You cast off all legacy systems and installed SAP; SAP ties it all together – but it costs. And did you achieve answers to your problems? Or are you contemplating to look for an alternative, because the migration introduced new problems?
ERP-centric companies are missing out on the full potential of a solution as rich as SAP, because they are failing to appreciate the implications – and continuing to make the mistakes of traditional systems development and integration. SAP implementation projects are suffering from ‘undue focus’ on technology, lack of user interface, lack of attention to human and organizational needs, lack of evaluation, and very little integrated working – internally between systems.
Measuring RoI is an essential prerequisite of any IT investment today. But the big problem is that it is far from quantifiable. And if the investment is as huge as an SAP implementation, the aforementioned problem becomes magnified. Spending on IT is no longer identified as an expense, but as an investment. And RoI is based on cash flow analysis. It is also true that management, and not technology, will ensure success or failure. Integration of business objectives with IT solutions succeeds only when management if committed to ensure a smooth transition of change management. “Leveraging staff and current investment” is the biggest faced challenge.
Most commonly posed questions:
- Can we reuse current investment?
- Can we simplify increasingly complex business processes?
- Can we increase productivity?
- Can we lower maintenance costs?
Until the early nineties, the relationship between an organization’s investment in IT and its impact on the performance and productivity was never seriously measured. Perhaps, the most critical reason was one’s inability to segregate the benefits based on ‘Deployment of IT’ vis-à-vis ‘Deployment of robust processes.’ Only if an organization has the latter approach to an SAP implementation, will it see the value and reap the benefits in the longer run. In accordance with the above approach, it must be added that SAP demands a fundamental change in the processes followed by business and the people who work those processes.
Change, being painful by nature, discourages many to take the second approach. However, if you install SAP as software without changing the ways people do their jobs, you may not see any value at all – and the new software (SAP) could slow you down by simply replacing the old legacy software that everyone was used to. On the other hand, if you are able to use SAP to improve ways your people take orders, manufacture goods, fill timesheets, for example, you will see value from it.
SAP, in spite of being one of the largest and most successful vendors of enterprise resource planning (ERP), ironically is a misnomer. For one, it DOES NOT help your planning. Resource – and the ownership of that resource in any business – is a hazy term. What is right about it is the enterprise part. It successfully integrates all departments and functions across a company onto a single computer system that serves the particular needs of different departments. Organizations opting for SAP as their ‘back-office software’ have one or more of the following reasons – to integrate financial information; integrate customer order information; standardize and speed up core business processes – manufacturing, financial services – but whatever be the case; reduce inventory, non-performing assets – as the case may be; and standardize HR information.
Business benefits aside, SAP as an ERP delivers well on three necessary objectives – consistency and reliability of data across the organization; streamlined transaction processing; and operations-level reporting.
Which is a better approach – Going for an ERP vendor like SAP or going for specialized point products? Opinions vary, based on a survey of several successes and failures in either case. Important is to base your evaluation on your business case, the strength of transaction processing backbone, and the desired room for sophistication. At times, an ERP like SAP is not able to handle a function vital for the company. In such cases, a specialized third-party product can be interfaced to deliver the result. For example, Mohan Breweries and Distilleries Ltd implemented SAP R/3; they found that they needed far superior functionality in the insurance area. They opted for IVL’s iNSUR/3, a comprehensive add-on package with SAP R/3 ERP solution that addresses the needs of enterprises in the areas of insurance and claims management. The company was able to authenticate information on numerous critical data of the insurance processes and cut down nearly 50% of excess manpower costs. It could increase the efficiency of the supply chain by integrating the routine insurance related activities into SAP R/3 Business Framework.
SAP is generic enough to cater to 24+ industries. As much as this being a strong point in favor, it introduces a major limitation – Usability! And this compromise cannot be escaped from, internally. The reason is commonsensical – in making itself applicable to diversified industries, diversified processes, SAP was forced to provide innumerable data elements packaged logically in discrete screens and transactions; terminology used on-screen is also generic in nature for the same reason. Following table captures the common ‘effects’ faced by most customers, and the ‘causes’ leading to those symptoms.
- Tedious and error-prone data entry
- Users spending more time on SAP than their primary tasks
- Steep learning curve
- High costs in training and re-training
- UI peppered with inconsequential data elements
- SAP by nature is more transaction-driven than process-driven
- Complex and excessive navigation to perform a task
- Imprecise and confusing terminology for your industry
Whatever industry you are in, “it’s all about productivity!” Productivity suffers if end-users are not comfortable with ‘what they see’ on screen and ‘how they interact’ with the screen. SAP evolution from R/2 to R/3 to Frogdesign look (EnjoySAP) has made a conscious effort to bring home better usability. However the spectrum traversed on this front is and is going to be limited because of the earlier mentioned fact – the generic nature.
Better usability can be achieved by internal and/or external customization and consolidation. For example, ABAP, the architectural language of SAP, can be used to re-configure, modify UI screens based on specific business process needs. Similarly, an external program (third-party) may be used to integrate with SAP in order to better the user experience. Or a combination of both! Important factors helping evaluate the approach are captured in the following points.
- change the underlying business logic of SAP
- incur extra overhead in terms of heavy maintenance and upgrade costs
- reduce system performance
- affect data integrity
- increase productivity and efficiency
- minimize or eliminate training and maintenance costs
- allow users to focus on their primary tasks
- provide flexibility in terms of deployment and configuration
For example, Rexam Beverage Can Americas implemented SAP R/3 to use its PM (Plant Maintenance) module for mapping their processes, for example – creating a maintenance work order; releasing the work order; and printing the work order –all of which they wanted to happen within 30 seconds. The Plant Manager of Rexam, New Jersey, Mr. Steve Foster and his team of professionals, during SAP training, found the interface neither simple enough nor fast enough to enable what they had in mind. “We had this idea of creating a maintenance system that looked like an ATM (automated teller machine),” says Foster. “No one’s ever been trained on how to run an ATM, yet everyone can use one. Why should it be any more difficult to create a work order in SAP?”
Foster and team found what they needed in a then little known product called GuiXT (software bundled within SAP R/3), developed by Synactive GmbH. With the help of a Synactive consultant, a Rexam programmer was able to use GuiXT to create an SAP PM interface that does, in fact, resemble an ATM in its simplicity. The basic menu screen contains just 10, touch-screen, function push buttons, each of which triggers a series of standard SAP functions that run in the background, but are transparent to the user. In some cases, a single button launches SAP transactions that would have otherwise required the user to navigate 12 to 15 separate screens using standard SAP interface, Foster says.
The result, according to Foster, is that Rexam training requirements for the SAP PM system were cut from an estimated 40 hours per machine operator – which would have been required using a standard SAP interface – to 4 hours with the simplified GuiXT enabled SAP interface. Multiplied times the 1,500 plant operators who would be using the system, that’s a savings of 54,000 hours. “We more than recovered the cost of GuiXT license in the training savings alone,” Foster observes. Moreover, the simplicity of GuiXT interface enabled Rexam to largely meet the 30-second goal for its users. “I’d say we’re hitting that 30-second goal about 80% of the time, and for the other 20%, it’s less than 45 seconds,” Foster notes.
Conceptually, from a CIO’s perspective, the perfect system would be one in which one could reuse invested software, describe software architecture so that a non-expert could successfully execute and simplify complex business modeling, and automate user tasks – all of the above with no or least maintenance.
Can you find or build one? Are you willing to Change?