Gartner Best Practice for SAP Competence Centre Planning

Gartner Best Practice for SAP Competence Centre Planning
Case Studies of Pioneering SAP Projects Gartner Best Practice for SAP Competence Centre Planning Derek Prior, PhD ASUG, May 2003 European Symposium Derek Prior, PhD 10–12 March 2003 Fortezza da Basso Florence, Italy These materials can be reproduced only with Gartner’s written approval. Such approvals must be requested via —

The Speaker Agenda Derek Prior: Research Director, Research Advisory Service Application Infrastructure & Operations - SAP Gartner, Europe Tel: Gartner SAP Services: SAP Research and Independent Advice, SAP Best Practice Groups, SAP Benchmarks

Agenda What is the Gartner model for SAP Competence Centres ?
Key Issues 1. What are the trends in CRM software licensing? 2. What are the SAP licensing models and maintenance options? 3 How can enterprises negotiate best-in-class deals with SAP and protect their investments over time? What is the Gartner model for SAP Competence Centres ? How should enterprises plan their SAP Competence Centre ? Case Study : A challenging SAP upgrade Case Study : A global SAP deployment

Life Cycle Stages Go Live !!! Acquisition Implementation Operation +
Extension Business Case Gap Analysis Integration/ Interfacing SAP Best Require- ments Definition End-User Training Data Design and Migration Selection Custom Modifications Parameter Configuration Testing Infrastructure Set-up Project and Change Management

Life Cycle Stages Go Live !!! Acquisition Implementation Operation +
Extension Business Case Gap Analysis Integration/ Interfacing Payback Review Require- ments Definition More Users End-User Training Data Design and Migration R/3 Upgrades Selection Custom Modifications Expand Scope Parameter Configuration Testing Infrastructure Set-up Project and Change Management

Life-cycle Challenges
Why have an SAP Competence Center anyway? Maintaining good system performance and availability Reacting quickly to new demands for system enhancements, e.g. new operational reports Managing SAP major upgrades and their costs Controlling the ongoing expenditure on external consultancy Controlling total Life-cycle costs for SAP projects spanning multiple business units and instances Experienced SAP people are in demand everywhere Retaining your expert resources who know how your processes work and how your SAP packages have been configured to support them Acquisition Implementation Operation + Extension Payback Review More Users R/3 Upgrades Expand Scope Requirements Definition Testing Project and Change Management Integration/ Interfacing End-User Training Custom Modifications Infrastructure Set-up Parameter Configuration Gap Analysis Data Design and Migration Go Live !!! Selection Business Case Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Gartner’s research has identified many challenges faced by SAP enterprises ! Business end users are extremely demanding. They naturally expect lightning performance and zero downtime on any of their SAP systems. Unfortunately SAP systems quickly grow in terms of database size and transaction throughput. This places a growing burden on the SAP technical operations team. As business processes evolve and as project rollouts continue greater challenges are placed on the SAP support team for rapid enhancements to the current system. Managing the ongoing costs after going live for all of these challenges is a further well documented challenge. SAP upgrades, when required, only makes things worse from both a risk and cost perspective. Those enterprises that can successfully retain their expert SAP resources are in a much better position than those that cant. Such resources are key to tackling all of these SAP life-cycle challenges ! Attrition costs are high. An integrated SAP CC is therefore a clear best practice for retaining these scarce resources to manage the life-cycle of all medium to large-scale SAP projects

A Well Kept Secret: Quote:
Business Imperative: Set up an SAP Competence Centre. Quote: “The most successful SAP enterprises around the World have at least one thing in common: Their own highly effective SAP Competence Centre” SAP CC This presentation examines the concept of the SAP Life-cycle. Quite simply there is no so thing as an SAP project, an SAP project is a myth. Why ? Because a project has both a clear start date and a highly desirable end date. For the majority of enterprises business processes are not static, they continue to evolve, so any SAP system must equally evolve to support them. So SAP applications, like any other ERP/ERP II applications usually have a 10+ year life-cycle. The fun starts when you first go live. This presentation identifies some of the most important challenges with an SAP life-cycle and uses case studies of two very successful SAP enterprises to illustrate how these challenges can be overcome. Gartner’s research consistently identifies an SAP Competence Center (CC) as the most common denominator among the most successful enterprises around the world who use SAP as their chosen ERP application. In view of the highly integrated nature of all ERP applications the CC concept can be applied to all other ERP applications, not just SAP. An ERP CC is a clear best practice for managing the life-cycle of all medium to large-scale ERP projects. Gartner has a lot of research on SAP CC’s for you ...

Best Practice Post Go Live SAP Support
Business Management Ownership Business process ownership Business change leadership Prioritisation of system changes Funding resolution SLA End Users Business Super Users SAP Competence Centre IT Help Desk Product Support Problem Track Solution Business process skills SAP product skills Infrastructure Support Development Key: processes

A SAP CC - Support Functions
Why have an SAP competence center anyway? * Support Desk: 2nd level support, application problem management * Contract Administration: central SAP license & contract management Business support: group standards for application configuration, templates and master data, etc Technical Support: Basis/WAS system operation and standards, performance tuning, etc Technical Support: of custom programs for interfaces, reports, etc Management of SLA to the business units * Required for CCC certification by SAP Explain Problem Yes Problem Resolution Process Fix? No

A SAP CC - Development Functions
Why have an SAP competence center anyway? Development co-ordination: interface to SAP development organisation, if needed Development: of new application configuration, modules, templates, etc Development: of new Basis/WAS techniques, eg archiving, workflow, portals, etc Development: of new custom programs Testing: of all custom developments, Support Packs and upgrades Project assistance: for implementation and upgrade projects Explain Request Yes No Now? Change Management Process * Required for CCC certification by SAP

A SAP CC - Knowledge Centre
Why have an SAP competence center anyway? * Knowledge sharing: of all SAP expertise across the enterprise Knowledge sharing: of all SAP best practices across the enterprise Evaluation: of all SAP and third party products, tools and services Learn once: share many Capture Organize Access Messages News Data Documents * Required for CCC certification by SAP

Shared SAP CC Organization Model
Why have an SAP competence center anyway? Business Unit 1 Business Unit 2 Business Unit 3 Business: IT Business SAP CC Organisation: Support Develop Data Centres I T:

SAP CC’s - Organisation Chart ?
75% 5% 10% 10%

The Gartner Survey of SAP CCs
Why have an SAP Competence Centre anyway? SAP Benchmark Database 36008 36069 36250 X X at the start X in 2000 20/06/05 06/11/98 00/01/00 01/11/96 01/04/97 23/03/98 01/05/98 01/01/99 1998 Date of intention to deploy SAP CC Date SAP CC Project Plan completed Date SAP CC started operational duties No real involvement from SAP SAP gave an initial presenta-tion on their SAP CCC SAP provided extensive document-ation on their SAP SAP fully explained how the SAP CCC model could help you fulfill the SAP Value SAP provided experienced consultants to help Unique Gartner Survey Questionnaire Gartner Research, Gartner Measurement 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Database Average No real involvement SAP gave initial CCC presentation SAP provided extensive CCC documentation SAP explained full Value Contract impact SAP provided experienced consultants to set up the CCC Other role Survey Report + Benchmark Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Gartner Research and Gartner Measurement conducted a survey of 24 operational SAP CCs, in the Summer of 2000, in order to answer the recurring questions of how many people does an SAP CC need, how much do SAP CCs cost and how big are the business benefits that other SAP CC managers have experienced ? This survey was an extension of the Gartner Measurement SAP Benchmark. A Gartner report was written to analyse the results of this survey, “Gartner Study 2000: SAP Competence Centres - Pain or Gain ?”. If you would like a copy of this report, please refer to the Notes section of the recommendations page of this presentation.

Why have an SAP competence center anyway? How Many FTEs per 100 Live SAP Users? 5.0 Total FTE per 100 users Internal FTEs per 100 Users External FTEs per 100 Users 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Database Average Survey: Summer 2000

Gartner’s SAP Competence Center Survey results Average Annual Costs Of FTE Resources In Your SAP CC ? $250,000 Internal Contractors Consultants Our sourced 200,000 150,000 100,000 50,000 Database Average Survey: Summer 2000

Gartner’s SAP Competence Center Survey results Hard Financial Benefits - Reduction in Your External Consulting Costs? 100% 1st Project 2nd Project 3rd Project 4th Project 5th Project 90 80 70 60 50 40 30 20 10 Database Average Survey: Summer 2000

Dow Corning’s Global SAP Upgrade
An SAP case study: single global SAP instance. Situation: Michigan Datacentre: Large single Global instance 19 countries, 9 languages Database 700GB, R/3 release 3.0F 1500 concurrent users Ave response times < 1.2 seconds Sun servers, Sun storage Mid range only: E6000/E4000!!! Problems: Too many customisations Needed new R/3, ESS, Euro and e-Business functionality 1 weekend downtime maximum to upgrade to R/3 release 4.6B !!! Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Dow Corning are an example of an enterprise that operates a single global instance of SAP to run their business, at the time of the Gartner case study research they were $2.6billion in revenue. The schematic summarises the situation that Dow Corning found themselves in during April They were on R/3 release 3.0F and had strong business reasons to upgrade their large production system to release 4.6B. The huge problem they had was to avoid any more than a weekend of downtime to this system, which had such a large database and criticality to the business. Conventional wisdom is that such a large upgrade is “too difficult and too expensive”. Dow Corning used their expert SAP CC resources to prove otherwise. Their business process super-users around the world were used to retest all new 4.6B functionality. All infrastructure was carefully resized and upgraded in advance. A CBU (which was new at the time) technique was used for minimising database conversion downtime. 7 test conversions were practised on the staging test system before the final production system conversion took place, with a technical downtime of 26.5 hours, leaving the rest of the remaining 15 hours of downtime for final testing and entry of businesss transactions..

Dow Corning’s Global SAP Upgrade
An SAP case study: single global SAP instance. Approach: Heavy use of SAP CC + Bus Process stewards around the world Some SAP external consulting Proper hardware/network resizing 20% customisations removed Reuse thorough test scripts/doc’n Careful planning, 7 test conversions $ Results: Results: $1000/end user Budget $850/end user Actual Total upgrade cost: 5% of Implementation (Gartner: 5 to 15% guide) New CBU final conversion used 41.5 hours system downtime System back up Sunday pm (US) 1500 => 1800 concurrent users … Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Dow Corning achieved all of their business objectives for this huge upgrade project and removed about 20 percent of previous customisations, which generated major cost savings. The most impressive cost metric for the project though was the total upgrade cost, expressed as a percent of the original R/3 implementation cost. Gartner usually advises clients to budget between 5 and 15 percent for such a major upgrade. Dow Corning required just 5 percent, which is highly cost effective. The 'secret ingredient' of the overall project was very close cooperation between the Dow Corning SAP CC, the business process stewards, SAP and Sun. Very careful planning also proved to be a vital success factor, plus practicing the actual database conversions. Dow Corning were able to retain the sparkling performance on their production system and the number of actual concurrent users of R/3 grew to 1800 shortly after the upgrade.

P&G’s Global SAP Deployment
An SAP case study: single global SAP design, but multiple physical instances. Approach: Three-Layer Data Model Physically Distributed, Logically Integrated Applications Architecture Global Development Model: ONE R/3 CONFIGURATION Global Support Model Bus/IT resources: SAP CC Procter & Gamble: P&G Profile: ~$40BN CPG Brand-driven Demanded: Globally-harmonised Fin/HR/ERP processes Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Procter & Gamble (P&G) is a household name the world over, it is a highly successful consumer packaged goods company with around $40 billion in ales revenue. Although P&G is clearly a huge global enterprise, it is at the same time a highly brand-driven organisation and tuned in to the needs of local markets. P&G runs its core back office ERP II processes on SAP applications. Unlike most truly large-scale enterprises, P&G has successfully standardised these business processes around just one ERP vendor to enable harmonised global business processes and an integrated supply chain. P&G is a true leader. Few large-scale enterprises even come close to this amazing achievement. How did they do that ? What are P&G’s ERP II secrets ? Many large-scale enterprises would love to be in P&G’s position with respect to ERP II. In fact, a surprising number of them are completely re-implementing their ERP systems to try to get into this fortunate position.

DATA WAREHOUSES LOCAL, REGION AND GLOBAL
P&G’s Three-Layer Data Model An SAP case study: single global SAP design, but multiple physical instances. MATERIALS FORMULAS PACKAGES PROCESS/EQUIP. DATA WAREHOUSES LOCAL, REGION AND GLOBAL CUSTOMERS PRICING / PROMOTIONS CHART OF ACCTS PRODUCT - ORDER SHIPPING BILLING - ACCOUNTING - LOGISTICS SYSTEMS - MATERIALS MGMT. SYSTEMS - HR SYSTEMS Globally-Standard Transaction Systems Web-Enabled Master Data Decision Support Key Issue: What are the secrets behind some of the most successful SAP enterprises ? P&G identified very early on the fundamental need for the three layer data model shown in this diagram. Building from the bottom-up the components of this model are: 1. Globally-standard Master Data. To operate globally it is critical to establish globally-consistent master data to enable transaction systems to talk sensibly to each other and enable apples-to-apples comparisons around the world. P&G maintain a repository of material codes, suppliers, products, suppliers plus structural enterprise data like the global chart of accounts and plant codes. 2. Globally-standard Transaction Systems. This layer is structured into a physically-distributed but logically-integrated set of ERP back office transaction systems which is underpinned by the standardised master data layer. 3. Decision Support. The apex of the pyramid contains local, regional and global data warehouses fed with globally consistent transaction and master data. Whilst P&G use an in house-developed Oracle-based data warehouse, SAP BW is the strategic data warehouse for supply chain operational data consolidation and reporting. All three layers of this data model are logically consistent. Source: Procter & Gamble

GDC Master Data Management
An SAP case study: single global SAP design, but multiple physical instances. BW + non-SAP Decision Support Systems HR Finance R/3: Order Mgt. Order Mgt. R/3: Custom: Transaction Systems 20% 80% Supply Chain Logistics Supply Chain Logistics Supply Chain Logistics R/3: Americas EMEA Asia-Pac Key Issue: What are the secrets behind some of the most successful SAP enterprises ? This diagram illustrates how the previous three-layer data model maps onto SAP R/3 instances. At the lowest level is the vital Global Data Client (GDC) system for managing the standard master data. This system all its data is maintained by a dedicated business group, who use front-end tools to create and change codes as requested by the business users in each country. As this data changes, it is fed automatically into the transaction systems on an as-needed, where-used, basis. P&G implemented single global instances each for finance and HR, but multiple identical logistics instances for its critical supply chain backbone. The logistics configuration is designed by the central development team to include all required processes, thereby capturing local requirements and practices in a common template. So, flexibility is achieved through a single, flexible template rather than local "add ons.” Specialised local instances also exist for smaller business units for language and legal requirements. In total there are 38 production instances running on Unix/Oracle, but they all run the same R/3 application configuration, which is developed and maintained by the integrated Global Development Environment (iGDE). This is a virtual organisation to secure local representation and buy-in. Notably, a rigorous change control process governs iGDE, which is FDA-compliant and runs on a quarterly cycle. iGDE is half of the P&G SAP Competence Centre (CC) organisation. The other half is responsible for global system support on a 24x7, follow-the-sun basis. ITIL standard processes for incident management, problem management and change management are utilised. Master Data System GDC Master Data Management R/3:

P&G’s Global SAP Secrets
An SAP case study: single global SAP design, but multiple physical instances. Approach: Three-Layer Data Model Physically Distributed, Logically Integrated Applications Architecture Global Development Model: ONE R/3 CONFIGURATION Global Support Model Bus/IT resources: SAP CC $ Results: Results: $$$ Confidential 6 month Acquisition, of $1.6BN Clairol Single ERP backbone: world-wide Goal: Full financials closure by the 5th working day 45000 named; 5000 conc users over 38 Production Systems Rapid move to APO, EBP already Key Issue: What are the secrets behind some of the most successful SAP enterprises ? P&G's global SAP support exploits the strong company quality ethic to optimise process accountability and the open reporting of internal P&G customer satisfaction with support services. Most enterprises have an expensive heavy dependence on external consultants for the implementation and support of SAP software — P&G does not. As a nominated "global account" of SAP, P&G has benefited from a particularly close relationship with SAP, which means access to real product experts. However, P&G has always pursued a strategy of building self-sufficiency and depth in SAP skills within its own staff. This means that both the global development and implementation/support organisations, which together make up the P&G SAP CC, have a very high level of business and technical SAP expertise. This provides great agility and large savings in consulting expenditure. P&G currently has 550 staff members in supply chain and 450 employees in financial/HR applications within its SAP CC. The user data in this slide illustrate the successful large-scale nature of the P&G deployment of its ERP backbone. With this highly successful backbone in place for some time, P&G have been able to move rapidly into supply chain optimisation and e-procurement projects. The business benefits remain confidential. Rapid mergers, acquisitions and divestitures are facilitated by this standardised ERP backbone approach.

P&G’s Global SAP Secrets
An SAP case study: single global SAP design, but multiple physical instances. CSFs/Lessons Learned: Obvious: Stick to the strategy Obvious: Bus / IT tight co-operation Top Mgt commitment to governance for global standards Regional business process owners for input to standard processes and SAP configuration Retention of in-house talent: SAP CC Learned: 1) High integration means big work redistribution 2) More work managing Master data drives benefits everywhere 3) Careful balance between central governance and local choice Key Issue: What are the secrets behind some of the most successful SAP enterprises ? Apart from adhering to its five deployment strategies, the "secret ingredient" behind P&G's SAP program has been the very close cooperation between the business units, the IS organisation and SAP. There have been 3 other critical success factors :1) Top management sponsorship from the inception of the SAP program has ensured that the vision and architecture are in concert with the corporate business strategies. This sponsorship has provided the governance to support the transition to the global standards, allowing the implementation teams to concentrate on fast deployment. 2) P&G established a network of regional business process owners that provide innovative thinking and input to the development of the standard work processes and solution sets. 3) Ensuring retention of its highly talented staff has been key to allowing P&G to continue with its strategy of using in-house expertise to deliver its SAP program. One of the key P&G learnings is that, while highly integrated applications like SAP give a net increase in productivity, work is redistributed in the organisation. Master data input required more effort than it did for legacy systems, but the investment in this data accuracy created benefits elsewhere. P&G has achieved what many other large-scale enterprises have failed to do: a standardised global ERP deployment with a centralised infrastructure that is flexible enough to support its global business plans. P&G found that real ERP success needed a careful balance between central governance and local choice.

Recommendations Use the 2.5 FTE/100 live end users guideline for headcount planning Focus on individual development plans, encouraging the skills of sharing SAP knowledge and best practices Choose an SAP CC manager with strong people management and internal selling skills Work closely with the business to retain SAP CC buy-in over the long term and to establish a “fair” funding model Deploy clear processes for problem management and change management across the SAP CC, help desk and business super users But the most important point is …….. Further Research From Gartner on SAP Competence Centers Research Notes Maximizing ROI from an SAP Competence Centre, TG SAP Competence Centers: Questions and Answers, QA World-Class SAP Upgrades: Proving It Can Be Done, CS Conference Presentations 1. A high-level analysis of why an SAP Competence Center is such a highly effective best practice for life cycle support of SAP: SAP’s 4th Info Forum on Customer Competence Centers, November 1999, St. Leon Rot, Walldorf. “ SAP Competence Centers – Maximizing Business ROI.” 2. An analysis of the importance of problem resolution and change management processes for SAP Competence Centers, with reference to a Case Study of Apple Computer’s SAP investment: SAP’s Global Systems Symposium, April 2000, Sardinia. “People and Process — the Keys to Success with a Global CCC”

I cant afford to lose my best SAP people
Summary I cant afford to lose my best SAP people

Gartner Best Practice for SAP Competence Centre Planning
Case Studies of Pioneering SAP Projects Gartner Best Practice for SAP Competence Centre Planning Derek Prior, PhD ASUG, May 2003 European Symposium Derek Prior, PhD 10–12 March 2003 Fortezza da Basso Florence, Italy These materials can be reproduced only with Gartner’s written approval. Such approvals must be requested via —

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