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In December 2014, I had the chance to attend a press/analysts presentation at Cirque Du Soleil’s HQ on their Cloud adoption and overall IT strategy. Thanks SAP for the invite.

Even if I am from Montreal and that Cirque is a client of ours, I was very surprised to see the level of maturity of the client and their path forward.

First it was presented the current Success Factors adoption by the client.  SuccessFactors apps were being deployed fast and across departments. The reason were 2: a fit with the out of the box solution and the simplification of cloud consumption.

Another very important point presented was the adoption of the Ariba sourcing tool. I can’t recall the number exactly but it was a very large part of the high dollar RFQ sourcing now processed in the Ariba tool. Most of Freight and hotel sourcing. This is huge!  It was by far the highest adoption I saw to date.

But what caught my attention the most was that the customer has reached a point in their evolution that it realizes the importance of sticking to standard processes. What we often refer to “Vanilla” in SAP, actually yields much faster adoption, leaner/simpler deployments and best position to benefit from future functionality. In the SAP market, SAP ERP, with its incredible flexibility, has allowed us to design solutions very “tailor made”, processes very custom and unique solutions. Do the custom processes, often referred to as “competitive advantage”, really pay off? Customers often look only to the development cost of building a custom solution. But it actually costs a lot more than that. We should factor in the upgrade hickups/retests/adjustments and more importantly, the fact that the customer may, often, end up on the wrong track (bad designs etc.).

The head of Cirque’s Procurement clearly manifested the importance of returning to Standard. They are impressed by how much value can be taken from little investment by using the out of the box cloud apps but also they think that returning to standard processes will allow them to further integrate with the Ariba Network.

I wanted to bring the point about return to standard because SAP is introducing a lot of innovation these days. S/4HANA is a huge game changer. Even the base ERP on HANA brings a lot of benefits. But both will prove challenging to migrate to for very customized customers. In the case of S/4HANA, the benefits of Guided Configuration and the newly delivered Fiori apps will be much better adopted by customers close to standard and best practices.

Will 2015-2016 be the year where customers will start seeing the challenges of running very customized solutions? Wasn’t the adoption of out-of-the-box solutions the initial motivation to jump into SAP in the first place?

DISCLAIMER: This is not a challenge ONLY for SAP customers. In fact, any customer that runs a packaged software will face the dilemma of Standard vs customized. It is just that SAP is introducing so much innovation that these customers will be the first to realize it.

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4 Comments

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  1. Luis Torres

    Good Read Leo! More and more companies are realizing that they are not deriving value (or enough value) from some of their customized processes and functionalities. Interestingly, such custom processes that were once a source of competitive advantage for customers are quickly becoming a source of overhead cost and unnecessary risk to their ERP investment. Watch out for “de-customization” projects happening in the field on a more frequent basis, in order to get rid of these obsolete/risky/costly to maintain custom processes and leverage standard instead (which more often than not are innovative, cost effective and secure).

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    1. Leonardo De Araujo Post author

      Yes Luis, you are very right. This is te type of realization that customers are coming to right now.  It will be interesting to see how this will reflect in customer’s attitude in the upcoming years.

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  2. Nathan Genez

    The ‘standard vs. customized’ discussion is always interesting to me because I feel that the majority of SAP customers feel that most of what they do is unique and worth the cost to develop a custom solution. After consulting for nearly 19 years I can say that this is not the case and I’ve seen plenty of customers go down a similar path where they realize several years later that the SAP process is fine.  Maybe it’s better, maybe it’s not… but it’s standard and something such as creating a PO, posting a journal entry… honestly, how unique does that have to be?

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    1. Leonardo De Araujo Post author

      Very true.

      Same here. Customers are getting savy and understading more and more the value of “out of the box” and the use-as-designed.

      Just said to see that some customers are so deep into custom code that it will be very hard to dug themselves out.

      😉

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