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Thrive after go Live:
Continuous Business
Evolution with SAP R/3
Michael Doane
Vice President and Research Director
META 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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1: The End of the Beginning
Few Firms Planned for the Full ERPDay
Experience
Vendor/SI View: the ERP wedding
 Vendor/SI improvements centered
on implementation
• Acceleration
• Knowledge Transfer
• Avoiding customization
Client Reality: the ERP marriage
 Business units underwent
organizational change, but not IT
units
 Project teams were “finite”
1-3 Years
15-22 Years
Investment scope
ERP has a 25 year life-span; investments took a much shorter
(and myopic) view
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During implementation, level of
After Day 1 (Days 2 – 7000)attention
paid to post implementation
During your ERP implementation, what level of attention was given
to your firm's post implementation support organization.
Total answ ering
246
100.0%
 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
FULL attention - including staff transition planning, reorganization
of IT and business alignment
SOME attention w as given - though more changes w ere needed
after Go Live
SLIGHT attention - w e w ere focused primarily on getting to Go
Live
We gave LITTLE attention to post-implementation issues until after
Go Live
35.8%
37.0%
20.3%
6.9%
To Be Vision Renewals
(by Project Team type after implementation)
Small/Mid
Team & Vision Continuity
Im plem entation Majority
Project Team Disbanded
Post Im plem entation Vision
100.0%
We fulfilled our initial vision and
have a renew ed vision that w e are
56%
pursuing
We fulfilled our initial vision but have
not come up w ith a new vision
44%
Large
Ongoing
Program
100.0%
Total
100.0%
78%
62%
22%
38%
ERP is treated like traditional IT once Go Live occurs
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Overview of an SAP Implementation Project
0
Vision
& Strategy
Project Charter
Funding
Commitment
Scoping
Staffing
Benefits
Targeting
A
Enterprise
Model
Definition
R/3
Configuration
Reporting
Process
Design
Interfacing
Data
Analysis
Data
Cleansing
Project Installation
Sizing
Transfer of SAP Knowledge
IT Transition
Help Desk
Integration
Testing
Interface
Support
Data Migration
Benefits
Monitor
Interfacing
User Testing
User Training
Production
Platform
Process
Improvement
B
Client
Ownership
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Pre-SAP Life Cycle
The perception of a need
Degradation
Project Planning
Acquisition/
Development
Maintenance/
Enhancement
Utilization
Information Systems Life Cycle
Testing & Training
Implementation
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The SAP Life Cycle
Continuous Business Improvement Cycle
Enterprise Vision
Extended Applications
Opportunity
New Software Release
Business Process Design
Configuration
Implementation
Business Process Refined
Configuration
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 &
Business side fortune cookie
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
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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:
Path A:
Configure to Meet Request Change
Negotiate Change
Integration Go
Review Change
Get on with it
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
To Be
Prepare the company for
transformational change
(all the time).
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
Implementation
Business Process Refined
Configuration
Expected life-span of an SAP installation=15+ years
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Continuous Business Improvement
Beyond Day One
ROI, Extended Applications, e-Commerce
Extensions toward SCM and CRM
Yes
Core ERP Implementation
Go
Live
TO BE
CoE?
No
Incremental
Improvement
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
CIO
IT
Architecture/
Planning
Sourcing &
IT Financials
IT Human
Resources
Quality &
Measurement
Security
Program
Management
Business
Groups
Continuous
Education
Application
Management
Integration Mgmt
Technology
Domains
•
•
•
•
•
•
Database
Host
Middleware
Network
Desktop
etc.
Infrastructure
Development/
Engineering/
Technical
Support
Operational
Services
Technical
Support
Center of
Excellence
Operations
Change
Management
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Business Domain
Line of 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
Finance
Sales
Logistics
Production
Software Configuration & Support
Applications
agenda
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
Production Control
Instance management
Change management
Process Owners
Users
Users
Users
Users
Help Desk
Continuous Education
Finance
Sales
Logistics
Production
Software Configuration & Support
Custom Applications
Integration Management
(Functional, Cross-Application)
Integration Management (Technical)
Production Control/Change Management
IT governs integration quality & efficiency
Applications
agenda
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Building an SAP CoE: Planning
 Create a high-level vision for a postimplementation 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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Gaining Measurable Value with ERP
 Bottom Line
Profit & Loss
Key Performance Indicators
Sample Business Performance KPI’s
Return on sales
Return on assets
Net sales per employee
Ratio of Assets/Liabilities
1.
Identify critical Key Performance
Indicators (business)
2.
Target KPI improvements
3.
Business Process Drivers
Identify which business
processes drive performance for
Sample Major Business Processes
those KPIs
Order Fulfillment Procurement
Production
4.
Reconfigure SAP accordingly
5.
Go to step 2.
Process
Process
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