ORLANDO -- Waste Management is suing SAP for $100 million because, the company claims, SAP sold it software that did not work. This raises the question of what kind of diligence Waste Management performed in order to end up in such a situation. Bank of America is, in this sense, the anti-Waste Management. Bank of America (BOA) selected SAP this year, and presented its decision-making process at the Sapphire conference being held here this week. It went through a rigorous and rational process of due diligence before selecting SAP.
Shawne Bass, senior vice president of finance technology strategy with the Charlotte, N.C.-based bank, shared her company's vendor selection diligence. Bass began by explaining that BOA's global banking, Accounts Payable (AP), and fixed asset system were fairly old -- in the case of the global banking system in use in the U.K. and Canada, 35 years old. Thus, BOA thought the time was ripe to refresh its financial applications. BOA already runs Oracle applications through its acquisition of MBNA and, after a marketplace review, decided to invite SAP to present its case as well.
SAP and Oracle were the only vendors BOA considered because the bank's list of vendor requirements locked out smaller players, Bass said. For example, BOA wanted the vendors to offer 10 banking reference customers of similar size and complexity to BOA, a criterion that instantly ruled out every other enterprise applications provider. The references were important because, as Bass said, it was vital to verify that both SAP and Oracle applications were already doing what BOA wanted them to do in production settings.
For those overwhelmed by evaluating all of the functionality on offer from SAP, Bass recommended the commonsensical approach of defining the scope of what you want from SAP. BOA's scope -- what it specifically wanted to buy SAP for -- included general ledger, AP, accounting hub, reporting, BI, forecasting and actuals integration, integration with the supply chain, integration with the Ariba purchasing system, and document imaging. The scope did not include OLAP and ETL tools.
BOA compared SAP and Oracle on multiple and weighted criteria, including performance, ease of use, product strategy, integration, global reporting capabilities, local country support, total cost of ownership, existing investments (evaluating the total range of the vendor's business), and organizational impact. Cost of ownership was broken down into hardware/infrastructure, software licensing, software maintenance, application implementation, application maintenance, training, and organizational change management. Bass presented a helpful chart summarizing how BOA investigated SAP's performance in each major criterion:
Performance: Tech deep dive, white papers.
Ease of use: Tech deep dive, round one demos (involving strategy experts who could make a general business case), reference calls.
Product strategy: Tech deep dive, round one demos, reference calls, white papers.
Integration: Round one demos, round two demos (involving infrastructure and architecture experts), reference calls, white papers.
Global reporting: Round one demos, round two demos, reference calls.
Local country support: Round one demos, round two demos, reference calls.