Proper SAP project governance is a function of the business in partnership with IT. With the exception of a few of SAP’s technical applications (such as parts of Solution Manager, HANA, etc.), the entire application suite is about business– business transaction processing and business processes. If key business resources are not directly engaged in SAP project governance, you may never realize the SAP benefits you expect.
This leads me to ask: What benefits you expect from an SAP implementation?
From what I have seen, SAP projects generally have two broad “buckets” of benefits. The first bucket is focused on consolidating and eliminating systems, while the second is all about transactional business execution. In other words, IT benefits and business benefits.
SAP Project Drivers in IT
The first benefit bucket is related to pure IT cost reduction with a focus on consolidating and eliminating legacy systems for many of the following reasons:
- reducing numerous applications’ license costs
- narrowing technical infrastructure needs
- simplifying technical architecture
- reducing system maintenance costs
- reducing legacy staffing needs
- standardizing on a single development platform
If your SAP project is more of a pure landscape play around replacing legacy systems, then SAP project governance would fall more clearly under IT. However, these types of projects usually end up having the business user community demand that all legacy system functionality be meticulously reproduced in SAP. In the end, you will likely achieve some measure of savings, but far less than you originally anticipated. Custom-coded solutions that need continual maintenance after go-live will generally consume any expected savings. These “solutions” are not supported by your SAP maintenance agreement and can eat you alive in post-production support costs.
SAP Project Drivers in the Business
The second benefit bucket is related to business processes and business transaction execution producing results such as:
- improved cycle times,
- greater process automation,
- inter- and intra-departmental integration,
- unified reporting data,
- improved inventory management,
- better planning capabilities,
- greater supply chain efficiencies,
- faster, more accurate financial closes and statements, and
- better operational decision making tools.
As you can guess, the list goes on. The difference here is the focus is on direct engagement and active participation with the business. This is the real challenge. A business partnership in your SAP project requires more change management, greater flexibility, and a clear understanding that some business needs will override IT drivers and IT goals. The goal of well-executed SAP project governance is to achieve measurable benefit– it is more about delivering business objectives and strategic direction.
IT Governance of the SAP Enabled Organization
When the SAP-enabled IT organization delivers on business objectives and focuses on strategic direction, their role in the enterprise changes. This SAP change moves the IT organization from being a mere service provider (a very expensive cost center) to a critical value-added business partner. When the SAP IT department is seen as a service provider, you quickly encounter budget and cost-cutting pressure. As I have previously noted:
In today’s competitive global economy, filled with international economic instability, no part of the enterprise can afford to move far from what pays the bills. If your SAP or IT organization is focused completely on technology solutions, you lose sight of what is important to the business: customers. Customer retention, acquisition, loyalty, satisfaction, and experience. Without customers, you have no growth or revenue. Without growth or revenue, you have no need for that expensive SAP or IT investment…
Without a clearer focus on customers as well as innovation in the enterprise, or “how business gets done,” the SAP and overall IT organization becomes a very expensive operational support layer. Without the genuine business focus, the organization becomes a commodity to be outsourced (see SAP IT Convergence Beyond Business to IT Alignment).
SAP Governance Includes Business to IT Convergence
Governance and convergence are closely related. For effective governance, the business direction and integration must be a key component of all SAP or IT initiatives. When you have that involvement, over time, and with some effort, convergence happens. It isn’t automatic, but the environment for it to occur begins with direct business engagement.
If the business isn’t in the SAP co-pilots seat, you may be headed for an IT crash landing.
If you’re thinking to yourself, “This doesn’t apply to me,” then you might want to think again. A recent IBM study found that many corporate lines of business are beginning to make their own independent technology purchase decisions. And they are doing this outside of the SAP or IT organization. Add to that Ray Wang’s recent Harvard Business Review Blog Post about the consumerization of [business] IT (see Integrating Business Stakeholders as Part of SAP IT Convergence), and you have a serious issue to contend with. As his research noted, “corporate tech spending is up by 17 to 20%… [but] spending by IT departments is flat.. business leaders, not their IT colleagues… are driving purchasing decisions.”
Business decision makers are starting to use their own budgets to make their own IT decisions, rather than contributing to what they see as an expensive “service provider.” That integration or convergence with the business is more important than ever, because in the end, they have more influence over your budget than you may realize.
For more information on this topic, please see these additional posts:
