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Thrive after go Live: Continuous Business Evolution with SAP R/3

Michael DoaneVice President and Research DirectorMETA Group, Inc.

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Protecting Your SAP Investment

80% of SAP installed base

clients express

disappointment in:

Benefits attained

Measurability of benefits

User competency

20% created post-ERP

IT/Business

organizations (CoE)

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The Fog of SAP War

A Business Case justifies the

endeavor (was it measurable?)

Software and SI are selected

Project begins – client grows

‘cost conscious’

Benefits are forgotten/training

is reduced

“We didn’t get what we

expected”

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Few Firms Planned for the Full ERP Experience

Vendor/SI improvements centered

on implementation • Acceleration

• Knowledge Transfer

• Avoiding customization

Business units underwent

organizational change, but not IT

units

Project teams were “finite”

Day 1: The End of the Beginning

ERP has a 25 year life-span; investments took a much shorter (and myopic) view

1-3 Years

Vendor/SI View: the ERP wedding

15-22 Years

Client Reality: the ERP marriage

Investment scope

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After Day 1 (Days 2 – 7000)

SI methodologies end at Day

1- Go Live

• How do organizations plan for

continual business

improvement?

Implementation teams are

disbanded

• Business cedes its role in

evolution

To Be Vision is static rather

than evolutionary

ERP is treated like traditional IT once Go Live occurs

During implementation, level of attention paid to post implementation

To Be Vision Renewals

(by Project Team type after implementation)Team & Vision Continuity

Implementation Majority OngoingProject Team Disbanded Program Total

Post Implementation Vision 100.0% 100.0% 100.0%We fulf illed our initial vision and have a renew ed vision that w e are pursuing

56% 78% 62%

We fulf illed our initial vision but have not come up w ith a new vision

44% 22% 38%

Small/Mid Large

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Overview of an SAP Implementation Project

Scoping

Staffing

BenefitsTargeting

Scoping

Staffing

BenefitsTargeting

EnterpriseModel

Definition

ProcessDesign

DataAnalysis

EnterpriseModel

Definition

ProcessDesign

DataAnalysis

R/3Configuration

Reporting

Interfacing

DataCleansing

R/3Configuration

Reporting

Interfacing

DataCleansing

IntegrationTesting

Data Migration

Interfacing

User TestingUser Training

IntegrationTesting

Data Migration

Interfacing

User TestingUser Training

ClientOwnership

ClientOwnership

Help Desk

InterfaceSupport

BenefitsMonitor

ProcessImprovement

Help Desk

InterfaceSupport

BenefitsMonitor

ProcessImprovement

IT Transition

BBTransfer of SAP KnowledgeTransfer of SAP KnowledgeAA

0Vision

& Strateg

y

Project Charter

Funding

Commitment

Project Charter

Funding

Commitment

Project InstallationProject Installation SizingSizingProduction

Platform

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The perception of a needThe perception of a need

Project PlanningProject Planning

Acquisition/Acquisition/DevelopmentDevelopment

Testing & TrainingTesting & Training

ImplementationImplementation

UtilizationUtilization

Maintenance/Maintenance/EnhancementEnhancement

DegradationDegradation

Pre-SAP Life Cycle

Information Systems Life CycleInformation Systems Life Cycle

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Continuous Business Improvement CycleContinuous Business Improvement Cycle

The SAP Life Cycle

Enterprise VisionEnterprise Vision

Business Process DesignConfiguration

Implementation

Business Process DesignConfiguration

Implementation

Extended Applications Extended Applications OpportunityOpportunity

New Software ReleaseNew Software Release

Extended Applications Extended Applications OpportunityOpportunity

New Software ReleaseNew Software Release

Business Process RefinedConfiguration

Business Process RefinedConfiguration

Expected life-span of an SAP installation=15+ years

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Business/IT Alignment Is Still Lacking

A wasted opportunity

• Implementation: combined business &

IT

• Post-implementation: business

reverted

IT alone cannot drive business

improvement

• Support, not a driver

Business is disillusioned

• Assumed driver

Business Contribution: Veni, Vidi, Vici, gone

Business side fortune cookie

SAP is implemented.

Game’s over. Go home.

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Bring Business Back to the ERP Table

Business staff resists

becoming IT

• IT is tech

• ERP is business

The subject is not IT

competency alone

• Who runs a business

process? (hint: not IT)

Continuity is continuity

• Permanent not project

IT must surrender; business must step up.Senior management must make it so. For keeps.

Put the Business Foot to the Info Pedal

Path A:

Configure to Meet

Integration Go

Get on with it

Business Need/Opportunity

(pick one)

Business Need/Opportunity

(pick one)

Path B:

Request Change

Negotiate Change

Review Change

Integration Go

Get on with it

immediate sloth-slow

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Business Impact: ERP becomes an engine for benefit, not a cost center.

Defining an approach leading to “Thrive after go live” Give business process ownership to business

• This includes responsibility, not simply the right to order up new code.

Place IT in a support role for business process

• Retains integration controls & disciplines

• Retains customization role

Perpetuate these roles and the urge for change

• Continual refresh of “To Be” vision

• All measured, all monitored

Bottom Line

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Why an ERP Center of Excellence?

An optimization of business

processes that drive business

benefit continually

An optimization of end user

competency and employee

fulfillment of business processes

Continued coherence and

integration of functionality and

data through all process chains.

AS IS

TO BE

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Parameters: Business Applications Span (ERP is the backbone)

Maintenance and support of ERP and related functions

(ERP/CRM/SCM)

Optimization of current system usage

Continuous business improvement

Prepare the company for

transformational change

(all the time).

As Is

To Be

Center of Excellence Functions

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Continuous Business Improvement CycleContinuous Business Improvement Cycle

The SAP Life Cycle

Enterprise VisionEnterprise Vision

Business Process DesignConfiguration

Implementation

Business Process DesignConfiguration

Implementation

Extended Applications Opportunity

New Software Release

Extended Applications Opportunity

New Software Release

Business Process RefinedConfiguration

Business Process RefinedConfiguration

Expected life-span of an SAP installation=15+ years

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AS IS

TO BEGo Go LiveLiveGo Go LiveLive

Continuous Business Improvement

ROI, Extended Applications, e-CommerceExtensions toward SCM and CRM

Core ERP Implementation

The “TO BE” vision established during core ERP implementation is limited to near and mid-term planning and is targeted for achievement at the point of Go Live.

At Go Live, a new “TO BE” must be established or business improvements will only be incremental relative to the initial To Be vision.

Clients need to simultaneously a) maintain and support existing ERP functionality and b) provide the engine to seize new benefits.

The “TO BE” vision established during core ERP implementation is limited to near and mid-term planning and is targeted for achievement at the point of Go Live.

At Go Live, a new “TO BE” must be established or business improvements will only be incremental relative to the initial To Be vision.

Clients need to simultaneously a) maintain and support existing ERP functionality and b) provide the engine to seize new benefits.

CoE?CoE?CoE?CoE? No

Yes

Performance

Beyond Day One

Incremental ImprovementIncremental Improvement

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ITIT

Architecture/Architecture/

PlanningPlanning

Sourcing &Sourcing &

IT FinancialsIT FinancialsIT Human IT Human

ResourcesResources

CIOCIO

TechnicalTechnical

SupportSupport

OperationsOperations

SecuritySecurityQuality &Quality &

MeasurementMeasurement

IT SteeringIT Steering

CommitteeCommittee

TechnologyTechnologyDomainsDomains

• DatabaseDatabase• HostHost• MiddlewareMiddleware• NetworkNetwork• DesktopDesktop• etc.etc.

ApplicationApplication

ManagementManagement

InfrastructureInfrastructure

Development/Development/

Engineering/Engineering/

TechnicalTechnical

SupportSupport

OperationalOperational

ServicesServices

ProgramProgram

ManagementManagement

Change

Management

Change

Management

Integration MgmtIntegration Mgmt

BusinessBusiness

GroupsGroups

Center ofCenter of

ExcellenceExcellence

ContinuousContinuous

EducationEducation

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Line of Business Domain

LOBs must have day-to-day control of their destiny.

Business Domain

Process Owners:

Respond to Enterprise Program Management (top) and user feedback (bottom)

Cross Lines of Business

Drive applications agenda

Users:

Provides feedback to process owners

Taps Help Desk for resolution

Receives continuous training from applications domain.

FinanceFinance SalesSales LogisticsLogistics

Enterprise Program ManagementEnterprise Program Management

ProductionProduction

UsersUsers

Continuous EducationContinuous Education

UsersUsers UsersUsers UsersUsers

Integration ManagementIntegration Management(Functional, Cross-Application)(Functional, Cross-Application)

Custom ApplicationsCustom Applications

Software Configuration & Support

Help DeskHelp Desk

Production Control/Change ManagementProduction Control/Change Management

Integration Management (Technical)Integration Management (Technical)

Process OwnersProcess Owners

ApplicationsApplications

agendaagenda

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IT Domain

IT governs integration quality & efficiency

IT Domain

Custom Applications:

Fill configuration void

Reporting

Integration Management:

Assure functional configuration integration – red/green light

Assure cross-app integration/interfacing

Production Control

Instance management

Change management

FinanceFinance SalesSales LogisticsLogistics

Enterprise Program ManagementEnterprise Program Management

ProductionProduction

UsersUsers

Continuous EducationContinuous Education

UsersUsers UsersUsers UsersUsers

Integration ManagementIntegration Management(Functional, Cross-Application)(Functional, Cross-Application)

Custom ApplicationsCustom Applications

Software Configuration & Support

Help DeskHelp Desk

Production Control/Change ManagementProduction Control/Change Management

Integration Management (Technical)Integration Management (Technical)

Process OwnersProcess Owners

ApplicationsApplications

agendaagenda

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Building an SAP CoE: Planning

Create a high-level vision for a post-implementation Center of Excellence. This vision will address:

• The scope of the center of competence: Will it support just the ERP installation, or also legacy systems, bolt-ons, and interfaces?

• Organization/structure: There are at minimum four basic variants for a CoE organization depending upon a client’s size, geographic locations, and support requirements.

Transition Plan (High Level): defining the calendar for migration of legacy systems to ERP as well as the migration of legacy IT staff to new roles in the Center of Excellence.

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Building an SAP CoE Development/Realization

Create a Straw Roster for the Application Management team:  

Establish role definitions for the post-Go Live for Enterprise Program Management, Application Management, and Integration Management.

Determine which CoE functions will be outsourced

Launch outsourcing negotiations with chosen vendors

Create a staff transition plan

 

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Realization to Final Preparation

Complete transition education for CoE staff.

Integration and orientation of outsourced CoE

functions should commence as the build phase reaches

the final preparation phase.

Initial end user training should include an introduction

to CoE user support functions and the Help Desk

should be in place.

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Go Live +

The Center of Excellence is operational, with all

elements in place for continuous business evolution.

After Go Live, the balance of legacy IT staff will be a)

transitioned to the new SAP-centric organization, b)

re-assigned with the organization, or c) terminated.

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Business Impact: Continuous business improvement

Gaining Measurable Value with ERP

1. Identify critical Key Performance

Indicators (business)

2. Target KPI improvements

3. Identify which business

processes drive performance for

those KPIs

4. Reconfigure SAP accordingly

5. Go to step 2.

Bottom Line

Order Fulfillment Order Fulfillment ProcessProcess

Order Fulfillment Order Fulfillment ProcessProcess

Sample Business Performance KPI’sSample Business Performance KPI’sReturn on salesReturn on salesReturn on assetsReturn on assetsNet sales per employeeNet sales per employeeRatio of Assets/LiabilitiesRatio of Assets/Liabilities

Sample Business Performance KPI’sSample Business Performance KPI’sReturn on salesReturn on salesReturn on assetsReturn on assetsNet sales per employeeNet sales per employeeRatio of Assets/LiabilitiesRatio of Assets/Liabilities

Procurement Procurement ProcessProcess

Procurement Procurement ProcessProcess

Production Production ProcessProcess

Production Production ProcessProcess

Sample Major Business ProcessesSample Major Business Processes

Business Process DriversBusiness Process Drivers

Key Performance Indicators

Profit & Loss Profit & Loss

SAPSAP

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Bottom Line

ROI should be measured from the beginning of the

project and carried through time

Cost is only half of the equation

ROI has no ceiling (nor does a To Be Vision)

Continuous business evolution is the goal, not just

implementation