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With Latin America constantly evolving their tax and electronic invoicing policies, corporate SAP teams are left with skyrocketing support costs and constant change management requests.  With Brazil changing their requirements and mandating the adjustment to version 3.1 by the end of 2014, now is the time to look at the true cost of supporting Nota Fiscal with a centralized SAP system.

Most of these costs are overlooked as they are considered standard operating procedures.  Below I want to describe the most common situation for Day to Day Support issues and Change Management when you have to manage Brazil Nota Fiscal with a global/centralized version of SAP ERP. Most likely your organization is dealing with this very situation in Brazil – and if you operate in Mexico, Argentina and Chile – well now you have 4 problems.

Before I jump into the example, it is important to understand the traditional architecture that has been implemented.   This usually wasn’t implemented by design, it was implemented for three specific IT realities:

  • Corporate IT wanted to standardize on a common SAP platform (Centralization)
  • Because many multinationals acquired companies in Latin America to grow – there were legacy systems already in place. When the SAP transition came into play – the standard operating procedure was to integrate the existing local system. Since local country providers do not reach beyond borders einvoicing compliance was solved with multiple local country solutions
    • In Brazil this meant a local provider
    • In Mexico – this meant a local provider
    • In Chile – another local provider
    • In Argentina – you guessed it, another local provider
  • A common SAP maintenance strategy is known as (N-1), this means that you stay one support pack back from the latest release. And often multinationals are many service packs back because applying OSS notes to a highly customized and configured and global SAP system has its issues.

Combine all of that together and you get the following – three distinct silos of support and change management.  Apply Day to Day support and constant Change Management to this infrastructure and you can see why many companies are looking to Managed Service providers to completely take this problem off of their list of things

to manage.

http://www.invoicewareint.com/wp-content/uploads/2013/09/9-5-2013-3-53-59-PM.jpg

The results of this architecture are issues.

  • Day to Day support –
    • Who do you call to fix an invoice issues?
      • The SAP support team
      • The middleware support team or the 3rd party system integrator that build the connector
      • The local einvoicing solution support
    • If you can’t fix, shipping is delayed or worse shut down
    • This process consumes many resources and is wasteful – today there are solution providers that solve all the issues, help you monitor, take all the support calls whether in Portuguese, English or Spanish, and help you resolve the issue before you have to engage your internal teams
    • Change management
      • Government makes a change like version 3.1 for Nota Fiscal
      • First – you have to get OSS Notes when they come out
      • Then, you have to apply those Notes and regression test against your global COE – this could take 6-8 weeks in many organizations
      • Then you have to get the updates from the local solution or the separate GRC box
      • Then you have to adjust your middleware or call the SI to adjust the connector they built for you
      • Then you have to align the SAP global team, the middleware team, and the local team to do and end to end test.
      • What if something fails, how long does that take, etc…
      • This process is lengthy and expensive – even the simplest of changes can take some companies over two months to move into production. There are solutions that eliminate all of these issues and makes all changes (whether gov’t, internal, or customer driven) as part of their Managed Service.

Summary – the real cost is support and change management.  Use a change like NFe 3.1 to re-evaluate your entire Latin America electronic invoicing – the amount spent to maintain these systems will often shock you.

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  1. Fabio Pagoti

    Hello Steve,

    First, I must agree with you when you refer to the complexity involving Brazilian legal requirements. Be aware that not all of these requirements are useless or wasteful. If on one hand SAP software is constantly evolving, on the other Brazilian tax regulations (as NFe 3.1) are evolving as well.

    Looking at the architecture perspective which results on a high maintenance cost, IMHO part of the complexity is due some SAP decisions involving the responsibility of ERP and GRC.

    Although there are tons of local providers, I believe that SAP software is the most advantageous when it comes to fulfilling legal requirements as it contains all back office information which is usually required for them. Moreover, it’s adaptable enough for not having to create interfaces with other legacy systems which also increase infrastructure complexity (and as a consequence the cost to maintain it). Talking about adaptability, it’s very important to have it in your system when SAP decides not to implement standard solutions for some legal requirements (not the case of NFe but there are many examples as well). On such cases, even local providers can’t help too much.

    As usually these changes impact of critical processes, testing will always be very important task during updates but definitely something I don’t see very often is automated testing focused on such requirements.

    Another factor which can help SAP customers speed up the process of updating its SAP systems for these obligations is a more active team responsible for checking new regulations. This shouldn’t be done by IT IMHO but have a high impact on it. It’s very common to see financial departments reporting government updates to IT departments just a few days (if not hours) before the start of its terms.

    Regarding SAP notes, they are a great way of delivering updates however I agree it has a high cost to apply them one by one. Something it could be improved regarding them is the SAP marketplace which just doesn’t work from time to time. Also, there could be a subscription on which companies could be notified of the last SAP notes released for a specific system. Actually this would be very helpful for any SAP system updated by SAP notes.

    In summary, companies have nowhere to run when it comes to fulfilling legal requirements. I really believe SAP customers run better with its systems. They at least should by the price they pay. 😛

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