After participating in several ROI-focused projects, I learned many lessons. A few of those projects achieved great results, but unfortunately many more were mediocre. I will begin a series of articles on how to achieve value and ROI from an SAP implementation.
For many years, a lot of literature, guidance, case studies, success stories and methods has discussed using SAP to automate processes and reduce costs. Unfortunately, a company may struggle to find help to achieve revenue and profitability increases using SAP. This site explores how to use SAP to improve revenue and profitability, as well as achieve process efficiencies and cost reductions.
To do so, we have to get beyond TCO, or a pure cost focus, and start looking at ROI, or what you actually expect SAP to help you do in your business. What actionable information or operational helps are you expecting from the system?
TCO, Cost Reduction, and the SAP Business Case
As you may expect, implementing an SAP system does require considering implementation costs, process costs, transactional costs, operational costs, or other cost-based ROI measures. But this is only one side of the implementation coin. Unfortunately, this may be the only side an SAP implementation realizes.
To ensure you consider all aspects of a quality implementation, you should begin your SAP project right from the beginning with a value-oriented and benefits-focused approach. With that as the starting point, you can then incorporate that mindset into the project right from the beginning. You can develop project success criteria for your SAP implementation or upgrade that will drive those results, and transform your enterprise or organization.
Plenty of companies and literature from vendors promote TCO (total cost of ownership) models, claiming to help you leverage your SAP implementation to realize a reduction in TCO. Rather than adding yet another voice to find ways to measure cost reductions in processes, operational efficiencies, and other cost-based measurements, you should start focusing on using SAP to channel organizational efforts into winning in the marketplace. I am not avoiding a focus on operational cost reductions, cost-based ROI or TCO because it isn’t important. Rather, I do not want to repeat points that many people are already aware of, as this is not new ground.
The New ROI Focus for an SAP Implementation
By focusing only on cost-based ROI measures, businesses rarely realize the real promise and value of enterprise applications like SAP. SAP can do so much more, transforming the enterprise by providing new ways to look at, analyze, evaluate, and then strategize in the marketplace. Unless your SAP project focuses heavily on the value-based business drivers for the SAP project justification, it will become little more than another IT transaction system.
Where do you start? Change your thinking!
SAP Project Thinking Must Focus on the Business and the Future
Focus on how to perform a successful SAP value-based project, with real ROI value realization, no matter what type of partner or implementation method you choose. To do this, your IT and SAP project thinking has to change. And the change in your implementation mindset, or the paradigm shift, requires you to focus on how to use SAP technology to propel your company forward.
To succeed in this area, you must stop looking at SAP or IT as just a tool to enable process automation or process efficiency. SAP and all technology primarily serve as a lever for change, with the application being the vehicle to help manage that change.
You should begin your change in thinking by asking yourself the following:
What do I want the system to enable me to do?
What actionable information or automation should it provide?
What marketplace competitive pressures do I need data about to address?
What data do I need to address those pressures?
How will process automation or actionable reporting help enhance my marketplace value proposition?
SAP’s value proposition lies in how it can integrate the enterprise with a common set of data, which becomes the critical information for strategic business management. When you design SAP right from the beginning to support the key information you need to strategically analyze your business, you will be well on your way to realizing the value of an SAP implementation.
Hi Bill,
I happened to come across this site from a link in LinkedIn. Wonder why I never came across such content before!!
In many implementations where I was part of, I felt that organisations were so poorly structured and managed, getting my key data structures and master data in place itself was difficult. I felt that such organisations should be getting lots of benefits just by getting information from a look up (F4). Example list of offices from storage location or sales area list! Or list of customers for a particular division!!
Without even doing a single transaction, a common platform which gives such information to organisations with diverse operations and locations itself gives lots of value to the organisation!!