Successful SAP ERP implementations hinge on getting the business side involved not only during the project but...
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long after go-live, according to SAP customers.
Making sure business ownership is within business units, not the technology teams, and including the business side in training and ERP-related business process improvements will help ensure success, according to David Edwards, divisional vice president of business transformation at Coldwater Creek.
The women's clothing and accessories retailer is currently completing an SAP ERP implementation that includes financials, human resources, merchandise management, sales order management and sales audit functionality. Ignoring the business side during the implementation would have been a fatal flaw, Edwards said.
"[It's] the biggest mistake I've seen in 24 years. This is not a tech project, it's not an IT thing. It is a business, moving-needle thing," said Edwards, who was one of four SAP retail customers who spoke about their SAP projects at the National Retail Federation expo in New York last week. "The lesson I would pass on to people is treat it that way."
Stick to governance model
Other retailers agree. Sticking to a strict governance model will help ensure that the project aligns with, and meets, its initial ERP business drivers, according to John Baldino, senior director of business transformation at Wawa Inc. The primary business drivers for the Pennsylvania-based grocery store chain were increasing its revenue, improving category management and getting a centralized view of what's in hundreds of its stores.
To make sure Wawa met its goal during its ERP implementation, there was a role on the project organization chart called "benefit realization." This was a finance person who worked with the project team to validate that decisions were consistent with the business case benefits that Wawa expected, Baldino said.
During the project, Baldino and the ERP implementation team were in front of the board of directors every six months to talk about project status and how it was tracking to its timeline. They also met monthly with executives. And even though they finished the implementation project at the end of last year, they're still in front of the board twice a year to discuss where to make ERP-related business process changes, he said.
One of the benefits Wawa realized right off the bat resulted from developing a direct product profitability model for the food service area. Now, Baldino said, Wawa can figure out whether the products it's putting in its delis are making any money.
Business team involvement critical
But when the project was complete, Baldino thought they made a mistake by not making the business team part of post go-live monitoring. Now, they're working with the business side every day to figure out ways to leverage the system to get more value out of it, not only with individual functions but across all functions. In the last 12 months, they've been focusing on building up a lot of data inside the SAP system in order to do store clustering and efficient item assortment. Business involvement has been a critical success factor.
"[It's] business ownership while it's a program and you're implementing it, but post the go-live ... the business can't walk away," he said. "Those 100 people that worked on this SAP project had to go back into their business areas and now become the change agents for how to use and leverage SAP to get more out of it. We kind of patted them on the back … and we left them alone, which I think was a mistake for us. Now we're … getting back more into staying in touch."
Other retailers reiterate that collaboration is key, which means drawing on IT's implementation experience to scope and deliver a project that meets business requirements in a timely, cost-effective way.
For Hastens and Reliance Retail, a successful SAP implementation meant getting the systems up and running quickly, and that involved avoiding the temptation to customize the SAP software too much.
"We just want to run best practices," said Dominic Luzi, CIO of Hastens, a Swedish luxury bed company. "So our implementation was all best-practices based, very quick. We changed the business rather than the software."
No hard line between business, IT
Reliance Retail, a retailer that serves India, relied on management to keep it on track, CIO Timothy Kasbe said. "It's been the leadership saying, 'Not too many customizations,' and sticking to it," he said. "For the sake of speed, there wasn't a hard line between business and IT. Some of the business things, my guys just did -- commercial-oriented work, we just went and did it."
With its SAP ERP implementation, Reliance Retail has been able to derive a very different kind of ROI as it enables more farmers to sell goods. Reliance's goal is to build up the distribution and the supply chain of India -- enabling communities to take part in rapidly evolving markets.
"What we have seen is that suicide rates have gone down in the farming communities when these rollouts have happened, and they have been able to sell to us and also buy some of our products," Kasbe said. "It's really a different scale and different way we look at this whole business issue."
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