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Top 5 Reasons Why Companies are Using Brazil version 3.1 to Transition off of on-premise solutions in to Managed Service Solutions

In the third part of this series on using the Brazil Nota Fiscal version 3.1 changes to evaluate the strengths of cloud and managed services over on-premise solutions. I wanted to discuss the issues concerning SAP customization and maintenance. This is mission critical especially if your organization has a strategy of deploying a single instance of SAP ERP around the globe.

With so many complicated SAP issues, why do companies want to keep up with the legislation and constantly implement the changes.  Especially, when the requirements are predominately the same for all companies. These are government mandates and standards after all.  Managed Service providers provide two huge benefits over on-premise solutions:

  • First, Managed Services and more specifically hybrid cloud deployments can offer economies of scale gained across their install base which turns into hard costs savings in annual support and maintenance costs.
  • Second, Managed Services and more specifically hybrid cloud deployments can buffer the global SAP Center of Excellence from changes. Some issues such as extended attributes and customer customizations are absorbed by the service provider. Additionally, some upgrades can be done without affecting the core SAP ERP platform. I found this quote to be intriguing from the Kellogg CIO in Latin America – Gustavo Lara, LA Regional CIO for Kellogg’s. “With {managed service provider) solution, our internal teams can focus on running our business rather than focusing on researching, implementing and reconfiguring our SAP system to meet the changes for Brazil Nota Fiscal and Mexico CFDI.”


By transitioning to a managed service, your internal teams can:

  • Avoid the burden of research, design and implementation – with an on-premise solution the IT organization must figure out how the Brazil changes will affect their SAP deployment.  In our next article, we will cover the “real” cost of this change management.
  • Eliminate Fire drills – most global SAP teams look at rolling out SAP ERP in waves across processes and countries.  They also tend to have a very rigid procedure for updating the SAP system. Often lead times to get on the COE calendar can be 6 to 8 weeks and in many cases the COE only wants to do major upgrades once or twice a year.  The pace of legislative change in Brazil is constant and is never timed to the SAP upgrade strategy. A managed service provider that guarantees your systems are maintained, eliminate unforeseen fire drills as they know when the legislative changes occur and coordinate the updates.
  • Reduce upgrade timing issues as many companies run N-1 maintenance strategy. It is common for the SAP maintenance teams to run at least one support pack behind the latest releases.  I work with customers that are still 4.7c and many who are in the process of upgrading to ECC 6.0 during 2014.  The issues arise when SAP releases new country requirements – logically they are released in the latest support packs. This can cause an issue with maintenance teams to decipher what is needed and how it will affect the SAP system they are running. Part of the managed service provider responsibility is to understand your company “Delta” to the legislation to assist with the changes. Why spend weeks figuring out the issue when it can be done in a 30 minute call.
  • Simplify problems with SAP customizations and extended attributes – These are the processes that are unique to your business and your customers. It is not always easy to get the data from your SAP configurations into the Nota Fiscal format.  Some of our customers sell “kits” and this unique packaging takes some unique manipulation to transform into the Nota Fiscal requirements. And for some cases, the data doesn’t come from SAP at all but are required transactions. For example, when you bring in goods to the country, by law you must declare the fiscal value of the goods sometime referred to as a Nota Fiscal Entrada. This information often comes from an extract from the Freight Forwarder you are using to import the goods. It still needs to be transformed, validated and tracked.
  • Reduce the cost of maintaining compliance -In a recent article (in Portuguese), Alexandre Quinze, CIO América Latina da Philip, discusses the cost and productivity benefits achieved by transitioning off an on-premise software for Brazil Nota Fiscal compliance.
    • Reduction of annual maintenance costs by upwards of 80%
    • Increase in productivity of local Brazil business user by 25%

(Source: 19 de dezembro de 2013, Philips no Brasil quebra paradigmas com arquitetura global de TI baseada no ERP)

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