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Shift from SAP projects to ERP benefits realization needs IT involvement

Many boards of directors are asking where the SAP business value is, and IT now needs to be involved in proving it.

Having completed several major SAP projects in recent years, including an upgrade to ECC 6.0, Hastens is like many...

other SAP customers these days -- shifting its attention to realizing the benefits of ERP.

The luxury bed-maker's board of directors has made that a priority in 2009, and the IT department is delivering. Hastens leverages SAP Solution Manager, the vendor's lifecycle management tool, to identify issues in the system and peg processes for improvements, according to acting CIO Dominic Luzi.

"We've got a number of projects that have finished up, and now we're going back and looking at the issues and fine-tuning some of the business," Luzi said. "We're getting some very good gains immediately by looking at some of the processes we're doing on the floor."

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A majority of IT departments in large companies running SAP surveyed by AMR Research are being pushed by boards to prove SAP business value, according to Derek Prior, research director with the Boston-based firm. IT therefore needs to shift from being project-focused -- from delivering successful projects on-time and on-budget -- to being business value-focused.

"We found that customers need to -- as hard as it is -- switch gears from doing successful projects to proving the value that comes from those projects," Prior said. "Not only provide on-time, on-budget projects with happy end users but see that business benefits have transpired from that project."

Find SAP business value within the system

To prove business benefits, the SAP program manager needs to interact with the board and must have the right people on internal support teams, Prior said -- people who can talk the language of business. They should get closer to the employees and find out what they need, find where they see traditional limitations, and try to use newer tools and technologies.

Many customers use tools like SAP Solution Manager, which is already included in SAP customers' support agreement, Prior said. Companies looking for assistance in better monitoring complex SAP landscapes can deploy modules in Solution Manager that help with performance management optimization, as well as support center enablement.

Many companies are also hiring consultants. Consultancies like Panorama Consulting, based in Denver, have seen an uptick in demand for ERP benefits realization projects, according to company president Eric Kimberling. IT teams can take tips from Panorama's approach.

Kimberling's team first identifies where the biggest pain points are in business processes -- where things are working and where things are breaking down. They also look at the technical side and whether there are certain capabilities in the system that the business isn't taking advantage of.

Often, the problem isn't with the software, it's with a group of people who haven't been trained appropriately on it, Kimberling said.

"The most common problems are unrelated to software," he said. "Lack of process clarity and training are the two biggest issues."

Look to third-party tools

When it comes to ensuring that end users aren't impeding the system's success, some IT departments have found that they've been able to realize SAP business value by deploying third-party tools.

The SAP ERP implementation in the City of Tacoma, Wash., completed in 2003, "left a bad taste in taxpayers' mouths," said Bradd Busick, manager of the change management team for the city. The ERP implementation, which involved the replacement of more than 100 legacy systems, went $20 million over budget -- it was supposed to come in at $50 million and ended up costing $70 million. Tacoma runs a custom version dubbed R/3 4.71, developed specifically for the city and its approximately 2,000 end users.

Busick, who started working for the city a few years after the SAP project was completed, chose Knoa software as one of the ways to prove SAP business value to the City Council. It monitors how end users are utilizing the SAP system in the form of a dashboard, and generates reports on items such as the most frequently generated errors, which are then broken down by each department. The implementation took six weeks, and the project cost $40,000.

The tool not only helps to solve end users' IT problems sooner, it helps them take care of situations before they arise and find situations that are impeding system performance that they may never have known about, Busick said. In that manner, it builds better trust between the IT and business sides, contributing to greater employee satisfaction with the system and better productivity.

"It's like having a million different Basis administrators in the form of a dashboard," he said.

For example, an employee on Tacoma's finance team had regularly been running a report in the system that took days to complete. Working with the Knoa tool, the Basis team was able to identify that and cut the time it took to run the report from a day and a half to 30 minutes.

With the reports, Busick's IT team can also identify the most frequent errors and hold special training sessions for users on how to avoid them.

Play with SOA and look to the future

SOA-type projects also have the ability to deliver huge business value, but most companies aren't pursuing them. IT simply has too much work on its plate, Prior said.

But companies that have upgraded to SAP ERP/ECC 6.0 are missing out by not using some of the latest NetWeaver tools -- including Visual Composer, a modeling tool that enables code-free composition of user interface elements, and Composition Environment, a toolset and runtime for developing, running and managing composite applications.

Companies are finding clever ways to pilot SOA-projects under the radar, Prior said, and they are really seeing how they can build entirely new capabilities, at lower cost, to fit on top of what they already have.

"Build a proof of concept to blow their socks off," he said. "Show how SAP can be used, and show the business manager something where he'll say, 'That's not SAP, is it?' "

Because these SOA projects have so much potential payoff, companies also need to be careful during this time of layoffs that they retain their best SOA skills. Keep the clever Basis technical staff and the architects, Prior advised, in order to understand the broader complexities of NetWeaver and understand how the applications are configured.

But above all, he said, SAP customers would be wise to implement a long-term SAP lifecycle plan, detailing major project changes, upgrades and new rollouts.

"If it's joined up in a holistic point of view," Prior said, "the board can understand the picture."

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