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

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

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

2 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 (CoE)

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

4 Hosted by Few Firms Planned for the Full ERP Experience Vendor/SI improvements centered on implementation Acceleration Knowledge Transfer Avoiding customization Business units underwent organizational change, but not IT units Project teams were “finite” Day 1: The End of the Beginning ERP has a 25 year life-span; investments took a much shorter (and myopic) view 1-3 Years Vendor/SI View: the ERP wedding Years Client Reality: the ERP marriage Investment scope

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

6 Hosted by Overview of an SAP Implementation Project Scoping Staffing Benefits Targeting Scoping Staffing Benefits Targeting Enterprise Model Definition Process Design Data Analysis Enterprise Model Definition Process Design Data Analysis R/3 Configuration Reporting Interfacing Data Cleansing R/3 Configuration Reporting Interfacing Data Cleansing Integration Testing Data Migration Interfacing User Testing User Training Integration Testing Data Migration Interfacing User Testing User Training Client Ownership Client Ownership Help Desk Interface Support Benefits Monitor Process Improvement Help Desk Interface Support Benefits Monitor Process Improvement IT Transition B Transfer of SAP Knowledge A 0 Vision & Strategy Project Charter Funding Commitment Project Charter Funding Commitment Project Installation Sizing Production Platform

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

8 Hosted by Continuous Business Improvement Cycle The SAP Life Cycle Enterprise Vision Business Process Design Configuration Implementation Business Process Design Configuration Implementation Extended Applications Opportunity New Software Release Extended Applications Opportunity New Software Release Business Process Refined Configuration Business Process Refined Configuration Expected life-span of an SAP installation=15+ years

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

10 Hosted by Bring Business Back to the ERP Table Business staff resists becoming IT IT is tech ERP is business The subject is not IT competency alone Who runs a business process? (hint: not IT) Continuity is continuity Permanent not project IT must surrender; business must step up. Senior management must make it so. For keeps. Put the Business Foot to the Info Pedal Path A: Configure to Meet Integration Go Get on with it Business Need/Opportunity (pick one) Business Need/Opportunity (pick one) Path B: Request Change Negotiate Change Review Change Integration Go Get on with it immediatesloth-slow

11 Hosted by Business Impact: ERP becomes an engine for benefit, not a cost center. Defining an approach leading to “Thrive after go live” Give business process ownership to business This includes responsibility, not simply the right to order up new code. Place IT in a support role for business process Retains integration controls & disciplines Retains customization role Perpetuate these roles and the urge for change Continual refresh of “To Be” vision All measured, all monitored  Bottom Line

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

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

14 Hosted by Continuous Business Improvement Cycle The SAP Life Cycle Enterprise Vision Business Process Design Configuration Implementation Business Process Design Configuration Implementation Extended Applications Opportunity New Software Release Extended Applications Opportunity New Software Release Business Process Refined Configuration Business Process Refined Configuration Expected life-span of an SAP installation=15+ years

15 Hosted by AS IS TO BE GoLiveGoLive Continuous Business Improvement ROI, Extended Applications, e-Commerce Extensions toward SCM and CRM Core ERP Implementation 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. 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. CoE?CoE? No Yes Performance Beyond Day One Incremental Improvement Incremental Improvement

16 Hosted by ITArchitecture/Planning Sourcing & IT Financials IT Human Resources CIO TechnicalSupportOperations Security Quality & Measurement IT Steering Committee TechnologyDomains DatabaseDatabase HostHost MiddlewareMiddleware NetworkNetwork DesktopDesktop etc.etc. ApplicationManagement InfrastructureDevelopment/Engineering/TechnicalSupport OperationalServices ProgramManagement Change Management Change Management Integration Mgmt BusinessGroups Center of Excellence Excellence ContinuousEducation

17 Hosted by Line of Business Domain LOBs must have day-to-day control of their destiny. Business Domain 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. FinanceSalesLogistics Enterprise Program Management Production Users Continuous Education UsersUsersUsers Integration Management (Functional, Cross-Application) Custom Applications Software Configuration & Support Help Desk Production Control/Change Management Integration Management (Technical) Process Owners Applicationsagenda

18 Hosted by IT Domain IT governs integration quality & efficiency IT Domain 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 FinanceSalesLogistics Enterprise Program Management Production Users Continuous Education UsersUsersUsers Integration Management (Functional, Cross-Application) Custom Applications Software Configuration & Support Help Desk Production Control/Change Management Integration Management (Technical) Process Owners Applicationsagenda

19 Hosted by Building an SAP CoE: Planning Create a high-level vision for a post- implementation 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 are at minimum four basic variants for a CoE organization depending upon a client’s size, geographic locations, and support requirements. 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.

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

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

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

23 Hosted by Business Impact: Continuous business improvement Gaining Measurable Value with ERP 1.Identify critical Key Performance Indicators (business) 2.Target KPI improvements 3.Identify which business processes drive performance for those KPIs 4.Reconfigure SAP accordingly 5.Go to step 2.  Bottom Line Order Fulfillment Process Process Sample Business Performance KPI’s  Return on sales  Return on assets  Net sales per employee  Ratio of Assets/Liabilities Sample Business Performance KPI’s  Return on sales  Return on assets  Net sales per employee  Ratio of Assets/Liabilities ProcurementProcessProcurementProcessProductionProcessProductionProcess Sample Major Business Processes Business Process Drivers Key Performance Indicators Profit & Loss Profit & Loss SAP

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


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