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SAP ROI

 

Lots of business ideas and paradigms have been proposed over the  years.  Some of them turn out to be fads and other have enduring  legacies.  While many have merit they all have one thing in common–,  they are supposed to address the marketplace in some way.  Whether or  not they stand the test of time depends on how well they help businesses  compete in a globally competitive marketplace.

 

Enduring business ideas generally become part of an accepted business  strategy.  One example is Michael Porter’s five competitive pressures  (as the keys to strategy) for focusing on operational excellence,  customer focus, vendor management, and competitor pressures.  The  ability to address these competitive pressures is directly related to  the quality of consultants your SAP system implementation partner  provides.

 

The  only thing that matters is  the specific consultants they bring to   your business to make a  difference in how your business operates.

 

When changing the enterprise culture to one that is strategically  focused and performance based several stages are required. These stages  relate directly to the early, up-front work needed for an SAP  implementation. Although the following quote is related to implementing a  Balanced Scorecard initiative, the same change process applies to an  SAP implementation and business transformation.

 

Initially, the focus is on mobilization and creating momentum, to get the process launched. Once the organization is mobilized, the focus shifts to governance,  with emphasis on fluid, team-based approaches to deal with the  unstructured nature of the transition to a new performance model.  Finally, and gradually over time, a new management system evolves—a strategic management system that institutionalizes the new cultural values and new structures into a  new system for managing (emphasis in original) (Kaplan and Norton, pg.  16, 1992)

 

The authors then note that the “various phases can evolve over two to three years.”

 

Over my SAP career beginning in 1994 I have seen this over and over.   What SAP causes is a cultural transformation that can be harnessed to  achieve great things.  SAP, properly implemented and properly guided  through the business transformation process provides front line managers  with key information to move from day to day transaction management to  longer term strategic management.  The idea would be to use SAP as a  change enabler or change lever (Change How You Look at SAP to Create ROI).  By doing this successfully you can transform your business in the marketplace (Why SAP Projects Fail to Deliver ROI and How to Change IT).

 

This transformation process requires a phased approach that moves you through the process from go-live to competency to excellence (Series on SAP Competency Center or SAP Center of Excellence).   The reality is with an integrated ERP application like SAP it takes  about 1 – 3 years to change the middle management culture from one of  tactical day to day execution to strategic data analysis and competitive  insight.

 

Mobilization – In SAP terms, the mobilization effort consists of the upfront business planning, strategy definition, goals and performance metrics definition.

 

Governance – The governance phase  would include the necessary project tools to accomplish the  organizational transformation. These are tools and resources not only  for the SAP implementation itself, but also for the change management  program within the enterprise.  In SAP, project governance begins from  before the vendor contract is signed and continues on long after go-live  to address ongoing business needs and requirements in the live system  environment.

 

Strategic Management – The strategic management system occurs over time as the new metrics, resources, and tools available in  your SAP implementation are used throughout the enterprise. It is the  old business axiom “what gets measured gets done.”  After go-live new  features or functions may be added to address marketplace competitive  pressures.  As the actionable data is able to be analyzed by  middle and lower level managers over time decisions can be made to more  effectively address those competitive pressures.

 

SAP Organization Change is Ongoing

 

Depending on your timeline and organizational tolerance for change,  by the time the SAP system is stabilized (anywhere from 3 – 12 months  after go-live) your organizational transformation will be well underway.  Within 12 – 24 months after go-live your organization should begin  seeing real benefit from a properly implemented, business focused SAP implementation.

 

It  takes about 1 – 3 years to change the middle management culture from  one of tactical day to day execution to strategic data analysis and  competitive insight.

 

My personal opinion is that because so much of the focus has been  operational and “getting the system in” for an “on time and on budget”  implementation that the upfront business work is little known and even  less understood by the wealth of “technicians” that most consulting  companies provide. Often times the consulting companies with established  client relationships are eager to get as many consultants billing as  they can. The several months of up front strategy work, even at  super-premium rates, only engages two, and even in large far-flung  enterprises, only 4 or 5 consultants. The SAP implementation itself will  engage at least 5 – 10 TIMES that many consultants and so if a client  does not insist on this up front strategy work, SAP vendors are  reluctant to press a client in this direction from the RFP phase on.

 

That is not to say that consulting companies have not tried, only  that customers or host companies, have focused so strictly on getting  the existing transactional processes into SAP that they often fail to  have the upfront business case for change created before the project  begins.

 

To be successful, this upfront business design and change work must become the central focus of the SAP implementation.

 

SAP Business Transformation for Competitive Advantage

 

Business transformation with SAP is entirely possible even in massive   enterprises if the business transformation effort begins by mobilizing   your team at least a few months before an SAP RFP.  After the RFP you   will need active change management throughout the SAP implementation.    For more information on various insight and ideas on SAP RFP strategies   please see:

 

 

The  RFP process is your first real opportunity to find the right  vendor and  the right consultants to transform your business.  By  navigating this  process successfully you can start out on solid  footing.  One thing to  always remember is that it is the quality of  consultants on your project  that makes the difference in the results of  your implementation.  It is  NOT the size of the company, the scope or  reach of the consulting firm,  how many offices they have, how much  marketing material they put out,  or how many fancy clients they can  name.  The only thing that matters is  the specific consultants they  bring to your business to make a  difference in how your business  operates.

 

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Kaplan, R. and Norton, D. (1992), “The Balanced Scorecard – Measures that Drive Performance”, Harvard Business Review 70 (1).

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