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Vendor RFI processes and information

SAP vendor RFI

 

It’s time to kill useless SAP Partner RFI (Request for Information) practices.  They need to be updated and replaced with results-oriented criteria.

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The SAP implementation or integration vendor selection RFI today is nothing more than a beauty pageant measuring the wrong things and providing little useful information for making the right SAP consulting service vendor selection.

SAP Quantity or SAP Quality, Which One Do You Think Makes a Difference Today?

Just because a baker has baked 100 cakes doesn’t mean they were good.  Lots of professional race car drivers have driven a hundred races or more and rarely (if ever) placed in the top 3.  Thousands of home-builders built hundreds, or thousands of cookie-cutter promotional tract homes but few  ever moved on to build award-winning custom homes.

Once the stupid parts of traditional RFI processes are killed we can focus on the useful parts of what an RFI should include.

The number and variety of comparisons to long term and financially sound business endeavors is never ending –, none of them indicates meaningful performance for your SAP project.  Typical SAP RFI measures are easily gamed by firms with deep sales and marketing staffs so that they hide whether an SAP partner is able to deliver value.

Background for Current SAP Enterprise Software Integration Vendor RFI Processes

Modern RFI practices were originally created to support manufacturing and distribution functions.  As technology service industries were maturing during the Technology Revolution the industrial (or manufacturing) Request for Information processes were well suited to support custom technology system and software development functions.

Because of the nature of the supply chain, and of custom developed software or hardware infrastructures, RFI processes which were developed for them are not properly aligned to modern Commercial Off-The-Shelf (COTS) enterprise business software.  Today’s frequent RFI and RFP factors came about before COTS enterprise applications.  At that time vendor financial performance, length of time in business, and office locations were critical components.  Businesses needed assurance that the vendor was going to be there for the long term so the supply chain and software or hardware business systems were not disrupted.  Today’s mobile economy and the nature of COTS software consulting changed that paradigm but the old RFI and RFP business models haven’t kept pace.

An SAP vendor RFI must shift away from factors that favor vendor lock-in to factors that indicate SAP project success with business improvement.  Does your SAP RFI-RFP process provide information on how a vendor can help your business succeed or is it just a “beauty pageant” for your vendors?

The rise in technology and services industries focusing on packaged business software applications are not well-suited to these old-fashioned SAP Request For Information (RFI) approaches.  When implementing SAP business software you are buying and implementing Commercial Off The Shelf (COTS) software.  Ask yourself how financial strength, time in business, and other typical RFI factors might help, but also how they might hurt you as well.

Vendor financial strength, time in business, and physical locations should not be ignored, but they distract from the important results-focused factors which are related to SAP project and business success.  Relevant RFI or RFP factors will ensure you focus attention on success with Commercial Off-The-Shelf business software applications like SAP.

SAP  Commercial Off The Shelf Business Software Requires Business Process Engineering Instead of Software Engineering

Normally SAP or other ERP application purchases are made with the idea of buying an off-the-shelf solution that you do not have to build–, not custom coded, custom developed, custom designed application suites.  In other words the whole idea behind implementing SAP or other package business software applications is to get away from the software engineering and focus more on business process engineering (see SAP Implementation Focus, Software Engineering or Business Process Engineering?). Otherwise, why did your company even consider SAP?

Even if it is not spoken or articulated, part of the reason you choose a COTS package such as SAP is to avoid system integration vendor lock-in.

Do you need SAP vendors to act as squatters –, to nurse, fix, adjust, and maintain their custom software engineering long-term?  Did you budget for this?

The focus of an SAP RFI must shift away from factors that favor vendor lock-in to factors that indicate SAP project success.  Typical RFI factors which focus on vendor financial stability and time in business may work against your goal of achieving a successful package implementation.  On the other hand, the typical SAP RFI checklist may support that vendor’s ability to “squat” at your company for years to support some custom-coded solution promoting their “financial health” and “long term stability.”

Big SAP Shops With Strong Financials and Time in Business

For a COTS system integrator, such as with SAP, longevity and financial stability means what to your business?  Does it mean that you will get a good, standard functional implementation of SAP and a vendor who moves off the project at go-live because they focused on business process engineering rather than software engineering?

Low Cost SAP Providers and How You Get Gamed to Cost As Much or More

On the other hand the ugly truth is that low cost vendors may not deliver one penny ($.01) of ROI or of business return from their implementation.  You might get SAP in cheaper but that low cost provider may also cause havoc with your business by insisting SAP’s robust application suite can’t do what you request.  And then there you go down the custom coding path again.  Or, their lack of knowledge may cause you to design very poor business processes to support the application because of a lack of depth of skill and experience.

After over 100,000 SAP installations, upgrades, etc., in virtually every industry vertical you can dream up, SAP application depth and breadth has been pretty well developed.  

Low cost providers generally cut thier costs to keep their margins up by providing green consultants.

As I’ve offered in a previous post, if you pay half the implementation cost of a competitor but get a negative ROI and your competitor pays twice the price but gets significant ROI then you have a serious marketplace competitive issue to deal with.  You did NOT get what you really paid for!  For example, in writing about SAP Implementation is an Investment NOT an Event the point was made pretty clearly:

[Two executives] wanted to know how their expenditure compared with other competitors, what they were really asking but were not articulating very well is whether or not they got what they paid for.

A simple illustration drove the point home quickly–, it doesn’t matter if you spent twice your competitors, or if you spent half, what matters is the return on technology dollars.  The numerical illustration I gave them is if they are looking at the amount they spent, say if they spent $50 million and their next closest competitor spent $20 million, they are looking at the wrong thing.  What really matters is the return.  If they achieved a 10% financial return from process improvements, automation, task time reduction, etc., and their competitor was achieving a -3% return then even at 2 ½ times the cost of their competitor they got the better deal.

By the time we finished the conversation it was clear they were simply asking how to measure any return or business results they received from the implementation.  However, from the conversation it didn’t sound like they were very happy with any perceived return.

The project team you put together, both with the implementation vendor and with your own internal resources are the ones that will deliver business solutions, or deliver junk.  At the end of the day that is the bottom line.  So ALL of your RFI – RFP and project processes must focus on getting the right resources to design the right business solutions for you.

Your SAP RFI must focus on the things that indicate the SAP Partner helped companies achieve operational excellence, innovation improvements, or customer focus

There are several posts here, including academic studies, anecdotal evidence, personal experience, and plain old common sense that demonstrate the current RFI and RFP supported consulting models are completely broken:

If you have the time to review those posts you will quickly see why so many enterprise “COTS” projects, like SAP, Oracle, etc., are disappointing, or worse still, complete failures!  But there is a better way.  There is a game changing way to resolve this issue and help ensure you get the right people for your SAP project.

It’s time to kill useless SAP Partner RFI practices so they can be useful again

Let’s look at a couple of examples where system vendors had decent (not great, but decent) financial statements, long-term business roots, and lots of office locations but they went out of business–,  Arthur Andersen Consulting and Bearing Point.  Arthur Andersen’s greed, compromise, and unethical activities brought the organization down.  But those activities had been going on for many years (and are unfortunately very common in some consulting firms today)>

The lesson is to resist the lure of big money to pull you away from your values. Enron’s pile of cash was irresistible to Andersen’s leaders. And their lack of moral fiber cost a storied and proud firm its existence. [FN1]

With Bearing Point, after they spun off from KPMG and tried to go solo they got into financial trouble and eventually sold or disbanded their U.S. consulting operations [FN2].  Before that spinoff, with all of those customers they were engaged with, they were able to provide great financial stories, deep geographical reach, and from their KPMG roots they had long-term “stability.” 

Bearing Point initially had $200 million dollars in liquidity but could not get additional financing or secure additional credit guarantees.  Until that came out publicly the indications were their financials and time in business were strong.  From an SAP RFI standpoint would have qualified right up until they got into trouble.  And they did qualify for many SAP projects that were started or underway when they didn’t survive.  They simply ceased to exist as a company much like Arthur Andersen.

Traditional RFI processes would have shown both of these vendors were highly qualified.  They had size, scope (locations), financial backing (even Bearing Point had it publicly), and were well respected.  Traditional RFI processes might have caused you to select the wrong vendor.  So, again I ask, what is important in evaluating SAP partners?

SAP Partner or ERP Integration Vendor RFI Conclusion

Hopefully by the time an SAP Partner has performed several SAP implementations they have figured out how to do them correctly.  Unfortunately for many customers my experience has shown me this is rarely the case.  To resolve this problem customers everywhere must insist on SAP Partner RFI criteria that indicates business success.  Focus on the things that indicate the SAP Partner helped the companies implementing SAP software to achieve operational excellence, innovation improvements, or customer focus.  By taking this approach you may be disappointed at how quickly you have a shortlist of SAP Partners or enterprise integration vendors even before getting to the proposal stage.

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[FN1] Companies that vanished: Arthur Andersen succumbs to the lure of big money, http://www.bloggingstocks.com/2008/06/08/companies-that-vanished-arthur-andersen-succumbs-to-the-lure-of/ (published 6/8/2008 and retrieved 10/18/2010)

[FN2] Consultancy Seeks Release From Debt Trap, The Washington Post.  http://www.washingtonpost.com/wp-dyn/content/article/2009/01/11/AR2009011101733.html (published on 1/12/2009 and retrieved on 10/18/2010).

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175
Bill Wood contact

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6 Responses to “Why SAP Vendor – Partner Selection RFI Processes are Stupid”

  1. Bill – this is a great article and an easy read.

    You are spot on that a consultancies previous history of delivery does not link to future success.

    Normally the client references provided include consultants that have moved on so there is no substance in those references.

    • Thank you sir, my ultimate goal with all of my posts is to help SAP customers and reputable consulting firms. I’m tired of seeing customers pay super-premium prices and get little or no value from their investment.

  2. Steve Phillips says:

    Bill,

    Another great article. What I like about you is you do not “speak with forked tongue.” You tell clients the truth, what they really need to know and dispell the industry hype.

    • Thank you sir! I’m glad you liked it but I probably should have cut down the length a little and broken it out into two parts. And if you liked this you will definitely get a kick out of the next part which finishes it. It is much shorter and right to the point on overcoming some of the really stupid SAP or other ERP RFI problems.

  3. And never forget when a prospective service provider tells you “We look forward to partnering with you…” – they have just unwittingly signed up for a gain sharing contract by which they will only be paid if you make measurable business gains.

    • That my friend is a GREAT strategy and approach! Maybe more companies should insist on gain sharing contracts with their SAP implementation partners or vendors. That would also go a LONG way toward changing the marketplace! Maybe we should work on fleshing out that approach?

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