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SAP for CIOs - Jon Reed's analysis

This section of JonERP.com contains pieces Jon Reed specifically wrote for CIOs, including for ERPtips. If you're interested in more content Jon publishes for SAP leaders, Jon is now the Editor in Chief for The ERP Executive - Panaya's Magazine for SAP Managers. See Jon's ERP Executive articles here. You can subscribe to ERP Executive content and check out the original content Jon and his team create each month for SAP managers.
Who Said SAP Was Expensive? Print E-mail
Article Index
Page 1
Page 2

jonerp_full_logo.PNGWho Said SAP Was Expensive?
How Sedgwick County, Kansas
Spent Less Than 10 Percent
of Their SAP Consulting Budget
(While Maximizing User Buy-In)

Unabridged Edition, Never Before Released
by Jon Reed

I’ve been writing about the SAP market since 1995. That’s a lot of verbiage, and there are times when I think all the groundbreaking stories about SAP have already been told. But at this year’s Sapphire, I stumbled upon a new one. At the conference, I met up with an ERP Director by the name of Renfeng Ma, and he told me about how his project managed to implement a BW dashboard system with more than 800 KPIs (Key Performance Indicators). They did this while achieving a high level of user buy-in, bringing a greater transparency of information to taxpayers, and, drum roll - they spent under 10 percent of their projected consulting budget for the project. He had my attention.

Site Editor's Note: For those readers who want to read more about this implementation, Renfeng Ma has kindly provided a downloadable PowerPoint Presentation (776K) about the Sedgwick County BW Implementation to JonERP.com visitors. This PowerPoint will also give you a closer view of the two screen shots used in this article - Figure One below is slide 3, and Figure Two (on page 2) is slide 5.

I’m not the first person to write about the Sedgwick County Business Warehouse (BW) project. However, there are some key aspects to this story, in particular the savings on consulting expenses and how that was achieved, that are seriously under-reported. Most companies could not adopt all the tactics developed by Ma and his team at Sedgwick. But there are enough innovative aspects to what they did that there are tips-a-plenty to choose from here.

In this article, I’m going to break down the key lessons from the Sedgwick County, Kansas, BW implementation, drawing on Renfeng Ma’s commentary in each section.

1. A Well-Prepared Organizational Culture Means Less SAP Change Management

The part of the Sedgwick County implementation that may be hardest to duplicate is the organizational culture. When it came time to look at installing ERP, and then put in the BW analytics components, Renfeng Ma found that the organizational culture had already been primed for a move towards better and more transparent information.

Ma’s role in the project came into focus after the initial 4.6C R/3 implementation was complete. At that point, SAP reporting was not meeting user expectations. Ma was challenged by some of the users: they wanted to see the great looking reports the SAP sales team showed them during the demos. “We were missing the whole analytical side,” recalls Ma. “The transactional side of the reports was only designed for technicians and not county-wide consolidated reports. So I do represent the challenges faced by the middle level and upper level managers.”

renfeng_ma.jpg
Renfeng Ma, ERP Director, Sedgwick County, Kansas

Fortunately for Ma, his organization was ready to embrace a better approach to reporting. They were driven by their accountability to their constituents. “When I first talked about using SAP to make our reporting easier, we were guided by an even more important question: what happened with the taxpayer dollars that we’re managing? What kind of difference did we make? We had tremendous buy-in from the beginning because the management team was all for transparency.”

You could say that Sedgwick County’s organizational culture was unusual: instead of technology causing upheaval, the organization was waiting for the right technology. They were ready for the analytics and performance indicators that BW was now capable of.

Ma had another advantage: he had political buy-in from the top down, starting with Bill Buchanan, the county manager that the entire project was accountable to. Also, as the ERP Director, Ma did not hail from the IT department. He was previously the county budget director, with twenty years of history and relationships to draw on. He understood how to push decisions through the system. Had he just been from an IT background, the users might have been able to go around him. In this case, there was a built-in trust with Ma’s leadership, and he used that to push Sedgwick’s innovations forward.

Specifically, Ma’s team built on the previous R/3 implementation by implementing a BW and SEM-based dashboard system, where more than 800 KPIs are now tracked by the county’s governance leaders via SAP’s Enterprise Portals. Data from those KPIs is relayed back to the public via reports, which gives taxpayers an unprecedented view into how their tax dollars are performing. The county implemented the project in BW 3.5, and within SEM, the Corporate Performance Management (CPM) component was heavily utilized.  Looking ahead, the county will be upgrading to NetWeaver BI 7.0 and ERP 6.0, but they were able to achieve their initial BW success running on 4.6C and BW 3.5.

mafigure1.jpgFigure 1: Manager-Level
KPI View at Sedgwick County via SAP Portals

If Ma’s team had the advantage of a culture prepared for greater transparency, they also had a disadvantage: an ingrained resistance to SAP, based on previous implementations that had been fast, but not necessarily meeting all user expectations. “I started this SAP job in the middle of some pretty big dissatisfaction with SAP,” says Ma. “There were people talking about sending SAP back to Germany so we could start with new software. We had some difficulties with the original implementation and user acceptance. We’ve done HR and Payroll in ten months, core Financials in twelve months. These were very rapid deployments, but we ended up delivering more changes than the organization can absorb effectively right away.”

Ma was able to use this negative perception about SAP to his advantage. Since the previous SAP installs had been quick, but had not gone over well with users, Ma was able to get across-the-board acceptance for a lengthy requirements gathering phase. Instead of facing resistance for a longer-than-normal process, Ma found his users receptive to trying something different. This requirements gathering phase was the key to the success of the BW portion of the project.

2. Better Requirements Gathering Leads to User Buy-In

When Ma was charged with running the Sedgwick BW project, he knew that he needed to start by developing Key Performance Indicators. In many cases, the KPI process is handled by an outside consulting firm, leading to extra expense and also creating the potential for user resistance through the imposition of KPIs that were not self-generated.

This was the most time-consuming portion of the implementation, lasting almost two years, but the time spent did pay off. And Ma’s team went much further into the KPI creation process than most companies do. “In Sedgwick County, we are developing our own ‘Managing by KPI’ model,” says Ma. “It’s based on your management story: tell me your story about how you manage. That’s a unique exercise that took about six months.” 

To accomplish this, Ma put in a focus group of twelve department heads. He would ask each one of them, “How do you manage your operation?” The responses were the beginning of the KPIs that these departments would eventually be publicly evaluated by. “Without relying on any predefined model, the EMS director would tell his story with all the major areas he watches for,” says Ma. “Then, the fire chief will tell his story, then the IT director. The HR director would tell her story about the way she manages her team and what she needs to do to prepare the organization’s human capital for the future. Through that kind of individual storytelling at the department head level, we extracted enough commonalities to basically come up with a model for managing by KPI.”

All the KPIs that became part of the dashboard were derived from this management model. The result? The users felt like they owned the KPIs in the Sedgwick County dashboards. That was crucial, because they were going to be under the performance microscope these KPIs created. “Now they can all say, ‘This is my dashboard, because I developed the story; I came up with the indicators,’” says Ma. “Of course later on, the indicators were refined by different groups. But the original concept was initiated by the dashboard owner. So we had built-in ownership from the beginning.”

The money saved by not relying on outside management consultants was not included in the consultant cost savings we will get to shortly. But Ma did point out the value of the build-your-own-KPIs route. “I do believe we did a unique job,” says Ma. “If we hire a consulting firm to come in and they say, ‘give us all your KPIs and I’ll put them in a dashboard,’ it’s not going to work here in Sedgwick County. The right collection of indicators is not there. It’s not comprehensive. Some of them make sense, some of them don’t. So in my mind, I knew to make it realistic, to make it meaningful, we really needed to develop a set of indicators that are based on real management practices.”

One more useful technique was showing demos of the dashboards back to the department managers well in advance of when they were finalized. This resulted in a practical feedback loop that made the final dashboards more effective. Ma estimated the leadership teams saw the dashboards at least twenty times before go live.

3. Save Money on Consulting Through Better In-House Training

Before Ma came on board the project, SAP performed an upgrade readiness assessment that included projected consulting costs for the dashboard project. The total estimated cost was $2,000,000 for consulting fess alone. The total amount spent on consulting at the end of the dashboard project was $125,000. $100,000 more was spent on training than what they would have had they hired a consulting firm to do the full implementation,  but even with that extra $100,000 taken into account, that still led to an overall savings of just over 90 percent on consulting and training services.

So how did they do it? Ma’s team did two things differently: they aggressively invested in their in-house training, and they used their outside consulting firm more as a strategic advisor than a source of full consulting teams.

For the training component of the implementation, Ma wanted to develop some internal competencies before he issued an RFP for outside consultants. So he started getting the development team involved in the initial dashboard creation, sending team members to the SAP Academy for front-end and back-end BW training.

In order to make the training more effective, Ma created a sandbox environment and gave all his employees remote access to the sandbox via laptops while they were at the SAP Academy classes. This led to a greater knowledge retention and a chance for all who trained to immediately test their know-how in the Sedgwick County environment.

By the time Ma issued the RFP, he could demonstrate a decent level of internal competency in BW/SEM dashboard development. But even with that competency, many consulting firms wanted nothing to do with the project. “I began to realize how risky our approach was perceived by outside firms, because not many people were doing it this way - a brand new project where you are only asking for consulting guidance, but you want to do the project on your own. Most of the consulting firms I talked to; after they realized what we were up to, they would hang up very abruptly and very politely say, Good luck to you guys.”


 

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