starting out, I would strongly encourage you to get serious about Organizational Change Management Inside the SAP IT Support Organization

What most customers do not know is that SAP has offered the “Value Delivery” methodology as part of the ASAP Methodology for many years

If you want to know Why Use the SAP ASAP Methodology? for your SAP project consider the fact that SAP has offered the “Value Delivery” methodology as part of the ASAP Methodology for many years.  Over the years it has taken many forms, all the way back to the early versions of the ASAP Methodology with the old “KPI” lists.  Today it is integrated into the ASAP Methodology structure. 

Isn’t it time to pursue the value delivery method regardless of whether your system integrator is capable of this or not?

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[FN1]  Kieninger, A. and Satzger, G., Risk-Reward Sharing in IT Service Contracts – A Service System View, 2011 Proceedings of the 44th Hawaii International Conference on System Sciences.

[FN2]  From fear to value: CIO strategies for propelling business through the economic crisis, pg. 5.  Retrieved 4/24/2012 ftp://ftp.software.ibm.com/common/ssi/sa/wh/n/ciw03057usen/CIW03057USEN.PDF

[FN3] Ibid. pg. 6.




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