SAP ROI — Enterprise Architecture & Business Solutions

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.  To that end something has to change.  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 offshoring 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 USEFUL reflections of business activity and investor / owner value.  Although they may be seen as “relics” by IT folks they are still useful to understand if any value was delivered for the investment that is made.

Do you want services delivered or business benefits delivered?

Truth is, if you just want services delivered then no matter WHAT the sales pitch is 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 are not important.  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 (maybe not what you expect, 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.

Related Posts:

• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Using SAP to Improve Revenue and Profitability
• How To Navigate the SAP Business Transformation Journey
• Achieving Business Value from SAP Investment
• Phase 6 RUN SAP ASAP Methodology

SAP Success Criteria Formula

Some time ago I put together a synthesis of SAP success criteria based on academic literature and my own personal experience.  The table below is part of the list of SAP Success Factors for Vender Selection – Responsibility Matrix. For a more detailed explanation of each of the vendor related items see the posts listed in the Series on SAP ERP Project Success Factors.

In the prior series we went through SAP success factors with shared responsibilities between the company adopting the SAP application and the integrator they use for the implementation (listed below) but today we will briefly review customer-specific success items (further down).

Legend

A = Primary responsibility
z = Secondary responsibility (can influence success but limited control over success)

——————————

The previous series did not address several of the customer-specific items where organizations should focus internal efforts.  As part of the recent series on Organizational Change Management Inside the SAP IT Support Organization it is time to consider the SAP customer specific items now.  That list of items includes:

1.  SAP Project Senior Management Support – 2. SAP Project Champion

You just can’t overlook strong senior leadership support and a strong project champion for SAP project success.  If the wider organization perceives it is important enough for executive leadership they will see that it is a key initiative to focus on.  The Real Reason Executive Participation Creates IT Project Success is related to the nature of their position which deals with corporate strategy. The enterprise also needs an SAP project champion to help cut through red tape, encourage organizational support, and marshal additional resources when needed.  The best project champion would be at least one NON-IT executive so this isn’t seen as “just another IT thing.”  The contribution of a well respected and strong internal leader can not be overlooked.

3.  Empowered Business Process Team Members to Make Key Business Decisions About SAP Setup

If you want your SAP project to make any progress then it is absolutely critical to ensure core team members from the business are able to make many of the important process decisions. There will be some decisions that have more widespread organizational impact and the business users will need more senior level managers to make some decisions.  For example one of the key reasons for Using Your SAP Steering Committee for Business Transformation is to help mentor, guide, and direct business project participants in designing the future state business.  This would include making “critical decisions which the project team is unable to resolve (escalations or key business decisions).”  On the other hand if they are so compliant or risk averse that they will not make any decision without gaining consensus you may be headed for problems with the project timeline and budget.  This doesn’t mean you need an autocrat either, just someone who has enough organizational insight and connections to make the right decisions, escalate the ones that should be escalated, and has an open line of communication to keep interested stakeholders in the loop.

4.  Business Process Team Members who are DEDICATED to the SAP Project Delivery and Success

Too often I see core SAP project team members, whether from the business or the internal IT organization, who are not assigned exclusively to the SAP project.  While they are given the new role they often still have their “day job” to continue overseeing and managing.  This is a significant distraction from a very serious undertaking.  When an SAP project is done effectively, and what I call “correctly,” there is significant business change that takes place.  To help manage that change and to ensure business users have their needs most properly represented requires a full commitment to the SAP project.

Unfortunately there are a lot of system integrators who are happy to have your business users commit to just “part time” on the project.  It helps the system integrator increase their billing, allows for lots of excuses for missing dates, and provides them the opportunity to push any solution they deem you should have.  Because core team members from the enterprise have divided attentions they can not ensure the same level of quality if the SAP project were their only focus.

6.  SAP project goals and success criteria

I was recently reading an article where a study of several hundred companies who had implemented enterprise applications were asked about having defined business related goals and success criteria.  The referenced study suggested only 4% of companies who implement enterprise applications complete the entire process of defining goals and success criteria and then actually follow up on seeing that they achieved the promised benefits. 

To achieve Sustained Business Value from SAP Business Software it is important to incorporate a Change Management Program within the SAP / IT Organization itself which is focused on Achieving Business Value from SAP Investment.  Another key part of the goals and success criteria is to Change How You Look at SAP to Create ROI because SAP Implementation is an Investment NOT an Event.

14.  Business process engineering – interdepartmental cooperation

 This is directly related to the first 3 items in this list:

• Senior Management Support (and steering committee makeup)
• SAP project champion
• Empowered business project team decision makers

Because of the nature of the integration in SAP some of the data entry responsibilities change, for both upstream and downstream process steps which may be in different departments.  There are also significant process changes and responsibility changes as a result of the SAP implementation.  All of these require a focus on processes, communication, and cooperation.  Because this can also be an area of political “friction” between departments or leaders it is critical to have a strong executive SAP project champion. That executive sponsor can help to reduce a some of the inter-departmental “border wars.”

24.  Company end-user involvement and end-user testing

Even a great implementation effort can turn into a painful disaster at go-live if end users are not prepared to use the new system, security and authorizations are a mess (VERY typical), and testing was not thoroughly performed.  Unlike other systems which were built in silos and without the level of integration a data or process mistake that is not uncovered during testing can have significant up and downstream effects.  Unwinding and correcting the error can prove to be very challenging.

For all of these items I only touched the surface, but none of these items can be ignored and are important for a successful SAP project.  Every one of these items is completely within the control of the enterprise or organization who implements SAP.  Good luck on your SAP journey but be sure to pay special attention to all of these success criteria for your SAP project which are provided in more detail in the Series on SAP ERP Project Success Factors.

Related Posts:

• SAP System Vendor Project Success Criteria 1
• Achieving Business Value from SAP Investment
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• How To Navigate the SAP Business Transformation Journey
• Steering Committee Governance for an SAP Center of Excellence

Anyone who has been around SAP for any period of time is reasonably familiar with the SAP ASAP Methodology.  In fact I rarely see sales presentation materials from many system integrators which do not at least mention it.  Even some of the bigger integrators with custom methodologies may reference it in passing and show the SAP Implementation Roadmap to demonstrate how their methodology has some similarity to it, or supplements some of the few gaps that may remain.  In a previous post on Why Use the SAP ASAP Methodology? I evaluated the SAP ASAP Methodology compared to SAP partner custom methodologies.

As of today it seems there are few of the SAP partners who are familiar with the latest Roadmap Phase 6–, the “RUN” ASAP Methodology enhancement.  This methodology enhancement is probably one of the most significant methodology changes offered since ASAP was originally introduced.  This is the key phase which relates to IT organizational maturity, to integration of the SAP support organization into the business after you go live.  In other words, this is one of the critical success factors for your SAP program.  That critical success factor is that SAP Program Management Requires a Type of CMMI.

Before we go into the little known Roadmap Phase 6 “RUN” enhancement let’s take a quick look at the first 5 phases of the SAP ASAP methodology most of us are familiar with:

1. Project Preparation (before the consultants begin)

• Project goals and objectives
• Clarify scope
• Schedule, budget plan, major milestones, and deliverables
• First pass at a WBS and task based project plan.
• Project organization, committees, and resources

2. Business Blueprint

• Design the future state
• Revise and refine the project plan
• Gain approval of all project templates and deliverables
• Refine scope, resources, and schedule

3. Realization

• Build the solution
• Test / adjust / correct the solution
• Develop end-user training (courses, logistics, schedules, etc.)

4. Final Preparation

• Finalize end-user based testing, user acceptance testing
• Perform final data conversion rehearsals (mock conversions with live data)
• Test the final cutover script
• Resolve any open issues or gaps
• Perform final setup activities related to printing, interfaces, external systems, third party software, etc.

5. Go-Live

• Transition the enterprise to the new SAP system
• Support the live environment with any needed fixes or enhancements
• Optimize system performance
• Transition to site support (help desk, etc.)
• Close the project

At a very high level this is the SAP ASAP Methodology (without the latest addition).  But what about Phase 6?  What about the RUN ASAP Methodology?

RUN SAP ASAP Methodology

A few years ago SAP introduced a stand-alone version of this approach and methodology for post go-live SAP system support.  It is now incorporated as a key part of the overall ASAP Methodology in version 7.x onward.

While Roadmap Phase 6 is mostly focused on moving customers along to independent support, and toward an SAP Certified Center of Expertise (SAP CCoE) there is much more to this phase.  The most comprehensive tools, resources, templates, and development are around empowering SAP customers to support their own systems.  This is part of the “Internal” focus as I have described it in SAP Enabled Business Transformation for IT Leadership. From an SAP perspective there are 2 key reasons why this portion of the ASAP Methodology enhancement is “built out” 1) the more you support your implementation the less maintenance and support you need from SAP (i.e. you are carrying some of the cost of your own support), and 2) that is the relatively “easy” part of the support paradigm.

See the Series on SAP Competency Center or SAP Center of Excellence for supplemental material to make the transition beyond the “internal” focus to Enterprise and eventually External market focus.

While the Phase 6 RUN ASAP Methodology focuses heavily on areas of support which benefit SAP there are several areas which are critical for the strategic and business integrated IT organization.  The SAP “Certified Center of Expertise” is the first step to ensuring you gain the trust and confidence of your business counterparts.  The Phase 6 RUN ASAP Methodology does not end with that first portion which benefits SAP.  Even though the material and templates are sparse for moving very far beyond this “internal” (CoE) focus there is still significant substance and some meaningful templates for moving your SAP organization to the next level of “enterprise” focus.  This is where your SAP support organization begins gaining wider acceptance as a business peer.  If you haven’t had the opportunity to get familiar with the Phase 6 RUN ASAP Methodology section you might want to do that today! 

This phase should be reviewed during the Project Preparation phase and elements of the future state SAP organization incorporated into your overall SAP project plan, project approach, goals, milestones, deliverables, and especially any Organization Change Management program you begin.  Part of that initial evaluation of the RUN Methodology enhancement would be an internal organizational assessment to get a baseline of where you are, as well as what it will take to go to the next level by the time the project goes live.  THIS should be a critical part of your project planning right from the beginning.

If you are an SAP customer, or if you are considering an SAP solution and would like access to the SAP ASAP Methodology and tools contact me today.

Related Posts:

• SAP Service Delivery versus Value Delivery
• SAP System Vendor Project Success Criteria 1
• SAP Customer Responsibility for SAP Project Success
• How To Navigate the SAP Business Transformation Journey
• Achieving Business Value from SAP Investment