Your company’s SAP or ERP business case should start before your RFP, not just at a high level. Before ever issuing an SAP RFP, you need to take some time up front to get educated and develop some key understanding.
Educated software buyers are more sophisticated in their research, and the more sophisticated you are, the better results you will receive.
The more educated you are:
- The better the quality of the ERP RFI or RFP,
- The better choice you will make at vendor selection,
- The more objective assessments you will make during demonstrations,
- The more focus you will have on ensuring vendors show you what is important to make a better decision,
- The better your project will be scoped and blueprinted, and
- Ultimately, the better your project and results.
The most successful RFP business case for an SAP, ERP, or IT project will include several components:
ERP Project Value Proposition Elements
- Operational Excellence – Expected cost reductions from automating and improving ongoing operations and their processes.
- Customer Focus – How people, processes, and technology enable operations, goals, and reports focus on the customer needs and wants. How sales, marketing, and customer service is integrated. Tools and resources to empower customers for success with the organization’s products and services.
- Innovation – Tools and resources to support internal and external collaboration, engineering efforts, and market intelligence.
Business Competitive Pressures to consider for your SAP Project
An honest assessment of the organization’s strengths and weaknesses requires looking at these four core competitive pressures [FN3]:
- Customer options
- Vendor power
- Existing competitors
- New (innovative) products or services.
To properly assess value propositions and competitive pressures, you need solid business goals and metrics that you expect the software application to enable. I’ve provided some insight on developing meaningful KPIs which can become the basis for a solid business case. That article helps to define the business drivers that you need to intersect with technology. By changing how you look at SAP to focus on the business rather than the technology, you are far more likely to achieve great results with your implementation. Additionally, by making the business drivers the focus of your efforts, you also gain more meaningful insight into aligning the right implementation vendor with your technology project.
To succeed in highly competitive global markets, your organization must be agile enough to change and adapt as necessary– regardless of the size of your organization. By focusing on business needs rather than just on the technology, you are far more likely to design processes, goals, metrics, and project expectations that prevent you from getting locked into rigid technology restrictions.
Where to start with developing a solid SAP business case based on business and IT strategy:
- Get your company “A” team together to work on the initial project definition. Ensure they are the people who have key responsibilities for the SAP project (and the key decision makers for the vendor selection process).
- If you have not acquired an SAP software agreement yet, then contact an SAP sales rep and ask about getting a copy of the ASAP toolset as part of your evaluation process for software selection. Be prepared for the sales pitch. If you have not yet decided on SAP, just insist that you are going through the upfront due diligence of Discovery and Evaluation to see what SAP might be able to offer.
- If you have already agreed to purchase the SAP software, then have your sales rep give you access to SAP’s ASAP toolset. Install it on any web server (Apache, IIS, etc.) and begin getting your team familiar with it.
- Set a timeline and deadline for the initial project team to produce a business case with your company’s core strategic direction.
- Get familiar with the ASAP tool set.
- If you have an SAP software agreement, then you also have something called “IDES” — a complete SAP system used for training by SAP America — available to you free. If you are a licensed SAP customer, the system is not a trial version; rather, it is an educational version that does not have a short-term expiration date. Additionally, you can install some of SAP’s Best Practice scenarios to get more familiar with the Best Practices resources SAP provides.
- If you do not have an SAP software agreement, or if you do not have the time or resources to set up an internal educational system, there are several reasonable online services for direct SAP access.
- If you set up the SAP IDES system, or decide to get remote access, then have several key decision makers about the SAP vendor selection familiarize themselves with the software.
- Depending on the size and complexity of your company and implementation requirements, plan on spending about three to six months on all of this pre-project prep work. It may take two to four weeks or more just to put the RFP together after you have had a few months’ exposure to SAP’s resources and tools.
From this exercise, you need to define outcome-based business drivers for the project. You should be able to verify them after go-live and have them be sufficient enough to write a contract with a vendor to include them along with penalties for lack of compliance.
SAP Business Case critical elements
No matter how you draft, define, or craft your business case, you should include a few critical elements:
- People – the expected organizational effects or company changes such as changes in workforce behavior, more collaboration, greater cross-functional cooperation, more customer focus, etc.
- Process – the implementation of existing business processes, along with any expected cost savings from improvements or automation (lagging indicator processes).
- Process and Technology – any new business processes that will address competitive pressures or value propositions, and any expected savings or revenue opportunities (lagging and leading indicator processes).
- Technology – the Key Performance Indicators (KPIs), reporting requirements, goals reporting, and other metrics that the SAP implementation will address and provide the details for (lagging and leading indicator reports). This would include any new technology that you need or desire to reduce operational costs or improve revenue and profitability.
Notice that this business case includes the three key areas of business process and technology intersection in the marketplace: people, process and technology. You should also note that the best business case will focus on both lagging and leading indicators of success. Finally, this type of business case is focused on business transformation: transformation in the form of developing an organization that is more focused on competitive pressures, company value, and growth. As a result, all that any application can do is enable those transformation efforts. An application can lead these efforts, but it cannot make them happen.
The best measure of success of your SAP project is whether the tools, resources, and means to achieve that business transformation were delivered as expected.
In other words, did the software and implementation vendor provide you with the tools and resources you need as a business to address your business drivers and business reasons for doing the project?
No software, technology, or even capital equipment is going to suddenly make you money on its own. Even capital equipment needs the raw material, labor, or service inputs that produce the products or services you make in a new, cheaper, or better way. In other words, no equipment or technology investment is going to create revenue, profitability, or cost savings without proper inputs and outputs. The new or more effective way of processing those inputs and outputs is what makes the difference.
Although it is enabled by technology, business transformation must come from the business itself.
From this business case, a set of success criteria, strategic goals, initiatives, processes and reports can be defined to be included in an RFP to a vendor. One of the most important focal points of an RFP and of an SAP project is in achieving “operational independence,” which is just a fancy way of saying that you have developed the internal competence to process day-to-day SAP related issues without outside vendor involvement.
Consider Independent SAP Contractors as SAP Project Auditors and Coordinators
If you have sufficient funding, you should consider bringing in one or two very seasoned contract veterans at this point to educate you and your team about the ASAP methodology, SAP’s Best Practices, solutions options, RFP, the SAP system, etc. And even if you don’t have an SAP license yet, your company may wish to use one of the many SAP educational services that provide access, so you can get some initial exposure to the application with no risk and no obligation.
If you decide to bring on an outside contractor or outside vendor resources during the Discovery or Evaluation phase, you should insist that by accepting that responsibility, they are not allowed to participate as a competitive vendor during the RFP. This will prevent them from skewing or distorting your upfront efforts to ensure only they get the project. By employing one vendor’s resources for that portion of the project with an absolutely clear expectation that they will not replace the final vendor, you also avoid some of the finger pointing and gaming between the vendors.
Despite an incumbent vendor’s or consultant’s claims, or their sales pitches on how they know your business the best, you are likely better off using their talents for the vendor selection and for guidance during the actual project.
However, depending on your vendor selection, you may want to work out an arrangement with the incumbent vendor who helped during the Discovery or Evaluation phase. In this arrangement, the vendor would be the first choice for project staff augmentation of your internal resources or staff augmentation for the prime vendor (but only if that vendor does not have certain key resources during the course of the project).
SAP Business Case Conclusion
Your SAP business case is the beginning of a business-focused journey that will help to move your SAP implementation, SAP upgrade, or SAP development work in the right direction toward realizing real business benefits. During the process, you may discover that elusive “ROI” and recognize the ERP system’s enabling of your organization to be more competitive in the marketplace and enhance your value proposition. Your primary goal should be to have your new system enable the business to focus more effectively on the underlying measures that are important for revenue and profitability. Defining what those measures and processes look like creates the foundation for the success criteria you need for your project.
For a little more insight, read the article on effectively scoping your SAP project [4] to get some initial scoping for the SAP RFP. Some initial SAP scoping work before your SAP vendor RFP will help level the playing field.
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Change How you Look at SAP to Create ROI
Why SAP Projects Fail to Deliver ROI (and How to Change IT)
Using SAP to Improve Revenue and Profitability
[2] SAP PDF files with overviews of the toolsets for use on your SAP business case.
ASAP Methodology and Tools Overview (Key Resource)
ASAP Proven Methodology for Fast Successful Implementation (similar to the one above)
Additional Resources for Using SAP Tools and Methodologies for Success (similar to the ones above)
Nearly every SAP vendor claims they use the SAP ASAP methodology, but few actually follow it.
[3] Adapted from Harvard Professor Michael Porter’s “Five Competitive Forces” model. Professor Porter adds a fifth consideration– the entry of new competitors. This author believes that while the fifth “force” might be a valid consideration for academic purposes, if an organization were able to master the other four competitive pressures, then in practicality the barrier to entry for new competitors would be so high as to make that competitive pressure irrelevant. That fifth force only becomes a real factor if one or more of the other competitive pressures sufficiently lower the barriers to entry.
