SAP value engineering services aim to boost SAP ROI

SAP is pushing its value engineering services, at one time offered to only the largest customers, to help with IT project prioritization and SAP ROI.

“Free” and “SAP” are two words not often mentioned in the same breath.

But in an attempt to help customers deliver more successful SAP projects and deliver on promised ROI around software they've already implemented, SAP is expanding and bolstering its value engineering services, something that used to be offered to only the largest and most strategic customers.

 

These services include both free on-site consulting and sessions known as Value Academies – two-day-long seminars in which senior SAP employees give half a dozen customers advice on IT project strategy.

“Instead of just selling and leaving, we need to hang around and provide methodologies, to make sure the business case that sold this project in the first place is realized down the road,” said Gene Likins, vice president, Global Value Management. “Every single piece that I put in had better do what you say it’s going to do and better have the impact that you say it’s going to have.”

For the consulting services, some organizations bring in SAP early on when a list of projects is being developed. Some have already developed a list and ask SAP to take a look at it. The SAP consultants determine whether projects on there don’t belong or simply aren’t on the right track. It’s an additional service to any systems integrators that companies hire to implement the software.

At the heart of this process is a collaborative value assessment. Participants identify one to three functional aspects that could use improvement. They take a survey that may take one to two finance people four to eight hours to fill out. The consultants then pin that survey against SAP’s benchmarking database -- which contains data from more than 8,500 customers gathered over the past seven years -- and see where the organization stands on certain metrics relative to peers in its industry.

By now, SAP has found two to three areas in various industries where cuts or improvements most often give customers the biggest bang for their buck, and the company typically starts with those -- areas like days sales outstanding.

Typically, two to three SAP consultants come on site for between six and eight weeks. They set baselines around operations KPIs. They aim to help IT translate improvements into quantifiable benefits – reductions in the number of manual reports, time to period to end close or days sales outstanding. They then go back a year later to see what happened.

“I don’t want this to be like some of the previous projects, ended on time [and] on budget and let’s go on to the next one,” Likins said. “I want to prove to the business and CEO that IT is a strategic enabler.”

For instance, in preparing to implement SAP manufacturing modules, Brookshire’s, already an SAP for Retail customer, enlisted the help of SAP’s value engineering team. The grocer, which has stores in Texas, Louisiana and Arkansas, gathered metrics from its six manufacturing plants and compared those against similar SAP customers to detail benefits that could and, more importantly, should be derived from the implementation. It was able to get such detail that the team could show the board of directors, line item by line item, in the general ledger how much they expected certain costs to decrease, according to John D’Anna, Brookshire’s vice president of IT planning and strategy.

“It really helps you build out what your budget’s going to look like,” he said. “It helps you build ROI.”

Currently in the middle of the implementation, D’Anna said the work the value engineering team did at the start of the project helped him stay on time and on budget. It helped better determine the types of resources Brookshire's would need for this difficult project and show in more granular detail the benefits it's looking to achieve, helping to better manage the scope.

“The time and effort is well spent, and the people in those services are very knowledgeable and a pleasure to work with,” he said.

Going forward, Brookshire’s is putting a project initiation methodology in place on how to build a business case for all future projects. It will use value engineering to help.

That’s the level of project prioritization Likins hopes all customer can get to – something SAP is aiming at with its Value Academies. These are invitation-only events that aren’t all that difficult to get invitations to (just ask a sales rep, Likins said). The academies aim to move IT departments out of “reactive” mode – where projects get prioritized by who yells the loudest – to a framework of consistency for prioritization that includes factors other than just cost.

One caveat D’Anna offered is that SAP doesn’t reveal who the customers are in the benchmarking database. He advised others using the service to ensure that they’re in the same industry – Brookshire’s was one of the first retailers to use the manufacturing modules and was measured against other manufacturers, not retailers.

But is this just an excuse for SAP to sell software? Sometimes the process results in customers not choosing SAP software at all, Likins acknowledged. He said this had recently happened with a midsized oil company -- at the end of the day, it didn’t go with SAP.

“I think our job is to say: ‘Is there a need for action and helping them make the right decision?’” Likins said. “We uncover a lot of insight and innovation and smart ideas that were already there."

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