The SearchSAP.com Conference Europe

1
Thrive after go Live Continuous Business
Evolution with SAP R/3
Michael Doane Vice President and Research
Director META Group, Inc.
2
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)

3
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 didnt get what we expected

4
Few Firms Planned for the Full ERP Experience
Day 1 The End of the Beginning
Vendor/SI View the ERP wedding

• Vendor/SI improvements centered on implementation
  
• Acceleration
• Knowledge Transfer
• Avoiding customization
• Business units underwent organizational change,
  but not IT units
• Project teams were finite

Client Reality the ERP marriage
15-22 Years
1-3 Years
Investment scope
ERP has a 25 year life-span investments took a
much shorter (and myopic) view
5
After Day 1 (Days 2 7000)
During implementation, level of attention paid to
post implementation

• 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

To Be Vision Renewals (by Project Team type after
implementation)
Small/Mid
Large
ERP is treated like traditional IT once Go Live
occurs
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Overview of an SAP Implementation Project
0
Vision Strategy
Help Desk Interface Support Benefits Monitor
Process Improvement
Integration Testing Data Migration Interfacing
User Testing User Training
Project Charter Funding Commitment
R/3 Configuration Reporting Interfacing Data Cl
eansing
Enterprise Model Definition Process Design Data
Analysis
Scoping Staffing Benefits Targeting
Production Platform
Project Installation
Sizing
Client Ownership
IT Transition
7
Pre-SAP Life Cycle
Information Systems Life Cycle
The perception of a need
Degradation
Project Planning
Acquisition/ Development
Maintenance/ Enhancement
Utilization
Testing Training
Implementation
8
The SAP Life Cycle
Continuous Business Improvement Cycle
Enterprise Vision
Extended Applications Opportunity New Software
Release
Business Process Design Configuration Implementati
on
Business Process Refined Configuration
Expected life-span of an SAP installation15
years
9
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 side fortune cookie
SAP is implemented. Games over. Go home.
Business Contribution Veni, Vidi, Vici, gone
10
Bring Business Back to the ERP Table
Put the Business Foot to the Info Pedal

• 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

Business Need/Opportunity (pick one)
Path B Request Change Negotiate Change Review
Change Integration Go Get on with it
Path A Configure to Meet Integration Go Get on
with it
immediate
sloth-slow
IT must surrender business must step up. Senior
management must make it so. For keeps.
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Defining an approach leading to Thrive after go
live

• Bottom Line

• 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

Business Impact ERP becomes an engine for
benefit, not a cost center.
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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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Center of Excellence Functions
Prepare the company for transformational change
(all the time).
To Be
Continuous business improvement
Optimization of current system usage
As Is
Maintenance and support of ERP and related
functions (ERP/CRM/SCM)
Parameters Business Applications Span (ERP is
the backbone)
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The SAP Life Cycle
Continuous Business Improvement Cycle
Enterprise Vision
Extended Applications Opportunity New Software
Release
Business Process Design Configuration Implementati
on
Business Process Refined Configuration
Expected life-span of an SAP installation15
years
15
Beyond Day One
Continuous Business Improvement
ROI, Extended Applications, e-Commerce Extensions
toward SCM and CRM
Yes
Core ERP Implementation
CoE?
Go Live
Incremental Improvement
TO BE
No
AS IS
Performance
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.
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IT Steering Committee
Change Management
Sourcing IT Financials
IT Human Resources
Quality Measurement
Security
IT Architecture/ Planning
Program Management
Continuous Education
Application Management
Business Groups
Integration Mgmt
Center of Excellence
Operational Services
Infrastructure Development/ Engineering/ Technical
Support

• Technology
• Domains
• Database
• Host
• Middleware
• Network
• Desktop
• etc.

Technical Support
Operations
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Line of Business Domain
Business Domain
Enterprise Program Management
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.
Process Owners
Users
Users
Users
Users
Help Desk
Continuous Education
Production
Finance
Sales
Logistics
Applications agenda
Software Configuration Support
Custom Applications
Integration Management (Functional,
Cross-Application)
Integration Management (Technical)
Production Control/Change Management
LOBs must have day-to-day control of their
destiny.
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IT Domain
IT Domain
Enterprise Program Management
Custom Applications Fill configuration
void Reporting Integration Management Assure
functional configuration integration red/green
light Assure cross-app integration/interfacing Pro
duction Control Instance management Change
management
Process Owners
Users
Users
Users
Users
Help Desk
Continuous Education
Production
Finance
Sales
Logistics
Applications agenda
Software Configuration Support
Custom Applications
Integration Management (Functional,
Cross-Application)
Integration Management (Technical)
Production Control/Change Management
IT governs integration quality efficiency
19
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 clients 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.

23
Gaining Measurable Value with ERP

• Bottom Line

Profit Loss
Key Performance Indicators

• Identify critical Key Performance Indicators
  (business)
• Target KPI improvements
• Identify which business processes drive
  performance for those KPIs
• Reconfigure SAP accordingly
• Go to step 2.

• Sample Business Performance KPIs
• Return on sales
• Return on assets
• Net sales per employee
• Ratio of Assets/Liabilities

Business Process Drivers
Sample Major Business Processes
Order Fulfillment Process
Procurement Process
Production Process
SAP
Business Impact Continuous business improvement
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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