migrate and evolve with sap erp

Migrate and Evolve with SAP ERP

Achieve a successful SAP ERP version upgrade project

Draw full advantage from the investment made

White Paper

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ISBN : 2-9523607-0-7 50 e




White Paper

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/ WHITE PAPER

All company or product names referenced in this paper are used for

identification purposes only and are trademarks of their respective

owners.

© ASK Conseil, 2008

ASK Conseil

8, rue Armand Moisant

75015 Paris - France

mail: [email protected]

www.askconseil.com

© USF, 2008

USF

64, rue du Ranelagh

75016 Paris - France

mail: [email protected]

www.usf.fr

The Code of intellectual property authorizes, as per article L. 122-5,

on one hand, only “copies or reproductions strictly reserved for the

private usage of the copyist and not intended for collective use”

and, on the other hand, only analyses and short quotes for the

purpose of example and illustration, “any representation or repro-

duction, whether in whole or in part, made without the consent of

the author or his legal successors or beneficiaries is illicit” (article L.

122-7).

Such representation or reproduction, by any process whatsoever,

would thus constitute a counterfeit, sanctioned by articles L.335-2

and following of the Code of intellectual property.

WHITE PAPER / page 3

We particularly wish to thank the enterprises who have readily accepted to reply as well as

the colleagues who spent time participating in the interviews to provide us with the most

meaningful experience feedback elements. For confidentiality reasons and, in compliance

with the study protocol, their names are not disclosed here.

We also thank the board of directors of USF, for having outlined the Terms of Reference

of this study, facilitated its conduct and carefully monitored its progress all the way:

Didier Gamain (GDF SUEZ), Hermine Quilici (COFIROUTE), as well as USF’s administrative

services.

Our thanks go also to the two ASK Conseil managers who have operationally conducted

the two studies related to this White Paper: Alexandre Colonna d’Istria for the first one,

Didier Cohen for the second.

Paris, 15 October 2008

Eric Remy

Chairman of The USF

Technology Commission

Gilbert Grenié

Associate Director

ASK Conseil

acknowledgements

/ WHITE PAPER

WHITE PAPER / Migrate and Evolve with SAP ERP

n n n First study: the SAP ERP version upgrade project . . . . . . . . . . . . . . . . . . . .page 7

The approach adopted Applied method, Sample analysis, Results analysis, the version upgrade project contribution to SAP

governance.

The results obtained Operational control over the version upgrade project, impact on users, cost control and alignment with the IT

Division’s policy, added value to perspectives, key indicators of a version upgrade.

Risk factors and best practices

Recommendations for the organization of a version upgrade project The phases of a SAP ERP implementation project, splitting the project in work groups, key points for each stage

of the project.

Conclusion Observations, recommendations.

n n n Second study: SAP ERP’s strategic perspectives . . . . . . . . . . . . . . . . . . . . .page 65

The approach adopted Applied method, sample analysis, results analysis.

Evolution of expectations in relation to ERPsOperations oriented expectations (flexibility, differentiation…), management oriented expectations (cost control,

data security…).

Perception (by the enterprises) of the SAP ERP offer structureThe NetWeaver stack, the SOA concept, the functional contributions, the complementary bricks to ECC, the

solution maintenance tools.

Analysis of SAP ERP’s contributionsRather satisfied and rather unsatisfied expectations.

Strategies considered during the implementation

Risks and opportunities brought by SAP ERPAt business level, at IS level, analysis of potential gain in function of the enterprise’s context.

SegmentationApplication case study.

Recommendations

Conclusion

struc ture of the paper

WHITE PAPER / page 5

This study has been conducted by USF (Club des Utilisateurs SAP Francophone – SAP French

Speaking Users Club) and ASK Conseil in two phases. The first phase is a synthesis from feedback

emanating from French and German companies who have completed the version upgrade from

SAP R/3 to SAP ERP 6.0 The second phase is a synthesis of a set of views from enterprises who

have completed their upgrade or are in the process of completing it and who wish, once the first

phase of the upgrade has been completed, to draw full advantage from the investment.

Previous studies, conducted in 2004 and 2006 and which were followed by the publishing of

two White Papers by ASK Conseil, had highlighted the maturity level concept of an enterprise in

relation to SAP as well as a set of good governance rules which allow a better management, over

time, of its SAP investment.

These best practices came from feedback from companies using the SAP R/3 4.7 or prior versions.

Subsequently, came the evolution to my SAP ERP 5.0 and the current version SAP ERP 6.0. This

version is the subject of this White Paper, which incorporates ECC (Enterprise Central Component),

the new version of our historic core R/3 as well as the NetWeaver platform.

The Business Suite includes, SAP ERP, SAP CRM, SAP SCM, SAP SRM and SAP PLM components

each of which is a separate product on its own, based on the NetWeaver platform.

This new SAP version came out with innovative features which are likely to provide added value

to those companies who know how to take advantage from them. It was tempting to find out

whether, in practice, the companies who had “taken the leap” had been able or not to take

advantage of the features and, if so, to what ends.

Where do we stand to-day, more than two years now after the SAP ERP6.0 launch, and what are

the interim observations that can be drawn?

• Taking into account the technological leap, is this version upgrade project more complex and difficult to successfully achieve than the previous version upgrades or not?

• What are the main problems and risks that should be avoided?

• What is the impact on the users?

• Does this version upgrade allow the enterprise making the investment to, in effect, profitably utilize, due to the new NetWeaver platform, SAP ERP’s opportunities and promises in the main fields claimed by the editor? (“people” integration, process integration, technology integration, information integration, improvement of the SAP CC IT processes, etc.)?

• How do companies plan the timeframe for the new technical base deployment and the exploitation of the new version’s opportunities, and what are its key success factors? Are these projects part of a strategic plan of deployment of new formal and shared SAP services within organisations?

introduction

/ WHITE PAPER

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Finally, does such a version upgrade represent a strong indication from the enterprises who have

gone through the upgrading process that they have in place a governance policy of their SAP ERP

Information System?

This White Paper attempts to shed some initial light on these questions.

Based on the interviews conducted, it seems to us that this White Paper may interest several levels

within the organisation:

Our immediate wish is that this White Paperwill immediately assist companies to achieve their

upgrade and draw full advantage from their investment.

It is important to highlight that this study has been conducted independently from the Editor and

that these results are being presented in compliance with the ethics rules and neutrality which

are at the basis of the USF charter.

Readers are invited to send us all their questions to the following email address: [email protected]

• What short term benefits do enterprises derive from this upgrade and what are the planned medium term benefits?

• Are the selected SAP architectures aligned on expected future benefits from the new SAP system and are those same benefits, in turn, themselves aligned with the enterprise’s strategy?

• Does the NetWeaver platform and its underlying technologies and new languages allow a deployment of the various announced SAP services with minimal specific developments? (for example on SAP Enterprise Portal…).

• General Management of course, provided that it dedicates some of its time to this important subject, often misrepresented as IT technique

• The IT Division, which is primarily involved since the SAP Competence Centre will have to maintain, exploit and promote this new version as well as develop the overall IS strategy inclusive of non – SAP applications.

• The business managements, who have participated in the selection of SAP as the core solution for the enterprise and need to have a visibility into the features & capabilities and potential limits of this new version, including performance.

THE SAP ERP VERSION UPGRADE PROJECT / page 7


THE SAP ERP VERSION UPGRADE PROJECT

White Paper

studyfirst

/ THE SAP ERP VERSION UPGRADE PROJECT

WHITE PAPER first study THE SAP ERP VERSION UPGRADE PROJECT

n n n Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 9

n n n The approach adopted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 10

Applied method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 10

Sample analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 10

Results analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 17

SAP Governance Vision: what contribution from the SAP ERP version upgrade? . . . . . . . . .page 17

n n n The results obtained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 18

The study results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 18

Achievement of the project goals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 21

Operational control of the version upgrade project. . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 26

Impact on Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 30

Cost control and alignment with the IT Division’s policy . . . . . . . . . . . . . . . . . . . . . . . . .page 35

Added value to strategic perspectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 39

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 42

The key indicators of a version upgrade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 42

n n n Risk factors and best practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 44

The main risks of a project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 44

Recommendations and best practices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 47

Examination of two contrasting scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 49

n n n Recommendations for the organisation of a version upgrade project. . . . . .page 56

The phases of a SAP ERP project implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 56

Splitting the project in work groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 57

Key points for each project stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 58

n n n Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 61

Observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 61

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 62

contents of the f irst study


This first study aims at assisting companies that have not yet performed their technical upgrade

to SAP 6.0, derive the best possible value while limiting the risks. It is a follow up to the inquiry

on version upgrade which was conducted in summer 2007 and is in line with USF’s objective to

provide its members with impartial and exploitable information.

Over and above establishing how to ensure a successful technical upgrade project, this study aimes

to determine the value obtained following the technical upgrade: was the lack of enthusiasm

from enterprises to upgrade to SAP ERP 6.0 evidenced during the 2007 USF convention inquiry,

justified?

The first chapter covers the study and its objectives. The second chapter describes the method

utilized. The third provides the main quantitative results of our study: statistics and indicators.

In the fourth chapter, we discuss the main risk factors identified as well as the recommended

best practices. The fifth chapter proposes a technical upgrade project model, based on customer

feedback.

The conclusion summarizes the main observations found and suggests a prospective orientation

to the SAP ERP version upgrade for the enterprises who have not yet migrated or those which

would like to derive greater benefit from their version upgrade.

introduction of the f irst study


The methodology consisted of conducting interviews with 19 French and German companies.

The sample size chosen may not be statistically valid, but is still sufficient for the purpose of

providing insight and guidance.

It was not possible to select the companies by industry sector, size or other criteria. As the pool of

companies who had already upgraded and inclined to participate in this study would be limited,

we accordingly looked for most companies who had already upgraded and had a relationship

with USF. This is particularly valid for France. Obtaining replies from companies in Germany was a

more challenging effort, primarily due to the absence of a sponsoring entity, such as USF.

A questionnaire was distributed to the participants and included questions to gauge the extent

of the SAP footprint (quantitative) and the extent to which the participating company adopted

best practices (qualitative).

In order to ensure the reliability of the information gathered, each interviewee validated the

interview minutes; the latter remaining confidential, as agreed with the enterprises.

The answers were subsequently categorized and statistics and correlations made, based on the

answers obtained from participants. The categories are shown below.

Finally, the study summarized the primary lessons learned in terms of best project practices and

value added for the enterprise.

Out of the 19 enterprises, 15 were interviewed in France by ASK and the remaining four were

interviewed in Germany by our partner WESTTRAX.

The main industrial sectors represented were: Services, Health, Energy, Food-processing,

Chemicals, Pharmaceuticals, Manufacturing, Automobile, Telecommunications, Distribution

(Retail), Associations, Insurance, Publishing.

APPLIED METHOD

the approach adoptedstudyfirst

SAMPLE ANALYSIS


In terms of enterprise size,

the following repartition is

observed:

In addition, let us

highlight that:

n 63% of the

enterprises have less

than 300 users and

only 37% have several

thousands of users.

The large enterprises,

less enthusiastic, have

invited the Middle Market

enterprises to play the

leading roles.

n Among the enterprises

interviewed, more than

50% are international

ones (multi-country)

and 84% are multi-site

ones (the majority are

“extended enterprises”

with both local and global

systems).

0%

5%

10%

15%

20%

25%

30%

35%

> 10 0001 000to 10 000

100to 1 000

<= 100

Business Turnover in EURk

Size of the enterprises in the sample what does this chart represent in terms of size?

0%

5%

10%

15%

20%

25%

30%

35%

40%

> 2 000500 to 2 000200 to 500< 200

Number of users

CA en k

Number of “super” users

As regards the number of intensive users, it is spread according to the following repartition:

It appears that Enterprises who have already completed their SAP

ERP technical upgrade have a smaller number of users. To determine

if the number of users influences the decision to upgrade, a

subsequent study was undertaken.

the

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the

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level 1

1 unique

SAP system

level 2

between

2 to 3

SAP systems

level 3

between

4 to 5

SAP systems

level 4

between

6 to 10

SAP systems

level 5

over 10

SAP systems

For the SAP technical upgrade project, 13 dimensions were identified, each associated with

5 complexity levels. On a scale of 1 to 5, 5 reflects the highest complexity score.

Project dimensions of a version upgrade

n n n Organisation of the enterprise: countries, companies, sites

level 1

single country

enterprise,

single

company and

single site

level 2

single country

enterprise,

single

company and

multi-site

level 3

single country

enterprise,

multi-company

and multi-site

level 4

multi-country

enterprise,

multi-company

and single site

level 5

multi-country

enterprise,

multi-company

and multi-site

n n n Number of users: number of SAP users (“super” users)

level 1

up to 250

users

level 2

251 to

500 users

level 3

501 to

1000 users

level 4

1001 to

5000 users

level 5

more than

5000 users

n n n Number of SAP systems in production: number of SAP components in the enterprise (one or more instances of core SAP R/3, a SAP BI system, a SAP CRM system, a SAP ARO system, an Industry Solution)

complexity levels:

SAM

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the

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level 1

1 SAP

system

level 2

2 SAP

systems

level 3

3 SAP

systems

level 4

4 or 5 SAP

systems

level 5

more than

5 SAP systems

level 1

ECC 5.0

version

level 2

SAP R/3 4.7

version

level 3

SAP R/3 4.7

version/3 4.6

level 4

SAP R/3 4.0 or

4.5 version

level 5

SAP R/3 3.x

version

level 1

core R/3 with 1 to 3 modules

level 2

core R/3 with the main

modules

level 3

core R/3 with the main modules

+ 1 additional component (CRM, BW,

APO, an Industry Solution,…)

level 4


+ 2 additional components

level 5


and at least 3 additional components

level 1

conformity with the

standards – targeted and

limited specific developments ( < 100 m/d)

(- 100 H)

level 2

selective and filtered usage via a demand

validation committee (<

500 m/d)(-500 H)

level 3

extended usage with a controlled

specifics mapping(500 to 3000 m/d) (to 3000 /H)

level 4

extended usage but with an

uncontrolled specifics

mapping (500 to 3000 m/d)

level 5

absence of governance

and no control over the usage

of specifics (>3000 m/d)

n n n Number of upgraded SAP ERP systems: number of distinct SAP components which are in the version upgrade scope and which have effectively been migrated

n n n Functional scope of upgraded SAP systems: (what R/3 modules, what other components: BW, CRM, SRM…)

n n n SAP R/3 source version (betweenR/3 3.0 and R/3 4.7)

n n n Adherence to Governance & Standards, such as the number of specific developments conducted around the R/3 core, the principles applied by the enterprise to adhere or not to the SAP standard, the control process around enhancement demands

SAM

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the

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ed

level 1

one centralized SAP CC (usually 1 unified Core

Model)

level 2

SAP CCs by branch or

business (several Core Models

dedicated by branch or

business)

level 3

one competence entity per

production environment

(primarily administrative,

operations)

level 4

1 centralized operations

center

level 5

absence of internal

competence unit

level 1

SAP communicates

with minor components in the landscape.

(non critical solutions)

level 2

SAP communicates with a limited

number of software

packages from third party

bolt-ons (limited interfaces)

level 3

SAP communicates with a limited

number of software

packages from third party

bolt-ons SAP or not (limited

interfaces)

level 4

SAP communicates with internal

software packages and developments

(mapping application of medium complexity)

level 5

SAP communicates with internal software and developments

(complex mapping

application - numerous interfaces)

level 1

90% are internal resources & 10%

are external resources

level 2

internal resources

mobilized and combined

with external resources

representing between 10% to 30% of the cost

level 3

internal resources

mobilized and combined

with external resources

representing between 30% to 60% of the cost

level 4

internal resources

hardly available, requiring

more reliance on external

resources > 60% of the cost

level 5

Internal resources limited to testing tasks

(IT Division testers and key

users)

n n n SAP integration with non SAP systems: relates to SAP’s mapping application and its complexity (SAP interfaces, legacy and third party bolt-ons)

n n n Several SAP CC organisation models, depending on the enterprise’s maturity level and the IS strategy (variable scope, including parameter setting or not, developments, management of user data, middleware administration and DBMS ….)

n n n Ability to perform the technical upgrade (sufficient & trained staff; degrees of reliance on third party resources on T+M or fixed price)

SAM

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SIS


the

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edlevel 1

very good

level 2

good

level 3

fair

level 4

weak

level 5

very weak

level 1

very good

level 2

good

level 3

average

level 4

weak

level 5

very weak

level 1

updating of the technical platform (ISO functionalities)

and modification of the IS

components (OS, DBMS,…)

level 2

level 1 + implementation

of Unicode

level 3

level 2 + implementation

of SAP ERP functionalities

(not implemented

under R/3)

level 4

level 3 + implementation of NetWeaver functionalities

level 5

level 4 + activation of an Industry

Solution

n n n Technical upgrade combined with new functionality, new components of Industry Solutions

n n n Use of tools; the extent to which tools are used for testing and other project activities

n n n Project management best practices: relates to an evaluation of the maturity level of the enterprise in project management (implementation of an internally developed initiative for a version upgrade project, project phase planning, project communication, management of risk portfolio, analysis phase of anticipated impact, splitting of the project by work breakdown schedule/packages, monitoring of deliverables, project status reporting, etc. – formalization and spreading of best practices within the IT Division project teams IT)

SAM

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The benefits of the version upgrade project can be assessed used the Balanced Score Card

approach.

n n n Prospective Balanced Score Card applied to SAP version upgrade projects

contribution to the enterprise’s policy

How do the shareholders perceive IT services?

Mission: Obtain a reasonable contribution to the enterprise’s business from IT investments.

Strategies: Control over IT expenses, business value of projects (project ROI), contribution of new abilities to the enterprise…

user

How do the users perceive IT services?

Mission: To be the preferred supplier to the users (applications and processing).

Strategies: Propose the best solution, regardless of the source, partnership with the users, perceived quality of the service, delivery delays.

future orientations

Is IT well positioned to respond to future needs? (ability to improve

the products and services of the enterprise and create value)

Mission: Develop opportunities to respond to future needs.

Strategies: General and professional training of the IS / IT staff, expertise of IT staff, research of emerging technologies and solutions to improve the agility and flexibility of the IS.

operational excellence

What is the efficiency of IT processes?

Mission: Deliver efficient services and applications.

Strategies: Efficiency of developments, deliveries, maintenance and systems operations.

SAM

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ANALYSIS OF RESULTS OBTAINED

We have evaluated the contribution of a version upgrade project, based on 15 criteria. Applying

the Balanced Score Card principles, we have regrouped the criteria as follows:

contribution to the enterprise’s policy

- SAP operations and maintenance costs

- adherence to budget

- increase of technical resources

- global satisfaction of IT Division

user

- user satisfaction

- improvement in performances

- system downtime

- freeze on developments

future orientations

- contribution to business

- reduction of the specifics list

- strategic lever for the IT policy

operational excellence

- achievement of project objectives

- adherence to detail

- compatibility / Interoperability

- reliable start up

n n n Contributions of a SAP ERP version upgrade: Cost, Utilization, Future use (business growth), Operational excellence

SAP GOVERNANCE VISION: SAP GOVERNANCE VISION: WHAT CONTRIBUTION FROM THE SAP ERP VERSION UPGRADE PROJECT?

Any IT Master Plan should align with the business direction of the enterprise. To facilitate the

interpretation of the results, we will utilize the criteria contained in the Balance Score Card.


THE STUDY RESULTS

User Dashboard

n n n Performance improvement: did the migrated SAP systems show improved, deteriorated or stable performance?

n n n User satisfaction: assessment of the enterprise’s business management satisfaction (project impact on service levels, ownership of the new SAP ERP version, project communication with users)

n n n Code freeze: period during which enhancement requests have been frozen

n n n System downtime: from a user perspective, was the SAP system unavailable due to switch over operations (switch to live production)

level 1 level 2 level 3 level 4

significant

deterioration

slight deterioration iso performance improved

performance


more than 2 days 1 to 2 days approximately

1 day

no downtime


unsatisfied fairly satisfied satisfied very satisfied


freeze > 70%

of the project

duration

40% < freeze <

70% of the project

duration

20% < freeze

< 40% of the

duration project

freeze < 20%

of the project

duration

the results obtained


the

resu

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obt

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dOperational Excellence Dashboard

n n n Post Go Live Reliability: assessment of the reliability level of the delivered solution, (number and criticality of the problems and incidents that occurred after SAP ERP went live)

n n n Achievement of the project objectives: global assessment of the enterprise (usually from the SAP CC responsible person) on the achievement of the project objectives

n n n Adherence to scheduled time line: was the scheduled live production date adhered to?

n n n Compatibility issues / interoperability: issues faced during the project and especially post migration regarding the interoperability between the new SAP version and other business software packages, specific developments, operational tools and other IS components (database, operating systems), output management software, mail servers, EAI other than PI,…


unsatisfied fairly satisfied

satisfied very satisfied


major compatibility or interoperability

issues faced

minor compatibility or interoperability

issues faced

no issues faced improved interoperability

of some IS components


objectives not achieved

objectives partially achieved

objectives achieved

objectives exceeded


planning exceeded by more

than 50%

planning exceeded by 25% to 50%

planning exceeded by less

than 25%

planning adhered to

TH

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TU

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RE

SULT

S


the

resu

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obt

aine

d

Future Orientations Dashboard

Contribution to the enterprise’s policy Dashboard

n n n Contribution to business (es): contribution of the version upgrade towards achievement of business objectives (availability of new functionalities…)

n n n Reduction in the specifics list I donlt understand this? What is the specifics list? any reductions or not in the list of SAP specific developments and to what extent?

n n n Strategic lever for the IS policy of the enterprise: does the version upgrade project contribute to the improvement of the enterprise’s IS?

n n n SAP maintenance costs: costs after the SAP migration (including the administration and maintenance of the migrated SAP system, the associated middleware and DBMS, as well as the OS management, the server (s), the storage and the high availability)


partial misalignment of the IS and the

business

no change minor contribution (availability of minor

functionalities)

major contribution (major evolutionary

maintenance operations)


increase of more than 10%

increase between 5% and 10%

no increase in costs reduction in costs


increase in the number

of specifics

Carry over of specifics

limited reduction in specifics

high reduction in the number

of specifics


exploitation of SAP ERP’s opportunities

not planned (nothing concrete)

exploitation of SAP ERP’s opportunities planned (projects in

pipe line)

effective and minor exploitation of SAP ERP’s opportunities (implemented in the course of the project)

effective and major exploitation of SAP ERP’s opportunities (implemented in the course of the project)

TH

E S

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RE

SULT

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0%

20%

40%

60%

80%

100%

ExceededAchievedPartiallyachieved

Notachieved

Achievement of the project goals

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n n n Increase in technical resources: evaluation of the percentage increase in technical resources necessary for the smooth functioning of the new SAP version (disk space, processor memory, number of servers)

n n n Adherence to the allocated budget (investment in licences, hardware, other IS components and service providers’ costs)


increase exceeding 25%


increase below 15% budget adhered to, and even below

forecast


increase of more than 10%


increase below 5% no increase

n n n IT’s satisfaction with service providers including, knowledge transfer dispensed by SAP


unsatisfied fairly satisfied

satisfied very satisfied

ACHIEVEMENT OF PROJECT OBJECTIVES

n An average score of

2,9 / 4 on this angle for

the interviewed enterprises.

n Most enterprises

interviewed (95%)

estimated having

achieved the objectives

in their project Plan.

The graphic below shows

the results obtained in terms

of achievement of project

objectives.

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n Note: in the remaining

part of this document, the

terms I am not familiar

with this (functional

version upgrade equal”

and “technical version

upgrade” will be utilized

in an equivalent manner.0%

10%

20%

30%

40%

50%

60%

Idem +businesssolution

Idem + Netweaverarchitecture

evolution

Idem +SAP ERP

functionalities

Idem + technicalevolutions

(Unicode or Cis)

Technicalplatformmigration

CA en k

Version upgrade project typology

This result is very high but what does it hide in practice? To ascertain this, it appears necessary

to examine the objectives which the enterprises set to themselves before starting their version

upgrade project.

The detailed list of objectives mentioned by the enterprises is given below. We have structured

this list by BSC dashboards. Some of these objectives came up in the course of the project, in an

opportunistic logic (for lack of advance project planning in some cases).

Operational Excellence Dashboard

• Centralization of the SAP system monitoring, alert management and the level 4 tickets between SAP CC and the Editor (thanks to Solution Manager).

• Improvement of the integration between the SAP system and the non SAP systems (for example: retain SAP ERP’s mail server instead of a third party server or implement SAP partner editors’ solutions which secure some operating tasks such as failed backups).

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• It is observed that most enterprises (72% in all) have limited their objective to a technical upgrade. Few enterprises (17%) retained a functional objective for their version upgrade and still less (11%) retained a utilisation objective of the new NetWeaver architecture.


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User Dashboard

• Unicode implementation.

• Delivery of new functionalities to the SAP (for example: New General Ledger).

• Compliance with legislation in the financial field (application of IFRS norms to the groups’ entities).

• Implementation of some core SAP modules which are more refined in SAP ERP than in R/3.

• Activate some SAP add-ons.

• Improve the availability of “real time” information, particularly in the client relationship management field (updating of real time information between the SAP back office and SAP CRM).

Contribution to the Enterprise policy Dashboard

• Avoid the increase in maintenance (+2% in Year 1 and + 2% applicable from the following year) of SAP R/3 by reverting to a standard maintenance contract.

• Reduction in hosting and costs of SAP systems by simplifying the system landscape and by centralizing and mutualising the IT resources (opportunistic logic of outsourcing a number of IT areas).

• Renegotiation of third party applications maintenance by attempting to reduce the list of specific developments.


• Facilitate the implementation of business projects through the modernization of the SAP system base (SAP ERP is promising in business opportunities and innovations in the field of integration of processes, human resources, technologies and information).

• Prepare the deployment of new major SAP system components (for example: the enterprise portal so as to allow subsidiaries which are equipped with non SAP IS to access the QM module and utilize part of the SAP system services rendered in the quality management field).

• Replace the EAI by the PI (previously called XI).

We enumerate here the general objectives stated by the enterprises. Most of these objectives have not been part of planned projects within a strategic planHave a more reliable, state of the art technical platform so as to allow the SAP system to support the growth of the enterprise (creation of new entities or easier integration of new subsidiaries).

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n Finally (see graphic

below), only 16% of the

enterprises interviewed

have taken advantage of

this project to utilize the

new SAP ERP features.89%

No Unicode

11% Unicode

40% No Unicode 60%

Unicode

Multi-country enterprisesSingle country enterprises

CA en k

Unicode implementation

60% of the multi-country enterprises (and, hence, multi-characters) have implemented Unicode

so as to manage character translation.

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The objective has, no doubt, been achieved for most enterprises but the ambition was limited.

Why?

0%

10%

20%

30%

40%

50%

Effective exploitationof SAP ERP

and / orNetWeaver

opportunities

Effectiveexploitationof SAP ERP

opportunities

Exploitationplanned

Exploitationnot planned

Strategic lever for the IS policy

Idem + évol. techniques

(Unicode ou Cis)

• First of all, the enterprises have followed the editor’s recommendation: separate the technical version upgrade from the functional aspects and, thus isolate the risks.

• Most of the enterprises have not clearly realized the functional contributions of the new version.

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Most enterprises already

have SAP version upgrade

project experience: 63% of

the enterprises interviewed

had already conducted

at least one R/3 upgrade,

which has facilitated achie-

vement of the objectives as

the process, mechanisms

and stages of prior projects

remained applicable.

0%

2%

4%

6%

8%

10%

12%

4 releaseupgrades

3 releaseupgrades

2 releaseupgrades

1 releaseupgrade

Experience of the enterprises in SAP version upgrades

• And also, the contribution brought by the new NetWeaver technical architecture has appeared complex to implement; The enterprises who already have an EAI are keeping it because a change of EAI is a complex project, which needs to be conducted in an independent and progressive manner.

• Finally, management involvement is generally observed as rather low, to attach more ambitious objectives to this version upgrade. This is, no doubt, due to lack of time, information and SAP ERP vision.

• The technical version upgrade highlighted a number of performance issues, necessitating a global system tuning.

• The interviewees expressed post upgrade regrets that they had not enough taken into account two things: the possibilities of reducing the number of specific developments / modifications carried over into the upgrade and also the possibility of exploiting the functional contributions of the new version.

On the other hand, we have observed a good experience level on the SAP technical version

upgrades.

As regards the 5% enterprises whose objective was only partially achieved, two factors explain

this:

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d Observation n° 1 : The SAP ERP version upgrade project has mainly been perceived as a technical

project, which most enterprises estimate having achieved.

We finally arrive to a first observation:

OPERATIONAL CONTROL OF THE VERSION UPGRADE PROJECT

This observation is indeed encouraging for the enterprises: their already acquired experience

in SAP version upgrades is re-usable, the announced technological leap does not lead to major

difficulties on the project. At the same time, however, this observation reinforces the question on

what economic value has been derived by the enterprise from this version upgrade. We will go

into further depth on this question.

n An average score

of 3,9 / 4 on this angle

of analysis for the

enterprises interviewed.

n Most companies

(94%) report

compliance with the

planning provided.

0%

20%

40%

60%

80%

100%

No delayDelay> 10%

Delay> 25%

Delay> 50%

Adherence to the project time line

Let us first take a closer look at the results obtained in terms of operational control of the version

upgrade.

• An underestimation of the adaptation charge and of the specific developments testing.

• Supplier delays in equipment delivery.

This good result is attributed to the good control levels exercised by the project teams of the

version upgrade project, the absence of major show stoppers during these version upgrade

projects and the stability of the SAP ERP version which, as at the date of this study, is more than

a year and a half old.

As to the 6% enterprises that have not adhered to their planning, the main reasons are:

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dn An average score of

2,4 / 4 for the enterprises

interviewed.

n 50% of the

enterprises interviewed

indicated having met

with minor or major

interoperability issues

between the new

migrated SAP version

and its IS environment.

0%

10%

20%

30%

40%

50%

Improvedinteroperability

No issuesMinor issuesMajor issues

Compatibility and interoperability issues

• A version upgrade of the interfaced tool as a prerequisite.

• Some adjustments: parameter setting modification or, even code modification.

• Implementation of SAP Add-On.

• DBMS version delet all withs below.

• Some messaging tools.

• A property management software.

• Some fax servers.

• Some barcode scanners.

• Some “.net” connectors.

• Some archiving tools.

Most of the interoperability issues were dealt with by:

NB: Unicode has generated incompatibility issues (in some cases, it has been necessary to change

the backup robot.

Examples of tools / applications for which issues were observed by some enterprises:

Major issues: A number of interoperability issues observed with third party products such as

application scheduler, backup software and other IS components such as the OS, some database

versions etc. These issues are being addressed by the Technologies Commissions of the USF.

Minor interoperability problems observed with:O

PE

RA

TIO

NA

L C

ON

TR

OL

OF

TH

E V

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SIO

N U

PG

RA

DE

PR

OJE

CT


What are the possible causes of these difficulties? Can the “Integration with non SAP systems”

context explain the observed phenomenon? For this purpose, we calculate: the proportion of

enterprises that have expressed an issue and / or those that have not expressed any issue. And this

proportion is calculated, on one hand, for the enterprises that have a rather complex mapping

and, on the other hand, for those enterprises that have a rather simple mapping.

Terminology:

Simple mapping application:

few interfaces between SAP and other IS applications SAP interacts with other IS components

which we consider as minor (services of weak business or operations criticality). SAP communicates

mainly with partner editors’ software packages (standard connectors).

Complex mapping application:

numerous interfaces between SAP and other IS applications. These applications are either

software packages from partner editors as well as non SAP partners, or specific developments

realized by internal teams.

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n n n Incidence of the mapping

Hence the table below:

simple mapping

interoperability issues

no interoperability issues

complex mapping

33%

67%

71%

29%

The mapping complexity is clearly and logically a source of interoperability issue for the

enterprises.

An enterprise which disposes of a complex mapping will accordingly have to take special

precautions to analyze and verify these interoperability issues.

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• Implementation of the SAP fax coupling tool.

• Replacement of an external mail server by the SAP mail server.

As for the few enterprises who have observed an improvement of their interoperability, the

contributions mentioned are:


3,2 / 4 on this aspect

for the enterprises

interviewed.

0%

20%

40%

60%

80%

100%

Verysatisfactory

SatisfactoryFairlysatisfactory

Unsatisfactory

Reliability at start up

• The adaptation of specific developments by allowing a swift identifica-tion of the reasons for the specific development and by facilitating the identification of the adaptations to be realized.

• Well documented and up to date test scripts for the main business streams.

The degree of satisfaction towards the quality level of the project is linked to the number and

seriousness of the incidents that occurred during production but also to the quality of the project

deliverables, particularly the functional documentation, the updating of test plans, and the

validating scenarios.

Few of the enterprises interviewed had registered an important volume of anomalies and these

anomalies were essentially minor. As regards documentation, the enterprises having replied to the

question had quality documentation at their disposal at the end of the project.

It is noted that the quality of the available documentation relating to the existing system has

allowed a significant gain of time for some enterprises for:

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Observation n° 2 : Most enterprises have secured their operational control of the version upgrade

project, the main difficulty to be anticipated being the interoperability of the new version within

its environment.

Hence, this observation:

IMPACT ON USERS

Finally, the global score obtained for the Operational Excellence Dashboard on the sample of

enterprises interviewed stands at 3,1/ 4, which denotes a satisfactory level of operational control

of the technical version upgrade project.


2,9 / 4 for the people

interviewed.

n Most users were

satisfied with the

version upgrade

(87,5%).

0%

20%

40%

60%

80%

100%

Verysatisfied

SatisfiedFairlysatisfied

Unsatisfied

User satisfaction

What was the impact of

this project on the users?

The SAP ERP user interface remains unchanged in relation to the SAP R/3 4.6C and 4.7 versions

and the technical migration does not require any specific training.

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achievement of objectives

2,9

adherence to time line

3,9

interoperability

2,4

reliability at start up

3,2

overall operational

control

3,1

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interviewed.

n Most enterprises

(60%) have achieved

their version upgrade at

ISO performances level.0%

10%

20%

30%

40%

50%

60%

70%

ImprovementIso-performance

Slightdeterioration

Significantdeterioration

Performances of the SAP system

• The SAP ERP version upgrade was limited to a technical project, not introducing anything new to the business.

• In general, most enterprises view this project as a relatively transparent one for the business, except that it necessitates user mobilization for the tests and validations.

12,5% were fairly satisfied, mainly for the following reasons:

the

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d• Insufficient sizing of the production equipment.

• Poor tuning of the production equipment.

• Cleaning and reorganisation of databases.

• Increase in the existing production equipment capacity.

• Installation of new, more powerful, servers (more CPU – increase in the number of SAPS, in disk memory).

• Move to 64 bit.

• Change in technical architecture – Example: mutualisation of resources, virtualization of servers.

12% of them faced a slight or significant deterioration, principally attributed to the following

factors:

And, worth highlighting, 28% managed to obtain an improvement in performance following the

version upgrade, mainly attributed to the following reasons:

The version upgrade project has been utilized as an opportunity for technical optimization

by a significant number of enterprises.

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n 40% of the

enterprises have been

able to complete their

version upgrade project

without any downtime

seen by the user (in

other words, with a

technical switchover

performed during

a weekend without

disruption during the

week).

n An average score of 2,9 / 4 on this angle of analysis for

the enterprises interviewed.

n The remaining 60% had between 1 to 4 working days of

downtime but most of the enterprises remained within one

downtime day.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Nodowntime

1 dayBetween1 and 2 days

Exceeds2 days

System down time from the users’ perspective

Business downtime is the unavailability of the SAP system during normal work hours. In most

cases, it is the down time duration over and above the cut over weekend.

Note that the duration of the switchover process (downtime) includes the export process of

production data from the existing R/3 DBMS and the import of that same data in the target SAP

ERP DBMS. Accordingly, the more voluminous the data is, the longer is the process, resulting in

a correlated downtime duration.

Finally, we observe that the analysis of the downtime factors identified during the interviews

highlights the main following causes:

• The average real migration time observed from the old system to the new one is slightly superior to 2 days (2,2).

• Accordingly, enterprises organize themselves to conduct this migra-tion over a weekend, or even better, a prolonged weekend (3 days), so as to minimize the impact on their business activity.

IMPA

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interviewed.

0%

5%

10%

15%

20%

25%

30%

Freeze< 20%

20%< Freeze <

40%

40%> Freeze >

70%

Freeze> 70%

Freezing of enhancements as a % of the project duration

What are the factors that lead to decide on the duration of the freeze?

The decision to freeze enhancements is linked either:

• To minimize the impact risks of a system downtime on business activity, the enterprises interviewed have conducted at least one “practice” migration so as to verify the smoothness of the process and also to check whether the migration time is satisfactory in terms of business downtime.

• Some enterprises have had to extend the migration time in view of unsatisfactory delays noted during the practice migration.

• Some companies have reduced their downtime by applying the “downtime minimized” migration methods proposed by SAP via the SAPUP’s System switch upgrade option.

• To a low volume of enhancements requested by the business.

• To a lack of availability of the resources responsible for enhan-cements as they are busy with the migration project – this lack of availability is either total since the beginning of the project or progressive as the migration approaches its completion.

• To an historical scenario whereby enhancement requests have typically always been made by the business managements in an uncontrolled manner. This lack of control and policy in place for the management of the SAP Core Models in production has thus prompted IT Division Management, as a measure of precaution to put a freeze on all such enhancement requests at an early stage of the upgrade.

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The choice between a complete freeze on enhancements at the beginning of the project or a

partial / progressive freeze is accordingly dependent on the enterprise’s context, its organisation,

the availability of its internal resources, its configuration management method and on the control

over the underlying risks.

Note that some enterprises, having achieved a good level of governance maturity of their SAP

Core Model solution, are able to introduce a progressive freeze on enhancements process which

takes into account:

• The need to be responsive to enhancement requests which are critical for the business (high financial, commercial stakes,...).

• The constraints of the version upgrade project (insistence on the acceptance of the requests depending on the various stages of the project).

• Once the development environment has been migrated, any new production enhancement needs, need to be kept in synch with the configuration (prior and post migration).

• To a combination of these various reasons.

In conclusion, the freeze on enhancements policy appears to vary to a great extent,

depending on the enterprise’s context.

Observation n° 3 : The SAP ERP version upgrade project, as conducted by most enterprises, ge-

nerates low impact on the users, the most significant impact being the freeze on enhancements,

of variable duration, depending on the enterprises.


Finally, the global score obtained for the Users Dashboard on the sample of enterprises inter-

viewed, stands at 2,9 / 4 which denotes a good transparency level towards the users for the

technical version upgrade project: the users have hardly been disturbed and, also hardly involved,

with the exception, for some enterprises, for their participation in testing. Hardly involved?

user satisfaction

2,9

performances

3,1

downtime

2,9

freeze on enhancements

2,5

global transparency

towards the users

2,9

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CONTROL OVER COSTS AND ALIGNMENT WITH IT POLICY THE IT DIVISION’S POLICY


2.7 / 4 for the enterprises

interviewed.

0%

10%

20%

30%

40%

50%

60%

70%

ReductionNoincrease

5% < Increase <10%Increaseexceeding

10%

SAP system operations and maintenance costsLet us now examine how

does the version upgrade

project position itself

in relation to the policy

objectives of IT Division

IT, in particular of control

over costs.

• Most enterprises have not attempted to utilize the version upgrade to reduce operations and maintenance costs linked to the suppres-sion of specific developments which are unutilized or transferable within the standard.

• Apart from the above factor, there is a quasi mechanical growth in costs, following the version upgrade, even if one of the major aims stated by the enterprises was to avoid the 2% rise in main-tenance costs (for the first year), at the end of the standard SAP maintenance contract (and another+2% applicable as from the second year).

We note that, for the majority of enterprises, the operations and maintenance costs have remained

stable (for 94% of the enterprises). In our view, this means two things:

We have a slightly paradoxal result here: the enterprises, for the major part, went into

the version upgrade project with the aim of avoiding an increase in operations costs (the

SAP licenses) but they did not succeed in going further into their analysis of opportunity

gains, in particular, by trying to reduce the volume of specific enhancements that needs

to be maintained.


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As regards the enterprises who have highlighted an increase in operational and maintenance

costs, it is the increasing complexity to exploit the new system which causes the increase.

As for those who managed to obtain a reduction in costs, they attribute it to the following

reasons:

• The mutualisation of the new system operations with others, internal or external.

• The setting up of a more homogeneous technical architecture, resulting in a reduction of the number of technologies to be maintained and, hence, a reduction in the number of types of technical experts to be mobilized.



interviewed.

n Most of the

enterprises (87,5%)

stayed within budget.

0%

20%

40%

60%

80%

100%

Adherenceto the budget

Increase< 15%

15% < Increase < 25%Increase> 25%

Adherence to the budget of the SAP ERP version upgrade project

Noincrease

15% < Increase <25%• A wrong estimation of the adaptation costs of the specific developments.

• To a wrong equipment sizing, thus necessitating the purchase of supplementary resources.

This result is coherent with the control over time line already observed earlier.

However, some of them exceeded the budget due to:CO

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dn An average score of

2.2 / 4 for the enterprises

interviewed.

n Around 78% of

the enterprises have

taken advantage of

the technical version

upgrade project to

increase the technical

resources utilized.


3,1 / 4 on this angle

for the enterprises

interviewed.

n A fairly general

satisfaction level is

apparent here from

IT Division: IT : the

“technical version

upgrade” project has

not appeared to be a

disturbing project for

the IT Division IT, be

it in terms of strategic

alignment or risk

incurred.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Noincrease

Increase< 5%

5% < Increase < 10%Increase> 10%

Increase of technical resources

0%

20%

40%

60%

80%

100%

Verysatisfied

SatisfiedFairlysatisfied

Unsatisfied

IT’s global satisfaction: IT

The enterprises have, in effect, wanted to anticipate the subsequent extension of their ERP

(external growth…) and have accordingly invested technically.

The IT Division is globally satisfied with the service providers chosen

and the tasks realized (IS architecture, technical migrations of

databases, OS versions changed or migrated and the SAP software

package).

As regards enterprises that have expressed dissatisfaction, this

appears to be mainly due to their budget having been exceeded.

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To note, however, including for the globally satisfied enterprises, an expression of regret,

sometimes, for the perhaps too limited ambition on the project conducted which could have

constituted the opportunity for:

• Optimizing / harmonizing / homogenizing the technical architec-ture.

• Eliminating the obsolete specific developments.

• The version upgrade is not really being utilized by the entreprises as an opportunity for reduction of operation and maintenance costs or of the project cost itself. Reduction of costs is indeed pos-sible by reducing the volume of modifications to be carried over (available benchmarks show that, on average, 30% of the specific developments / modifications are not actually utilized in practice or are hardly utilized). Are the enterprises properly advised by their service providers? Or do we not have here a divergence of interest risk which should be closely monitored?

• The final result of this situation is that, taking into account the technical investments conducted and, short of a systematic, deter-mined policy on the specifics, the general trend would seem to be that of a slow, moderate but real growth in SAP operations and maintenance costs.

This apparently satisfactory result however appears to us as hiding two realities:

No doubt, the IT Divisions, used as they are to additional costs of functional projects, feel satisfied

here, with a technical project that has stayed within budget. This misleading parallel however

leads to neglecting the opportunity of optimizing one’s operations and maintenance costs thanks

to the version upgrade project.

Finally, the global score obtained for the Control over costs and alignment Dashboard with IT

Division’s policy the IT Division’s policy, is 2,9 / 4, which denotes a good alignment level.

operations cost

2,7

project budget

3,8

technical resources

2,2

IT satisfaction

3,1

global result

2,9

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interviewed.

n For the large majority

of enterprises (72%),

the version upgrade

conducted has no

positive impact on

the businesses (which

is coherent with the

objective, limited,

more often, to a purely

technical version

upgrade).

0%

20%

40%

60%

80%

100%

Majorcontributions(evolutions)

Minorcontributions(adaptations)

Nochange

Partialdisalignmentwith business

Contribution to business

Over and above the technical short term results, in what strategic perspective is positioned the

SAP ERP version upgrade?

This result is accordingly not surprising, the more so, given the Editor’s recommendation to

conduct a technical version upgrade prior to any functional project, is known and respected by

the enterprises.

We have, however, also observed a weak knowledge of the functional possibilities brought by the

new SAP version. Enterprises are complaining about the lack of information from the editor on

the functional enhancements of the new version.

Observation n° 4: Most IT divisions appear satisfied with the control over operations and main-

tenance costs following the version upgrade. But the opportunity to reduce these costs, notably

by the reduction of the specifics maintained, is not really exploited.


ADDED VALUE TO STRATEGIC PERSPECTIVES

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2.8 / 4 for the people

interviewed.



interviewed.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Significantreduction

Limitedreduction

Specificscarried over

Increasein specifics

Reduction of the specific developments list

0%

10%

20%

30%

40%

50%

Effective SAP ERPand / or

Netweaverexploitation

Effective SAP ERP

exploitation

Exploitationplanned

Exploitationnot planned

Strategic lever for the IS policy

Idem + évol. techniques

(Unicode ou Cis)

Many enterprises simply and purely carry over their prior modifications without trying to

eliminate those that are not utilized or profit from the transfer possibilities to the SAP standard. Only

a few enterprises (18%) fully utilize the potential for reduction of modificatiosn brought about by the

version upgrade (30% reduction or more).

The enterprises that reduced their specific developments identified the obsolete and / or unutilized

modifications and have eliminated them. A majority of our interviewees are disappointed with the

lack of management support to return to SAP standard.

These upgrade versions having been recently realized, a number of the functional possibilities

will, no doubt, be taken advantage of later but, provided at least that one studies the possibilities

offered and is convinced of the contributions to businesses.

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Clearly, the functional and, indeed, strategic (NetWeaver) possibilities brought about by

the new version are still rather largely underestimated or, at least, little taken advantage

of for the time being.

• An insufficiency of information and understanding of the perspec-tives offered by the new SAP ERP version.

• A rather restrained involvement from management (business and IT) who express limited expectations in relation to the simple tech-nical upgrade, no real search for optimum cost and value.

• But also, to qualify the above comments, the vision deficit may also be attributed to the fact that the version upgrades conducted are quite recent and some enterprises will, in time, use this as a stepping stone for a more ambitious plan.

This deficit appears to have several causes:

Finally, the global score obtained for the Future Orientations Dashboard stands at 2,3 / 4, which

denotes a medium term prospective vision deficit of the version upgrade.

contribution to businesses

2,3

reduction of specifics

2,8

strategic lever for

the IS policy

1,8

global result

2,3

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SObservation n° 5 : The strategic possibilities of the new SAP ERP version, whether functional

or architectural, are hardly valued and put in perspective; should the enterprise stop there, it

would lead to an underutilization of this version’s potential and to a more limited return on

investment.



Operationalexcellence

Contribution tothe enterprise’s

policy

User

Future orientations

Results of a version upgrade project

4

1

5

3

2

2,3

2,9

2,9 3,1

Recapitulating the results obtained in a BSC vision, we observe that the results level expressed

is globally satisfactory on the 3 “short term” dashboards (Operational Excellence, Users, Control

over costs), but that there is clearly a deficit in strategic vision of the version upgrade: the

strategic (and also economic at medium term – value creation) potentiality of the version

upgrade is not correctly taken into account.

THE KEY INDICATORS OF A VERSION UPGRADE

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SUMMARY

commentsindicator average value

• Includes the analysis phases, technical migration, tests, 1 to 2 dummy migrations and the implementation to production.

• More than 60% of the enterprises have migrated in around 6 months.

• The IT divisions arrange for switchovers to coincide with the prolonged May weekends.

average duration of a project

migration period

7.1 months

between September and May

We have requested the enterprises to provide us with the values attached to a number of key

indicators of their version upgrade. Only some enterprises were able to provide us with an estimation

of these indicators and the values given below are accordingly purely intuitive?. In the second phase

of our study (October 2008), we will attempt to refine the estimation of these indicators.


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• Only 14% of the enterprises utilize tools for the non-regression and performance tests.

• 10% of the enterprises managed the project only with internal resources.

• The external services are essentially the management of the SAP middleware and of the DBMS, the installation of the environments and technical migration works of the SAP version, the eventual migration of the DBMS and the replacement of the operating system, and particularly the updating of specific developments.

• As an example, budget of EUR350K for a Middle Market enterprise with a R/3 core limited to a few modules, not many users, not many specifics to maintain, implementation of Unicode.

• Another example: >EUR1000K if the project profile proves to be complex: R/3 migrated with another SAP system (BI or CRM), numerous interfaces ( complex mapping, and SAP partner applications to be migrated in parallel), a non negligible number of specifics to carry over, an updating of the technical platform which is accompanied by the implementation of new standard SAP functionalities, replacement of a number of the IS components, etc.

work load

budget

50 to 65% dedicated

to tests

Variable, depending on SAP

lanscape

• The duration varies strongly, depending on the enterprise, between 0 to 5 months. Some enterprises have proceeded to a “categoric” freeze from Day 1 of the project.

average duration of the freeze on enhancements

average duration of the freeze in % of

the project duration

2.5 months

around 40%


THE MAIN RISKS OF A SAP ERP VERSION UPGRADE PROJECT

Risks linked to the conduct and monitoring of the project

Risks linked to the availability of technical competences

• Difficulties in coordinating the functional and technical work groups (R7 risk): projects with predominantly technical characteristics are not likely to mobilize key users in charge of tests. It is recommended to organize a launching meeting in the presence of the key project players and to present the project phases, the sequencing of the development activities and tests from a business process approach.

• Incomplete tests (R8 risk): the project impacts the SAP system as a whole and the testing scope is an extended one. It includes the unit tests realized by the developers after adaptation of the SAP objects, the non regression tests (CC SAP consultants and key users), integration and operations tests as well as performance tests. It is appropriate, in preparation phase, to define the testing scope and evaluate the associated work load. The operations and performance tests must not be neglected. It is recommended to use the last functional test plan again and enrich it with the appropriate new test plans.

• Difficulty to find skilled external resourcest (R1 risk): several enterprises were dissatisfied with the lack of competence of the service providers’ teams (BC profiles) and about project managers who do not always have the required experience, not to mention resources who do not finish the project. It is appropriate to draw the matrix of the project key competences at the project definition level and to proceed to a call for interested external parties to bid for offering their services (SAP ERP migration project experience with their CV) It is then necessary to ensure that service providers offer a continuous service during the life of the project (contractual clause).

We have identified the key success factors of a SAP ERP version upgrade project and have linked

to those factors the main risks which the enterprises had to face.

Risks linked with the availability of business resources

• Lack of motivation and involvement from key users (R2 risk): the projects lack business stakeholders and it is hence difficult to mobilize the Project Sponsors which do not see the direct usefulness. It is appropriate to involve the Project Sponsors at the project

r isk fac tors and best prac t ices


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Risks linked to the objectives and scope of the project

• Project which does not appear to bring any real contribution to the business (R3 risk): the project is often “transparent” for the users who are satisfied with no disruption to their day to day activities. On the other hand, the slightest deterioration in service will affect the image of IT Division.It is recommended to put in place a progressive freeze on enhancements process (avoid the “sudden” freeze), limit the downtime period (during switchover) and put forward the list of functional improvements, even minor ones, induced by the version upgrade (example: better integration between SAP and Microsoft Office Suite, etc.).

• Carry over of a too large number of specific developments (R5 risk) : the version upgrade project is not compatible with the desire to return to the SAP standard. Most modifications are carried over and this does not support the upgraded SAP system in being more flexible.It is desirable to establish a governance processs from the initial project phase and to get the business line managements to adhere to a Core Model policy and return to the SAP standard.

• Lack of training / creation of awareness of the internal teams to the SAP ERP version the SAP ERP version (R6 risk) results in a lack of vision of the enterprise on the post migration opportunities, an absence of planning and a difficult task for the enterprise to supervise the service providers’ works. It is necessary to internally identify the project key stakeholders (managers, SAP CC consultants, key users, developers, architects, …) and to provide the adequate training (delta modules, SAP awareness sessions,…).

definition phase and identify the SAP ERP business advantages. It is subsequently appropriate to build a communication plan which satisfies and convinces the key users of the legitimacy of the project and insists on their key role within the functional task team.


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Risks linked to the tooling and best practices of project management

• Incorrect sizing of the SAP system architecture components (R9 risk): Sizing assessments studies of the targeted SAP system components (development line or production system) must be rigorously conducted. Servers, processors, disks and memory must be sized in accordance with the SAP recommendations (charts) and thereafter, proceed with performance tests by using market tools (response time, increase in load).

• Incorrect estimation of the load linked to tests (R4 risk): the testing load is largely linked to specific developments that need to be carried over or modified. It is recommended to utilize market tools which allow an evaluation of the load linked to testing:

- identification of specific developments that need to be carried over (utilized and with high business criticality),

- evaluation of the workload linked to the adaptation of specifics that are carried over (realisation and unit tests),

- evaluation of the tests load (functional tests).

We have positioned the main risks put forward by the enterprises in the risk matrix according to

their occurrence probability (P) and their gravity (G). The (P x G) product gives us the criticality

level of the risk (gross risk).

fatalmajorminor

• Difficulty to find service providers with the right SAP competences (R1)

• Lack of motivation and involvement of key users (R2)

• Incorrect estimation of the Testing tasks workload (R4)

• Carrying over of a too large number of custom developments (R5)

• Lack of formation / awareness of the MOE / MOA teams on SAP ERP (R6)

• Incomplete tests (R8).

• Incorrect sizing of SAP SI architecture components (servers, disks, memory, rocessors) (R9).

• Project without contribution for the business (R3) (project “transparent” for the users)

• Difficulty to well coordinate the functional and technical task groups (R7)

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RECOMMENDATIONS AND BEST PRACTICES

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Apply SAP system good Governance principles

Management of resources and partnership competences

1• Involve General Managementand business managements at project launching phase (R3) and (R2).

2• Identify the specific developments which will not be carried over (obsolete or with a low level of business criticality) (R5).

3• Review processes so as to carry over a minimum number of specific developments and make maximum exploitation of the SAP standard (R5).

4• Proceed to a permanent SAP technological watch (maintain the maturity level on the internal teams’ tool – key users and SAP CC resources) (R6).

1• Anticipate on the availability of the business resources and free the key users from their daily work during the project (R1).

2• Choose the service providers according to their teams’ experience (CV) (R1) and (R7).

3• Secure the continuity of the critical resources of the project (contractual clauses with the service providers) (R1).

4• Carefully evaluate and monitor the equipment load during the project and in start up phase (adjustments sometimes necessary) (R9).

5• Sign a “Safeguarding” type contract with SAP which consists in having a “Total Quality Manager” (project quality assurance and better reactivity from SAP developers for problem solving).

• Management of resources and competences.

• Governance of the SAP system.

• Change management.

• Project monitoring.

We propose a classification of the recommendations put forward by the enterprises according

to 4 main themes:

The recommendations are classified, according to a decreasing importance order, taking into

account the frequency character of the recommendation as well as its operational character

(implementation) Regarding the recommendations which are risk preventive (or mitigation), we

mention the corresponding risk number.


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Change Management - Communication

Best project management practices

1• Communicate to sell the project to the project owner and present it as a first technical stage which opens the door to planned business projects (R2).

2• Communicate regularly on the project progress with business managements, the contact users in the work groups and the key users (R2).

1• Ensure the scope of the tests is correctly evaluated and book competent resources (the tests represent over 50% of the project’s total workload) (R8).

2• Manage the project risk portfolio all along the project (R1 à R9).

3• Cautiously evaluate the analysis and adaptation workload of the specific developments to be carried over (R4).

4• Conduct several dummy migration (rehearsals) before the actual switchover (R8).

5• Rigorously size the future SAP development and production servers (apply at least the SAP recommendations in SAPS) (R9).

6• Provide for a RSV (regular service verification) which corresponds to a definitive test as well as a guarantee period of 3 to 6 months.

7• Provide for a recovery plan.

8• Utilize tested upgrade methods recommended by SAP or by the service providers (R7).

9• Utilize validation tools (tests automation, performance control)(R8) et (R9).

5• Communicate regularly with business managements on the enhancements scheduled by the editor and define a system enhancement plan (R3) et (R2).

6• Be attentive to the users’ new requirements and identify the SAP opportunities in the project definition phase (R2) et (R3).

7• Convert a technical version upgrade obligation into an IS impro-vement opportunity (R3).

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STUDY OF TWO CONTRASTING SCENARIOS

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The extended enterprise is a multi-country, multi-company and multi-site one. It has between

1000 to 5000 SAP users. Its various businesses are federated within a sole Core Model R/3 which

operates the main SAP back office modules (SD, MM, FI, CO, PS, HR, QM). The enterprise has rolled

out the SAP solution of Management of Client Relationships (SAP CRM) and its Management is

monitoring the activity, the results and the business performance process by using the SAP BI

solution (BW) The migration project includes the SAP R/3 4.7 core version and the SAP BW solution

3.1 version (migration in SAP BI 7.0).

The good Governance maturity level of the SAP system has allowed the enterprise to promote

a Core Model policy supported by General Management and relayed by the Business Process

Owners (BPO) who are the “temple guards”. Any enhancement request is first examined by a

BPO and the SAP CC (filtering of the request, feasibility study, proposition of a quantified solution

which is based on the SAP standard and/or a specific development, qualitative or quantitative

gains and criticality level for the business). It is subsequently supported by the BPO in “Solution

Board” (the Core Model governance instance) which decides on the appropriateness or not of the

request, depending on the Business Case initiative. The result is a controlled utilization of specific

developments (a total below 500 m/d) limited to critical business processes and with strong added

value.

The enterprise’s mapping application is controlled thanks to a sustained urbanization effort of

the IS. An initiative to streamline the IS operations has led the enterprise to limit the interfaces

between SAP and other ERPs, for the most part, SAP’s partner editors, which cover business related

processes (vertical solutions) or transverse processes (central applications).

The SAP CC is centralized. Its resources and mutualised competences (analysts, functional and

technical consultants, abapers) are mainly in charge of the adaptative and evolutive maintenance

of the SAP system: technological watch, receipt of enhancement requests from the BPOs, research

of the best SAP solutions in view of guaranteeing the evolution and deployment abilities of the

SAP Core Model, solution production and management of the Core Model documentation.

The hosting, the SAP administration, (SAP middleware and DBMS) and the systems operations

(servers, operating system, backups, availability,…) are externalized (global information manage-

ment contract). The IT DivisionIT Division, which manages the deployment of Core Model projects

in parallel, has been reinforced with external SAP consultants who conduct deployment tasks:

localization parameter setting (entities), management of user data, non regression tests,…


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ces An internal project team (SAP CC and key users) is strongly mobilized on the project and represents

over 50% of the total m/d. It is assisted by the service providers in charge of the SAP technical

migration and of its DBMS as well as of the change of operating system.

The project consists of the implementation of the new SAP ERP platform, move to Unicode and

benefit from the functionalities of New General Ledger.

The enterprise applies the best practices of project management: definition study, splitting of

project in work groups and phases, management of project risks and exploitation of the experience

feedback of its 2 previous migration projects which have been the subject of project reports.

The enterprise has tooled the testing phase (automation of the non regression tests campaign and

performance tests by using market software products).

We note that the radar surface represented below is not well developed: the project is of a relati-

vely low complexity.

Profile of the version upgrade project (the best result)

5

4

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5

3

3

3

3

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Tooling level

Project managementbest practices

Typology ofthe release upgrade

Involvement ofthe enterprise

in the release upgrade

SAP CC’s organizationmodel

Integration with non SAP systems Governance maturityof custom developments

SAP R/3 release to migrate

Scope of the migratedSAP IS

Number of SAP systemsmigrated

Number of SAP systemsin production

Number of users

Organizationof

the enterprise

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The results obtained according to the 4 BSC dashboards


User Dashboard

The project objectives have generally been achieved:

• The project planning has been adhered to.

• No compatibility / interoperability problem is observed because the preparation phase has allowed identification of the work to be done: adaptation of interfaces and need to proceed with version upgrades of ERPs from the SAP partner editors. The automated tests have allowed identification and rectification of anomalies before launching production (exhaustivity of non regression tests).

• No incident or problem faced at start up due to a controlled and equipped tests task team.

• The users are satisfied with the project: no deterioration of service level and the delivery of new functionalities was accompanied by adequate training.

• The SAP system’s performance has slightly improved (users perception).

• Delivery of new functionalities in the Accounting / Finance field (financial monitoring by activity and site).

• Implementation of Unicode.

• Compliance alignment in the financial field (application of IFRS norms to the Group entities).

• Availability of information which is more “real time”, notably in the field of Business Intelligence (real time data communication between the SAP ERP core and SAP BI).

• The freeze on enhancements has been progressive and, on the whole, has remained below 2 months (which is less than 20% of the total project duration).

• The project has not led to downtime for the users (SLA adhered to) and the switchover took place over two days (weekend).


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Results of the version upgrade project (the best result)

4

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5

3

2

4 4

4

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3

33 3

3

2

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Reliable start up

Adherence to project budget

Freeze on developments(in project duration %)


Increase in technical resources

Compatibility / interoperability problems

User satisfaction IT Division global satisfaction

SAP Operations costs

Adherence to time line

Strategic lever for policy

System downtime

Improvement of performances

Reduction of the list of custom developments

Projectobjectivesachieved



• The operations and maintenance costs remain unchanged and the information management contract has not been subject to any modification.

• The IT DivisionThe IT division is globally satisfied of the project and notably of the quality of the tasks outsourced to the service providers (competence of the teams, quality of the SAP system elements delivered – guarantee period of 6 months).

• The project budget has been adhered to.

• Technical resources have increased by around 10% in anticipation of the projects to come.

• Reduction of specifics limited (their number is reduced because the enterprise applies a good Governance of specifics).

• The project is a lever for the IS policy: deployment of an optimized SAP architecture with a simplified SAP system landscape, improve-ments on the IS components which render it more flexible so as to facilitate its deployment within new entities.

• The contribution to business remains negligible and the project remains above all a technical migration project which consists in deploying the new SAP ERP platform, promissory of future innovations.

• The enterprise has placed emphasis on training and creating awa-reness among its future project teams(consultants and managers of SAP CC, BPO and some key users) so as to inspire innovation and prepare the exploitation of SAP ERP’s opportunities.

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Tooling level

Project managementbest practices

Typology ofthe release upgrade

Involvement ofthe enterprise

in the release upgrade

SAP CC’s organizationmodel

Integration with non SAP systems Governance maturityof custom developments

SAP R/3 release to migrate

Scope of the migratedSAP IS

Number of SAP systemsmigrated

Number of SAP systemsin production

Number of users

Organizationof

the enterprise

Profile of the version upgrade project (the worst result)

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The unfavourable scenario which leads to poor results

The enterprise’s organisation remains complex (multi-country, multi-company and multi site) and the

number of users is between 1000 and 5000 There are numerous Core Model SAP R/3 in production

because the initial Core Model (first SAP integration project), whose objective was to diffuse a unique

organisation model and standardized business processes, has deviated as deployments took place, for

lack of SAP system Governance. The upgrade version project consists in migrating the 4.5 version of one

of the Core Model R/3 (of one branch of the enterprise regrouping several subsidiaries and sites) as well

as the Client Relationships SAP CRM Management solution (migration from 4.0 to 5.0).

The absence of Core Model R/3 Governance (no BPO, a General Management hardly involved and no

instance for the validation of enhancement requests) has led to the proliferation of specifics (more than

3000 m/d) which are part of the migration project. For lack of urbanization, the application mapping

is complex: the SAP Core Model cohabits with a large number of local applications (local interfaces on

sites) and central (transverse solutions).

There are several SAP CCs dedicated by Core Model (with various geographic localizations). The

resources and competences are “verticalized” by business and/or a branch of the enterprise (absence

of mutualisation and little synergies). The SAP CC resources and the key users of the branch are hardly

mobilized on the project and the service providers’ share exceeds 60% of the project’s total m/d.

The version upgrade is mainly technical and is accompanied only by the implementation of Unicode. The

enterprise has not formalized, let alone, diffused project management best practices and the projects, as

well as the SAP solutions, suffer from a chronic lack of tooling, the whole situation being due to frequent

recourse to service providers and a lack of internal control on projects.

The radar surface is much more developed and reflects the high level of the project’s complexity which

the enterprise will have to face up to The level of results obtained is of “chamois skin” type.


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The results obtained according to the 4 BSC dashboards


• The limited project objectives are globally achieved.

• The time line has not been respected (production launch delayed by 2 months – Testing tasks undervalued, notably due to the number of specifics carried over).

• The IT Division The IT Division has to face an incompatibility issue post switchover between SAP and a critical operating system.

• Start up reliability is evaluated as mildly satisfactory due to post start up issues met (anomalies which were not detected and rectified during the non regression tests and particularly the operations tests which were breezingly done).

User Dashboard

• The users are globally satisfied of not having noticed anything.

• A slight deterioration in the SAP CRM performance which could have been avoided if the performance tests had been conducted with a market software.

• The SAP enhancement requests have been frozen during around 4 months (which is equivalent to around 50% of the project duration).

• The project has led to 3 working days downtime (user service unavailable from Friday morning to Tuesday night).

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Reliable start up

Adherence to project budget

Freeze on developments(in project duration %)


Increase in technical resources

Compatibility / interoperability problems

User satisfaction IT Division global satisfaction

SAP Operations costs

Adherence to time line

Strategic lever for policy

System downtime

Improvement of performances

Reduction of the list of custom developments

Projectobjectivesachieved

Results of the version upgrade project (the worst result)

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2222

1



• No increase in operations and maintenance costs of the SAP system.

• The IT Division is mildly satisfied because the task of carrying over specifics has not been controlled by the service provider and its budget has trebled (nearly 70% of the total cost of the project).

• Technical resources have increased by 30% (impact of Unicode observed on the size of the DBMS).

• The list of specifics has been carried over as is, which reflects an absence of will to return to the SAP standard and a lack of vision in terms of flexibility and agility of the SAP system with regard to the enterprise’s future trajectories.

• The project is not a lever for the IS policy: no improvement brought to the SAP system’s architecture and no exploitation of this SAP version upgrade planned for the months to come.

• Contribution to business remains unchanged (no new functionality delivered to the SAP users).


Delimitation of project (phase 1)

The call for interested external parties to bid for offering their

services is optional (phase 2)

The migration project

Delimitation of project (Phase 1) it allows to define the scope of the version upgrade project and to build the deployment plan of the SAP ERP opportunities (scope of the initial migration project and the subdivision of value creating business sub projects).

The call for interested external parties to bid for offering their services is optional depending on its sourcing policy and its decided involvement level in the delimitation phase, the enterprise may or may not be led to solicit service providers in various fields (SAP technical migration, DBMS migration, middleware and DBMS administration, implementation of SAP modules,…).

The migration project which we will develop below, at ISO functionalities, is rolled out from the preparation phase until the implementation phase with the start up and the support (phases 2.2 to 6).

THE PHASES OF A SAP ERP IMPLEMENTATION PROJECT

phase 1 phase 2.2 phase 3 phase 4

phase 2.1

phase 5 phase 6

delimitation of project preparation

realization & tests

integration & validation

call offering

final preparation

start up & support

n n n Project phases

recommendations for the organisation of a version upgrade project


recommendations for the organisation of a version upgrade project

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SPLITTING THE PROJECT IN WORK GROUPS

The splitting of the project in work groups is a classic move. It is recommended that one responsible

person should be appointed per task team and a global coordinator (often the Project Manager)

who will be responsible to ensure that there is a good synchronization between the various work

groups so that the tests can start at the earliest possible date.

n n n The work groups of the SAP ERP version upgrade project

phase 1 phase 2.2 phase 3 phase 4 phase 5 phase 6


realization & tests


final preparation

start up & support

project management, quality management, communication

environment & systems

system administration

SAP – Technical migration – OS & SGBD

functional (customizing, non regression tests, validation)

development & integration

safty - autorisation

change management (training…)

Note 1

For the enterprises that have not yet gone through the management experience of accreditations organized in “roles”, this subject will be a task on its own within the context of a version upgrade. This point will be discussed in further depth in the White Paper second edition, as well as the other elements which are identified as exercising an impact in relation to this first White Paper edition.


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Note 2

Depending on the maturity level of the SAP technical architecture, the “Environment & Systems” task is a critical project factor and it must be well anticipated. Note that the passage to 64 bits is recommended as it will be mandatory for the next SAP version (budget permitting, might as well anticipate the future migration).

KEY POINTS FOR EACH PROJECT STAGE

Preparation

• Make an inventory of the SAP system documentation (notably, the blueprint, the list of developments, the documentation for each specific with details of the SAP objects modified, the test plans, the scenarios and existing test plans).

• List the specifics to be carried over (as per business criticality) and those to be eliminated (obsolete, not utilized, or which will be replaced by the standard SAP ERP).

• Communicate on the project objectives.

• Freeze the ongoing developments and projects.

the migration SAP project (phase 2.2 à 6)

phase 1 phase 2.2 phase 3 phase 4

phase 2.1

phase 5 phase 6


realization & tests


call offering

final preparation

start up & support

n n n Migration project phases

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Realisation and tests

• Not to underestimate the numerous treatments and adaptations to be performed:

- Treatment of all the specifics and, accordingly of all the associated objects (tables, programs,…) which are present in the SPDD and SPAU transactions.

- Updating of the ABAP syntax in the programs if the latter has evolved.

- Unicode migration of specific programs (for multilingual enterprises).

- Other treatments to be performed, linked to SAP evolutions (new organisations of tables such as TVARVC, new parameters in the module functions, …).

- SAP standard modification to be redone if the program has strongly been modified in SAP ERP version in relation to the existing R/3 version.

• At least, pass the developments in “Unicode compatible” version, in anticipation of the next version, even if there is no immediate migration of the base to Unicode (provide for a corresponding workload which should not be underestimated).

• The environment must be operational before the arrival of the functional groups in charge of the validation (during this phase, the unit tests and the non regression tests are performed by the SAP CC consultants who communicate with the developers in charge of the necessary adaptations and treatments on the SAP objects).

• Starting with the business scenarios to formulate them first in unit tests ensures the respect of the business imperatives and facilitates the transition to non regression tests and to the functional validation.

• Get the SAP Quality Manager to intervene if necessary to accele-rate the treatment of the OSS notes.

• Automate the non regression tests when there is an extended scope and several entities are involved.


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Integration and validation

Final preparation

Start up and support

• Optimize the testing documentation (enrichment of the previous phase test plans).

• Involve and accompany the functional team (key users) and identify within the project ownership a responsible person for the validation task team.

• Do not get the functional team in charge of functional validation to intervene as long as the priority developments are not up to date.

• Identify the Go/no Go criteria for the switchover.

• Validate the recovery plan (fallback).

• Mobilize the onsite contacts in charge of level 1 support (if the functional enhancements are important).

• Trigger the level 1 support by key users (contacts).

• Make the training / awareness documentation available on line.

• Hierarchise the residual anomalies.

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• Avoiding the R/3 surcharge maintenance costs.

• Move to Unicode.

• Adhere to international reglementation.

• Prepare the deployment of the organisation model within new enti-ties, in the best of cases.

• Simplify the system landscape, mutualize and modify some SAP components for savings purposes (servers, databases, OS, combination of different more or less greedy processors dedicated to business transactions or to operations activities, …).

• Centralization of SAP administration (monitoring, alerts, management of level 4 tickets with Walldorf) with the implementation of Solution Manager scenarios (often with the information management services).

• Specific developments, unfortunately too often carried over.

• Mapping applications which remain complex, due to interfaces maintained and a lack of will to better exploit the SAP potential

The SAP ERP migration project is well tuned, facilitated by a stable version since more than

18 months and the ISO functional character. Its complexity is mainly linked to the number of custom

developments, of interfaces and components impacted by the modernization of SAP’s platform.

Nevertheless, whilst it is predominantly technical, it still consummates functional resources, the

tests being a major task that falls under the client’s responsibility.

The project with ISO functionality is transparent to the user since the 4.6 version, a situation which

does not facilitate the mobilization of functional resources who don’t feel concerned by a project

which is not bringing them anything. Still on the subject of ISO functionality, no particular action

in change management or training is necessary.

The projects consist mainly in the modernization of SAP’s technical platform. They are based

on objectives and stakes which remain limited and contribute too modestly to the IS good

Governance:

These projects are realized in a short term optic, they are launched without real project definition

thinking and thus do not find their place within a strategic plan of profitable expoitation of

opportunities. They contribute little to improving the flexibility of the IS and its capacity to

synchronize itself on the governance trajectory and the general direction of the enterprise.

In this sense, we can for example cite:

conclusion

OBSERVATIONS


conc

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RECOMMENDATIONS

(no reintegration in SAP ERP of specifics developments or proces-ses hosted in non SAP applications).

• Maintenance of the EAI in place.

It is desirable to implement the SAP ERP version upgrade project within a strategic deployment

plan which highlights opportunities & value induced by the new SAP version. These opportunities

can be first identified and prioritized at an early stage of the migration project at the project

definition phase (or study of opportunities).

The SAP ERP opportunities deployment plan, major deliverable of the project definition phase,

presents the exploitation of opportunities by stages. The first stage of technical migration

is analogous to the construction of a “launching pad” of the future business projects which

constitute the following stages.

This first stage is the opportunity for the entreprise to put the right organization order in place

and to gain in Governance maturity of its SAP system by rendering it more flexible, agile and

interoperable.

One has to concede to the enterprises however that the SAP offer remains hardly legible and

difficult to decipher by the SAP CC technical teams, the business managements as well as the

project managers. It results that the enterprises find it hard to sketch the future innovative projects

and value generators, the ROI remaining stuck at investment state. The profits mines announced

by SAP ERP remain unfortunately hardly exploited after the version upgrade project.

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• The training and raising the internal teams’ (MOE and MOA) awa-reness on the new SAP ERP offer so as to inspire the will and desire to innovate.

• The identification and nomination of Business Process Owners (BPO) who have a strategic vision.

• The introduction of a specifics governance which advocates the return to SAP standard through maximum reduction of such speci-fics, thus making the SAP system more flexible and agile and thus, more easily synchronizable with the trajectory of the enterprise (easier and quicker deployment of other IS components).

To do so, the enterprise utilizes several levers:


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• Make SAP services available to the extended enterprise’s users through a unique entry point, the enterprise portal (SAP Enterprise Portal).

• The personalization and work space optimization of the SAP’s user (the roles) who accedes, in the action, to the information and knowledge sources of the enterprise (the functionalities of SAP KM).

• The deployment of SAP “cross modules” internal processes (with sequential logic and based on roles and workflow).

• The communication between SAP and non SAP systems thanks to the NetWeaver platform (ESOA services) which facilitates the orchestration of transverse processus (and managed all the way in real time) between the enterprise and its partners.

• The implementation of frameworks and collaborative processes which federate the extended enterprises’ teams and which allow the enterprise to collaborate more efficiently with its customers, suppliers and co-contractors.

• The consolidation of a global network set up which is based on a unique master database (SAP MDM) and of an “ information exchange facilitator” (SAP PI) which guarantee to management an efficient, real time monitoring.

• The improvement in efficiency of the IT processes which guarantee to the SAP users a better level of service (implementation of SAP Solution Manager scenarios).

The following stages will allow the enterprise, still, depending on its level of SAP Governance

maturity (and, hence, its level of uniformization, standardization, and process integration) to

draw full benefit of the SAP ERP version opportunities in different fields, notably:

• An urbanization effort so as to simplify the application mapping (reduction of interfaces and streamlining policy of the SAP sys-tem which relies on a limited number of other vertical applications from partner editors).

SAP ERP’S STRATEGIC PERSPECTIVES / page 65

studysecond


SAP ERP’S STRATEGIC PERSPECTIVES

White Paper

/ SAP ERP’S STRATEGIC PERSPECTIVES

WHITE PAPER second study SAP ERP’S STRATEGIC PERSPECTIVES

n n n Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 68

n n n The approach adopted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 69

Applied method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 69

Sampling Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 70

Elements outside the study perimeter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 70

n n n The change in expectations related to ERP . . . . . . . . . . . . . . . . . . . . . . . . .page 71

Operational Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 72

Management oriented Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 75

n n n SAP ERP offers structured perception . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 77

SAP «Netweaver» software application packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 77

The « Service Oriented Architecture » concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 81

The most cited functional contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 82

EEC complementary software application packages . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 83

The tools for maintenance and operation of the solution . . . . . . . . . . . . . . . . . . . . . . . .page 84

Summary of the vision of the SAP ERP offering’ structure . . . . . . . . . . . . . . . . . . . . . . . .page 86

n n n Analysis of strategic contributions of the SAP ERP offering . . . . . . . . . . .page 88

The more satisfied expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 88

Rather unsatisfied expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 90

n n n Strategies considered during the implementation . . . . . . . . . . . . . . . . . . .page 93

Implementation by levels or ISO-functional Deployment . . . . . . . . . . . . . . . . . . . . . . . . .page 93

Waiting for improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 93

« All SAP » or « case by case SAP » IS strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 94

« With » or « Without » strategic planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 95

« Promote » or « minimize » the new release to businesses . . . . . . . . . . . . . . . . . . . . . .page 95

contents of the second study


n n n Risks and opportunities brought on by SAP ERP . . . . . . . . . . . . . . . . . . . .page 96

Risks brought on by SAP ERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 96

The opportunities provided by SAP ERP at the IT strategy level . . . . . . . . . . . . . . . . . . . .page 99

The opportunities at functional or business levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 104

n n n Business segmentation and earnings potential . . . . . . . . . . . . . . . . . . . .page 107

Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 107

Case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 110

n n n Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 113

A key success factor: the organization and optimization of SAP Competency Centers . . . . .page 113

Facilitate the behavior of change within the IS teams . . . . . . . . . . . . . . . . . . . . . . . . . .page 115

Organize communication for the «decision makers» of the enterprise . . . . . . . . . . . . .page 116

Approaching a strategic deployment plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 117

Review the calculation of the overall cost of change . . . . . . . . . . . . . . . . . . . . . . . . . . .page 119

Understand innovations according to their level of maturity . . . . . . . . . . . . . . . . . . . . .page 121

n n n Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 122

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If our first study «Feedback on the SAP ERP release upgrade» was designed to help corporations

that have not yet migrated, to better prepare their release upgrade, this second study aims to

provide the strategic potential of this new release from a business and technical point of view .

At first, it seemed logical to present the study and its objectives and describe the method used .

Then, the interviews revealed a change in business expectations for ERP as well as the challenges

that now SAP ERP has to confront . This issue is the subject of a dedicated chapter .

Then, a chapter is devoted to the perception of the main innovations in the SAP ERP solution,

addressing the expectations met by this new release and those which are less so .

Thereafter, a part of our work is devoted to analyzing the implementation of various affected

principles, before addressing the risks and opportunities associated with this new release, both

at the technical level, as well as at the operational and strategic levels, within the IT department

or the business users .

The following chapter is based on enterprise segmentation, enabling to show a relationship

between the potential contribution of this new release for a company, and their characteristic

profile as well as that of their IS . Thus, according to their profile, each corporation will be able to

identify the potential benefits that may derive from this new release .

The recommendations chapter offers keys to develop devices for optimizing the allowed

investment .

Finally, the conclusion summarizes the main findings that were made and offers some food for

thought to deepen the subject .

introduction of the second study


the approach adoptedstudysecond

The method of study has been to interview fifteen corporations in the French territory .

All the data presented in this second part was collected through face to face interviews .

Throughout the collection of information, our main objective was to maintain a neutral position

in order not to influence the answers . Our approach was to put the vision proposed by their SAP

System Administrator, through the various elements that are provided by the surveyed companies

in our series of interviews .

Having collected a panel of, qualitative and quantitative information in our first study, the goal

here was to seek more qualitative information in a more prospective study, even though few

corporations have, so far, significant experience for feedback leading to formal conclusions .

Before each interview, a grid referencing the main discussed topics was communicated to each

corporation . This approach has allowed us to collect additional information, in fact, the respondents

were given the choice to either gather the information they lacked within the IT department, or

refer us to other IS or business representatives, as it is difficult to find a comprehensive technical

and functional view of their systems .

On the other hand, even if it was not possible to select corporations upfront, encountered on the

basis of representative criteria, the sampling was made up of companies with various features in

terms of their size, geographical perimeter, business sector, organization, or depending on the

importance of SAP in their IS, ensuring sufficient diversity for the study .

So this should allow any type of business to take advantage of the feedback and awareness,

within the specificity of their context, from the level of opportunity offered by this new release

proposed by SAP .

Let’s underline that we have sought to meet mainly corporations that have already migrated,

and that, thanks to the involvement of USF, were able to welcome us and to give us a significant

number of responses .

These responses were categorized and analyzed on a set of lines in order to bring out relations of

dependency or correlation . These lines of analysis are presented below .

From this analysis emerged a synthesis expressed in terms of potential value for the enterprise and

best practices for implementation .

APPLIED METHOD


Almost all corporations operate in an international context (groups with subsidiaries) .

The main industries in which SAP solutions are implemented have been covered

(telecommunications, automotive, energy, aerospace industry, etc .) .

If the majority of surveyed corporations had feedback from experience linked to migration, and

minimally functional ISO, a portion of them was still migrating or planning to do so: it seemed

nonetheless interesting to interview those who had placed their project in a «medium-term

plan» .

In addition, we also found interesting to interview corporations implementing SAP for the first

time since the implemented technical scope was often larger than the corporations that had

made only a functional ISO migration .

We have not voluntarily wished to collect elements on the interviewed companies’ new licensing

or maintenance policy, simply because, beyond the confidential aspects of negotiations, this

depends on the relationship between each company and their administrator, and on the scope of

the implemented application solution .

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SAMPLING CHARACTERISTICS

ELEMENTS OUTSIDE THE STUDY PERIMETER


The ASK Council had conducted in 2005, a study on factors of a successful ERP deployment . This

study showed that the main expectations from corporations concentrated around productivity

gains, unification targets and group cohesion, of quality and traceability increased from their

management information, or yet, of course, functional and technical improvements of existing IS .

This study showed that in the past few years, the expectations of corporations from ERP, have

evolved: beyond previous expectations, corporations wished now that their ERP were a facilitator

to achieve their strategic business objectives: competitiveness, flexibility, and differentiation .

The major differentiating factor between ERP’s in the market is the consideration of these business

issues, and their management, unification, and traceability, not being really more than the factors

that differentiate the few leaders originated from ERP market concentration, which took place

in recent years .

Therefore, it seemed interesting at the onset of this new SAP ERP release, to revisit in more detail

the expectations of Business Management compared to the company’s ERP . On this point, the

findings were very instructive, because they highlight the growing maturity of corporations in

relation to their ERP .

Clearly, these expectations are not limited to reducing costs or improving productivity: SAP ERP is

now seen as an element directly impacting (positively or negatively) the operational activity of the

company . It is especially more certain that the scope of an ERP tends to spread more and more

to reduce the circulation time for the cycle of information flow, hence, the actions or decisions

based on the received information .

The interviews that we conducted have helped to highlight the main challenges to which SAP

ERP needed to respond . These challenges have been consistently cited by all the IT department

heads who we interviewed, with a fluctuating degree of importance, according to the business

sector . We chose to separate the operational expectations of Business Management from those

concerning the company’s governance and management framework .

the change in expectat ions related to ERP


IS flexibility is ahead of Management expectations towards their ERP; it is often associated with a

need for responsiveness . This flexibility is illustrated, for example, by reducing the time of taking

into account a new promotional offering when it is within the scope of Commercial Management,

or also by reducing the time for company integration, following an acquisition in the scope of

consolidation at the level of Financial Management .

Faced with these situations, the IS should no longer be an obstacle to achieving these

changes . Rather, it is intended to speed up the implementation of these decisions by offering

« pre-programmed » processes or services allowing meeting those demands . Flexibility in IS is

strategic for the company’s marketing, when a lot of new products or services are offered during

the year, or for those making many acquisitions or divisions of activity . It is then essential, before

upgrading, to ask the following questions: how will SAP ERP respond to this expectation? Does

this new release facilitate operations or on the contrary, make them more complex?

Standardizing means the harmonization of practices in all entities of a group .

The IS department of a corporation is expected to take part in achieving this goal by standardizing

the technology, the procedures and the execution and management processes .

The following figure shows the different possible levels of standardization in a company, knowing

that the closer the level is achieved, the higher the increase of the return of investment obtained

by SAP ERP .

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OPERATIONAL EXPECTATIONS

Flexibility / reactivity

Standardization


Increasingly, lasting relationships are established between corporations and their partners

(co-contracting, long-term contracts, etc .) . These alliance strategies or networks, when properly

managed, are also often a sign of competitiveness . For example, to a subsidiary located abroad

whose corporate purpose is the production of food, establishing lasting relationships with

distribution channels will enable them to maximize their production flow, limit the unsold rate,

and hence the loss rate . Internally, fostering communication between people and between

departments is a sign of responsiveness .

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Increasing communication with partners (clients, suppliers, etc.) and internally

n n n Level of standardization

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standardization of the management processes

standardization of the Business Operational Processes

standardization of SAP skills

standardization of the SAP infrastructure

Requires harmonization of the process of management and control

Requires harmonization of the business process

Requires skills’ centralization in a SAP CC (virtual)

Sharing practices for control management, decisional analysis

Sharing common management rules and reference data

Sharing technical and functional skills

Sharing servers, license contracts

Incr

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A major challenge today for corporations wishing to increase or maintain their competitive

advantage is differentiation . Indeed, it is often by being different from the competition, that it is

possible to win new market shares .

Although this issue has been regularly cited by the surveyed corporations, their perception of

an ERP is to see it as a tool for standardization . Therefore, this expectation of differentiation is a

challenge for the new SAP release: being able to enable both the standardization of most process

while facilitating the most critical differentiation process for competitiveness . This obviously raises

the question of specific developments in SAP .

Often presented as a valuable solution, specific developments, and differentiation factors, can be

made more sustainable, primarily through the services-oriented approach of SAP ERP .

The challenge for the IT departments is to carefully weigh the contributions of specifics compared

to the additional costs of maintenance, but also to decide whether these developments are

carried out under SAP or through other technologies, provided that they will be accessible to SAP

via web services .

To overcome a need for detailed planning of a logistics chain enabling to offer differentiated

customer service (shorter delivery times) a surveyed company had to implement a programming

algorithm . Three choices were available to them:

Thus, this differentiation can be seen today in a new perspective because of the increased level

of openness made by SAP ERP .

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• Using standard SAP SCM features (formerly APO) which requires the acquisition of additional licenses .

• Developing the ABAP (or Java) algorithm as a specific program .

• Using an external tool or a development outside SAP made available by web services .

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Throughout history, cost control or reduction has been one of the main requirements regarding

ERP .

Curiously, this expectation was not the first one, we were told most often .

Is it because this requirement has become ubiquitous or because Management has become aware

that demanding a continued reduction in maintenance costs and IS operating did not necessarily

allow making the best profit? Without doubt, a bit of both!

It should be noted that in one of the surveyed corporations, SAP has reduced IS associated costs by

20% per year for 4 years by standardizing applications and by deploying an integrated solution .

In order to ensure trade confidentiality and respecting financial security requirements (SOX, IFRS,

LSF, etc .), both internally and between companies, securing IS data has become essential for

corporations .

An ERP and SAP ERP in particular, are known for their ability to meet these requirements

but the openness of these systems to the outside imposes new requirements: access to ERP

is done by individuals and IS outside a company . Access represents security risks, starting with

certain employees among competitor partners . These are new factors to be taken into account .

Furthermore, this ERP openness requires commitments from contractual service levels with

partners in terms of availability, and response time .

Internal risks are automatically reversed to external ones, which require a stronger requirement

level .

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Security, data management and information flow

MANAGEMENT ORIENTED EXPECTATIONS


Because of their external growth transactions (mergers, acquisitions, divisions), often of

international nature or high company fragmentation, the «parent» company increasingly needs

to have a view of all their subsidiaries to accelerate the consolidation of their results or, more

generally, to better manage their business .

In a corporation, it is often the decision makers who need to have this overall vision . The

challenge for SAP is then to provide the means to make information available real-time (stock

levels per store, monthly turnover by geographical area, etc .), even though they are not always

very experienced system users .

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SAP ERP is presented as a carrier of technological and functional innovations . Therefore, it seemed

interesting to highlight the view of companies that have implemented all or part of the innovations

of this new release .

The perception of innovations provided by the new SAP solution is still not clear to the interviewed

subjects . Indeed, beyond the editors’ speeches communicated to clients and users, the real

contributions from innovations and new module features, their purpose and their interest at the

business strategy level are not always clearly identified .

For example, SAP Solution Manager, in everyone’s view, appears to be displayed as a useful tool

offering multiple features to monitor SAP systems and ensuring stability, but in practice few

IT department or SAP Competence Center heads are able to have a comprehensive, objective

and operational view of the tool . In practice, it is a little used tool in relation to the potential it

offers .

Although this part did not aim to present the content of the SAP offering, for clarification,

we would like to briefly relate the main features of each one of SAP ERP’ software application

packages .

SAP ERP OFFERS STRUCTURED PERCEPTION

SAP « NETWEAVER » SOFTWARE APPLICATION PACKAGES

SAP NetWeaver is presented as a platform allowing the unification of heterogeneous information

systems, and their collaboration . The innovations provided by SAP NetWeaver mainly happen by

four main software application packages: The Portal, the features and the structure for decision

analysis (Business Intelligence), the module for orchestrating the process (Process Integration) and

the software application package for Master Data Management .

SAP ERP offers struc tured perception

The objective of the SAP Portal is to enable collaboration within the enterprise, both between SAP

and non-SAP applications as between individuals . In addition, this tool increases the autonomy of

the players and facilitates the application of change since the web interface occasionally allows

users to find themselves in a known environment (the web browser) . It mainly allows a user to

access all the necessary functions to conduct their job without having to know SAP or other

products that perform each function .

The SAP Portal (SAP Enterprise Portals)


However, the perception of corporations that have implemented it or tried to implement it is

much more measured . Indeed, the only case of business application found several times in our

interviews is to use the MDM software application package for the management of external

catalogs that must be «synchronized» with SAP ECC .

Furthermore, the opinion of the surveyed companies is unanimous: even if it communicates very

well with the Portal, Master Data Management lacks maturity and stability . Its integration could,

even now, weaken existing installations .

Finally, its acquisition cost calls into question the viability of certain «benchmark» projects

designed from that software application package technology .

The potential of the next MDM release seems to gather better opinion, but it is too early to

substantiate this point .

SAP

ERP

off

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n

• Loading SAP systems or no-SAP system master data .

• Cleaning and enrichment of master data .

• Generating the best possible entry .

SAP MDM is presented as a software application package that provides a basic structure for

«master» reference data management in a service-oriented architecture .

Access to master data repositories is done through services, in a manner transparent to users .

The MDM software application package allows also achieving additional functionality on data

including:

In light of the conducted interviews, this tool still seems to lack maturity especially in its external

portal use . However, its general ergonomics are especially appreciated in comparison to the

SAPGUI interface . It has now become essential for certain functions, making it an important

software application package of the SAP architecture in this new release .

SAP Master Data Management

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SAP PI (formerly SAP XI) is a software application package enabling to achieve orchestration

functions for business processes and supervision . It also allows integration with SAP and non-SAP

applications and offers a library of standard business scenarios that can be interconnected .

SAP PI is truly seen as an internal « component» of SAP, if only because its installation requires the

installation of SAP Netweaver as a base . Its ability to replace other Business Process Management

tools, including market leaders, is thereby reduced .

At the moment, companies whose IS majority is based on SAP technology, are considering the

installation of this solution (including the next release, that seems more successful), when they

have this type of need .

However, in IS where SAP architectures is a «component among others», it is often the BPM

market leaders that have been implemented or are considered as a standard solution .

PI is also used by surveyed corporations for externally interfacing with business protocols: some

corporations have implemented interfaces in line with business protocols (RosettaNet, CIDX,

etc .) whose interfaces are available as standard . We have not yet met corporations that have

implemented EDI through SAP Netweaver .

SAP

ERP

off

ers

stru

ctur

ed p

erce

ptio

n

SAP Process Integration

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SAP BI (Business Intelligence) is the tool for reporting and for data analysis and their logs, to assist

in decision making .

The SAP ERP offering strongly emphasizes the decisional aspects if only by including them in its

license .

Thus all the surveyed corporations that had no decisional solution are considering in a relative

short or medium time period, to launch a Business Intelligence project with SAP .

Beyond the approximation of SAP and Business Objects (this will be the subject of a forthcoming

White Paper), which offers new perspectives for the modalities of restitution, the main contribution

of SAP BI, underlined during our interviews, is the ability to achieve simulations, such as the

budget process, which is often repetitive and requires repeated adjustments .

The decisional SAP Business Intelligence


SAP

ERP

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ers

stru

ctur

ed p

erce

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n

The interviews revealed a few other application cases by corporations supported by SAP

Netweaver-based applications, but cited to a lesser extent:

Other SAP Netweaver potentials that were found

• SAP Netweaver Mobile Infrastructure provides access to SAP solutions by mobile devices (smartphones, etc .) . The idea is attractive to sales force teams or to onsite technical intervention individuals . Meanwhile, surveyed corporations that are thinking about this type of project have all made the same remark to us: the cost of «in house» developments is often weak for mobile applications and is generally more interesting than the sum of the cost of acquiring licenses for mobile and the cost of configuring predefined scenarios in SAP .

• Note that SAP ERP also allows to use SAP in offline mode and to asynchronously synchronize its data . None of the interviewed companies, however, has raised this possibility .

• The use of RFID technology (Radio Frequency Identification): the openness of SAP Netweaver platform allows interconnecting ‘RFID’ reading systems to SAP to facilitate, for example, recording stock movements . Some surveyed corporations plan to deepen this opportunity, SAP seen as facilitating the project .

• SAP TREX is a search engine provided by SAP, which complements certain products such as CRM for quick access to stored data .

LES

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SAP System Administrator greatly highlight, in this new SAP ERP release, the Enterprise Service

Oriented Architecture («e-SOA») .

We could simplify the definition of the SOA concept by the following formula (which the purists

will be able to complete): separate the «presentation handling» and «exchange layers with

databases» in making them independent and accessible by all web services and a unified dialog

protocol . The exchanges are independent from the systems and languages that are used . The

links between the IS are extremely flexible so they can communicate together without being too

dependent on each other .

Although not being an SAP Netweaver architecture software application package as such, nor SAP

specific, it was impossible not to mention the SOA concept, given the number of corporations we

encountered that mentioned the term during our interviews .

In addition, SAP has developed their e-SOA concept which is, in short, a new SOA instantiation by

SAP providing a large share of SAP transactions with the SOA standard and therefore accessible

by web services .

The SAP ERP offering is mainly different from earlier releases by its level of real openness to other

systems and therefore the ability to significantly interconnect these systems .

This has the beneficial effect to make information from non-SAP applications collaborate with

SAP information in a single interface (a web browser in most cases) .

One illustrating example is to leave your requests for time off but displaying the balance of

remaining leaves, this data coming directly from SAP . The user who makes the request or who

approves another’s request then has easy access to the information necessary to request his/her

leave, or to validate the leave of the other .

The interest is to enable the integration of SAP NetWeaver and Web services within the «SOA»

best practices context . Overall, the feedback we received shows that the integration and operation

of SOA are satisfactory and provide good cohabitation of SAP and non-SAP applications .

SAP

ERP

off

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stru

ctur

ed p

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THE « SERVICE ORIENTED ARCHITECTURE » CONCEPT


The interviewed companies have cited this example several times as a typical case of functionality,

often specifically developed, which will allow a return to the standard . SAP ERP allows now as a

standard, to smooth the leasing charge that many businesses had to specifically develop in earlier

releases .

SAP

ERP

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ctur

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erce

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THE MOST CITED FUNCTIONAL CONTRIBUTIONS

Asset management

The New Ledger appears as the main functional innovation implemented following the first level

of update of the technical release (ISO functional) . By all accounts it is a real «breakthrough»

for SAP although some experts believe that the FI-SL module already allows implementing

many of the features of this New Ledger . Without going into too much functional detail, this

innovation can slice an account entry into analytical sub-entries . If that does not contribute to the

establishment of the earnings account, the contribution is significant for the balance sheet, the

management of client accounts and of profit centers .

However, this innovation is mainly useful for large groups . Additionally, the New General Ledger

may constitute a retake with the notion of profit centers within SAP, a notion sufficiently spread

from which a lot of companies have organized their management control, their SAP system(s)

and their specific developments .

The surveyed corporations had some difficulty in clearly identifying functional SAP ERP innovations .

Apart from the « New General Ledger », spontaneously mentioned by all of them (whether they

implemented it or not) and the new calculation method for lease management, the functional

ECC 6 .0 contributions related to previous releases are perceived as « marginal » .

New General Ledger


This tool facilitates communication between companies and their partners, clients or suppliers,

using interactive forms in PDF format that we could describe as «intelligent» . Once the form is

completed, the update is done automatically in SAP .

The opinions have rather converged on this tool: The contributions are real and interesting, but

the acquisition cost of the tool and lack of profitability has, more than once every two times,

called into question the projects that companies wanted to launch .

The following software application packages can be considered as «add-ons» to SAP ECC . They

are not functional modules (Finance, Controlling, etc .) as such, but rather the means to interact

with users and to fill some gaps in the « classic » solution . These software application packages

are not, except when specifically negotiated, included in the « standard » SAP license pack .

SAP

ERP

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erce

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n

Adobe forms

EEC COMPLEMENTARY SOFTWARE APPLICATION PACKAGES

Duet is a component that interconnects SAP to the Microsoft Office world (primarily Outlook) .

For example, follow-up of approval workflow and e-mail alerts related to office mail can be

implemented .

All issues gathered by the interviewed companies that evaluated the Duet product, converge

to the same conclusion: Many corporations that need Duet’s functionality have developed for

very low cost, SAP to Microsoft Outlook interfaces to achieve them . Finally, those surveyed have

questions about the Duet progress Roadmap: Indeed, it does not offer future releases, and this is

perceived as a sign of a component that is practically on its last lap (this tool is still in release 1 .5

and planning a new release is not a priority) .

Duet

Self Management Tools and Services Employee Self Services give employees a greater visibility on

the missions and objectives to be achieved, and managers on their teams, particularly in terms of

training and working time .

Overall, MSS acts as a management tool for managers . It allows analysis and control . As far as

ESS, for example, it allows employees accessing, managing and updating personal information

on time management, training, etc . Finally, these software application packages have a common

purpose: they allow the relocation of captured information to the «source» user, reducing the

burden of administrative services .

MSS et ESS


SAP used to bundle patches and developments in their Support Packages . It was then necessary,

to be able to benefit from an upgrade, to install several entire support packages, which sometimes

required a significant effort of non-regression testing and adaptive maintenance (specific adaptation)

to take into account the corrections from the support packages even if a company did not need them

immediately .

The interest of the Enhancement Packages (EhP) is to install new functionality that could be activated

thereafter without impacting the rest of the architecture .

Their activation and integration are seen as simple and this is a real SAP ERP breakthrough over

previous releases .

It is still too early to have real feedback on the experiences of implementation (beyond the EhP

embedded with the release upgrade), because the surveyed companies, having completed their

release upgrade more than a year before, had chosen to rely on one or other of Enhancement

Packages according to their needs .

SAP

ERP

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THE TOOLS FOR MAINTENANCE AND OPERATION OF THE SOLUTION

SAP Enhancement Packages

SAP Solution Manager

The SAP Solution Manager case is somewhat particular, because the quality of the product is not

in question . On the contrary, corporations are rather satisfied with this component . However, its

usage so far is minimal compared to its potential .

More than half the surveyed companies have reported using Solution Manager only for the needs

«imposed» by SAP:

• Get the product activation codes required for installation .

• Managing the link with SAP for remote support between them and SAP Support .

The other encountered cases of usage are quite limited:

• Insertion of documentation (configuration records, test records . . .) .

• Using Early Watch Alert .


SAP

ERP

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« First time users », those who install SAP for the first time, experience application cases that are

a little more elaborate:

• Using SAP integration project management features .

• Using Service Level Reporting to provide system usage statistics, issues on performance or even on availability .

While many companies give interest to the features of the Solution Manager covering the ITIL

processes of the « Change Management », of « Incident Management » and of the « Service

Center » with ticket management, these usage cases have not been observed in practice and no

installation was presented .

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Several reasons can explain this:

• Solution Manager, a tool that is adequate to SAP, competes with broader support tools for the IT department processes .

• The use of the Solution Manager to manage non-SAP tickets pays off .

• The cumbersome implementation of the product implies a low return on the project investment compared to non-SAP, which are considered more flexible .

• The low number of installations to-date, creates a limited level of available skills on the market .

• It’s a product that is interesting to all the IT departments but not to the Business .

Finally, the monitoring features of business processes proposed by Solution Manager are, as such,

deemed insufficiently mature when the process uses specific transactions or through no-SAP

systems .


SAP

ERP

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A big part of the already existing offering, but better integrated

Let’s recall for information purposes that starting with SAP NetWeaver 7 .0 release, Solution

Manager provides additional features accessible to workcenters that allow having an added view

of the entire system through a prism . Among the standard available prisms, we find:

• System Landscape monitoring .

• Upgrade management .

• Incident Management .

• Central User Administration .

• Systems Administration .

• Business processes and interfaces monitoring .

• Batch process scheduling .

• Problem analysis .

• Upgrade release management .

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ION

What was apparent throughout our interviews is that virtually some functional and technological

innovations offered by SAP ERP already existed before this new release: for example the SAP

Portal, or SAP PI/XI, existed before the emergence of the SAP ERP . However, reading the offering

and the technical implementation of the components, seem facilitated by this new release .

SUMMARY OF THE VISION OF THE SAP ERP OFFERING’ STRUCTURE


The table below shows how much the innovations made by SAP ERP have been incorporated by

the surveyed corporations .

SAP

ERP

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Clearly identified innovations

A part of the offering still needs to be clarified or to mature

The interviews also highlighted certain components or features for their «lack of product maturity»

of the SAP ERP offering . Whether a lack of relevance to business needs or shortfalls intrinsic to the

product, the following require special attention because the returns of the surveyed companies

are rather reserved for these components . With one exception (Duet), the administrator plans for

release components that gradually eliminate the gaps in matching the needs of user companies,

beyond deficiency correction, which suggests a half way convergence of the quality of these

components with other software application packages of the SAP offering .

0%

10%

20%

30%

40%

50%

60%

70%

Rate of innovation integration

Solu

tio

n M

anag

er XI

MD

M

Port

alBI

Enh

ance

men

ts

Ad

ob

e

Mu

ltic

han

nel

Du

et

ESS

& M

SS

GR

C

CR

M

SCM

SRM

PLM

New

Led

ger

SUM

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RY

OF

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ISIO

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HE

SA

P E

RP

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’ ST

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E


THE MORE SATISFIED EXPECTATIONS

• Autonomy level / control level .

• Cost level / risk level .

If the interviews have clearly identified these issues as priorities, they also showed that SAP fully

met the strength, and the quality of information and security of these requirements . Although

maintainability of the authorization management mechanism permits improvement, particularly

when the company falls to a level of control trailer granularity, the financial security requirements

(SOX, IFRS, etc .) can be met .

Those interviewed also mentioned SAP GRC (Governance, Risk, and Compliance) as contributing

to the response of these expectations despite, in some cases, a certain complexity seen in its

implementation .

SAP now offers various a priori or a posteriori security levels . Companies can now place their

security “slider” at the level where they wish, over the two alternative usual lines:

The analysis of the interviews shows that the SOA « concept » is a reality in the new SAP

release .

Therefore, the fact is that when this concept is implemented in a SAP infrastructure (SAP PI,

SAP Portal, etc .) or in a non-SAP infrastructure, SAP ERP has shown but few evident limits in the

service-oriented architecture of the surveyed corporations that had it .

The only identified limits are linked to specific developments, if they were not designed according

to SOA best practices, and also without doubt, to some SAP standard features not yet switched

on in this model .

Therefore, this architecture when actually implemented can offer standard and configurable

services, that once integrated, become end to end processes, that are usable by all entities of a

company .

In fact, total IS flexibility is still a medium term target rather than a current reality . However, the

Respecting quality, security and strength expectations

Business flexibility

analysis of strategic contributions of the SAP ERP offering


anal

ysis

of

stra

tegi

c co

ntri

buti

ons

of

the

SAP

ERP

off

erin

g

important point is that the new SAP release will constitute and accelerator, instead of an obstacle

for the deployment of an architecture allowing business flexibility . Corporations with very high

coverage of their IS by SAP and a reasonably low rate of specific developments, might consider

the deployment of this flexible architecture rather quickly, which was less likely with earlier SAP

releases .

As a direct result of the e-SOA architecture and of SAP openness to Web services, the new SAP

ERP facilitates exchanges with players who historically had rarely used SAP .

For example at the internal level, requests for purchases or time-off requests that historically were

either centralized to assistants, or were the purpose of complementary tools, can now be more

easily captured by the «original» applicants, which allows avoiding unnecessary re-keying, and

also keeping the request traceable .

At the external level, clients can also have access, according to their security level, directly to the

company stock, or they can update their own contact information in case of change of address

or bank details .

This expectation of strong interconnection between the IS department of a company and their

clients or their suppliers reflects the need for establishing lasting relationships, which is sometimes

a necessary ticket for «doing business» . On this point, SAP ERP allows facilitating exchanges

and implementing integrated solutions, when, before, the integration of several technological

software application packages, which sometimes were difficult to interact with SAP, had to be

internally done .

Internal communication and communication with partners

TH

E M

OR

E S

AT

ISFI

ED

EX

PE

CTA

TIO

NS


anal

ysis

of

stra

tegi

c co

ntri

buti

ons

of

the

SAP

ERP

off

erin

g

One of the main expectations is IS’ flexibility when facing organizational and concrete enterprise

changes, this experience means that IS should be sufficiently flexible to adapt to major changes

within the scope of a company . In addition, reorganizations, mergers or divisions of corporations

are driving changes in a globalized world where concentrations were held regularly, and whatever

the sector, SAP ERP is expected to be highly scalable and modular .

And yet, on this issue, almost all the surveyed subjects told us that SAP ERP did not provide any

substantial improvement . Some corporations have even stated that SAP ERP complicated their

organizational changes, especially when in addition to ECC 6 .0, SAP CRM or SAP SCM were

installed .

Starting with SAP R/3, the formal description of the organization of the enterprise was recognized

While there has been no major expectations expressed in terms of ergonomics, the interviews

revealed a positive perception from users on the user interface, compared to this new release .

Overall, upgrading the release has been almost transparent to users, in so far as it has only caused

minimal changes to the user interface and, presumably, no regression . In a context where any

change involving users remains delicate, SAP was able to offer a release with little impact on users

of ISO features .

In addition, the portal user interface is a complementary source of satisfaction because the user,

who has learned to master the «philosophy» of the web browser, remains within a familiar

environment and in a context of «current » technology .

Finally, the feedback from some corporations expresses real improvements in transaction execution

time . However, the feedback falls short when trying to clearly credit the new SAP release, and

also the infrastructure changes that have taken place, with proven improvement (new machines,

network flow increase, etc .) . Without doubt, it is a set of parameters which have contributed to

this report, etc .

Flexibility in organizational changes

Improved user interface

RATHER UNSATISFIED EXPECTATIONS

TH

E M

OR

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AT

ISFI

ED

EX

PE

CTA

TIO

NS


anal

ysis

of

stra

tegi

c co

ntri

buti

ons

of

the

SAP

ERP

off

erin

g

One of the high expectations in the SOA approach, regardless of SAP, is the ability to manage

business processes at two levels:

On this point, the collected opinions show that the current solutions offered by SAP do not

completely meet the needs of the surveyed companies: loss of monitoring in the case of processes

which are involved in exchanges with the user; weak supervisory capacity, …

However, the new SAP PI release (scheduled for early 2009) would overcome these early

shortcomings, especially as the System Administrator’s strategy is clearly moving towards this

area which has and adds value to the IT department and the businesses .

as a structural step for a successful SAP project . Which, undoubtedly, constitutes a strong ERP

characteristic over its nearest competitors, a factor of strength but also an area of relative

rigidity .

Certainly, SAP offer a skills service enabling to facilitate organizational change operations, but it

remains an on demand skills service for businesses and it’s not included in the standard purchased

licenses .

If corporations emphasize this point as one that needs to be improved in the SAP ERP offering,

they are also aware that the level of generality needed for this flexibility is probably not necessary

for everyone . How many different management rules need to be planned to create transactions

to be part of their client’s file or their product catalog? Acquisitions, mergers or divisions are often

subject to different rules for each transaction, etc .

Performance management of the business process

• At the operational management level, in «real time», or at the or-chestration of services: identify bottlenecks and breakdown areas in the IS process that supports the business processes .

• In terms of strategic or «on the spot» management: the availability of information that enables to identify the structural weaknesses of the process: paths that are used too much or too little, service levels (response time, etc .) that are not respected .

RA

TH

ER

UN

SAT

ISFI

ED

EX

PE

CTA

TIO

NS


anal

ysis

of

stra

tegi

c co

ntri

buti

ons

of

the

SAP

ERP

off

erin

g

If the Enhancement Packages make it really easy to identify changes in SAP functionality and

guarantee real stability of the SAP ERP release the SAP ERP release, the fact remains that

preventive maintenance on the SAP system becomes more complex with this new release .

Indeed, the Netweaver technical platform, being embedded in the ECC functional component,

the interdependencies between these software application packages, and the increased system

landscape, make the transition from support packages to be perceived, according to our

interviews, at least as complex as before . Meanwhile, this official report is strongly influenced

by the characteristics of the surveyed companies’ systems (number of environments, rate of

specifics, etc .)

Taking a step back, is this really a failed expectation? Is it not also a consequence of a failure of

the governance of the system within the Business, which somewhat has slowly diverged the SAP

system and its maintainability?

Simplification of SAP maintenance operations

RA

TH

ER

UN

SAT

ISFI

ED

EX

PE

CTA

TIO

NS


IMPLEMENTATION BY LEVELS OR ISO-FUNCTIONAL DEPLOYMENT

A lot of the surveyed corporations told us that they will wait some time, so that the innovations

proposed by SAP can mature before starting their integration project .

This point has been much quoted for the implementation of SAP PI or SAP MDM . Beyond the

ramp-up conducted by SAP to prepare for the marketing of new releases of the various modules,

there is a real question about the IS strategy for corporations . How to solve the dilemma posed

by this strategy? For the System Administrator, this is a matter of stabilizing a release, based on

concrete cases of installation by clients . It is a matter of waiting for responses from conclusive

experiences from other SAP customers, to provide some «real life customer experience» on the

release .

This phenomenon is partly responsible for the current low rate of migration to SAP ERP

installation . However, all the surveyed corporations acknowledged that ECC 6 .0 was stable and

the ISO-functional migrations were generally successful (see the results of the first survey in the

first part of this paper) .

As recommended by the administrator and by the best practices in this field, the first step

undertaken by most corporations is the upgrade of the release to ISO-features . A small number

of companies, nevertheless, chose not to just implement this «ISO-functional» release, but to add

functional extensions from the start .

While some corporations chose to establish a release upgrade with a tiered implementation of

successive new features (often the New General Ledger), this behavior has clearly not been that

of a significant proportion of the surveyed companies, which opted instead for an upgrade of

the technical release followed by a stabilization phase (i .e ., little changes) . In several cases, these

corporations have chosen to start a deployment phase on other sites of their Core Model, a phase

that for some of them was interrupted by the release upgrade project .

WAITING FOR IMPROVEMENT

strategies considered during the implementation


stra

tegi

es c

ons

ider

ed d

urin

g th

e im

plem

enta

tio

n

This thought, often summarized by corporations as ”should we put all our eggs in one basket?”

takes a particular meaning with the new SAP ERP release . Actually, if a large part of business and

organizational processes had already implemented in SAP R/3, in the new SAP ECC release, and

especially its Netweaver component, this issue goes beyond business processes in the functional

sense, and potentially affects all other IS functions: orchestration of processes, exchanges with

partners, and the «new» information access channels (intranet, extranet, mobile personal

assistants, Web services, etc .) .

The challenge is to be able to wedge the temporary scale on the x-axis knowing that, in general,

a release is considered stable when a certain proportion of clients has integrated it (undoubtedly

around 10% to 20%, depending on the number of changes conducted between the two

releases) .

In contrast, « first time users », tend to install a large SAP Netweaver technology software

application package: SAP Portal, SAP PI and SAP BI are part of the majority of the SAP landscape

of the surveyed corporations in this category . These first time users tend to favor «All SAP»

solutions .

The observed situation is fairly typical of the adoption curve of an innovation by its potential

clients, presented in the chart below .

« ALL SAP » OR « CASE BY CASE SAP » IS STRATEGY

Late-comers�±15%

Skepticfollowers

�±34%

Thinkingfollowers

�±34%

Innova-tors ±2%

Leaders�±15%

Curve of innovation adoption

MDM

ECC

EP

BI

WA

ITIN

G F

OR

IM

PR

OV

EM

EN

T


stra

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« WITH » OR « WITHOUT » STRATEGIC PLANNING

The interviews showed a lack of communication from part of the IT departments to the Business

and «internal marketing» for this new release: indeed, a release upgrade project is sold as a

«technical» project or «ISO-functional» and therefore fairly painless for the business . The business

is sought only for tests that can be considered as non-regression tests . If this approach has the

virtue of minimizing risks for the release upgrade and complying with the recommendations of

the administrator (separate the release upgrade from other technical developments) its setback is

not involving the jobs corresponding to this new release, which is often seen as only technical .

The organizational analysis of the of SAP Competence Centers of the different surveyed companies

showed a clear difference in approach between those with a monitoring team, compared to those

whose SAP competence center was only directed towards support and maintenance .

If large corporations have easier access to these monitoring functions because of the size of

their Competence Center, some companies with smaller facilities, having to choose to outsource

their support and maintenance in the form of Third Party Maintenance, have also set up this

monitoring role within their local Competence Center .

It is with people occupying these roles that SAP ERP visions are more mature . In fact, these teams

take time to explore new SAP ERP features or technological contributions to assess their interest

to make models (Proof of Concept) and then to propose a strategic implementation planning . But

at this stage, few are the companies that have held up the planning until their implementation in

a productive environment .

« PROMOTE » OR « MINIMIZE » THE NEW RELEASE TO BUSINESSES


After presenting the perception of the SAP offering by the surveyed companies, their met and

less satisfied expectations, and the principles used in the path of implementation, it seemed

interesting to highlight the risks and opportunities arising directly or indirectly from an SAP ERP

upgrade project presented by the interviewed subjects .

The first risk identified through the interviews on the operation of the new SAP release, is the one

from keeping this new release with the same previous architecture, development and governance

practices . Not that it was radically needed to change these practices, but the «openness» strategy

is a reality and it must be taken into account by corporations .

Failing that could result in classic and ‘closed’ client server oriented SAP architecture, which

should work with web technology oriented open components, with likely medium term limits .

For example, SAP BI web restitution requires activation of SAP Enteprise Portals and the Java

stack, which increases architecture demands .

SAP BI can be installed in the same environment as SAP ECC, which could reduce infrastructure

costs, except this happens by increasing the risk of performance, the dependencies between

Support Packages, the burden of the mounted release on the whole, regression tests and so

forth .

In addition, the configuration of databases is usually completely different between operational

and decision-making systems .

A single SAP BI system may make sense if SPA BI is only used for reporting functions . For example,

much of SAP CRM reporting has been switched to standard in SAP BI .

« Old stuff » with « new stuff »’ in the design of SAP applications

The architecture for the decision-making bases: bundling or

integration into the SAP ECC component

RISKS BROUGHT ON BY SAP ERP

r isks and opportunit ies brought on by SAP ERP


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PSAP Netweaver offers new opportunities but also new issues such as the number of SAP BI

solutions installed in a company, which can rather quickly multiply, with a SAP BI per SAP solution

(SAP ECC, CRM, SCM, …), just for reporting needs, as well as a comprehensive SAP BI to handle

the decision making needs . This thought could be identical for SAP XI or for the SAP Portal . A

criterion of choice related to the separation or non-separation of instances is undoubtedly the

criticality of the applications concerned .

The establishment of software application packages such as SAP Netweaver solutions (SAP PI,

MDM, Portal, etc .) increases the number of servers, the background and the overall complexity

of the SAP landscape . The division between the display components located in the Portal and

the exchange components located in SAP PI makes SAP ECC and their components increasingly

interdependent . Therefore, the complexity of the integration between SAP components, although

lower than the one resulting from the integration with non-SAP equivalent components (other

portal or other middleware), still requires a significant workload .

The increase in the overall complexity of the system

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n n n Example of target architecture

E P

P I ( + M D M )

S C MC R ME C CB I

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The different analysis presented in this work show that if SAP ERP provides innovations at «Front

Office» level with the portal, the Multichannel Access, in direct competition with no-SAP tools in

the market, using « back-office » in SAP, i .e ., for intensive use by a rather small number of users

(for example, an accounting team) remains the common denominator of all installations . The risk

here would be wanting to mistakenly reduce the use of the complex SAP client (SAPGUI) for the

benefit of SAP or non SAP Web interfaces, which are not designed for such intensive use .

Whether it is in terms of response time, the resistance to network micro-blackouts, the complex

SAP client remains effectively the most suited to use SAP for a back office manually dealing with

an important work load .

The obvious point to be taken into account, is not to set time aside to study the opportunities

offered by this new release . Indeed, because of operational daily needs, many companies are

struggling to make the necessary time to complete daily work and evaluation work to properly

manage the medium-term development of their SAP system .

This work is difficult to delegate to the System Administrator or to external teams because it

requires taking into account, in addition to the functional fitness criterion, other criteria such as

corporate culture, the maturity level of the users and the IS policy of a company .

The limits of the web interface during intensive SAP use

The risk of not taking advantage of opportunities

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The new SAP ERP release provides access to virtually all technologies in the market . It is

unambiguously a real breakthrough compared to older SAP releases, which were rather closed to

these technologies .

The use of Web 2 .0 in SAP CRM, the interconnection to RFID technology, data access from PDA

«standard» processes are real advances that makes the surveyed companies respond, even if in

practice, no actual implementation has been observed during our interviews; but probably, this

will be different in a short period of time .

The launching of the new release into the «Java» world is also an opportunity to reuse components,

although the response from those surveyed recalls performance problems of this technology

compared to ABAP, which is more resistant to increasing system load (number of users) .

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THE OPPORTUNITIES PROVIDED BY SAP ERP AT THE IT STRATEGY LEVEL

While recognizing that entrusting the totality of the information system of the enterprise to a

single System Administrator can be an industrial risk, it may, nevertheless be interesting, as long

as SAP provides the expected features at an acceptable cost to use the complementarities of the

various components of the SAP ERP offering, for not having to bear the cost of implementation

and maintenance of integration between heterogeneous systems .

Indeed, a company seeking a strong interconnection between SAP CRM and SAP ERP, for example,

wanting to have access to their inventory in real time will have a minimum of two choices to

choose the appropriate technologies to have SAP ECC communicate in real time with SAP CRM .

The choice of one or another solution allows then, if such integration is not native, to identify a

representative in charge of the overall problem .

Making a permanent technological leap

Entrusting the administrator with interface problems between two systems


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For companies deciding to implement service-oriented architectures built around SAP technology,

the question about status and management of specific developments will arise . Indeed, to make

specifically developed features accessible to other SAP or non-SAP applications, it will be necessary

to revisit these specific developments to be restructured according to «SOA» design principles .

The layers for «presentation», «handling» and «exchanges with databases» talking to each other

through web services . This principle allows for each specific developed program to call on one

any of the 3 layers of another specific program; it is a factor of architectural flexibility, of reusing

the developments and of the interoperability .

The aim is also to be able to interface with standard codes and to only develop the necessary

specific layer (for example to change screen templates), or again, to use the standard features

of authentication and exchanges in its specific developments and with the lower layers (data,

operating system) .

Updating the developments and their modular quality

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n n n Choice of solutions and impact on integration with SAP ECC

Integration provided

by SAP

by « middleware »


by the IT Department

Point to Point


by SAP to promote

Real-Time

S A P E C C

S A P E C C

C R M S A P E C C

S A P C R M

no-SAP CRM

S A P P I (native)

market BPM


By way of illustration, for the Business this means that a specific application for client risk analysis

developed for risk management may be available to the commercial divisions of all branches,

whether they have or not the same CRM system .

It is necessary then to plan specific developments in the same approach as the standard

programs . This is not a matter of launching a vast redevelopment of all the characteristics, but of

implementing «redesign» reflexes whenever it is necessary to modify a development (corrective

maintenance or development) .

It also means, at the level of resources involved in the system, a sufficient level of competence on

this «new» SOA development approach .

If one does not use these good practices, the consequence is the reduction in SOA adoption, a

rate of the programs responding to SOA best practices, and therefore, loss of business flexibility of

the IS overall solution (knowing that in a SAP solution, standards move towards a «100% SOA»

standard architecture) .

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n n n Application of the SOA architecture to an application to calculate the risk to the client sharing several subsidiaries

F i n a n c i a l d a t a

s u b s i d i a r y 1

F i n a n c i a l d a t a


R i s k a n a l y s i s h a n d l i n g

Web Services Web Services

S A P C R M p o r t a l


C R M p o r t a l

s u b s i d i a r y 2Web ServicesWeb Services


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The openness of SAP towards non-SAP technologies (Java, web, etc .) associated with an IS

architecture increasingly mixing SAP and non-SAP technologies (often through external portals)

naturally raises the question of positioning SAP Competence Centers within the IT department .

The IT Division The SAP Competence Centers are often perceived in the IT department as the state

in which the IT department process are not always respected, the blurred budgetary systems, the

relations with the jobs in which IT is not always involved and the specialized skills .

The decision of an IT Department to enter into a service oriented architecture, in which the service

must be made independently of the underlying technology, requires a decompartmentalization

of skills .

Although SAP ERP does not in itself offer a guarantee of good governance of the SAP system of

a company, several corporations (usually the larger ones) stressed that upgrading SAP ERP was a

good opportunity to review the SAP governance mechanisms, especially since the investment on

the release upgrade was consistent .

The main challenges are to define mechanisms allowing to assess the relevance and regulating

the flow of applications compared to the capacity (human, technical, financial) allocated by

Management ., taking into account that simple, but necessary, budget adjustments are not

sufficient to preserve the overall performance of the SAP system .

Several scenarios of organizing the relationship between businesses and their IT department

structure showed these governance mechanisms:

Starting a SAP de-compartmentalization in the IT department

Review the SAP governance mechanisms within the enterprise

• No profession dedicated resources: it is an implicit delegation to the IT department which plays the role of referee between businesses that are often fragmented .

• Complete and explicit delegation to IT: without a strong sponsorship, this model is difficult to operate because the IT department has the power to decide the organization of the processes for and with the business .

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A release upgrade project offers the opportunity to highlight the various governance failures that

should be corrected .

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• A project manager for each business of the enterprise under the responsibility of its business: the quality of «bilateral» relations is correct, but coordination is left to the IT department .

• A project manager for each business process of the company with a coordination mechanism: this will improve the governance of the system but requires rules of governance shared with an escalation system .

• A mastery of multi-business projects under the responsibility of a transverse structure with business process outsourcing (BPO): it is probably the most effective model, but it requires a decision at a high managerial level of a company .

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n n n Governance Framework SAP company

P o r t a i l S A P C R M F i l i a l e 1


Operational Management



Functional Management

IT department

SAP CC, Support, Design,

Execution, Integration

General Management

IT department

headquarters

Management framework

Software architecture policy

IS strategic objectives

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Business strategic and operational objectives

Management requirementsBusiness requirements


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THE OPPORTUNITIES AT FUNCTIONAL OR BUSINESS LEVELS

SAP R/3 has been frequently criticized for the rigidity of its interface, the great difficulty of

modifying this interface and the significant training scale so that users become familiar with

SAPGUI . This criticism was especially true for occasional SAP users such as, in the context of some

interviewed subjects, the management, and the commercial or technical teams .

Thanks to web access by portals or PDA access, these people find interfaces which are most

familiar to them and which facilitate user ownership and that are well suited to their «occasional»

user profiles .

As a direct result of the previous point, access to SAP via Web and also by PDA or through

asynchronous exchanges (Adobe forms) allows infrequent users, direct access and real-time

information in SAP without having to go through an intermediary; and this in with a better level

of freshness than that of frequent reports issued in particular when facing situations where each

step of the way is running against the clock .

The assumed complexity of using the system is no longer an obstacle for deploying it to these

telecommuters . They benefit indeed the side of the integrated solution for operational processes

of a company (sales, maintenance, …) .

If this openness is to be carefully studied, it would only be in relation to the cost of complementary

products, real time access to information to read and write to improve source data recording of

the operational processes of a company (capturing orders directly by the commercial department,

capturing operational records directly by the onsite technician, etc .) .

Hence, a reduction of the risk of interface rejection, compared with a situation where these

processes are initialized outside SAP and synchronized with SAP in night batches (handling) . Indeed,

often in the latter case, there is a duplication of reference data between systems (duplication of

customer contacts, duplication of the description of an electricity, water or telecommunications

network to maintain, etc .) with strong risk of baseline data de-synchronization between systems,

which generates rejection to the interfaces .

Simplify user interfaces

Open system access to new people


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SAP ERP provides a real perspective for using SAP in both synchronous and asynchronous

exchanges with partners (customers, suppliers) .

Regarding synchronous exchanges, SAP «standard» Web services can rapidly interconnect a

partner’s IS with the company by providing, for example, an equipment distributor, real time

information on current and future manufacturer’s stock .

On asynchronous exchanges inputs the contribution from Adobe forms are appreciated by all

the surveyed corporations (even if the licensing cost has challenged many projects whose ROI

became low or even zero) . The use of these forms, for example, asking customers to update their

information, creating purchase requests, etc .) allows the flow of exchanges that were previously

done in a Word document with double entry and the risk of subsequent errors, or in an Excel

file with direct integration schemes into SAP needing to be developed with all the entry controls

necessary for integration .

It goes without saying that the decision to establish a Shared Services Center (SSC) may take the

form of common services, of EIG .

Within a company or shared between several corporations, not just depending on the information

system part . In addition, having the SAP system does not in itself justify the decision to centralize

accounting, purchasing or even human resources . However, the SAP ERP technology and features

clearly appear as synchronous and asynchronous exchange facilitators between a Shared Services

Center and its customers .

The multi-channel SAP Portal access allows real time consultation of business indicators produced

by the Shared Services Center and facilitates real time access to information . On the HR area,

the predefined ESS – MSS scenarios (Employee Self Service – Management Self Services) allow

accelerating the implementation from the moment these scenarios correspond to the needs of a

company, with acceptable implementation and maintenance costs .

The Adobe forms themselves allow performing, fluid asynchronous exchanges because the

integration of data forms filled out by the customer is done in a very powerful manner . This

logically leads us to extend these arrangements for communication outside a company and to

identify a complementary opportunity, which is the organization of exchanges with partners .

Review the modes of exchange with partners

Facilitate the establishment of a Shared Services Center

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Finally, the SAP Portal is an interesting asset enabling operational teams from the Shared Services

Center to organize their work according to priorities defined within the SSC service contract

framework and obtaining summarized views . Users generally need to access multiple production

orders, for example, following the acquisition of companies . With the SAP Portal, the «Single

Sign On» (SSO) feature, allows then, easier navigation between systems and facilitates access to

information .

The SAP Portal also allows providing visibility to the customer on the status of these orders and

reduces bottlenecks in the SSC process .

For example, the interviewed SSC’s foresee implementing the SAP Portal to supply information on

the status of supplier invoice collection and contributing to the flow of the process . This should

allow:

Facilitating the establishment of Shared Services Centers with SAP ERP is beginning to be a reality

in corporations including the accounting, financial reporting and human resources departments .

The extension of the concept of outsourcing all or part of a business process (Business Process

Outsourcing) is also an opportunity to explore, no doubt facilitated by the new release of SAP .

However, this point has not been seen in the surveyed corporations . We know that these practices

are less developed in France than in other countries .

• Reducing the number of operational calls by the SSC team, for this type of questions .

• Alerting clients when an invoice is blocked by lack of input from the reception .

• Providing indicators respecting commitments on services rendered by the SSC .

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• Company Size: we found that the real innovations of SAP ERP concern mostly large companies: organizational complexity, the amount of partners .

• Level of « globalization »: the contributions, such as Unicode, above all affected companies with subsidiaries in countries where the language requires the use of Unicode characters .

• Implemented processes: the more the current SAP scope is limi-ted, the more SAP ERP offers a strong potential; this, arises from the current availability of numerous modules that have reached a satisfactory level of maturity and offer a real alternative to dedica-ted business software (for example, SAP HCM or even SAP CRM) .

• IS coverage level by SAP: when SAP is used as a software in-cluded in a rather heterogeneous architecture, software applica-tion packages made by SAP Netweaver are in direct competition with leading components in the market, which are, in general, privileged . By contrast, corporations with a SAP strategy, naturally endorse SAP NetWeaver components . Corporations have often mentioned the percentage of SAP contribution in their IS archi-tecture, even if there is no true measure («SAP represents 90% of our IS») .

Analysis of different risks and opportunities highlights glaring differences in potential earnings

between corporations in relation to SAP ERP . There are several factors that explain the achievement

of more or less important strategic gains depending on the context of the enterprise .

The interviews have revealed a number of these factors . We chose to define 4 levels for each one

of them . The more the context of the company locates it at a high level, the more the potential

for strategic gain grows in relation to SAP ERP . Let’s note, that some factors are dependent on

a company’s strategy in terms of IS, others are more intrinsic to the enterprise on which the IT

department maneuvering margins are very weak or nonexistent .

The following are the criteria for enterprise segmentation in terms of SAP ERP . There are certainly

other, but here are those that emerged during the interviews:

SEGMENTATION

business segmentation and earnings potential


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• Maturity of a company’s IS software architecture: depending on the level of integration between the different IS applications of an enterprise, SAP ERP could be an interesting solution to fit into an IS software architecture approach . For companies that already have a SOA architecture and common software application packages (portal, exchange bus, references, etc .) the capacity of substituting these software application packages by SAP technologies was revealed as very low .

• Type of activity: we noticed that beyond the specific business itself (energy, telecom, automobile, chemistry, etc .), the nature of the activity allowed to withdraw more or less significant gains from SAP ERP, and that some differences of potential were emerging between the corporations selling services and those selling products . The volume of managed customers, merchandise and suppliers is also a differentiating factor .

• Level of potential openness of IS: not all companies require exchanges with their partners’ IS . Some of them have established outgoing exchanges other, incoming exchanges, others two-way exchanges . For example, corporations that are vertically integrated in a scale of value, in general, have a lesser need for inter-IS exchanges . For these companies, in which SAP R/3 was « the only » IS for a company, the needs are already often covered and SAP ERP will have rather limited perspectives . By contrast, corporations operating in networks or intervening in a horizontal approach certainly benefit from SAP ERP contributions in terms of IS openness .

• Level of specifics: the SAP ERP contributions to the management of specifics are detailed in the first study of this White Paper . In summary, SAP ERP provides the opportunity (for the release upgrade) to review the specifics and the new features to facilitate a return to the standard . Another point characterizing the specifics is their level of matching the SOA strategy from SAP . In other words, companies whose specifics were developed according to SOA best practices can more easily achieve their flexibility and differentiation goals .

• Use: the SAP openness to other user interfaces that SAPGUI

brings, naturally raises the question of the type of use of SAP in

corporations: the «telecommuters», the «casual» are new SAP

user candidates on top of the «industrial» users of back office

accounting, sales or purchase administration .

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The proposed profiling is the following:


company size

level of inter-nationalization

implemented processes

Level of coverage of IS

by SAP

types of activities

maturity of the software architecture

of the enterpri-se’s IS

level of specifics

level of potential IS openness

use

• <500 people

• 1 country

• Finance & Sales

• Less than 10%

• Low volume product

• No shared software application package infrastructure

• No management of specifics no review of release upgrade (excluding technical accounting), no compliance with requirements in the SOA design

• No external communication

• Nb users <33% Nb employees + weak use

• >500 people & < 1 000 people

• Several countries, 1 continent

• ECC scope outside HR

• Between 10 and 50%

• Low volume services

• A middleware is installed

• Review of specifics only directed back to the standard or deletion because they were unused

• Unidirectional incoming and outgoing exchanges

• Nb users <33% Nb employees + strong use

• >1 000 people & < 5 000 people

• Several countries, several continents

• ECC scope full

• Between 50 and 90%

• High volume product

• A middleware and portal are installed

• Existence of specifics technical governance mechanisms

• Two way exchanges

• Nb users >33% Nb employees + weak use

• >10 000 people

• Several continents and non-Latin character languages

• ECC scope + one or more components of the business suite

• Near-full SAP

• High volumes services

• All the infras-tructure software application packages are installed

• Few/No specifics

or

• Comprehensive review of the specifics responding to the SOA requirements

• Two-way exchanges with several protocols

• Nb users <33% Nb employees + strong use


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CASE STUDIES

• Reports:some reports specific to management control .

• Interfaces with the consolidation, with the HR-IS, detailed produc-tion planning, intranet, our portal and EDI .

• Con releases: N/A .

• Enhancements: none, it was a principle of strong governance during the project .

• Forms: the classic forms, purchase orders, invoices, etc ., they are sta-ble because the number of car manufacturers with whom we work is quite stable . There are also some local specifics on the labels . »

Below is an example of a fictitious company obtained by compilation of real cases, also

remaining anonymous to ensure the confidentiality of the information provided by the surveyed

corporations .

The TOTOMOBILE company is an international automobile subcontractor . SAP was implemented

in 2003 and the company is considering upgrading to SAP ERP . Here are some excerpts from

the transmitted elements by the head of the SAP Competence Center: « The company has

3000 employees and a third of them are currently SAP users, which is implemented on a large

part of the R/3 (FI, CO, MM, SD, PS, PP) core . The SAP system is completed by activating the

IS-Automotive solution » .

«Our subsidiary in China remains under a local system to keep the language of the country in the

management system .» «The coverage of the SAP system in relation to the needs is satisfactory

and hence there was no need to develop a lot of specifics:

«The commercial teams do not use SAP, the commercial assistants capture the orders .» In light of these

factors, the «profile» of the company relative to the above presented segmentation is as follows:

Utilization

Level of specifics

Level of openness

Type of activity

Level of IS coverage by SAP

Implemented Processes

Level of internationalization

Size ofthe company

Profile of the "Totomobile" company

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• Order capture by the commercial teams through web portal with a validation of stock allowing teams to improve the quality of customer service by not focusing only on orders creating a problem .

• Establishment of a business intelligence project to facilitate sales analysis, the quality of commercial forecasts, inventory turnover analysis, accessible by commercial teams .

• Establishing vendor files in pdf format to be completed by each supplier when created in the system .

• Establishment a New General Ledger to facilitate accounting integration / management control .

• Review of the authorization principles to validate compliance with Financial Security Law .

• Establishment of a proposal validation workflow when the levels of discounts exceed the allowed thresholds .

• Retrieving information, provided by a subcontractor via Web Services, raw materials stock for 12 consecutive months .

• Establishment of a product catalog accessible from the outside of the company’s portal .

• Deployment of the Chinese subsidiary following the introduction of Unicode when upgrading to the ISO-functional release .

• Centralization of administration platforms through SAP Solution Manager .

• Leasing new production machinery that is more efficient .

• Switch transport orders under SAP Solution Manager .

Here are some identified perspectives in relation to SAP ERP beyond the ISO-functional release

upgrade:

Functional Projects

Deployment Projects

Technical Projects


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• Discerning between urgent and important .

• The budgetary constraints imposed by his management .

• The business constraints, such as the reorganization of commercial management into geographical areas, which is a project in itself to be included in the plan .

• The size of his teams .

• The experience of his IT subcontractors . Indeed, on some appli-cations, both software and computing services companies which he used to work with do not have the skill level available to carry out the projects .

• Training in object-oriented programming .

• Java, WebDynPro Java and ABAP WebDynPro technology training .

• Launch a tender for maintenance outsourcing in Third Party Application Management to release more resources to be devoted to monitor SAP .

In parallel, the head of the competence center identified a number of internal actions:

Finally, the head of the competence center has phased all the needs and opportunities over the

next three years according to several constraints:

He was able to present to the Management of IT the medium-term plan previewed for the SAP

IS of TOTOMOBILE .

This example illustrates the type of thinking from a large part of the surveyed corporations (and

certainly the non surveyed corporations) . The « transition to act » requires the completion of

some major milestones that are described in the following chapter .

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A KEY SUCCESS FACTOR: THE ORGANIZATION AND OPTIMIZATION OF SAP COMPETENCY CENTERS

• Identifying eligible innovations for the company to meet the stated and underlying needs based on mature technologies: this advisory function plays a filtering and synthesizing role of the administra-tor’s speech, of the proposals from integrators, and of the expe-riences shared with user corporations (for example through USF workgroups) .

• Support the business clients on the implementation of the « business case » (economic and strategic profitability study) .

• Support IT and businesses on the SAP governance process taking into account new parameters provided by SAP ERP:

• Economic: Licensing Mode, impact on equipment require-ments .

• In terms of architecture: modalities for reuse through a service-oriented architecture, and ease of deployment through Web interfaces .

• Contribute to define and implement SAP within the software architecture, which is the target of the IS of the enterprise .

A number of surveyed corporations have told us that the resources of the SAP Competence

Center were largely responsible for the only supervision activities of the production, of support, of

corrective and scalable maintenance, processed as they go along .

These competence centers do not reasonably have the time to devote to important activities

added by the company, which is the role of businesses consulting, allowing them to make the

most of their SAP solution .

In functional terms, the extension of SAP ERP with the new system components complementary

to SAP ECC (SAP CRM, SRM, SCM, PLM, etc .) added to the openness of SAP to other IS of

the company, requires the establishment of a true advisory function (internal, external or mixed)

within the SAP Competence Center, this function should have the minimum tasks of:

The role of the «consulting» function in the SAP Competence Centers

recommendations


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Prime contributor to the advice entity and sometimes conducted by the same players in the

enterprise, the internal monitoring team is necessary to identify, qualify and propose internal

innovations offered by the System Administrator .

As previously mentioned, a manifested difference of the support of the new release among the

companies that have monitoring functions (technical and functional), and those that do not arises

from the interviews .

In one case, a generic and little instantiated speech is often heard on the context of the enterprise,

in the other case, views are more developed, and they rely on real product evaluation steps,

implementation models, etc .

Set up a monitoring team

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n n n Change in positioning of a SAP CC over time (Study source : ASK)

T4: The SAP CC reinforces its IT project management support activities for SAP software architecture and governance

T2: The SAP CC takes over the complete SAP IS project management (maintenance and new projects)

T3: The SAP CC also takes into account the advice of the IT project management support to the Business

T1: The SAP CC after the 1st project takes over the maintenance

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FACILITATE THE BEHAVIOR OF CHANGE WITHIN THE IS TEAMS

• In the first instance, it is required that SAP teams soak up the service oriented architecture induced by SAP ERP, on which the majority of surveyed corporations agree that it is the target that must be aimed for, because it makes sense with the requirements of business flexibility . This implies current, good working knowledge for the IS teams for assessing the opportunity to reuse a component or develop another within a approach of reusable components: if the technical functional parameters are accustomed to this type of approach, the ABAP (and Java) developers, often outsourced to «ABAP factories» among providers that are at times offshore, need to be additionally channelled and managed beyond the initial functional specification, the requirements of «Service Oriented Architecture» will have to be respected as well as the requirements for reuse and for interoperability with other components .

• In a second step, the slicing of the aspects of the presentation, the processing and the exchanges at the developmental level and also in technological SAP software application packages (Portal, PI) will tend to complicate the specific developments where the ABAP on R/3 developer offered a program that managed everything from A to Z .

• The Enhancement Packages will have to be studied more carefully: where earlier, the SAP Competence Center was deciding whether to install a new release or not, it is now possible to install «pieces» of ECC releases . Furthermore, SAP CRM or SAP SCM are in principle software application packages independent of each other but that independence could present mid to long term limits .

• The arrival of Web technologies in a client-server oriented world also has significant impacts on the IS teams . Should everything go web? Surely not!

• Which interfaces are to migrate to Web format? What are the selection criteria? What technologies should be used (ABAP vs . Java)?

• As many issues require the questioning of the principles of earlier developments in order to maximize this SAP ERP release .

The implementation of SAP ERP and the operation of its technical potential for company business

is still a fairly recent phenomenon; it has not then seemed that it needs a progressively adequate

process change . This behavior of change at the level of the IS teams involves several aspects:


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ORGANIZE COMMUNICATION FOR THE « DECISION MAKERS » OF THE ENTERPRISE

• On the one hand to try taking advantage of innovative experiments already conducted, to further accelerate the overview of all the innovations and the benefits and the risks they generate .

• Else handle their own «POC» (Proof of Concept) to lead, if necessary, to a finding of feasibility and relevance in the context .

• Finally to «share information between steps», in order to collectively mature the vision of the proposed potential, and help the emergence of a shared and appropriate decision on implementation .

For example, the classic conception of communication between two SI applications based on

SAP (for example, a front office CRM and back office in ISU) leads to the flow of data exchanged

by night batches . This design results in a temporal phase shift between the bases, to rejections

depending on flow volume and on the non-quality of data, on heavy re-keying, manual labor and

recycling . However, an attempt to improve interoperability between the two applications based

on SOA and guidance on the establishment of web services, leads to better IS synchronization,

with increased quality of service for the user, and to a substantial reduction in back office labor

costs .

One conventional challenge for management is that those with relevant information on a subject

as innovative as SAP ERP do not have the authority to decide on strategic implementation, and

those who generally have that authority, however, do not have the information that would enable

them to make informed choices .

But the daily operational pressure and the fragmentation of functions in a company does not

facilitate the work to develop a summary for decision makers, free of excess technicality .

The still uncertain readability of the SAP offering does not facilitate it either .

It seems then necessary for the enterprise:


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• Identify SAP ERP opportunities to benefit from .

• 1st platform: ISO functional, back to the standard and SAP archi-tecture optimization when possible .

• Following thresholds: taking advantage of SAP ERP opportunities in different areas of integration as presented by the administrator under several conditions:

• That the need exists within a company .

• That an equivalent tool is not already present in the IS of a company . The study shows that no one has substituted a product already integrated into the IS of a company by a SAP software application package performing the same function .

• Whether the SAP tool is considered to be at the proper level of maturity .

• That the cost of implementing and maintaining all or part of a SAP NetWeaver software application package is at most equivalent to the cost of a specific development type solution or one made from another product .

For this new approach to be implemented effectively, it is necessary to build a relation that is

clear and makes sense between 3 plans: business, technology, IS cost management; so that all

stakeholders understand the contributions of this «SOA oriented» approach, both for the quality

of rendered business service, and to optimize cost in a permanent way .

It is for achieving such vision, of converging and focusing on priority issues, that we need the

establishment of appropriate forms of communication with business decision makers, and the

general management . One of these arrangements is to build a «business case» assessing the

potential gains in concrete terms, a «business case» subsequently shared in a management

seminar (workshop), for example .

It is important to preview a SAP ERP upgrade as a key step in the path of the Information System

of a company .

The scoping phase (or opportunity study) enables defining the strategic deployment SAP ERP

opportunities plan:

APPROACHING A STRATEGIC DEPLOYMENT PLAN


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n n n Plan for deployment strategy of the SAP ERP opportunities

Path of the deployment o

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iso features

activation EhP

collaborative scenarios ESOA

mashup applications

SAP Company PortalCore Models convergence

SAP PI / MDM

SAP BI

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The subsequent thresholds in the form of development, improvement and innovation batches enable to create more value for the business

following thresholds: improvements, developments, innovations

mash up application

SAP CRM

SAP BI

ESOA solutions SAP Portal

SAP MDM

The release upgrade to ISO-features provides the new SAP ERP 6.0 base, which is necessary to orchestrate change management in IS

governance of specifics

threshold 1 : ISO-features

Unicode

technical architecture optimization

Plan for Diagnostic & preparation for SAP system governance

• Plan for deployment strategy

• Business case (ROI)

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REVIEW THE CALCULATION OF THE OVERALL COST OF CHANGE

Usually, in a large scale, the costs of an IT project are divided into three parts: equipment, licenses

and services (system builder, management, project management assistance, etc .) .

Before SAP ERP, the cost of an upgrade of a SAP IS was mainly driven by the costs of the «services»

line, the cost of licenses being the same for all SAP R/3 and the physical costs fairly stable and

more dependent on the number of users and the volume of data .

SAP ERP involves a new cost and licensing structure and a new architecture breakdown that

challenge the numbering procedures of a SAP IS change and its maintenance .

With SAP R/3, there was an overall cost of licenses regardless of the SAP use: whether a company

implements one or five modules, the cost of license and maintenance was the same (in all

cases, calculated on the basis of cost per license) . This drawback made the solution expensive

for a company only wishing to have SAP accounting but it had the advantage of making the

supplementary cost of setting up a new feature in SAP as the most interesting aspects of licensing

costs were already settled . Only the number of SAP users influenced the invoice amount payable

to SAP .

With SAP ERP, in addition to greater complexity of licensing mechanisms, a new approach appears

to pay for new components depending on the context of use and the volume of exchanges . Some

components, like PI, are «free» when it comes to SAP interface components, but are payable

when used for non-SAP IS exchanges .

This creates a complexity in numbering the changes of their SAP IS, because beyond the integration

costs, the license component and the associated maintenance must be taken into account . This

is because SAP R/3 has been functionally replaced by SAP ECC, a SAP ERP component, which

includes the Netweaver technology platform .

The interdependence of these two sets requires the client enterprise to consider that SAP R/3

was, in fact, replaced by SAP ERP, the ECC component not intended to be installed «by itself»

particularly in large corporations .

On the licenses issue


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Netweaver architecture generate the establishment of additional environments .

Where three environments were previously required (development, quality and production) in

SAP R/3, it is now required to replicate this channel for each software application package (three

environments for SAP PI, three others for SAP BI, etc .) .

Given these elements, the physical costs should be explicitly taken into account at each major

level of change of their SAP system .

To summarize: some elements of calculating the overall cost of an upgrade related to SAP:

On the physical aspect

• Lifetime of a release: ≥5 years .

• Costs to take into account:

• Licensing (where there is an additional license to pay) .

• Benefits:

• Parameters .

• Development .

• Corrective and preventive maintenance (minor release upgrades) .

• Equipment .

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UNDERSTAND INNOVATIONS ACCORDING TO THEIR LEVEL OF MATURITY

The successful implementation of SAP ERP innovation requires a well matured technology software

application package (reliability, strength .) and teams mastering these new technologies .

When these two criteria are difficult to meet, it seems appropriate to adopt a prudent course of

action to secure IS changes .

In some cases it may be interesting to stagger the projects until the products are more mature or

until the skills to master them are accessible and available .

It goes without saying that staggering the project is not acceptable unless an acceptable, pending

or provisional solution is found, in terms of cost, implementation time frame and functional

coverage .

Finally, a solution closer to SAP technologies, the most tested, may be a short term response .

This project staging may have a dual interest:

• Evaluating future releases: for example, future SAP PI or SAP MDM seem to initially receive quite positive feedback .

• Integrate some business needs in SAP standard functionality .


The second study of our White Paper gave the opportunity for a preliminary exploration, with the

corporations we met, for the possibilities and also, the current limitations of the new SAP ERP

release and its SAP Netweaver base .

What are the prominent features that emerge from this research?

• First of all, the resulting feedback is still very low . So at this stage it is difficult to have any real certainties «proven by experience» .

• Then, the situation is quite varied depending on the level of technological or functional maturity of the software application package in consideration . In practice, it seems important to «shop around» with discernment . The SAP strategic plan must take into account, beyond the rhetoric marketing, the real condition of stability of the planned components .

• At this stage one issue that still lacks a clear answer, is that about the technical and functional SAP ERP contribution to enhance the strategic flexibility of corporations during mergers, acquisition and reorganization .

• Nevertheless, despite these rocky shortcomings, it seems that the new SAP ERP release offers some significant strategic advantages enabling concrete and progressive change towards a software architecture modeled according to SOA .

• The consequences of this possibility seem substantial for the corporations, at medium-term, at least for those whose business, size, and environment require a high level of interoperability between systems, whether they are «SAP» or «non-SAP» . These consequences can be expressed in terms of business gains and in operational savings .

• However, these potential gains are not guaranteed in advance, they are to be built on a case by case basis and must rely on new skills from the SAP CC teams, which must change their work habits .

conclusion


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• In this sense, from the same base, some corporations will find the «right path» and enter a new area of strategic benefits . Others however, may get lost in route, and just be burdened with the additional cost resulting from the technological change and from the increase of the overall level of the resulting complexity .

• It seems more likely that corporations that will not invest a minimum in monitoring activities, in sharing experience and experimentation in their own context, may finally join the second group rather that the first one .

One of the roles of USF is to assist and guide its members to join the first group, the one with

corporations that will get the most benefit from this new release; even if the approach for

clarification of the potential reach, and new practices to implement, is not yet achieved .

This White Paper proposes the initial trajectory elements allowing each client to enhance the

investment of their migration to SAP ERP .




White Paper

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www.usf.fr

ISBN : 2-9523607-0-7 50 e

migrate and evolve with sap erp

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