SAP & ERP Consulting from the Customer Point of View

The other day I made a post to SAP’s Community Network on making sure customers get the best SAP business software integrator for their money.  One of the comments to that post suggested I was advocating for customers using ONLY SAP as their system integrator.  My response made it pretty clear that my goal is to encourage SAP customers to get educated so they actually achieve value and ROI from their SAP business software projects.  My response sums up why I started this site and what the posts here are all about.

Don’t waste money on consultants who cannot help you implement business software in ways that improve your business!

And to that end we will look at the implementation of SAP or other large business software applications.  Continuing this series of posts on shared success criteria, please see the table below for more information.

Legend

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

16.  SAP System Vendor and Customer Trust

I place this SAP critical success factor (SAP CSF) clearly in the SAP system integrator column.  I can’t say it any clearer than you are writing the checks for an SAP system integrator who needs to deliver value, otherwise what are you paying for anyway?

Trust, but verify – Why would you pay an integrator or their consultants who do not deliver business value?

SAP System Vendor “Trust but Verify“

There is a Russian proverb which states “trust, but verify” or, its English equivalent, “better safe than sorry.”  The phrase gained popularity in the United States during the presidency of Ronald Reagan.  He often used the phrase when dealing with the Russians about nuclear weapons.  When the U.S.-Russian INF (Intermediate Nuclear Forces Treaty) was signed, Mikhail Gorbachev commented to Reagan that he used the phrase at every meeting, to which Ronald Reagan replied “I like it!”

How does this relate to you and your SAP project?  The whole idea behind the proverb as used during the Nuclear Treaty discussions was the ability to monitor compliance with the treaty details.  Just like this nuclear weapons discussion was critical to the relations and operations of the two nations, and even the world, so is an SAP implementation to your company.  A business software system project is critical to competitive advantage, efficiencies, operations, innovation, and even customer acquisition and retention.  A properly implemented SAP business software system is critical to navigating a hostile competitive global business landscape. 

Progress monitoring, deliverables verification, and QA assessments must take place throughout the project lifecycle.

See the list of SAP ASAP Methodology deliverables by project phase.  Your SAP sales rep or SAP system integration vendor will have access to the most recent ASAP methodology and can provide you with the SAP standard version of the requirements.  Unfortunately because of the way the SAP copyright is written on the material I am unable to directly distribute it legally.

How do you “trust but verify?”  Here are some tips for ensuring this:

• Ensure that you consistently communicate your expectations to the system integrator
• Make sure your integrator provides a clear project plan with key project milestones (from the ASAP methodology).
• Ensure that there are deliverables that have a connection back to the project activity being completed (again, from the ASAP methodology).
• Verify that the vendor has a complete set of deliverable templates they can show you and explain ahead of time how they will work and how they are used to track SAP project progress.
• Perform a “mini-audit” at each project milestone with business stakeholders making the determination whether the deliverable(s) were sufficiently addressed and whether the upcoming deliverables templates appear sufficient for the next milestones.
• At the end of each project phase ensure that you perform a QA check of that phase before continuing with the next.  This is a standard SAP methodology process but is rarely followed by many consulting firms.

17.  SAP system design decisions and

18.  Amount of SAP ABAP custom coding

Both of these topics are directly related and with SAP in particular they are pretty much interchangeable.  The academic literature breaks these two critical success criteria items out because SAP is not the only business software package that is evaluated.  With SAP in particular the depth and breadth of business software functionality is so significant that custom coding should only be used if there is no close fit from standard functionality.

Before you begin your SAP project it is imperative for you as a customer to decide whether or not you want to do software engineering or business process engineering.  This post explains the differences, what the consequences are, and when it might be appropriate:

SAP Implementation Focus, Software Engineering or Business Process Engineering?
http://www.r3now.com/sap-implementation-focus-software-engineering-or-business-process-engineering

The amount of custom-coding and software engineering you engage in will have a dramatic affect on your overall SAP TCO (Total Cost of Ownership).  This will also have a significant impact on the amount of budget you allocate to critical change management activities and to ongoing software support and maintenance.

• Set a project expectation with the system vendor that everything you had in your scope must be delivered with standard functionality.
• Create a change review board to address any scope change requests AND any custom coding requirements.
• Create a contract provision with terms stating you will get ( x ) amount of a credit when a custom coded solution is proposed that had standard package functionality addressing ( x ) % of the business requirement.
• Ensure that every custom coding decision includes a written justification with:
  • The standard functionality that was evaluated.
  • Why the standard functionality would not work (what were the gaps).
  • What the business justification for the custom coding is (is it business / mission critical?)
  • Alternatives considered (remove from scope, third-party software, manual process, etc.)
  • Business impact if removed from scope or manually performed.
• If a decision is made to pursue the custom development then a standard functional specification must be completed.  A good template to start with can be found in the SAP ASAP methodology.  It should contain:
  • Detailed requirements.
  • Expected effort and cost.
  • All SAP module or other areas affected (in other words is this custom development going to be a huge project distraction by consuming too many of the consultants’ time and effort).

19.  Appropriate SAP Software Configuration (system settings)

The system integrator is hired to set up the SAP software.  Through the sales process they’ve convinced you their consultants have the experience you need for success and you hire them for your SAP project.  They are the experts and you have to rely on them because you don’t have the internal experience.

This is where good SAP consultants come into play.  The SAP ERP application contains so much functionality that nearly any business process can be addressed.

Appropriate software configuration is one of those things that is usually discovered at integration testing.  By that time in the project it may be too late to make significant corrections or adjustments without jeopardizing the entire project timeline and budget.

Make sure you invest in your own project team’s training

As a customer there are several things you can do to help ensure that the correct SAP software configuration and settings are made even though you as a customer may not know what they should be.  Here are the major ways to ensure good software configuration.

SAP Project Team Training

First and foremost to ensure appropriate SAP software configuration and to ensure you get good SAP consultants make sure you invest in your own project team’s training.  This critical training should be budgeted for right from the beginning and do not let any SAP system vendor talk you out of it.

An educated client is a sophisticated client, and sophisticated clients usually have the best implementations.

Some system vendors will try to convince you that they can teach your project team rather than having you send your people to independent SAP training.  That is a great way for them to “control the message” you receive about SAP’s functionality and the consultant’s level of skill.  Often times the “pitch” they use to try to sell you on the idea that they should be training your people instead of you sending them to training is that it is cheaper.  But if you do the math for the consulting hourly rates and then factor in the consultants’ time away from value added implementation efforts it doesn’t add up.  Often it is less expensive to send your project team to formal training and even if it isn’t, you still need that independent oversight.  Only independent training ensures your people really know what they need to know.

SAP Prototyping and Proof of Concepts for SAP Project success

I personally favor the prototyping approach.  The reason is that if you are a customer who wants to make sure you have the resources you are paying for this is the easiest way to find out.  By requiring a baseline proof of concept no later than the end of your Blueprint phase you will quickly see which consultants have real experience that the SAP system vendor has provided.  By contrast you will also see those who lack the experience as well.

In the SAP ASAP methodology one suggestion is that the initial baseline prototype (the first one done right at the end of blueprint) might cover 50 – 80% of the business requirements. 

For more information on prototyping and the steps for ensuring project success please see the post ERP, SAP, or IT Project Management and Prototyping for Success at http://www.r3now.com/erp-sap-or-it-project-management-and-prototyping-for-success  

Be sure your system integrator’s consultants do FULL END TO END process prototypes.  For example just doing a single transaction is not enough to demonstrate the system will meet the business needs.  By the end of Blueprint a seasoned and experienced consultant should be able to demonstrate these simple, straightforward, and standard processes.

• In the SD area (Sales and Distribution) an order, and then delivery with picking and goods issues, and then an invoice must be created.  You may wish to have them post cash and then review the material and accounting documents as well.
• In the PP area (Production Planning) maybe you want to see independent requirements run through MRP and then convert the results into the purchasing and production documents.  From there you may wish to have them do the receipts, and the confirmations of the production on a material, and even shows costs.
• In the MM (Materials Management) area you may wish to integrate this with PP (or not) and have the consultant show you the requisition to PO to Goods Receipt to Invoice receipt and then application of cash payments to the vendor.

In other words a skilled SAP consultant can do the setup work to do at least a first pass at all of these processes by the end of Blueprinting.

Significant benefits of SAP Prototyping and Proofs of Concept

I strongly favor SAP prototypes and functionality demonstrations throughout any SAP project.  Prototypes can quickly expose process gaps, potential integration problems, business process issues, and ensure that testing is smoother.  One of the significant advantages of prototyping is that it places an emphasis on overall business processes.

By relying heavily on prototypes and functionality demonstrations throughout an SAP project you help to ensure that the project team works more closely together, that only the best consultants are provided by the integrator, your internal client project team acquires more knowledge sooner in the process, and a better go-live.

Related Posts:

• SAP System Vendor Project Success Criteria & Factors 2
• SAP Success Factors for Vendor Selection – Responsibility Matrix 1
• SAP System Vendor Project Success Criteria 1
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Using SAP to Improve Revenue and Profitability

SAP Project Success

Using the success criteria table laid out in SAP Success Factors for Vender Selection Responsibility Matrix 2 as a starting point for shared SAP project success we will look at some strategies, tactics, techniques, and ideas for managing these shared responsibilities.  By more aggressively managing these shared SAP critical success areas we can set the correct tone and expectation for the SAP project. [FN1]

This series will look at the types of things you should expect from your SAP system vendor, and how to ensure your SAP vendor is focusing on the critical issues for project success.

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

Because of the importance of each of these SAP Critical Success Factors a set of posts covering the shared responsibilities will be evaluated.  Because of the shared responsibilities for each of these success criteria they are often some of the most common problem areas.  When one party (either the vendor or the customer) falls short of success it is a common (and maybe natural) practice to try to deflect the blame by pointing at the other party.

Both customers and vendors must aggressively address the areas of success where they have the primary responsibility.  Several of these success criteria have been extensively written about on this site and rather than re-phrase some of those high points the links to posts with more detail are included.  For SAP project success it is critical for customers to manage the SAP partner relationship by regularly verifying these critical success criteria items are being properly addressed.

Do not allow the overall control of your project to be taken over by the consulting project manager

Legend

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

Your approach to any or all of thse SAP success criteria items may be different.  In the end it is important to understand that failing to address any of these success items creates risks that should must be mitigated.  Your responsibility as a customer is to do whatever it takes to manage the SAP partner relationship rather than allowing the SAP partner to manage you.

5.  Experienced SAP Consultants

You entrust your entire business to “seasoned” SAP consultants that your SAP system integrator provides.  However too often these same system integrators, anxious to keep high margins and remain “competitive” often bring in consultants with less experience than you need to be very successful.  This topic has been explored in detail on this site with what you need in a “good” consultant, the consequences of bad consulting, and the steps to take in finding a good consultant.

To ensure the best possible results it is important for you to verify and validate the skills and experience of EVERY consultant your SAP system integrator provides.  Failing to do so may cause areas of your project to fail to see any business benefit.

How well the project is managed and delivered is up to you as a customer

After all of the time, effort, and trouble through the entire selection process that last part of due diligence, in verifying EVERY vendor consultant, is critical for success.  Here are some key resources to consider when it comes to selecting consultants.

• Successful SAP Project Team Composition – Technicians or Experts?
• SAP Technicians or Experts
• Screening Methods to Find the Right SAP Consultant
• Screening and Interview Methods to Find the Right Consultant – Part 2
• Certainly Certifiable – SAP System Integrators Not Just Consultants

The SAP implementation vendor is almost exclusively responsible providing high quality resources for your business project’s success.  However, because of their margin requirements you don’t always get good resources from them.  Therefore you will have to do some of the important due diligence to ensure you do not get taken.

7.  SAP Implementation Strategy

There are three key factors to consider for your SAP implementation strategy.  These are the implementation methodology, vendor type, and the project implementation approach.  Each of these components of your overall implementation strategy are important for achieving SAP and ERP project success.  To gain greater understanding and insight on these key SAP implementation strategy factors the following post provides details to consider:

• SAP Project Implementation Strategies and Approaches

8.  SAP Project Management

The key parts your SAP project management efforts usually involve budget, scope, timeline, resources, and deliverables. The various types of flavors of monitoring and managing tools are as different and as diverse as the companies or project managers performing the function.  The SAP ASAP methodology provides deliverables lists and templates with full explanations for the entire project lifecycle.

Properly structured deliverables will help to monitor execution progress.

Here are some key resources from this site related to project management:

• ERP, SAP, or IT Project Management and Prototyping for Success
• ERP Project Planning – Getting Real (Part 1)
• ERP Project Plan: Getting Real (Part 2)
• ERP Project Plan: Getting Real Part 3
• ERP Project Plan: Getting Real (Part 4)

The primary responsibility for successful project management falls to you as the customer.  This means that you must not allow the overall control of your project to be taken over by the consulting project manager.  That does not mean they should not have input, and it is almost exclusively the SAP partner’s responsibility to provide an initial project plan, but at the end of the day how well the project is managed and delivered is up to you as a customer.

The SAP ASAP methodology provides deliverables lists and templates with full explanations for the entire project lifecycle.

For SAP project managers from consulting firms one important “skill-set” is the ability to set, manage, and deliver expectations.  Part of that also involves social skills that might be more political in nature, including the ability to deflect criticism of their project management.  As a result when reviewing a potential SAP project manager it is critical to dig past a possible “glowing reference” to actual results. Part of the successful SAP project manager’s job (from the consulting firms) is to help set and manage your expectations.  Some of this is necessary but some of it can be abused as well.  Do not allow yourself to give up control of your project to a consulting project manager.

At the end of the day, the most effective project manager will personally “own” the success of the project.  What I mean by that is they will avoid laying blame because the success of every project team member (both of the consultants and of your own staff) is a direct reflection on their success.  A project manager who finds “fault” with a resource but does not take clear corrective actions before it becomes a crisis is not much of a project manager.

A good SAP project manager from the consulting world has enough experience with using properly defined and designed deliverables to be able to track and monitor project progress.  If they have enough skill and experience at managing those deliverables as well as the tracking and monitoring tools then they can do the necessary resource adjustments and resource leveling that are necessary for success.

A good SAP project manager must take clear corrective actions before an issue becomes a crisis. In any reference check make sure you drill down to the details of the actual project delivery, not just personality issues.

Some of the steps, techniques, tactics, or strategies for finding a good SAP project manager are:

A.  Look for an experienced SAP project manager who has actually done SAP configuration before being a project manager in either a supply chain area (SD, MM, PP) or in finance (FI or CO).

B.  When checking references it is CRITICAL to ask results-oriented questions that go beyond the personality of a particular project manager.  In any reference check be sure to drill down to the details of the actual project delivery.

a.  Was the project delivered on-time or on budget?  If not it may (or may not) reflect poor management or poor scope development, in either case it is a warning flag.
b.  Did the project manager provide the necessary tools and templates ahead of time for success?

i.      Project plan – BEWARE project or program managers who do not provide a project plan or seem to have a hard time working with very basic project tools such as MS Project.
ii.      Deliverables list.  Properly structured deliverables will help to monitor execution progress and roll up to higher level project plan items to prevent micromanagement of project activities.
iii.      Training, Change Management, Knowledge transfer plan
iv.      Progress monitoring and tracking resources down to the delivery level.  Many PMs will monitor budget and not the actual execution level of project delivery.  If they do manage the execution it is usually at a micromanagement level of the project plan which can kill productivity.

C.  When checking project manager references remember, the project manager is responsible for overall results of completion of deliverables related to project success.  So it is important to ask prior clients about:

a.  Testing, was this purely “success testing” to get signoffs or was “challenge testing” allowed to discover defects outside of the scope of testing documentation?
b. Were there significant data problems after go-live?
c. Was the project delayed several times because the scope and timing were so tight that the go-live was excessively risky?
d. Were the consulting company resources underestimated or scope changes so significant that many more consultants needed to be added?
e. What about additional software or technology, were those things missing from the original scope, quotes and estimates?

9. SAP Tools, Templates and Resources

Assuming you are using the ASAP methodology, many of the templates, tools, and resources are clearly defined and initial examples are provided, see SAP Project Implementation Strategies and Approaches.

Where these may need to be supplemented with vendor specific examples is for training, change management, security / system authorizations, and the deliverables tracking tools.  The deliverables themselves should be defined right from the beginning of the project and the SAP ASAP Implementation Methodology contains a presentation template with a full deliverables list and includes many templates for those deliverables.

Effective SAP deliverables will include a mechanism to monitor progress toward completion.

With this background, during the sales cycle, it is absolutely imperative to insist that every vendor provide ACTUAL example templates that show experience in this area.  Every one of them will claim they have the resources every time.  None of them will admit otherwise so you primary job is to verify their claims.

Vendor sales people are taught how to say “yes” even as they are telling you “no”

The key factor to consider when looking for templates, tools, and resources are do they support proper tracking and monitoring of deliverables progress?  In other words, beyond the project plan itself, are the deliverables designed to integrate progress monitoring?

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

[FN1] Please see the following links for more background information on the development of the SAP Project Success Factors with Vendor Selection Responsibility Matrix and some of the source material from The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors .

Related Posts:

• SAP System Vendor Project Success Criteria & Factors 4
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• SAP System Vendor Project Success Criteria & Factors 3
• Some Reasons SAP Projects are Over Budget and Over Time
• Reduce SAP, ERP, or Technology Project Stress: Part 2

For a brief intermission before I make the final posts on managing the shared responsibilities for SAP project success I thought I would offer this explanation of the different strategies and approaches for an SAP project.

 There are three key dimensions to an implementation strategy–, they are: 1) the vendor type; 2) the methodology-tools-templates-resources for a project, and; 3) the implementation approach.  The decisions you make around these three areas generally make up the implementation strategy for your SAP project.

SAP Implementation Methodology

For the methodology approach I will assume you are using the SAP ASAP methodology.  As a result other than mentioning it here I won’t spend a lot of time on this one.  With only a few exceptions, nearly every SAP system integrator claims they follow the SAP ASAP methodology.  As an ASAP certified consultant since the late 90′s I can assure you that few SAP system integrator project managers actually follow much of the ASAP methodology no matter what claims they make during the sales cycle.

The SAP ASAP methodology will help to ensure you are doing the right things in the right way

I’ve written on the ASAP methodology in A New SAP Implementation Methodology and Implementation Steps and for more background on the different vendor or project approaches see Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP .  And let’s put this in context, the SAP ASAP methodology has been used literally tens of thousands of times.  It is tested, proven, and it plain works!

The SAP ASAP Methodology is tested, proven, and it plain works!

As a parting note I would strongly encourage any SAP customer to get their own copy of the ASAP methodology.  No matter what stage of your SAP project the SAP ASAP methodology will help to ensure you are doing the right things in the right way. 

For more information on acquiring your own copy of the SAP ASAP methodology, see the 10 steps I previously outlined under the section “Where to start with developing a solid SAP business case based on business and IT strategy” in the post ERP and SAP Business Case for ROI, Business Benefit, and Success.  During the sales cycle (or during your project if you are past that) ask your SAP system integrator to show you the SAP ASAP methodology.  There are two identical versions, one is an HTML web server version and the other is integrated into Solution Manager.  Both are free, and the HTML version is available to any customer or vendor free of charge who wants to download it directly from SAP.  There really is no reason they can not make it available.  Because of its wide availability you should beware of any vendor who pitches the SAP ASAP methodology and can not make it available to you! 

If you are an end SAP customer contact me and I will arrange for you to get your own copy!

SAP System Integrator or Implementation Vendor Type

This topic is a little different because there are several possibilities for how you approach your vendor selection or project staffing.  Each of them has their benefits and drawbacks and some of them can be substantially different in cost and results.  The type of implementation vendor and consultants you use will also affect your implementation strategy.

You may wish to employ a well established system integrator; a “boutique” consulting firm; or completely manage the project with your own selected staff of contractors; or you may want to consider a hybrid approach.  If you are considering the contractor route, of staffing a project yourself, you might wish to review the screening methods to find the right consultant Part 1 and Part 2.

You will also need to determine your project implementation model.  Will you do a pure time and materials approach, or fixed fee, or time and materials with penalties for under-delivery (over budget, over time) and rewards for over delivery (under budget, early), or time and materials with cost controls, or a blend of some of the approaches.

Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP

If you choose the large integrator be prepared for the full sales pitch about their “special” methodology (whether it actually exists or not).  This is one of the classic approaches the larger consulting firms use to try to differentiate themselves.  However the SAP ASAP Methodology has been tested and proven so many thousands of times that any other approach actually introduces risk into the project.  That does not mean that there aren’t ways to supplement that methodology — there are a few gaps — but the ASAP methodology is very solid, reliable, proven and consistent.

The boutique firm may work well for many companies, but they have the drawback of being focused on a narrow niche area. 

The company run implementation with outside contractors (rather than a system integrator) requires a very experienced, very skilled SAP project manager.  I have participated on two of these projects that were very successful and their rates were about 35 – 50% less expensive than other consulting options.  One significant caution here is this type of approach can be a disaster without the means to carefully screen consultants and without a very seasoned SAP project manager.  The other problem is that many (though not all) of the staffing and recruiting firms are so “sleazy” that you are better off putting in the effort to screen yourself.  Back to the chicken or the egg problem, this requires someone who has the capability to do the screening.  This approach has probably the highest reward and the greatest risks associated with it. 

SAP Project Implementation Approach

Over the years I’ve only ever seen two key approaches to SAP implementation projects–, Big Bang or Rollout projects.  Within these two methods you can do a Phased Approach as well, but that is more of an issue of functionality scope rather than organizational scope.

Organizational scope would cover the “Big Bang” SAP implementation approach and the “Rollout” SAP implementation approach.  It affects the amount of the company or organization that is affected by the project. 

Functional scope would address the amount of the SAP business software that you plan on bringing into your organization(s).  This would generally be a “Phase” of the project.  For example you might bring in Financials and Supply Chain functionality in Phase 1, and then CRM or online ordering or BI / BW (reporting) in Phase 2, etc.

ERP Big Bang

The “Big Bang” SAP approach is probably the most common and generally involves a single major functional event.  It usually affects all “legal companies” where financial reporting is required for taxes or regulatory requirements.  This can be a large implementation across multiple countries, multiple business divisions or product lines, and generally affects the whole of the organization.

The “Big Bang” approach may be easier from a single “change event” or “change shock” to the company and organization but it has a number of drawbacks as well.  For example with any ERP application some of the potential design, data, and knowledge transfer problems are only discovered after the system is live.  So if your SAP system integrator or vendor is not as skilled as their sales presentation might have indicated you could end up with serious long-term difficulties, cleanup, and ongoing maintenance headaches.

ERP Rollout

The Rollout approach is fairly popular among a number of larger SAP customers with several legal companies, several locations, or multi-nationals that do business in several countries. 

Advantages of this approach includes the ability to “learn” from each rollout and improve subsequent operational rollouts.  Rollout risk can be more carefully managed because data and configuration inconsistencies can be discovered, remedied, and resolved while the subsequent rollout is occurring.  Change is better absorbed over a longer period of time in the company and knowledge transfer is generally better handled if the customer insists their resources are involved (done correctly this can actually reduce overall implementation costs).

Disadvantages of this approach are that it generally costs more because cumulatively it takes more time and effort to manage the ongoing operations while also bringing on new operations.  Also the blueprint will need to be re-visited for each rollout location because no matter what ANY integrator says (or what the SAP documentation purports) there always seems to be some legitimate differences between each rollout location.  Failure to re-visit the blueprint for each rollout, no matter what the integrator or SAP might say, can cause more difficulties than it is worth.  However, these later stage blueprint reviews and adjustments are not as intense or time consuming.

ERP Phased Approach

Because of the many variations and options we will re-visit the Phased Approach at a later date with more details.

Related Posts:

• SAP System Vendor Project Success Criteria & Factors 3
• SAP Success Factors for Vendor Selection – Responsibility Matrix 1
• More on Vendor Selection Criteria and Methods for ERP Project Success
• SAP Implementation Partner or Company Selection Criteria
• ERP and SAP Business Case for ROI, Business Benefit, and Success