Jon Reed is an independent SAP analyst who writes on SAP consulting trends. He is the President of JonERP.com, an interactive web site which features Jon’s SAP Career Blog and his podcasts for SAP professionals. Jon has been publishing SAP career and market analysis for more than a decade, and he serves as the career expert for SearchSAP.com’s "Ask the Expert" panel.
The "Human Side" of Midsize SAP Implementations
Talk Before You Leap:
What Midsize Companies Have Learned About the "Human Side" of SAP Implementations
Unabridged Edition, Never Before Released
by Jon Reed
Midsize companies are giving SAP serious consideration for their ERP installations because SAP has proven itself. Gone are the days where SAP’s price tag and implementation challenges were enough to scare smaller companies away before they could give SAP a serious look. At this year’s combined ASUG/SAPPHIRE conference, I had a chance to hear from a number of managers at mid-size companies who were in the process of implementing SAP. My goal was to find out what worked and what didn’t and to come away with some "lessons learned" about SAP’s expanding role in the ERP midmarket. Some of what I learned confirmed what we would all expect to hear about SAP’s ability to deliver value through one integrated software instance, and some of what I learned genuinely surprised me.
After the conference, I had a chance to explore these themes in more detail when I interviewed Daniel Lubin, Director of Information Technology at Abiomed, about their whirlwind 28 week All-in-One SAP installation. (My full interview with Daniel is available as a podcast on JonERP.com). My goal during the talk with Daniel was to get his insights on how to manage the "human side" of an SAP implementation - a question that is very important to midmarket companies, all of which have strict parameters in terms of ERP project staffing and budgeting.
In this article for SAPtips, I’m going to present the highlights from my conversation with Daniel and also share the themes from other presentations by midmarket companies I attended at ASUG/SAPPHIRE 2007.
I’m going to divide this article into several sections, each with a different emphasis. First, I will review the clichés about SAP implementations that turned out to be true. Then, I will note some of the key ways that SAP is delivering value to medium size companies, as well as the components of the SAP product line that are generating the most interest and return on investment. I will then cover the things I learned about SAP in the midmarket that surprised me.
The final section of this article will review the key "human factors" on SAP implementations and note some of the best practices companies have developed to ensure that their users embrace the changes in their day-to-day roles that SAP invariably brings with it.
I. The Clichés are True - Successful SAP Implementations Boil Down to Common Sense
I’m not going to waste time in this article going into deep detail about standard implementation tips that have now become clichés. However, not all clichés are true, and not all SAP installations are successful, even with today’s robust support "Ecosystem." So someone out there must still be ignoring these common sense implementation principles.
True "Keys to SAP Success" Clichés
1. Executive buy-in must drive the project. It’s quite simple: history now shows that SAP projects without executive buy-in fail. The only exceptions? Projects that are so small in scope that top-level buy-in is not needed. But I don’t consider those smaller scale projects true ERP initiatives.
2. SAP’s project methodology works and should not be deviated from. SAP’s ASAP methodology is no longer a clever "damage control" marketing ploy, yet to be tested on real projects. ASAP is now a trusted and well-honed blueprint. The most frequent "lesson learned" I heard from midmarket panelists? Don’t veer off SAP’s project blueprint, especially when it comes to that big no-no: making complex modifications to the software.
Daniel Lubin emphasized this point as he looked back on Abiomed’s first SAP installation. As he put it, "SAP gives you not one, not two, but five or ten best practices that you can adopt in your implementation. Where we decided that we had to be special, where we were so unique that we couldn’t use any of those best practices, where we did something completely different - we now realize we’ve taken on either a management burden or a maintenance burden for those proprietary processes. If we could do it all over again, we would have pushed harder to align with SAP best practices."
Gary Rietz, CIO of Ubiquity Brands, who appeared on a panel I attended at SAPPHIRE, shared his company’s unique way of keeping the desire to modify SAP under control: "Essentially, at our kickoff, our CEO said, ‘It’s vanilla, it’s vanilla, it’s vanilla, and if anybody wants to do otherwise’ - he then wrote his cell phone number up on the board, and said: ‘Call me.’" That’s one way to stick with SAP’s program and nip "scope creep" in the bud.
3. SAP is a business process implementation and must be driven by business users, not IT. Engaging business users and driving the SAP project from the vantage point of industry best practices is the secret to all successful SAP implementations. Information Technology (IT) folks are still instrumental to the process, but they must accept the role of facilitators rather than being in the driver’s seat.
4. Start small - smaller scale installs are more successful than "big bangs." This common sense lesson is not as iron-clad as the others; I still run into successful "big bang" SAP installs. But for the most part, companies are succeeding with SAP by starting small and manageable, gaining momentum, and applying the success and wisdom from the first projects to their second and third phase initiatives.
5. You are only as good as your data. The verdict is in: without a well-thought and well-implemented master data scheme applied within the SAP system, the SAP implementation will not deliver on its potential.
6. Best-of-breed doesn’t work. There was a time when many companies tiptoed into SAP, unwilling to let go of their "best of breed" systems which they would then try to integrate with SAP. Everyone had a lot of fun giving that approach a try - IT folks in particular loved working weekends tying products together from vendors that didn’t like each other and whose products didn’t like talking to each other. This was a costly and complicated road.
Today’s successful SAP installs focus on pulling all the core processes into SAP and pulling the plug on the best-of-breed systems. The only exceptions? Companies are still using best-of-breed software for mission-critical aspects, like shop floor operations. But this generation of SAP installs is the most successful precisely because companies have relinquished the best-of-breed concept and use it only in "must have" situations.
6. People matter. It’s the ultimate cliché: your installation is only as good as the people who run it. This is such a cliché that we tend to nod along without realizing there are specific things we can do to support the "human side" of an SAP project. I’ll cover some of these tips in the last section of this article.
II. How SAP is Delivering Value to Midsize Companies
In the SAPPHIRE sessions I participated in, I heard some common answers to that all-important question: which aspects of SAP provided the most "instant return on investment?" I will list these in relative order of priority.
1. Core SAP implementations provide a "single source of the truth" and deliver companies from the headache of managing chaotic "multi-system" legacy environments. Most initial midmarket SAP installations are nothing fancy, just the core SAP modules and architecture for starters, with maybe one add-on component of choice (CRM, SRM, etc.) But companies are deriving huge cost savings and reducing Tylenol intake simply by shutting down the "legacy spaghetti" and bringing their core ERP operations together in one SAP instance.
Of course, once all the transactional data is captured in one system, even more value can be extracted. But the first simple step of bringing the processes under one vendor’s roof reaps big dividends. Bill Rogers, VP and CIO of Goss International, had a really funny comment about this. Appearing as part of a SAPPHIRE panel, Goss said that his company acquired three new plants whose IT strategy resembled "Noah’s Ark - let’s buy two of everything and figure out how to put them together." Simply reducing this duplication within SAP provided huge value.
2. A well-integrated SAP instance is a huge boost for global operations. More often than not, today’s midmarket companies are global in scope. SAP has made global operations more efficient for many companies, particularly in terms of functionality that helps with multi-lingual operations, multi-currency scenarios, and compliance with local and regional tax codes.
3. SAP is delivering more sophisticated industry-specific functionality. SAP used to pay lip service to industry functionality while the reality was often sketchier. Industry solutions had their own upgrade cycles and the whole idea of leveraging SAP’s industry know-how seemed like a case of over-promising and under-delivering. But the latest releases of SAP make industry pre-configuration easy to implement, and numerous companies cited the value of this out-of-the-box content.
4. SAP doesn’t force companies to take less functionality anymore. In the last section, I talked about the end of the best-of-breed days. What happened in the 2000-2003 years is that companies had to make tough choices: if they standardized on SAP, that meant settling for inferior functionality in areas such as HR, CRM, and supply chain management. Today, that is not the case. I heard more than a few managers say how pleased they were to find that when they unplugged their best-of-breed systems to standardize on SAP, in many cases the SAP functionality was just as good, or at least in the same ballpark, as their best-of-breed systems, while providing all the benefits of superior integration.
5. SAP is providing value to companies involved with mergers and acquisitions and dealing with compliance and financial reporting. Several panelists noted that SAP provides a great roadmap for consolidating companies after acquisitions and dealing with the compliance and reporting issues entailed in acquisition and post-acquisition activity.
6. Considering its depth of functionality, SAP is surprisingly affordable and easy to implement. I almost can’t believe I’m typing this, but SAP has figured out how to price its solutions in a way to get "into the conversation" when smaller companies look at ERP systems. This wasn’t always the case, but enough panelists offered their own honest comments on this to assure me that it was indeed the truth.
7. The most popular "value add" areas of SAP include Business Warehouse (BW/BI), Global Trade Services (GTS), and handheld device integration via CRM and RF/barcoding. BW was by far the most common product cited by name when panelists were asked to cite the component within SAP that had helped their company the most. BW’s ease of reporting for both user and executive teams was noted, as well as a reduced dependency on IT for effective reporting. I was a little surprised that GTS was mentioned as frequently as it was, but many companies are raving about it. It was not as surprising to learn that the integration of portable mobile devices, both for salespeople and on the warehouse floor, was a point of emphasis.
III. Surprises about Midsize SAP Installations
There were a few trends I noted at the conference that surprised me:
1. Midsize companies are not moving aggressively into SAP’s most hyped products (xApps, Enterprise SOA, MDM). I was expecting to hear more about companies using SAP’s most hyped products. But in fact, most companies were focused on the value delivered by SAP’s core ERP release, with perhaps one add-on component they were looking into, such as CRM or APO. I thought it was especially surprising, given the amount of emphasis the panelists put on getting your master data right, that very few of them were actually using SAP’s own Master Data Management (MDM) product that runs on the NetWeaver architecture.
However, what did come across clearly is that companies did perceive a benefit in SAP’s vast product suite and increasing web services capabilities. The panelists running on NetWeaver were definitely looking into some targeted Enterprise SOA initiatives, and those not yet running on NetWeaver were looking in that direction in the not-too-distant future.
While many midsize companies were not currently focused on SAP’s advanced products and Enterprise Services capabilities, the fact that SAP did have the deepest and most forward-thinking functionality of any ERP vendor did impact their initial selection of SAP. The verdict? Companies will move in the direction of NetWeaver-enabled Enterprise SOA, but on their own timeframes. Many panelists noted plans to open up their systems to trading partners, suppliers, and customers as "next phase" projects in the works.
2. Companies are pulling business process experts into permanent IT roles. Several companies mentioned that they have had success beefing up the SAP skills in their IT department by taking exceptional users from the project team and putting them in long-term IT roles. The most common example? Bringing a user with deep expertise in a particular SAP module, such as Financials or Human Resources, and setting them up as a permanent liaison between the functional users and the IT team. At first, it seemed odd to think about pulling business users into IT roles. But I think that’s indicative of a trend we are seeing with SAP’s latest releases: an increasing convergence of functional and technical skill sets. Given that convergence, pulling functional folks into IT roles makes a lot of sense.
3. Companies are outsourcing more than just ABAP programming. It was not a surprise to hear that midsize companies were finding value in "offshoring" ABAP development projects. What was more surprising was hearing how many companies are outsourcing other aspects of their SAP implementations. I heard from companies outsourcing payroll functions, accounts receivable functions, and other general back office functions. A surprising number of companies were outsourcing their entire IT operation pertaining to SAP, opting for hosted application environments. Some reported success with SAP Hosting, others relied on other third parties. The ERP hosting market has not been a hot market up to this point, but perhaps as more midsize companies evaluate the pros and cons of maintaining SAP applications in-house, we will finally see a pickup in the market for hosted ERP environments.
4. SAP is now enjoyable to use. SAP has known for a long time that it could stand to be more user-friendly.
You used to hear jokes at every SAPPHIRE about people stumbling onto ABAP code still written in German. In the late ‘90s, SAP launched the EnjoySAP campaign specifically to promote SAP’s commitment to an easier-to-use SAP. To be fair, SAP has gradually improved its user-friendliness with each major release cycle. But this was the first year where I heard numerous panelists gush about their users’ enthusiasm for their SAP environment - without any apparent solicitation. Several companies mentioned that their own users were driving the push for new upgrades and new functionality because they were so sold on what SAP had to offer them.
IV. SAP Still Comes Down to People - Tips for Handling the "Human Side" of an SAP Implementation
On my recent podcast with Daniel Lubin of Abiomed, which was hosted by SearchSAP.com’s Jon Franke, we had a chance to dig more deeply into the human issues of handling an SAP install than we usually get to hear about. Daniel spoke frankly about how his team overcame burnout and managed to achieve a live environment that not only achieved business goals, but also met the ultimate criteria for SAP project success: enthusiastic user buy-in.
Keys to Managing the "Human Side" of an SAP Project
1. Detailed user documentation may be a pain, but it’s well worth the effort. It makes sense that the time spent developing quality (not just run of the mill) user documentation pays off. But Daniel Lubin’s take on this subject still got my attention: "The areas that put a lot of effort into documenting the business processes - the areas that put the most time into the most boring part of the implementation, which is writing everything down - are the areas that a year later are having the most success with SAP today."
2. Put your most talented people on the project. Clearly there is a cost to putting your best people on the SAP project - they were already doing something pretty important. But several SAPPHIRE panelists emphasized that any pain caused by losing a talented person from a different role was well worth enduring for the payoff of getting the best people onto the SAP project.
3. Users may have to give up some flexibility when moving to SAP. This should not be denied, but addressed in a thoughtful way. Flexibility is an interesting and perhaps even controversial topic in the SAP community. On the management level, what we hear is mostly rave reviews about how flexible SAP is becoming - meaning that in the era of NetWeaver and Service-Oriented Architecture, it is easier than ever to customize SAP without having to do expensive and problematic custom development. The consensus? SAP provides much more flexibility "out of the box" than it used to.
But on a user level, SAP is not always the most flexible system. Part of the payoff of SAP is that when you install it properly, you standardize your business processes and procedures, which has huge payoffs in terms of reporting and compliance. But it also means users can’t "go rogue" and do their own thing.
Daniel Lubin faced this issue at Abiomed: "The way I explain it internally is, ‘Where process and practice didn’t meet, people have felt more pain,’" says Lubin. "It’s a good thing, because we’ve taken variability out of the execution of processes, which means that we’re executing consistently. But, at the same time, that can be interpreted negatively to mean that we’ve reduced our flexibility. I think that’s an area where people continue to get more and more comfortable."
A common example of flexibility tradeoffs cited by conference panelists was in the area of e-procurement. By standardizing procurement processes and vendors throughout the enterprise, many companies enjoyed big cost savings through SAP. But it did force some users to change their "ad hoc" approach to procuring supplies.
So how do you handle a situation in SAP where users have some gripes about the rules of the new system? That leads us to the next lesson...
4. When in doubt, over-communicate. During our talk with Daniel Lubin at Abiomed, I was struck by how aggressively they sought to involve users in every phase of the implementation. Regular communication was the key to addressing any issues of discontent, whether it was the long hours of the implementation deadlines, or the impact of SAP’s structured workflows on day-to-day job roles.
Lubin put it this way: "We spent a lot of time over-communicating. We bought a lot of lunches. You spend a lot of time trying to communicate with folks one on one. You do everything that you can...making sure that people understand, one: that they’re appreciated, two: that their efforts are important and valuable, and three: that everyone is working towards a goal. And what you have to do is continue to raise the visibility of that goal."
Sometimes, companies make the mistake of assuming that users will "buy in" to the new ERP system as long as the new software improves the company’s financial picture. But while bottom-line success is important, that’s only one piece of achieving buy-in. Another key is making sure that SAP is enjoyable to use, and SAP has come a long way in that regard. But the third factor is the one that Abiomed excels at: taking the time to get management in the same room with the key users and forging working relationships. When the inevitable "burn out" period comes during the go-live push, the time you have spent on those relationships pays off.
We asked Daniel about that very topic. How did they address the strain that almost always occurs before the finish line? "The further into the project, the more people started to get that level of exhaustion, and certainly, it’s just something that you have to manage," says Lubin. "And, again, you manage it through communication. You manage it through lending a kind ear. And you manage it through highlighting people’s successes, giving them an extra hand when they need it, and ultimately rewarding them for their successes as we get the project completed."
Daniel makes it sound so simple, yet I’ve spoken with a lot of consultants, and a lot of project team members, who found themselves on projects where those common sense principles of communication were not prioritized.
Conclusion
SAP is not the only viable ERP solution for midmarket companies, but judging from all the success stories of ASUG/SAPPHIRE 2007, there’s no question that SAP has come to the table with a well-tested product that offers bottom-line functionality at an affordable price. SAP also offers a range of functional enhancements and enterprise services when companies are ready to add them. The presentations I attended convinced me that SAP has finally found a way to offer a streamlined product with a project-tested methodology, without sacrificing its greatest strength: deep, industry-specific functionality.
Having said that, the hard-won lessons from these ASUG/SAPPHIRE ’07 panelists bring one point home: SAP doesn’t install itself, and without the right implementation approach, a quality product guarantees nothing. It’s still about the people, and people have been known to be difficult. But a good project plan still goes a long way. I hope this article has shed some light on the keys to building an SAP environment that users look forward to working in. For this article and Jon Reed’s full website visit: http://www.jonerp.com/content/view/42/43/1/0/ Caarma Corporation is not affliated with Jon Reed or his website. This information is provided for informational purposes only.