Hosted by Thrive after go Live Continuous Business

Hosted by Thrive after go Live: Continuous Business Evolution with SAP R/3 Michael Doane Vice President and Research Director META Group, Inc.

Hosted by 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 (Co. E)

Hosted by The Fog of SAP War l A Business Case justifies the endeavor (was it measurable? ) l Software and SI are selected l Project begins – client grows ‘cost conscious’ l Benefits are forgotten/training is reduced l “We didn’t get what we expected”

Hosted by 1: The End of the Beginning Few Firms Planned for the Full ERPDay Experience Vendor/SI View: the ERP wedding l Vendor/SI improvements centered on implementation • Acceleration • Knowledge Transfer Client Reality: the ERP marriage • Avoiding customization l Business units underwent organizational change, but not IT units l 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

Hosted by During implementation, level of After Day 1 (Days 2 – 7000)attention paid to post implementation l SI methodologies end at Day 1 - Go Live • How do organizations plan for continual business improvement? l Implementation teams are disbanded • Business cedes its role in To Be Vision Renewals (by Project Team type after implementation) Small/Mid Large evolution l To Be Vision is static rather than evolutionary ERP is treated like traditional IT once Go Live occurs

Hosted by 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

Hosted by Pre-SAP Life Cycle The perception of a need Degradation Project Planning Acquisition/ Development Maintenance/ Enhancement Utilization Information Systems Life Cycle Testing & Training Implementation

Hosted by 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

Hosted by Business/IT Alignment Is Still Lacking l A wasted opportunity • Implementation: combined business & Business side fortune cookie IT • Post-implementation: business reverted l IT alone cannot drive business improvement • Support, not a driver emented. SAP is impl. Go home. er ov Game’s l Business is disillusioned • Assumed driver Business Contribution: Veni, Vidi, Vici, gone

Hosted by Bring Business Back to the ERP Table Put the Business Foot to the Info Pedal l Business staff resists becoming IT • IT is tech • ERP is business l The subject is not IT competency alone • Who runs a business process? (hint: not IT) l 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.

Hosted by Defining an approach leading to “Thrive after go live” t Bottom Line l Give business process ownership to business • This includes responsibility, not simply the right to order up new code. l Place IT in a support role for business process • Retains integration controls & disciplines • Retains customization role l 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.

Hosted by Why an ERP Center of Excellence? l An optimization of business processes that drive business benefit continually l An optimization of end user competency and employee fulfillment of business processes l Continued coherence and integration of functionality and data through all process chains. AS IS TO BE

Hosted by Center of Excellence Functions To Be Prepare the company for transformational change (all the time). Continuous business improvement As Is Optimization of current system usage Maintenance and support of ERP and related functions (ERP/CRM/SCM) Parameters: Business Applications Span (ERP is the backbone)

Hosted by 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

Hosted by Continuous Business Improvement Beyond Day One ROI, Extended Applications, e-Commerce Extensions toward SCM and CRM Yes Core ERP Implementation Go Live TO BE Co. E? 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.

Hosted by 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

Hosted by 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 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.

Hosted by 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 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

Hosted by Building an SAP Co. E: Planning l 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 at minimum four basic variants for a Co. E organization depending upon a client’s size, geographic locations, and support requirements. l 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.

Hosted by Building an SAP Co. E Development/Realization l Create a Straw Roster for the Application Management team: l Establish role definitions for the post-Go Live for Enterprise Program Management, Application Management, and Integration Management. l Determine which Co. E functions will be outsourced l Launch outsourcing negotiations with chosen vendors l Create a staff transition plan

Hosted by Realization to Final Preparation l Complete transition education for Co. E staff. l Integration and orientation of outsourced Co. E functions should commence as the build phase reaches the final preparation phase. l Initial end user training should include an introduction to Co. E user support functions and the Help Desk should be in place.

Hosted by Go Live + l The Center of Excellence is operational, with all elements in place for continuous business evolution. l After Go Live, the balance of legacy IT staff will be a) transitioned to the new SAP-centric organization, b) reassigned with the organization, or c) terminated.

Hosted by Gaining Measurable Value with ERP t Bottom Line Profit & Loss Key Performance Indicators 1. Business Performance KPI’s Identify critical Key Performance Sample 8 Return on sales 8 Return on assets Indicators (business) 2. Target KPI improvements 3. Identify which business 8 Net sales per employee 8 Ratio of Assets/Liabilities Business Process Drivers Sample Major Business Processes processes drive performance for those KPIs Order Fulfillment Procurement Production 4. Reconfigure SAP accordingly 5. Go to step 2. Process SAP Business Impact: Continuous business improvement

Hosted by Bottom Line l ROI should be measured from the beginning of the project and carried through time l Cost is only half of the equation l ROI has no ceiling (nor does a To Be Vision) l Continuous business evolution is the goal, not just implementation