Transformation Expert Blog

Planning a New SAP Project - Expert View

SAP systems have implemented at several thousands of companies worldwide. New SAP packages and industry solutions have been added to wide spectrum of SAP solutions that prompt many companies, institutions and government organisations to implement SAP to support its growing organization. There are wide variety of reasons why companies implement SAP. Mid-size and large companies have large complex business processes and operating procedures that have evolved over time. During this time it is most likely that these companies kept on enhancing their legacy systems to a point where it is not performing efficiently. This legacy systems may be re-engineered or over-engineered so much in the past years that you are almost certain that you cannot support your large corporate growth with such an ageing system. Also, some large companies that have acquired other companies often end up with sphagetti systems that are redundant or even outdated. When you end up with these complicated sphagetti systems, there is often an urge to transform your large corporate business to a well integrated robust system like SAP. Annual or strategic corporate board room meeting often discuss these factors while planning for rapid short and long term growth of an enterprise. And this kicks off an initiative to evaluate and plan for a new SAP business transformation project.

Key Steps to Effective Planning for a New SAP Program

Step 1: Define Scope of Business Transformation

Your corporate board and executive management have made a decision that your organisation need to move your business operations to a new technology platform like SAP. At this junction either CIO, COO or a senior vice president representing business or technology need to define scope of the project together with goals and objectives. The scope should clearly identify whether the leadership prefer to implement SAP in a big bang approach or implement the project in multiple releases. You should identify key objectives that the project needs to meet to support business growth and also address pain points that business is currently experiencing due to ageing or poorly integrated legacy systems. I expect that the CIO or COO prepare a executive report and a presentation to the board that outlines all these points.

Step 2: Review of Scope, Goals & Budget by corporate CFO, CEO and executive leadership

CIO/COO should schedule a corporate executive management meeting along with key board members to review scope, goals and objectives of the project. A formal presentation should be created that should begin with the pain points and challenges the organisation is facing that can jeopardize rapid growth due to systems and technology limitations. Explain clearly why SAP platform is the best to resolve these challenges and meet business needs to support growth. A few slides should then follow emphasizing the project scope and release approach. If you are trending for a multi-release implementation, be prepared to discuss how you plan to split the releases and what will be the benefits to the business for a specific release sequence. Main goal of this executive review meeting is to build confidence with executive stakeholders and address any concerns the management may have with such a big investment. I recommend that your CIO establishes a criteria to measure success of the project and review the same with the executive management during this meeting.

Step 3: Select Your Executive Project Sponsor

My experience with several SAP projects over the years has convinced me that selection of a very competent and responsible leader with high values for business ethics and integrity is crucial for the success for any large IT transformation project. Ideally the executive sponsor for your SAP implementation should be a CIO or senior vice president of business operations. Executive Sponsor should have the appropriate level of authority to make all project decisions on behalf of executive management to ensure smooth execution and resolve any challenges that arise time to time during an SAP implementation. My recommendation would be to choose a C-level or Vice President level executive who has led major IT or business transformation projects within your company. I would advise against hiring a new individual to serve in this role as it would be rather beneficial to have someone who has been with your company for a few years and understands your business operations along with tactics that are needed to navigate through your corporate culture to make quick decisions.

Step 4: Setup Project Leadership and Steering Committee

Its time for the executive management to meet and form the steering committee for your SAP implementation. I recommend that steering committee should have key corporate leaders such as CEO, CIO, CFO, COO, key senior vice presidents in business/operations, executive sponsor (if not already in SC), SI senior executive and trusted advisor (in advisory capacity). A good size of steering committee for large SAP projects is between 8-12 members. C-level executives are highly recommended to be part of the steering committee. You will need to take part on scheduled steering committee meetings (mostly once every month) and any other key events that demand steering committee representation.

This newly formed Steering Committee should now define the project leadership team. You can add some leadership members to the project leadership during project planning phase. At this stage the project leadership should have executive sponsor (which you have already chosen by now), program manager, business lead, it lead and project advisor. These members will be actively involved in making key decisions such as inviting and evaluating vendor proposals (system integrator proposals), collectively approving a final SAP systems integrator, drafting SOW and all other key decisions before officially kicking off the project and throughout its lifecycle. The Business Lead should be a vice president or senior director level resource who has successfully led business teams on prior project within your company. Similary, your IT lead should be a VP or director who has led large systems deployment, applications development and integration initiatives. SAP Program Manager should have SAP program leadership expertise on at least two SAP implementations. I recommend hiring a new SAP program manager or appointing one within your organisation with prior SAP project leadership expertise if you had another SAP business or regional rollout.

Step 5: Invite SAP System Integrators to Submit Project Proposals

Each company is different with respect to industry in which they operate, business needs, regulatory & budgetary restrictions and combinations of these factors. You should select the 4-5 SAP systems integrators that have proven expertise in delivering SAP implementations within your industry using the SAP modules that you plan to implement. Example: If your company is a large retail company like Walmart, Target Corporation, J Crew, etc and say you are planning to implement SAP IS Retail solution. There are a select few SAP implementation vendors that I would recommend who have proven successful delivery track record with SAP IS Retail solution. I would suggest inviting only a few vendors from this list in this scenario to submit proposals for your implementation.
Your project leadership may sometimes have a preferred SAP systems integrator of choice or there may be only one SI who has systems transformation delivery expertise within your industry. I would still advise on engaging atleast 2 or 3 vendors so that you create a competitive environment between these vendors and your company end up getting the lowest possible project bid. Many public sector organisations or smaller companies have budget restrictions that define the spending cap on your SAP project. Creating a competitive bidding environment as mentioned earlier would ensure that you get the best proposal and lowest bid from the vendors that you have been dealing. select all competitive SIs; at least two; provide quick orientation of high level requirements/objectives; desired business functionalities;

Step 6: Review Vendor Proposals, Implementation Approach and Bids

Your prospective SAP system integrators must have submitted proposals in response to your inquiry. The project leadership team should establish a criteria to rate each proposal and vendor. This would help you to review and rate each proposal in a consistent and accurate manner. A few essential criteria I expect to see in the evaluation include:

• Vendors prior experience in implementing SAP in your specific industry and SAP modules that you plan to implement.
• Reference from an existing SAP customer that vendor has implemented SAP for your specific industry. Reference checks to include delivery on time and within original budget.
• SAP functional and technical expertise of team leads and architects. Review profiles that have been submitted for these prospective resources.
• Vendor ability to build cost effective RICEFW objects with supporting model.
• Implementation methodology tailored to fit your project needs
• Organisational change management approach
• Risks and issues management approach
• Preliminary cost estimate for entire project lifecycle.

I usually like each of the SAP system integrator who are bidding for your project to come in at different times and formally present their proposals. This should include a proposal, presentation to project leadership that includes vendor portfolio, implementation approach, staffing model (or approach), engagement models, etc. Proposal should include preliminary project implementation costs split by each phase.

Step 7: Selection of SAP Systems Integrator to Lead Your SAP Transformation

So far you had a chance to review each vendor proposal and also some understanding of each vendor capabilities. Now it is time to evaluate each vendor and select the system integrator based on the evaluation criteria some of which have been discussed above. If you have more than 2 prospective SAP system integrators bidding for your project, I would suggest that you shortlist the vendors to 2 or maximum 3 based on prior SAP implementation expertise and successful SAP solution delivery track record in the same industry as yours. These shortlisted vendors should then be thoroughly evaluated based on the criteria discussed above.

Step 8: Finalize Engagement Model: Fixed Fee Vs Time and Material

Negotiations should be done with the ultimate two vendors that have been shortlisted. My preference is to push for a fixed fee implementation. If you have received a time and materials based project costs, typically most system integrators add 20% contingency to arrive at a fixed fee cost. Pushing for a fixed fee implementation protects your company from cost overruns which are very important if you are going for a large SAP transformation project ($50 million USD or above) or if you are a public sector implementing SAP on a restricted budget. If your project involves significant custom development or RICEFW objects, then it is likely that system integrators may not agree to fixed fee engagement

Step 9: Statement of Work for Planning/Blueprint Phase or Entire Project

Its very important to draft a clear and precise statement of work (SOW) that accurately defines that scope of the project, timeline, contracted cost for each phase or overall implementation including any penalties in case of vendor(s) failure to meet project timeline.

Step 10: Interview and Selection of Your Vendor (SI) Leadership

Believe it or not, but a crucial factor to the success of your SAP implementation depends on the quality of leadership personnel that represent your SAP systems integrator. I strongly recomment that your executive sponsor, advisor and leadership along with CIO interview and choose engagement partner (senior executive or delivery partner) from your systems integrator. On the project I have been involved, I recommend that during vendor selection phase, you should interview the engagement partner, project manager and solution architect from the SI. Engagement Partner should have prior successful delivery track record with SAP implementation project in your line of business. Project Manager should be an SAP project management leader who have SAP project management experience which may not necessarily be in your specific industry. But project manager should have led SAP technology projects. SAP Solution Architect should be the expert in at least 70% of the SAP solution you are planning to implement and should have prior successful implementation track record.

Step 11: Kickoff Your SAP Transformation Project

Its time now to prepare and schedule a kickoff meeting for your SAP implementation which will begin with the planning phase.

Above are just a summary of select key activities and measures we follow while engaged on your SAP implementation. To know more about our SAP Program Management service, please request a FREE no-obligation call with one of our SAP Progam Advisors by sending an email to svcs@iiitech.com