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Conceptualizing Two-Tier SAP S/4HANA Cloud for Enterprise Portfolio and Project Management

Business Background and Introduction of the Concept

Our On-premise customers today face an uphill task of mapping requirements with processes across several solution offerings. Even in a specific area like project management, we see a lot of different capabilities provided in different project management solutions. Some solutions offer a great risk management framework; some offer a wonderful scheduling experience while some others offer seamless integration to downstream and third-party applications. But all these solutions try to address the same base purpose, “The need to have an integrated end-to-end business process setup for project ”, starting from ideation to project closure.

Having implemented different Project management solutions from SAP at various customers, this idea of creating an integrated end-to-end process is easier said than done. On paper these solutions seem like the best fit for each scenario, and in specific cases they are, but on the field, the story gets a bit more interesting.

Let us take the example of a simple Portfolio and Project Management scenario built using SAP PPM 1.0 for S/4HANA. Now this is by far the most robust and capable solution offering in the project management space today. It has a full-fledged Portfolio Management framework that caters to key functionalities like portfolio planning, bucket hierarchies, scenario modeling, questionnaires and many more. It has a complete project management capability set, that out classes even the best of breed solutions in the market today. Additionally, with direct integration to Project Systems and other ECC components, it makes a case for a fully integrated end-to-end offering.

This is certainly true in most project scenarios, but where this solution starts struggling is in the multi-level project arena where projects are managed by multiple affiliates and setup in a headquarters-subsidiary or central services model. These projects typically run into multiple levels and have very large work breakdown structures. Also, there could be multiple stakeholders responsible for different sections of the project, which makes coordination, data consolidation and progress reporting a complicated and tedious task.

A simple sketch of various capabilities required for an on-premise multi-level project setup is shown below:

Based on feedback from multiple implementations of this solution, the following limitations emerge for Multi-level Project Scenario:

  • Projects become cumbersome and hard to manage, resulting in delays in identifying, tracking, and solving issues
  • Access management of specific project sections to subsidiary teams is complicated to implement
  • Lack of control over subsidiary scope and budget tracking leads to overruns or delays
  • Multiple channels of inputs for the program managers to consolidate and report
  • Unnecessary functionality provided to Subsidiary projects as they do not require full-fledged project management capabilities all the time.
  • Massive change management efforts during onboarding new suppliers and upgrades.
  • In-accurate reporting due to delays in some subsidiaries impacts all reports

Now, these are not showstoppers by any means and there are many customers today who are successfully live on this solution and very happy with how they are running their large projects. But with everything SAP related, continuous innovation is always around the corner and here we have a great opportunity for melding innovation with out of the box thinking.

The Great Collaboration

With the introduction of SAP S/4HANA Cloud, customers now have a whole heap of pre-built project management capabilities offered directly on the cloud. As part for of the Professional Services and EPPM solutions areas of SAP S/4HANA Cloud, customer can now enjoy more savvy and lean ways of managing their projects, on the cloud. This now makes a great case for a hybrid project management framework, where Two-Tier scenarios like headquarters/affiliate or master project/sub-project can be handled.

Let us take this as an example and understand how a Two-Tier scenario of this sort will work. A typical headquarters or parent company setup would involve portfolio management and steering-committee capabilities on the on-premise end and leaner project management capabilities on the cloud end. This will facilitate portfolio managers and program managers to centrally manage multi-level projects and delegating the sub-project management to individual project managers from each of the affiliates.

The key project management capabilities moved into the cloud are visualized in the sketch below:

With the introduction of Project based read and write APIs, integration capabilities can now be built between SAP S/4HANA on-premise and SAP S/4HANA Cloud, resulting in information flow from the master project down to the sub-project(s) and information roll-up from the sub-project(s) back up into the master projects becoming a possibility.

Key Business Benefits from this approach:

  • Headquarters has real-time visibility on all project activities associated with the master project
  • Single platform to track and manage projects for customers dealing with multiple subsidiaries
  • Subsidiary projects operated in silos on the cloud enabling restricted access only to specific project areas
  • Integrations with cloud-based procurement, billing for all subsidiary projects
  • Light weight project management on subsidiary side to increase time to adoption and reduce change management efforts

Relevant Project Types where this approach could be used:

  • Development
  • R&D Engineering
  • Strategic Feasibility
  • Consulting / IT

Relevant Industries where this approach could be used:

  • Engineering and Construction
  • Professional services
  • Commercial Property and Lease Contract Management

The Potential Outcome

Now taking the concept further into a full-fledged process, let us try to see if an end-to-end scenario is possible. A simple Multi-level project requires the following key capabilities:

  • Portfolio Management
  • Scoring Models and What-if scenario Analysis
  • Proposal Management
  • Project Structuring and Scheduling
  • Progress Tracking
  • Time Entry
  • Billing and Invoicing
  • Project Based Procurement
  • Actual Cost Reporting

The following sketch visualizes a Process flow for Two-Tier Multi-level Portfolio and Project Management. The functionalities for both Tier 1 (Headquarters) and Tier 2 (Affiliate or Subsidiary) are highlighted as well:

Tier1

  • Portfolio Manager prepares portfolio forecast and allocates budget per bucket
  • Program manager and steering committee members evaluate and finalize potential projects
  • Project manager prepares project plan and identifies subsidiary projects
  • Periodically, project progress can be pulled from the subsidiary project via the Read API and rolled back up into the master project.

Tier2

  • Subsidiary project managers prepare detailed project plan for their specific subsidiary project
  • Project managers allocate budget to lower level work packages / WBS elements

This approach is an example of how project management capabilities on SAP S/4HANA Cloud can be used to create a Two-Tier environment conducive for Multi-Level Project scenarios. The API Enterprise Project Service can be used to Create, read, update or delete the project definition or the project elements of enterprise projects using this synchronous inbound service. More details about Create, Update and Read operations for enterprise projects are available on the help portal.

With this blog post, the intention is to get customers thinking about Two-Tier scenarios for project management and start the conversation about utilizing the various API’s available to make these scenarios a reality.

2 Comments
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  • HI Sonal, Two-Tier is a deployment model, that lets us use cloud and on-premise in conjunction with each other. So this is an opportunity to explore the best of both worlds for key business processes that demand this sort of approach. So I would see a lot of advantages for customers using this kind of model. There are of course limitations with either approach, but in this context the benefits far outweigh the limitations.