Jon Reed Interviews Paul Halley, SAP SEM Consultant

An Historical View of the SAP SEM Consultant:
Jon Reed Looks Back on His Interview with SAP SEM Consultant Paul Halley

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part One
September 15, 2003

We've had it with the hype. SAP consultants are sick of hearing about the "next big thing" that will revive the SAP market and boost sagging rates. The reality is more complicated anyway: offshore outsourcing has changed the nature of the consulting market forever. Even a sharp rise in SAP software sales does not mean the consulting market of the 90s will return. But we know all that already - yet we're forever searching for the "hot new app" that will give the SAP market some real teeth.

Enter SEM. If any application has a chance of breathing life into the SAP consulting market, it's this one. For starters, SEM is part of a family of mySAP products that truly helps customers leverage their ERP infrastructure for strategic planning and decision-making. And SEM's ultra-tight integration with BW makes it a natural add-on for users who found that BW really does make their lives easier. Finally, because of the techno-functional nature of SEM projects, there are potential entry points into SEM consulting from a variety of SAP skill areas. And due to its strategic nature, SEM will be very low on a company's "should we outsource this?" list.

To get to the bottom of these issues, we needed a real SEM expert, and we found one in Paul Halley. We are honored to have the opportunity to discuss the SEM market with Paul. Paul was on SAP America's original SEM product development team in the U.S. He has played a key role in developing the SEM market in the U.S., and through SAP America, Paul's had a bird's eye view on the evolution of SEM and its main components.

Paul is now the SEM Practice Director for Business Information Solutions, LLC (BIS). As he builds the SEM practice at BIS, Paul has the opportunity to work with numerous SEM consultants and client sites. With his broad market knowledge, Paul was the perfect sounding board for all of the burning questions I had accumulated about SEM. To Paul's credit, he answered all of them. The end result is an interview that touches on just about every issue an aspiring SEM consultant would care to read about.

In our wide-ranging discussion, Paul fields questions on topics such as SEM's product evolution and level of market acceptance, its relationship to BW and Enterprise Portals, its main components, and how those components stack up against Hyperion. Paul talks about which areas of SEM companies are implementing, and he explains why companies are taking a cautious, "bottom up" approach to SEM implementations. Most importantly, there is extensive discussion about entry points into SEM consulting from both the functional and technical sides of SAP. Paul tells us why BW experience is essential to breaking into SEM, and he outlines the functional and business knowledge he looks for when he's hiring SEM consultants. The final section of the interview contains a "wrap up" section where I pose questions to Paul that I received from several other SEM consultants.

I hope you get as much out of the interview as I did. On behalf of all our readers, I'd like to thank Paul for his commitment to the SEM market and his willingness to share his "career best practices" with us.

In part one of our interview, Paul tells us how he broke into SEM, and found himself on the original SEM product management team with SAP America. We trace the evolution of the SEM product from its initial releases to its current version. Then, Paul details and clarifies the current components of the SEM product. We wrap up part one of this interview by exploring the reasons for slow SEM market acceptance, and Paul explains why SEM is now turning the corner.

Jon Reed: Paul, tell us about your current company and how you perceive your role in the SEM market right now.

Paul Halley: Business Information Solutions (BIS) is a full service BW and SEM consulting firm. We handle everything from small niche projects and pilots all the way up to large-scale implementations. We also have a separate entity called BIS Energy that focuses on the utilities industry. But by itself, BIS covers all sectors and industries.

Reed: And is BIS Energy also focused on SEM consulting?

Halley: It's a little bit broader. BIS Energy focuses on SEM, BW, R/3, and CCS (SAP's customer care solution). BIS Energy also does some public sector work for the Department of Defense and other public sector entities.

Reed: Paul, you really got in on SEM from the ground floor here in the U.S. Weren't you at SAP America when you first got SEM exposure?

Halley: Yes, that's right. Starting in 1998, I was an FI/CO consultant with SAP America. That's about the time when the consulting market started to slow down considerably. I got in one implementation with basic FI/CO, but after that, there wasn't too much work out there - even for an SAP America employee. So I started looking for new products to pick up in order to diversify my skills. At the time, I noticed that there was training going on over in Walldorf for a new product called Strategic Enterprise Management. I asked my colleagues in my SAP office if anyone knew about SEM, and no one had heard of it. So I thought to myself, "This is a great opportunity to learn a niche consulting skill that no one really knows about yet." So I attended the training class in Walldorf and learned how to configure the five components of SEM.

But I didn't realize how timely my training was until I returned home from the class and found out that I was only the second person from the United States to have attended SEM training. So at that time, I had skills that very few people had. I was then invited by Kathy Wilhide of SAP America and Alan Hildebrandt of SAP Canada to join SAP America's first SEM product management team.

Reed: So to retrace your steps here, you observed a down trend in the consulting market, and it provoked you to put your head up and try to spot an emerging product you could segue into.

Halley: That's right. In the consulting world, you have to keep your skills current and seek out those niche areas where other people don't know as much as you do. I found exactly what I was looking for with SEM. I've been working with it ever since.

Reed: Were you able to get out on SEM projects after your first training in ‘98? Were there enough SEM projects out there to keep you busy?

Halley: Initially there weren't. In the early days, we spent a lot of time doing knowledge transfer with customers, and doing knowledge transfer internally within SAP. We worked with SAP's salespeople to help them tell customers about the benefits of SEM, and we worked with consultants to teach them how to implement SEM. We also took on the role of trainers, because at the time, there weren't any trainers who knew SEM either. So we helped Walldorf develop SEM training materials and taught the first classes within North America until the SAP America training department got trained.

Reed: So in the early times, you guys were product evangelists more than anything else.

Halley: That's right. We were forced into a "jack of all trades" role, which was an invaluable learning experience.

Reed: Sounds like it gave you a window into how to build a whole new consulting market. You must have seen a lot of interesting evolutions in the SEM product. Was it a classic SAP rollout where the first releases were a bit sketchy, and then became increasingly robust?

Halley: In a sense they were, but not as much as one might expect for such early releases of an SAP product. But more importantly, the early versions lacked functionality that many customers felt was necessary, especially on the consolidations and planning side. It was almost like the SEM developers spent too much time on the quality of the SEM functionality, and the quantity of functionality might have suffered for a while. But overall, I think they did a great job with the product. These days, the functionality is top notch, and customers are really starting to come out of the woodwork to implement it.

Reed: Let's talk about that. What official release are we on now?

Halley: The most recent release of SEM is version 3.2. We went from 3.0 to 3.1, and as of February 2003, we've been on 3.2. SEM 3.2 sits on top of BW 3.1, and it's a very solid release. I would say that from version 3.0 on, SEM has really moved into "primetime," and customers are finding a lot of value in it. It's been some time since 3.0 came out, so SEM is an extremely stable product right now.

Reed: Tell us about the main components of the SEM solution in its latest incarnation. What are the key areas? Hasn't SAP changed a couple of the SEM component names recently?

Halley: Ever since the early days, there were five components, or "submodules," of SEM. There have always been five, but over time, those five have changed a little bit. It started off with: (1) the Business Information Collection, or BIC, (2) Business Consolidations, or BCS, (3) the Corporate Performance Monitor, or CPM (and that was comprised of the Balanced Scorecard and the Management Cockpit), (4) Business Planning and Simulation, or BPS, and (5) SRM, or Stakeholder Relationship Management. From version 3.0 onward, they've combined Business Information Collection and Stakeholder Relationship Management into one component, and split the Corporate Performance Monitor into two: the Balanced Scorecard was placed in a new Strategy Management (SM) submodule, and the Management Cockpit was put into a new submodule called Performance Measurement (PM).

Out of those new five components, by far the most popular products are the Business Planning component and the Business Consolidation component. The others are not lacking in functionality in any way, but in this down economy, people are looking for a quantifiable ROI. And in my opinion, with tools like BPS and Business Consolidation it's a lot easier to quantify a return than it is on a rollout of the Balanced Scorecard or the Management Cockpit.

Reed: So when BIC and SRM were merged, what was the new component called?

Halley: It's still called Stakeholder Relationship Management.

Reed: And just to clarify: when CPM was broken down into two components, they were called...

Halley: The two components are called Strategy Management (SM) and Performance Measurement (PM). The PM component has the Measure Builder, Measure Tree, and Management Cockpit, and the SM component has the Balanced Scorecard and Risk Management in it.

Reed: Just what we need: another SM abbreviation within SAP. :)

Halley: That's right, and another SRM too.

Reed: Oh right, there's also Supplier Relationship Management... well, it will probably change again soon, so that shouldn't be a problem. :) So, for those who are still catching their breath from the latest SEM lineup, the five major components of SEM are now known as Strategy Management (SM), Performance Measurement (PM), Business Planning (BPS), Business Consolidation (BCS), and Stakeholder Relationship Management (SRM).

Halley: That's correct.

Reed: Let's move into SEM market acceptance. My theory on SEM is that most companies are still a bit sore over how much money they spent on their initial R/3 ERP systems. Unfortunately, their frustration over the amount of money already spent can get in the way of realizing what they can actually do now. And like many other mySAP products, SEM allows companies to take a transactional ERP system and really turn it into more of a strategic tool that can help them to leverage all of the effort that's already been put in. I assume you are in basic agreement with that theory. But even if that's true, it doesn't change the marketing challenge. All of these SEM components you've described sound pretty sexy and interesting, but can you tell our readers about how these modules can help companies right now? How can companies use SEM to leverage their SAP infrastructure?

Halley: You bring up an excellent point. It's something I see fairly often at organizations that are already R/3 customers. You're right, it seems like SEM - and the consulting organizations that are driving it to SAP customers - are being penalized by previous implementations that didn't go as smoothly as companies would have liked. I keep trying to remind R/3 users that SEM (and BW) are part of a new line of SAP products that don't get implemented the same way as their older R/3 systems did. Most of those R/3 implementations were longer, and they were more costly. These days, an SEM implementation can be as small or large as you want it, and it can get done a lot faster and less painfully than classic R/3 implementations. In my opinion, SEM is the number one implemented product by customers who didn't necessarily purchase SEM. What I mean by that is: many SAP customers in the U.S. now have mySAP licenses. So these folks come into the office one morning, and right there in front of them is this case full of CDs from SAP. Of course, the major reason why they ordered all these CDs (and licenses) is because they wanted to use FI/CO or HR or any other standard R/3 module. But after they finish those implementations, they look back into that box of CDs and say, "Jeez, what else can we use?"

My opinion is that SEM is the most widely implemented product out of all of those "secondary" implementations. That's because users, once they understand what SEM does, see the obvious value in the SEM product. To find out what SEM does, users have to either read SAP marketing materials on their own, read interviews like this one, or listen to presentation at ASUG. Users are somewhat forced to learn about SEM on their own, because, quite frankly, SEM isn't the high-profile product that CRM or APO is. You don't read about SEM as much in the industry press and you surely won't see an ad for it during the Super Bowl. But once SAP users find out about the value of SEM, and all the different things it can do for a company, they usually decide to implement it.

Reed: And the exciting thing for them is the realization that two-thirds to three-quarters of the work is already done, through the groundwork they've already laid in the R/3 system.

Halley: You're absolutely right. And even more work is already done if they have some portion of BW up and running.
A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Two
October 6, 2003

In part two of our interview, we start off by asking Paul about the current SEM pricing scheme, and we take a closer look at the two most popular SEM products, Business Planning (BPS) and Business Consolidation (BCS). We get into some of the fine points of BCS, and Paul explains why BPS is on a different release schedule. Finally, we wrap up part two by digging into the SEM-BW relationship, as we start to get a feel for the opportunities BW consultants may have in the SEM consulting market.

Jon Reed: In terms of the pricing, are you saying that companies basically get SEM along with an overall mySAP license? Is it ever sold separately? Are there any price barriers to speak of?

Paul Halley: SEM is included in the mySAP licensing strategy. If you buy a mySAP license, you receive BW, SEM, and all the other mySAP components. In the past, SAP has been willing to sell SEM separately, but I'm not certain of what they'll do these days. A customer's best bet is to speak with their SAP account executive about it.

Reed: So the only SEM-specific expense is for the installation itself... You mentioned that two aspects of SEM are being used a lot right now, the consolidation and business planning areas. Tell us more about what kind of results you're seeing there and what companies are doing with those components that they couldn't do in R/3.

Halley: Business planning really comes to mind when you think about something that customers are doing today that they really couldn't do in R/3. What they're accomplishing is flexible and customizable planning, budgeting, and forecasting. Within R/3, you're dealing with a transactional system, and you're often told how you need to do your planning. Obviously, you have specialized data for cost center planning, but how those processes are going to work is often dictated by the R/3 system. And as far as forecasting within R/3 goes, it's virtually non-existent, because R/3 is your system of record. And you don't want to do "what if" analysis within your transactional system of record. But that flexibility is exactly what you get when using SEM. So by using SEM Business Planning, you're able to replicate customized planning, budgeting, and forecasting processes, and "what if" analysis can be accomplished as frequently as desired. This is all possible because of the flexibility of SEM and it's tight integration with BW.

BW, which acts as SEM's database, can extract the data from anywhere within R/3, along with any other third party data. And because BW is an open system, you can use it to integrate your SAP and non-SAP data. Once the data is in BW, SEM's Business Planning will allow you to do any type of forecasting and planning on that data. So if you want to do top-down or bottom-up planning, you can do it in SEM. Or if you want to do what public sector organizations like to call the "budget prep," where you're actually creating your next year's budget (or many years after next), you can do that. Or if you want to create any other type of plan or budget, whether it be financial, headcount, marketing, sales, or any other functional area, SEM can do it. Another nice feature of BPS and its integration with BW: once you're done creating those budgets using SEM (and saving the data in BW), you're able to use what SAP calls "retractors" to bring that planned data back into your R/3 system. That retraction functionality is something that some customers use and some don't.

I know that when Walldorf created Business Planning, the original idea was that customers would just extract the data from SAP into BW, and you would just do your plans in SEM using the data in BW. The idea was that you would also extract your actuals into BW, so you would do your actual-versus-plan reporting in BW. But what a lot of customers have decided is that they'd like to compare the actuals-versus-plan in their existing R/3 reports, maybe using Report Painter or ABAP Reports. They want to get the plan from Business Planning back into their R/3 system, and that's why they would use the retractor functionality. A company I am working with now has a very specific need, due to regulations in their industry, to have their final annual budget within the R/3 system. They're creating their entire budget within SEM Business Planning, but once they're done with that process, they'll retract that final version back into R/3. And they'll use the retractor functionality to do that.

Reed: That's great functionality. Tell us a little more about Business Consolidation.

Halley: Business Consolidations is the evolution of SAP's consolidation products. Originally, SAP had no consolidation product at all. SAP told its first customers in the U.S. that if they needed a consolidations product, they should go with Hyperion. After a while, SAP realized how much market share Hyperion was getting in the industry and how much money they were losing, so SAP built the FI-LC, or Legal Consolidation module. As soon as they created LC, they knew they needed to enhance it, so in the late 1990s, they evolved FI-LC into something called EC-CS, or Enterprise Controlling Consolidations. And finally, in order to round out the offerings of Strategic Enterprise Management, SAP decided to move the consolidations product from R/3 into SEM, allowing it to sit on the open hub of BW. That would let customers run their consolidations reports out of the Business Warehouse instead of R/3, where EC-CS is situated.

So for the last few years, Walldorf has been recreating EC-CS functionality in SEM-BCS and adding new functionality along the way. They now have a nice, solid SEM Business Consolidations product which allows companies to do things like intercompany eliminations, currency translations, management-versus-statutory reporting, and other consolidation activities.

Reed: I'm glad you brought this topic up, because it's a critical one for companies that are considering SEM. Let me put it straight to you: to what degree does SEM duplicate existing R/3 functionality, and which areas of SEM are intended to replace current R/3 components? That's always the question about mySAP products - from the perspective of both consultants and end-users. From the users' perspective, it comes up as a cost objection and an implementation objection. They're saying, "Well, I'm already using EC-CS for my Legal Consolidation, and I've got some pretty good analytical capabilities in CO-PA, so why should I bother with SEM?"

Halley: That's a great question. From a consulting standpoint, what I tell customers is: "If you're using something today, and you like it, and it's not going to fall out of support soon with SAP, stick with it." It's a tough economy, and people don't have the budgets to change just to try out something new. So if you're currently using EC-CS, and it does everything you need it to, then sure, evaluate BCS, but there's no reason to move unless you've got a good solid business case for it. But quite often, what we find is that there is more flexibility and more functionality in the SEM product. So from a consulting standpoint, I like to inform my customers of the pros and cons. I tell them what they're missing if they stay, and what they're getting if they go, and let them make the decision for themselves.

Reed: And when you take, for example, EC-CS, is it the kind of thing where SAP stops adding functionality to R/3, and focuses primarily on BCS, or does SAP continue to add to both products?

Halley: Your first statement was exactly right. SAP already stopped supporting FI-LC some time ago, and they have now stopped further development on EC-CS. They're focusing 100% of their efforts on BCS. If you're OK with R/3 consolidation (FI-LC or EC-CS), and you're not looking for any advances, then by all means, stick with it until it runs out of support from R/3. But if you're looking for new enhancements, you're not going to find them in EC-CS - you'll only find them in BCS.

Reed: Are you seeing many customers using the Business Consolidation component of SEM?

Halley: Yes and no. I have not seen many people upgrade from EC-CS to SEM-BCS yet, because many people are very satisfied with their existing EC-CS consolidations, and aren't seeing the value in the upgrade yet. But all new consolidations implementations are with SEM-BCS, because it's a stable product and that's where all of the future enhancements will be seen.

Reed: So there's not an urgent need because the existing consolidation functionality in R/3 is getting the job done for a lot of SAP customers.

Halley: Exactly. The other thing is that SAP, in my opinion, has really not handled the communication of BCS functionality and releases in the best way. It's on a different upgrade path, a different timetable than the other four components of SEM, and that really confuses a lot of people. That confusion causes some customers to feel like BCS is not ready to be implemented. I don't agree with that; I believe it is ready, it just depends upon which version you implement. But that's just too confusing for the market.

Reed: It's funny you mention that, because I got a complex email on that same subject from the an SEM-Portals consultant. He told me that there are going to be opportunities in BCS for functional EC-CS folks, and he talked about how, up until SEM version 3.1A or 3.1B, depending on what version of BW you're on, BCS needed to be "put into its own instance of financials," but that in later versions of SEM, there is a different setup, allowing BCS to reside on top of a BW instance, using a so-called "consolidation engine," but he said there were limitations to that architecture. At that point in the email, I stopped reading and said, "Why don't you just email me again when this all gets sorted out." It just struck me as a technical design that hadn't really solidified yet. I think what he was trying to say was that, at this point, BCS was not as closely linked to BW as the other SEM components - thus allowing a greater opening for functional folks without BW to get involved with SEM. Other than that, I really didn't know what to make of it. I'm sure there are SAP customers out there who are similarly confused. :) But that resonates with what you're saying, that different versions of SEM are dealing with BCS differently right now.

Halley: Yes, and customers can get confused by it. They want to know, if these five components are so integrated, then why are they working off of different release schedules? It just puts a question in their mind.

Reed: So they're all on the same release schedule except for BCS, right?

Halley: That's correct.

Reed: BCS is really the "Black Sheep" of the SEM family right now.

Halley: That's right, and in my opinion, that's because it's being handled by a different set of developers over in Walldorf. But I should mention that although all of this seems confusing to SAP customers, it is not a plan that the developers threw together at the last second. The development of BCS is following the plan SAP created years ago, it's just that that plan gets confusing when it's communicated to customers.

Reed: Well, SAP does have a good track record of polishing and integrating their solutions, so I imagine that eventually BCS will be on the exact same schedule as the others. It makes me wonder if the lack of urgency for getting BCS in line with the other components has something to do with the fact that SAP's clients, being happy with EC-CS overall, haven't been howling for the BCS component yet.

Halley: That may be true. That's a good point.

Reed: Let's take a closer look at the BW/SEM relationship, because that's not always clearly understood. Is it possible to run SEM without BW?

Halley: It is not. We caught a little flak in the early days from a couple customers for not decoupling SEM from BW, but we realized what the developers in Walldorf had already decided: a lot of the value in Strategic Enterprise Management was the fact that it was so tightly integrated into the Business Warehouse. If SEM didn't sit on BW, it would need to have its own database to store data. That would have meant you would have had three databases: one for R/3, one for BW, and one for SEM - and that just didn't make any sense.

Reed: On the consulting side of the product, these SEM/BW issues come to a head as we look at consulting roles that are available in SEM. I think there are some misconceptions about all this. Recently, I heard a consultant describe SEM as part of BW, and that's not quite accurate. There is a pervasive sense that if you're going to work in SEM, you really must be a BW consultant. But you and I have talked about how there are some clear functional paths into SEM from the FI/CO side as well. So can you talk a little bit about the types of consulting roles that are needed to design and implement SEM?

Halley: You're right, there is a lot of confusion amongst customers and consultants themselves in terms of what skills are needed, what constitutes a good SEM consultant, and what type of backgrounds are ideal for SEM consulting. After seeing lots of different backgrounds, and lots of different people attempt to become SEM consultants, it's my belief that the best consultant is someone who has a financial background - some sort of FI/CO training or knowledge of those R/3 modules - and has a knowledge of the Business Warehouse. The reason I say that is because so many of the components within SEM are tied into financial data. Obviously, BCS is a financial product, and Business Planning, while not a financial product, if often used primarily by finance divisions for some reason. People want to use it for financial planning and cost center accounting. Maybe that's partially because of their previous use of Hyperion; Hyperion used to go after financial planners, and a lot of times, financial data is being passed through business planning.

The Balanced Scorecard and Management Cockpit also have a financial component to them as well. So most often, you find that people need some sort of FI/CO background, and then, because of the tight integration between SEM and BW - especially when it comes to SEM Business Planning - it is very important to have some BW knowledge. I'm not necessarily saying you need to be able to implement a full Business Warehouse project, but you do need to understand what an InfoObject is, and how to build a query within BW. You don't necessarily need to be a BW expert or a BW Basis consultant, but you need to be a good BW end-user, and understand how data works within BW and how to access it.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Three
October 27, 2003

In part three of our interview, we dig into the most important topic of all: how consultants are breaking into SEM, and the avenues Paul sees for getting started in SEM. We start by asking Paul how functional FI/CO consultants can move into SEM, and that discussion leads into Paul's take on how technical SEM consultants need to be. From there, we get into a detailed back-and-forth about the art of breaking into new SAP areas in general, and SEM in particular.

Jon Reed: Do you find that people in FI/CO who have backgrounds in CO-PA, where they're getting into the more analytical areas of FI/CO, have a natural transition into SEM, because they have expertise in some of the most strategic areas within R/3?

Paul Halley: Absolutely. Someone who's familiar with CO-PA, or even CCA, will find it a very natural progression into SEM consulting. Quite frankly, as a company that focuses on BW and SEM, and, specifically, as the director of an SEM consulting practice whose only niche is SEM, when I'm hiring, I really look to hire consultants who have that type of background, where they've got some financials and some BW. That person might be a BW consultant, but if so I prefer that BW consultant to have a financial background - it's not a "must have," but the best SEM consultants are pretty well-rounded.

Reed: What about EC-CS (Legal Consolidation) consultants? Do these folks have a natural entry point into SEM-BCS from that angle?

Halley: Certainly. Working with consolidation in SEM, you obviously need to have a solid financial background. In my opinion, BCS is the hardest to implement of all the SEM components because of the accounting background that one must have to implement it. So if you're already an SAP consolidations consultant, you're already 75 percent of the way there.

There's one other key trait that a good SEM consultant needs to have: the ability to interact with levels within a customer's organization that are higher than the average SAP consultant is used to working with. A typical senior SAP consultant might deal with IT managers, Directors of Finance, Directors of Purchasing - folks like that. With SEM, I can tell you that at least 75% of the time, I am dealing with Vice Presidents, CEOs, and Chairman of the Board types. The components within SEM are ideal for users who are interested in the holistic health of an organization, as opposed to focusing on one or two specific areas. Often, the only people in the organization who have that broader view are the "C level" executives.

Reed: That all makes sense, except you haven't explained something that I see right now in the SEM jobs that cross my desk: I would say that four out of every five SEM jobs I see emphasize BW skills and the technical aspects of SEM, as opposed to the functional, financial type of background. Is this because there is a complimentary technical role in SEM that we haven't discussed that plays into issues of installation, data integration, and other areas on the technical side of SAP?

Halley: You bring up a very good point there. I think the reason customers are having a hard time finding those consultants is because there is a very technical side to most SEM implementations, and customers in this down economy have very tight budgets, and they're trying to find the technical and functional skills in the same person. They want the ABAP and Basis folks who can install the SEM and BW CDs. These are the folks who can create InfoCubes and bring over source data from transactional systems. But they're trying to find those skills in the same SEM person that has the FI/CO and business background, and who can interact with the CFO and CEO.

In my opinion, it is extremely hard to find all of those skills in the same person. Out of the thirty senior SEM consultants that I know, I would say that maybe three of them have the ability to do all those things. And the highly technical people who do have the ability to interact with high-level executives often don't want to get into a technical focus on a project. I see those kinds of requests you're talking about pretty often - requests for SEM consultants with deep ABAP programming skills who are going to help design a Balanced Scorecard or a planning scenario. It really doesn't seem very plausible that customers will find consultants who bring all of that to the table.

Reed: True. It does seem that a divide and conquer strategy - where you try to isolate and divide up those SEM roles a bit - might work a little better. What those technically-heavy SEM jobs say to me is that there is the potential for technical BW folks who don't have a heavy finance background, to get involved in SEM from that direction. Now, they might not be your ideal profile, but they do seem to match a lot of the SEM jobs I see these days.

Halley: That's a very good point. It's very plausible for someone who has a deep technical BW background, or who has been a BW consultant for quite some time, to transition into SEM. For them, it's just as natural a progression as that CO-PA type we talked about, because they have that technical background. After all, SEM is technically an add-on to BW, so a lot of BW consultants feel like it's going to be a very simple transition, and to some extent it will be; but what they also need to have is some of that business background. If they don't have that, it still might be ok, as long as the customer is aware of that, and the customer is able to provide business process assistance to that consultant.

Reed: A very similar issue came up recently when I was fielding some questions on SearchSAP.com about SAP CRM. From what I've learned from senior CRM consultants, in the SAP CRM arena, the so-called "functional" roles often require a much greater degree of technical knowledge than the classic SAP functional consultant was expected to have. It's not quite the same in SEM, but I do get the sense that a product like SEM is going to pull technical people in a more functional direction, because they're going to need to have a little more business know-how and business process understanding they're typically used to having. On the flipside, it seems like functional SEM people are going to have to get a little more comfortable technically - maybe not doing any hard coding or installation work, but at least understanding some of the query and data integration issues that are involved in terms of accessing that data. It sounds to me like SEM is going to pull consultants closer to the middle from whatever direction they're initially coming from.

Halley: I agree. I've actually heard complaints from some functional SEM consultants who are being pulled towards the technical side, because what they find is that the technical consultants often have more competition at that level, and rates have been driven down further than functional folks with business backgrounds are used to. And so functional consultants find themselves having to take lower rates than they're used to, because they're competing with more technical people who are more used to those rates. Quite honestly, at this point, SAP customers don't always know the difference between the two types of consultants, and again, when budgets are tight, you're going to go with the consultants who can do it and do it at a lower rate.  

Reed: True. And that brings us around to a very important issue: the role of certification and training in terms of breaking into SEM. Consider the case of one of the best CO-PA consultants I know - a guy who has been trying to move into SEM. He did a lot of the right things: he got certified in both BW and SEM a couple of years ago, but he still hasn't been able to pull it off. And you couldn't really think of a consultant who would be more effective in SEM than this guy. You're talking about someone with a lot of relevant SAP and financials experience, with an MBA to boot. Nevertheless, his situation indicates that there are some major obstacles to overcome in the SEM field, even for the most senior consultants. I'm always telling people that training is a great window into a new area of SAP, but you have to be careful about putting all your eggs in that basket, because you don't know what you're going to find out there.

Halley: That's a very valid concern that a lot of people have. There were days back in the mid to late 1990s where if you got trained in something, customers wanted you, regardless of the number of implementations you had. These days, that is no longer happening. Every single SEM position a customer asks me to fill requires a minimum of one year of SEM consulting experience. When you think about it, that is not plausible, because there just weren't that many SEM implementations in existence a year ago.

Now, in the last year, there are a larger number of consultants who have gotten trained and have fallen into SEM projects one way or the other. Maybe they were working for a client who was putting in BW, or doing an FI upgrade, and that client decided that they also wanted to do SEM. So they got pulled aside and asked, "By the way, Mr. or Ms. Consultant, would you be willing to do this for us?" And of course that person will say yes. But I've even had times where a customer required my consultant to have three years of experience - not just in SEM, but in SEM-BCS - and I've had to say, "Look, there are maybe three consultants in North and South America right now who have those kinds of qualifications."

So going to training is a great way to get started, but unless you are tied into a customer that wants you to implement SEM, or unless you have connections with an SEM practice lead somewhere, you're probably going to be sitting on the bench for a while. And odds are, whether you're an independent consultant or you're working for a consulting company, you're going to take the next job that comes up, regardless of what the project is, because you don't want to sit on the bench for too long. There just aren't enough large-scale SEM implementations going on - the kind where someone wants to hire five or ten SEM consultants at a time. They often want to hire one or two, and that leaves a lot of people on the bench.

Reed: I think that's the key to understanding how to break into new areas of SAP in today's market: the vanishing role of the "junior consultant" is causing a disconnect between getting certified and getting your first project experience in a new area. There used to be lots of "Big Six" projects where the large consultancies could get away with placing a few very junior consultants on a large team - that's how a lot of consultants were able to get their feet wet in new areas back in the day. If you were one of those lucky "junior consultants," while the client wasn't looking, you just rolled up your sleeves and started to learn what you were supposed to be doing. And before too long, you weren't a "junior" anymore. But you can't fly under the radar screen in today's market.

Halley: That's right. A lot of my implementations have been two to three person projects - anywhere between one SEM consultant and two BW, or vice versa. More often than not, all of the consultants must have previous BW and SEM experience. And there are many instances where customers only want that one "do it all" consultant. There are very few projects out there where you'll find more than two or three SEM consultants.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Four
November 17, 2003

In part four of our interview, we continue with our discussion of the effectiveness of SEM training in terms of breaking into SEM. Jon shares a success story of a consultant trying to break into the field, and Paul tells us the most common way consultants are breaking into the SEM field. From there, we ask Paul to recommend the best tactics for FI/CO consultants who want to break into SEM, and we ask him the same question in regards to BW specialists. We wrap up this portion of the interview by looking at Paul's own career progression and his current role at Business Information Solutions.

Jon Reed: When I talk to consultants about which areas they should get SAP training in, I tell them, "You need to target the areas of SAP that are most relevant to your skills, instead of just chasing hot-looking areas like SEM just because you're thinking, ‘Gosh, this is really taking off now, I have to find a way to get involved.'" I think consultants are better off mapping themselves into the mySAP application that is best aligned with their current skills. For example, folks in the Materials Management or Production Planning area are better off pursuing more of a supply chain direction, such as APO. So I recommend that folks start by figuring out where the most relevant skills connection is, and then, by all means, go get the training, but understand that it's mostly to expand your own knowledge base and perhaps build up your industry contacts a bit. It's probably not going to land you a project in and of itself.

Where the training kicks in is during the kind of situation you described, where you're on a project, and suddenly your client decides they're going to pull the trigger on an SEM project. And you are a CO-PA guy, let's say, already on the project, and you've performed some valuable work for them in the last four months, and it just so happens that based on the SEM training you've taken, you have some advanced knowledge. At that point, they might pull you into SEM, and the SEM training (and certification) you already have can give you the edge and give you more consideration for this kind of get-paid-to-learn type of project. That's the kind of project that gives teeth to your training and plays a pivotal role in your skills transition. Without that kind of break, you're stuck.

I recently heard from the CO-PA guy I mentioned who has been trying to break into SEM for the last couple of years. As it turns out, his big break might be looming, because his new client has plans to implement SEM down the road. They hired him for his current skills, but he knows that the SEM and BW certifications will give him the best possible chance of breaking into SEM down the line. It still comes down to being at the right place at the right time, but I think certification can help consultants to nab those rare opportunities. You might not land a project based on your certification, but if you take a longer view, it could help make a big difference down the road.

When I talk to consultants about this "delayed gratification certification strategy," I admit that it is a speculative approach. But I think it's a lot less speculative than getting certified in a new area and then expecting (or hoping) that a company will hire you in a junior role to give you the skills break you're looking for. How do those theories jive with the SEM hiring trends you're seeing?

Paul Halley: The most common way that people are getting SEM experience is by being a consultant on a project - most often a BW consultant, and having a customer say, "We've heard of SEM, can you tell us a little bit about it?" And the BW consultant looks it up on the web site, gets some information, tells the client about it, and says, "Hey, I can implement this for you." Before you know it, you're doing a two or three month pilot project. But the days of going to training and being plucked out by some consulting manager to be a key SEM consultant on a project are over.

Reed: Well, that's a cold shower for some of our readers, but I think this discussion is important. Training is expensive. Not that it isn't worth the investment, but people need to understand what a realistic return on that investment is.

Halley: I agree.

Reed: Of course, all independent SAP consultants who want to remain marketable have to apply part of their income towards education and training, whether it's conferences, training manuals, or certifications; but at this point, that's understood. You have to do that to keep track of where SAP is going and stay competitive, but you won't necessarily get an instant result or rate increase as soon you obtain a new certification.

Halley: Right. You always want to stay up on current releases, and you want to be as well rounded as possible.
Reed: In addition to the work I do on this site, I also answer SAP career questions on SearchSAP.com. People often write in to my SearchSAP.com column and say, "I'm thinking of breaking into SEM..." By the nature of their question, I can usually tell that I know more about the SEM product than they do, and that's not a good sign. :) It wouldn't be that hard for an enterprising SAP consultant to educate themselves about SEM to the point that they knew more about SEM than I did.

Halley: You're exactly right. There's a wealth of information out there. There's a bunch of info on the SAP web site; I've got some things on my company's web site on SEM; and the help.SAP.com files out there provide an enormous amount of information - not only about what the product can do, but also about configuration and that sort of thing. So that's a good way to get training.

If I were an FI/CO consultant today, and I wanted to break into the SEM market, the first thing I would do is get some general BW training. I keep going back to my first days of SEM in 1999. There was so much discussion about Business Warehouse that I ended up spending the majority of time trying to learn the phrases and the functions of BW. I really wasn't paying enough attention to the SEM config. :) If I had had that general BW knowledge behind me at the time, I would've understood the SEM training much more than I did at the time. Luckily, as a product manager, I was working with SEM 14 hours a day every day for several years, so I had time to fill in the gaps in my knowledge. But if I were starting from scratch, I would start by getting some BW training knowledge. If your customer has a BW sandbox environment you can play around in, that's ideal, and you can build on your knowledge base from there by adding in an SEM component or two.

Reed: And to flip that around, if you were a BW person, would you try to get as much FI/CO and functional exposure as you could, in order to round out your business process understanding and better position yourself for SEM?

Halley: I would. I wouldn't do that by learning how to configure FI/CO - I would do just what you said. I would try to get as much exposure as I could to the business processes, or the planning processes, within an organization. Pretty much every customer I have ever spoken to has some kind of pain in the planning and/or forecasting areas within R/3. No one is 100% satisfied with what R/3 has to offer in those areas. So if you're on the ground at a customer site, find out what some of those pains are; find out what the process is from start to finish, in terms of how someone would go through planning or forecasting at that organization. That research will give you a good background as to the things you might be able to configure within SEM Business Planning or Consolidation.

Reed: Sounds good. Now you're in a career transition yourself right? You're now at a point in your career where you're not taking on full time SEM projects anymore.

Halley: That's correct. I'm not personally doing full scale SEM implementations anymore, because I'm spending my time on growing our SEM consulting practice. As far as I know, I'm the only person in the country that focuses 100% of his efforts on managing an SEM consulting practice. A lot of consulting companies have the same person manage BW and SEM at the same time, or financials and SEM, but I focus 100% on SEM. What I'm doing now is quite like what I did at SAP, because after I transitioned out of SEM product management into pre-sales for SAP, I was the only one at SAP America/SAP Public Sector who focused 100% on SEM.

I seem to have a similar role these days - when I'm on projects, I'm doing things like fit/gap analyses, and helping customers evaluate SEM versus Hyperion, which is still SEM's chief competitor. And I have the ability to do that because our other practice directors focus 100% of their time on BW. I also find myself being a project manager type to oversee implementations that my consultants are on, so I'm on site maybe one or two days a week. I'm also doing pre-sales support for my organization to help educate customers on how they can derive the most value from SEM.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Five
December 8, 2003

In part five of our interview, we continue talking about Paul's career progression and his future plans. We ask him about "taking the leap" from working primarily on hands-on projects and how he plans to stay marketable as he moves into bigger leadership roles. Paul also comments on the current level of demand for SEM projects, and how that influenced his decision to leave SAP America and join BIS. In this section of the interview, Paul tells us how he has defined a role that has kept his SEM skills relevant while allowing him to take on "partner level" responsibilities at BIS.

Jon Reed: Did you have to give yourself a gut-check the day you decided you weren't going to be a full time SEM consultant on projects full time anymore? Were you at all worried about moving away from the hands-on skills that are the key to marketability for most SAP consultants?

Paul Halley: Well, I was ready to move from full time consulting to an environment where I was able to do strategic work on more projects. It seemed logical at the time, because there weren't that many people who knew much about SEM. Having worked with it for four or five years, I'm asked by a lot of different people to get involved with their projects. For me, it's very rewarding because I can help educate many more people this way, rather than just focusing on one customer at a time. That's why I hire my own consultants, so that they can take some of the direction I give them and work full time with our clients and give them the day-to-day help they require. One of the biggest transitions I had to make was simply leaving SAP, a large corporation, to join a smaller niche consulting company. But that was also one of the selling points of coming to Business Information Solutions. It's a leaner organization, and we're able to move more quickly when customers require things of us.

Reed: It's sounds like you were ready for a more entrepreneurial phase in your business career?

Halley: Absolutely. I've got an MBA, a business background, and five years of SAP experience under my belt, four of which are with SEM. When I left SAP America, I felt I had reached a level where I could provide more value to someone by leading a practice, by training other consultants, and by helping multiple customers implement the product. I was also ready to move up in an organization, not to just implement software, but to help start a practice. Although I had helped start a practice with SAP, which is essentially what we did as product managers in the early days of SEM, joining BIS was a bit different. I was ready to do something, in a sense, on my own. I started up the SEM practice for BIS, and with the help of my BIS colleagues, I'm growing it more and more with each day. I believe that the next step in my career will be to move even higher up that rung towards running my own organization, somewhere where I will likely be a bit further away from the day-to-day of SAP software implementation.

Reed: It's always good to hear from consultants who have a carefully thought-out plan of where they see their career going. It's interesting to hear how you have envisioned your career playing out.

Halley: I see this as the next intermediate step for me. I'm helping to add a lot of value to help grow BIS, yet at the same time, I'm learning how to run my own business in a very competitive environment.

Reed: And you've also figured out how to stay relevant to SAP clients without working on all-consuming projects. That's pretty important, because some of the people that are having the hardest time right now are SAP managers who stepped away from the technology a few years ago, and now want to get back into it to stay marketable. These folks are having trouble breaking back in. Your ability to stay relevant on projects, despite not being there full time, is another nice aspect of your current setup.

Halley: I agree. Back when I worked for SAP, the banter around the office was that product knowledge was everything. If you had in-depth product knowledge, you would move up in the organization. Although that's not the case everywhere, it is the case in a lot of places. I keep talking about the economy we're in, but consulting companies don't have the ability to keep overhead that does not add value directly to customers. Case in point: at BIS, our CEO and our General Manager are both working on projects. They're not consulting full time, but still, these are people who are running our organization and at the same time, they're helping a strategic customer of ours plan for a very large implementation.

Reed: Sure. Actually, this brings us back to the very first part of our conversation, before we started the official interview, when you were joking that in the current economic climate, SAP customers are short on cash, but long on results - they want to see a lot of return on investment for the limited resources they put into play. Given that reality, I'd like to get your comments on how your firm has fared in today's market. Most of the SAP work is not mySAP product extension work, but classic upgrade scenarios, such as 3.1 to 4.6 - general housekeeping stuff seems more prevalent than ambitious new ventures. Have you guys figured out a way to tune yourselves to what customers expect in this market?

Halley: Yes, we've been doing very well, and that was one of my criteria for leaving the very good situation I had at SAP. We are seeing a lot of increased business due to satisfied customers and we're growing every day as a result of new demand for BW and SEM.

Reed: So for your firm at least, the demand for SEM consulting is meeting your expectations?

Halley: It is. But I think part of that demand is due to the fact that we don't have junior consultants. Being a niche provider of SEM affords us the ability to hire only very senior consultants, and as I said before, customers right now are demanding that level of experience. As a result, some of that demand is being shifted away from larger consulting firms with less SEM experience to organizations like ours that have teams of more senior consultants. I was asked to speak at the BW/Portals conference earlier in the year in Orlando, I spoke at ASUG a month or two ago, and I spoke at the BI ASUG in October. So demand for my consultants and my time is definitely meeting, if not exceeding my original expectations. And after going to those kinds of events and having customers hear me talking about SEM, I get flooded with requests when they find out I specialize in SEM. To me, that legitimizes the work that we're doing at BIS, and it really proves that the demand is out there if you've got the experience.

Reed: So being a visible consultant with a visible industry presence is part of a good consulting strategy right now, whether you're independent or part of firm. Making the rounds and making your niche public is a key part of your approach.

Halley: Absolutely.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Six
December 22, 2003

In part six of our interview, we pick up in the middle of our talk about Paul's firm BIS and how it has positioned itself in the SEM market. Then we move into a wide-ranging talk about the current state of the SAP market and the factors that have held back IT spending. Since we had this discussion, the fortune 500 (and SAP) has achieved a great deal of earnings growth - another promising sign of SAP market recovery. However, IT spending continues to lag. Also included in our discussion: the evolution of the BW product, and the relationship between SEM and Enterprise Portals.

Jon Reed: It sounds like your firm has made strides getting customers to realize they can make a targeted investment in SEM and see a return on that. You've been able to steer the conversation away from objections like, "Well, this would have to be a huge project, we'd have to install five separate components, it would probably take a whole year..." Have you been able to cut through the "bloated budget" stereotypes and present success stories of targeted projects that were completed in a shorter time frame?

Paul Halley: Yes. And again, that's really the result of customer demand. In order to keep our reputation at a high level, we need to be able to get many implementations done in one or two or three months, and get them done with as few consultants as possible. I'll give you an example of a program we started up last month that's been getting a lot of interest from our customers: a thirty day pilot program. We're offering SEM or BW pilots in thirty days, because those are the things that customers are demanding these days. They want to be able to show a quick turnaround; they want to show lower costs of implementation so they can prove their ROI. So these types of pilots are really taking off - at least in the U.S.

Reed: Paul, from what you're saying, it really does seem that companies are starting to see an SAP universe beyond their R/3 system. They're starting to get a sense of how SAP can help them to build on what they already have. That's really exciting, because I think that it's the strategic benefit of the "extended" mySAP products that's going to kick-start the SAP market and get things moving again.

Halley: That's right. And I can tell you that there definitely does seem to be - knock on wood - a slight upswing in demand these days. I've been feeling it for a few months now. I know IT spending is heavily tied to the economy; hopefully as the economy fills out, we'll start seeing even more improvements.

Reed: Well, not to go overboard on market hype, but Cisco had some positive news today which pulled a bunch of tech stocks higher; and eBay, which isn't really a true "tech" stock, hit a high today it hasn't hit since 1999. My own theory on SAP is that it's so closely tied to the Fortune 500 and the stakes of the large companies, that we're not going to see SAP move until the largest companies see some sustained earnings growth. This theory would help explain why the SAP market has been stagnant the last few years, even as some smaller companies and "small cap stocks" did really well and experienced significant growth.

SAP, on the other hand, struggled along with the big companies that went through corporate accounting scandals and other barriers to growth. On the smaller end of the enterprise market, it's Microsoft, not SAP, that is poised to capitalize. SAP doesn't start moving until the "big players" do. The day I'll get a little freaked out is the day the Fortune 500 takes off and SAP doesn't. When these companies decide to invest in IT and capital projects a little more, SAP has the menu of products to take advantage of the upswing.

SAP faced a tough market in 2000 also, but at that point, what did SAP have to offer companies that were trying to move at "Internet speed?" Sure, SAP had released early versions of CRM, APO, and BW by that time, but a lot of those releases were more wishful thinking than actual products. So you had ways of extending the R/3 infrastructure, but they weren't really proven solutions. But now SAP has a full line of robust solutions. Some industry analysts think of BW as the most sophisticated reporting and data warehousing solution on the market - that's not what they were saying when it first came out.

Halley: Isn't the turnaround that BW has made amazing? I see customers struggling with BW decisions all the time, because they're thinking of the "old" BW, and not the new BW. Many SAP customers purchased BW in its early days - versions 1.2B, 2.0A, 2.0B. These are large, widely-respected organizations - all very important to SAP as "referenceable" customers - and these customers didn't like it. They felt that it was hard to implement, and it didn't work as well as they wanted. They felt like they were sold short on what they were promised, so they just wrote off BW and haven't taken a look at it since.

Fast forward three years: we go back in there and tell them these great things about BW and now SEM and what customers can do with it, and they look at me like I'm crazy. So I say, "Look, you have to understand, BW was not a great product when it first came out, but things are different now. Don't take my word for it; don't take SAP's word for it; take the analysts' word for it. It's a terrific product now. There are many organizations out there that are making tremendous strides with it, and finding an enormous amount of value in it. And now that BW is the great product it's become today, think about how much better it can be when you install Strategic Enterprise Management on top of it.

Reed: That's what the market needs to hear. The ability to process internal transactions is not going to do it any more. There has to be a more strategic bent to SAP if it's going to be successful. It seems to me that there's another wave coming. I don't think it's going to be the same kind of surge in demand that made our cups runneth over in the nineties, but companies haven't realized the vision yet. Sure, they put in ERP, and they passed judgment on ERP one way or the other. They might have even thought about ripping it out in favor of a best-of-breed approach, but they didn't. So ERP is here to say - the free-for-all, best-of-breed market many were predicting is not to be.

So you have your ERP backbone, but you can't really say that the vision is complete because a bunch of pieces are still missing. You don't have true real-time information yet from all corners of the enterprise, and you're not really sharing product requirements with your partners in a truly collaborative way. As for opening up the order and manufacturing process with customers and suppliers, you're not there yet, and you're not strategically evaluating information the way SEM allows you to. I don't know if you agree, Paul, but it seems to me that in the next few years, there's going to be a lot of activity in the SAP market. This stuff isn't just hot air, it isn't part of the deflated Internet bubble. These products really work; this is stuff that allows you to take advantage of the hard-won and overspent money you put into the original ERP implementation. Finally, you can allow yourself to think, "Maybe this was worth it after all."
Halley: I agree with you completely. It's a shame when you see customers who feel like they didn't have a good experience the first time around, and who don't feel like they're getting value out of their systems, because it's sitting right there in front of them today. It's called BW, it's called SEM, and it's called something we haven't even talked about yet, which is Portals. In my opinion, these are the three most value-added products that SAP has to offer today for someone who has already implemented R/3. When you think about a lot of the complaints you get about R/3 - that it's too hard to work with, that it doesn't look good, that the reporting isn't useful enough - when you add those three products, which aren't going to take you that long to install, depending on the scope, you have a completely different SAP solution at your organization that can do things you would never imagine.

Let me give you an example: last month, I finished doing an implementation where we upgraded BW; we did an implementation of SEM's Management Cockpit, and the consultants on site installed the Portals solution. All of this was done in ten weeks. This organization got a fantastic deal in terms of their costs and timeframe, and they're thrilled with it. They're out talking to people at ASUG, talking to other customers about how fantastic this solution is. They're a very well-established R/3 customer, but they found that just by adding those three new products, it's a whole new environment.

Reed: There's no better selling point than happy customers - especially customers who are showing some bottom line results due to those investments. We've talked about this a little bit, how companies can hold each other back in a stagnant spending environment. When no one is innovating, you comfort yourself by the fact that your competitors aren't doing anything about their issues either. But once one of your key industry competitors starts to make a move and show results, in terms of morale, performance, and bottom line results, you almost don't have a choice but to start paying attention again. I feel like that's what's going to happen, and that's how this market is going to turn itself around on the SAP side. You're going to get these thrilled customers, and other companies that have been dragging their heels and complaining about SAP as if it was the year 2000, are going to wake up and realize that those complaints aren't valid anymore.

Halley: I agree. You've got to keep spending on IT to keep your organization moving forward, regardless of what the economy is. You can't afford to wait because of your competition - if it's not stealing your customers away, it might be stealing your employees away.

Reed: Very true. Let's talk a bit more about the connection between Portals and SEM, as that's topic I haven't seen much coverage on. Is Portals basically just a more user-friendly way of accessing SEM data, or is there a deeper integration between the products besides a user-friendly presentation?

Halley: That's the extent of the connection. You're able to access SEM through the Portal, along with the other SAP modules, so it makes life easier on end-users. One interesting thing to note, though, is that a lot of the users of the SEM Portal are people who aren't really traditional R/3 users, such as "C level" executives and senior managers. Obviously, there are a tremendous number of daily users and analysts who use the Portal as well, but sometimes SEM and Portals are the first time that you get a C level executive to actually work with SAP software.

Reed: Well, hopefully the CIOs and SAP managers who read this interview will see that another great byproduct of SEM is better executive buy-in for the SAP project. Once you have your executive team using the system and getting good information out of it, they're going to be a lot more open to further enhancements.

Halley: I agree.

A Strategy for Success: How SEM is Changing the SAP Market
An In-Depth Interview with Strategic
Enterprise Management Expert Paul Halley
Part Seven
January 12, 2004

A month after our initial interview, we had the opportunity to speak with Paul again and ask him some of our readers' burning questions about SEM. So in this wrap-up section of our interview, we were able to get Paul's take on the SEM analysis of other consultants, and to tie up a few loose ends of our own. The topics covered include: Paul's take on why Enterprise Portals is so integral to SEM success, how SEM stacks up with its main competitor, Hyperion, and why companies are taking a "piecemeal" approach to implementing SEM.

Jon Reed: So the SEM market is looking even more appealing than when we last talked?

Paul Halley: Yes, I'm cautiously optimistic. I'm still finding a lot of people out there who aren't educated about SEM yet, including other consulting partners who are using my SEM consultants.

Reed: At the end of our last talk, you and I were talking about Enterprise Portals and SEM. Is there anything else you would like to add to that?

Halley: The last thing I would add about Portals is the value proposition. Let me explain my reasoning as to why it's such a good investment and why it can add so much value. BW and SEM have the ability to communicate the transactional and analytical information from any SAP module or component. They can touch the folks in HR, they can touch sales, they can touch manufacturing - everyone can benefit from those tools. Using the Portal really allows each one of those groups easier access. A lot of IT people don't want to deal with the reality that end-users won't touch a product unless it's pretty, but the bottom line is that there are plenty of organizations where that's exactly the case.

Reed: So you feel that the Portals user interface is much friendlier for the typical end-user who isn't familiar with the ins and outs of navigating an SAP system?

Halley: That's right. The web-enabled versions of BW and SEM (using the Web Application Server), even without the Portals, are significantly better than anything I ever worked with on the R/3 side in the old days, but the Portal just adds so much more to it.

Reed: It makes you wonder if the expense of a Portals rollout might be offset pretty quickly by savings in end-user training, and also greater usage of the system for the purposes it was designed for.

Halley: Absolutely. When you're making such a big investment in a major product like R/3 or CRM, why not spend a little bit more to guarantee yourself that user acceptance is as high as possible? I think that the easiest way to make an SAP implementation fail is to not do everything you can to improve user acceptance.

Reed: During this interview, you've mentioned Hyperion a couple of times. Would you consider Hyperion to be the greatest best-of-breed competitor to SEM at this point?

Halley: Yes. SAP will tell you that there's one competitor even stronger than Hyperion: Microsoft Excel. :) But that's not a totally serious statement. In terms of full-fledged functionality, Hyperion is SEM's main competitor. In almost every single pre-sales situation, SEM is up against Hyperion, and I am asked to explain to the customer why they should use SEM versus Hyperion. When I worked at SAP, I spent a lot of time in pre-sales doing the same comparisons. Even now, years later, I still get asked those questions. It seems like everyone wants to compare those two products. In fact, I've done two SEM versus Hyperion evaluations since we last talked.

Reed: That's interesting. What's the short version as far as why you feel SEM is superior?

Halley: Well, I know it sounds like a cliché, but it's the integration. SEM was designed, several years ago, in order to compete head-to-head with Hyperion, and with every one of Hyperion's products. When you get down to it, SEM and Hyperion do the same functional things - they each can plan, they each can budget, they each have scorecards, they each have consolidations. I'm sure if you talk to a developer in Walldorf, he would name fifty different things that SEM does better. But in my opinion, the two pretty much do the same things. But SEM is integrated amongst all of its own components, meaning that the consolidations piece is integrated with the planning; the planning is integrated with the scorecard - they're all meshed together. With Hyperion, those are all separate applications. In Hyperion, if you make a change in your budgeting software, it doesn't automatically show up in the balanced scorecard or in your consolidated financials the way it does in SEM.

The other benefit of SEM is that you don't have to deal with all the manually maintained R/3 interfaces. For example, I just did an evaluation for a customer that was only using Hyperion consolidations. They were considering using planning, and they weren't using the balanced scorecard at all - just Hyperion consolidations. And they already had seventeen interfaces to maintain and keep in sync with their R/3 system. So imagine going to a global planning solution! They estimated that they would increase from about seventeen to sixty interfaces between Hyperion and R/3. That's just silly, because if you go with SEM, you eliminate every single one of them.

Reed: It seems to me that that "ease of integration" sell is going to create some challenges in the long-term for Hyperion with SAP clients - kind of like what Siebel is going through now on SAP sites. Now that SAP's product lines are more mature, it's really hard for customers to resist a "one vendor does it all" solution for their e-business initiatives and ERP product extensions.

Halley: That's right. Once you convince a customer that the functionality is equal, then it all comes down to price, and the price difference is usually pretty negligible.

Reed: And since SAP isn't dependent solely on analytics or CRM for its revenues, it can afford to make price concessions that the best-of-breeds can't. Moving along. Since our first round of questions, I published an SEM consultant's assessment of the product on this web site. This consultant was basically arguing that people don't understand that SEM offers the real business intelligence that BW promises. His take is that most people, including the consulting houses, think of SEM primarily as a fancy CO planning tool. This guy argues that SEM's ability to extract, manipulate, and simulate BW data, and write that data back to the BW InfoCubes, makes the product unique. He feels that SEM's data manipulation and simulation abilities, using BW as an information source, is really what sets SEM apart. What is your take on that theory?

Halley: I would agree, but just like all SAP products, you have to be a relatively informed user of the software to take advantage of those benefits. But I would agree, he's absolutely right. A lot of people are missing the boat on SEM; it is such a flexible tool. There are just thousands of different ways you can simulate the data, and there are specific benefits that no other product from SAP offers.

Reed: Then I heard from a Portals-SEM consultant who explained that SEM requires more technical knowledge than a functional consultant is used to. His point is that every system in the enterprise has input into SEM, and so a major part of SEM work is just getting the data from a wide range of SAP and non-SAP resources into the SEM system. Therefore, SEM consultants need to know how to bring different data sources together, whether it's from R/3 or any other system. Does that ring true with your experience?

Halley: Yes, I would agree to some extent. One of the main reasons why people haven't used SEM more, along with not understanding what it can do, is that they feel like they don't want to tackle the project of getting all that data into BW so that SEM can work with it. It's too bad that this is the case, because if you really believe in integration - and you should, because that's why you bought R/3 in the first place - then you should be working to get that data from all of your different legacy systems into BW. Then you put in your SEM system, and that's just icing on the cake. But what customers should also know is that they don't have to do a "big-bang" SEM implementation. So they don't have to start off with a wide range of SAP and non-SAP resources. They only have to start with one resource, and they can add more and more as time goes along. Of course, the more resources they add, the more value they'll get out of SEM.

Reed: So aspiring SEM consultants need to familiarize themselves not just with BW, but also with an understanding of the role of data integration in the overall enterprise. To say to yourself, "I'm a strategic planner" isn't going to cut it.

Halley: Correct. As I said in our last talk, the most successful SEM consultants are going to have a holistic approach to SEM. Now, those skills won't get used very often by customers, because very few customers in this economy are taking a holistic approach to how they're working with SEM. Right now, they don't feel like they have the money to use SEM and BW to run their entire organization better. But the most successful SEM consultants are still going to have that "total" approach to SEM. It's not going to be just a functional approach, but it's also not just a technical one.

Reed: And right now, companies are focusing mainly on which aspects of SEM?

Halley: Right now, they are focusing mainly on BPS (the business planning component of SEM). Most organizations are looking at SEM very narrowly, meaning that they put in SEM because they want to do financial forecasting, or they want to do headcount planning. Very few organizations are saying, "We want to do headcount planning, and financial planning, and sales planning, and IT planning, and we want to have all these plans integrated, so that when we make a change to our IT plan, it affects the cost center plan, which affects the profitability plan, which rolls up to the CEO level briefing." People aren't doing that, and they should be. The common approach is more like: "I've got this immediate need right now, and I only have the money to address this one issue." Unfortunately, to date, it's been more of a bottom-up process for customers implementing SEM. Whereas a top-down approach would allow the organization to better integrate all of it's planning.

Reed: Well, hopefully, if they get a taste of SEM, it will spur them to bigger and better things down the line. Paul, that just about covers all the bases, and then some. Do you have any last thoughts on SEM you'd like to share before we wrap this up?

Halley: No, that's about it. I look forward to hearing what other consultants and customers have to say about our discussion.