SAP Consolidation and Shared Services Impementation - A Perspective

Just completed a business consolidation and integration project on a shared services platform. Hind sight is always 20:20 . There are many things which could have been done better .Still it's worth sharing the learning and experiences with the wider audience.

A common myth regarding such implementation is that it involves data migration and extensive testing and the rest is plug and play . I too had similar expectations before landing up in this assignment. Well, data migration and testing are indeed very important , but thats only a part of the life cycle .

As I see it, the biggest challenges facing SAP system environment consolidation projects are not only to meet company requirements but the need to implement all the measures that will ensure the successful operation and further development of a consolidated system. In other words, it becomes critical to establish processes that will institutionalize the system’s continuous development. Otherwise, the projects and system adaptations carried out after consolidation will be subject to paralysis and failure.

With the above goal in mind as we went ahead we faced major challenges and navigated well to end up with a high quality and under budget system delivery .

Some of the major challenges we faced are -

• Business process realignment - No two business are alike and realigning them with a common purpose wasn't easy , more so when they are in two countries having different legal requirements . Many of these business processes have dependencies on 3rd party systems not only within the respective landscapes , but also with outside vendors' and customers' system . The directive was to create minimum ripple to the ecosystem outside SAP. Having said that , we also had to be constantly aware that over caution shouldn't lead to needless duplication of business processes.
  

• Development hygiene - It becomes imperative that when two systems merge we have to enhance or build new programs , interfaces , reports etc to harmonize business processes . A high quality development hygiene is required such that we don't end up breaking the functionalities of the leading system where live business is running . The challenge was to simplify development objects and make them more generic and broad based such that enough scope is left for future business to merge .Developing or enhancing programs were challenging , but more challenging was to create scope for future development in a harmonized system.
  

• Robust Testing-Needless to say a robust testing strategy needs to be in place . A thorough testing of new / enhanced functionality is as essential as to test existing functionality . You are always at risk - not sure if you have broken something else while building .

• Data Migration - Master and transactional data migration holds key to a successful implementation . Since we were handling two homogeneous systems the complexity was limited, but it may not be the case everywhere . Few months back TCS has completed a massive consolidation for ABB, where they merged 8 non homogeneous ERP systems in a single SAP instance . Some of these systems were non SAP ones like Oracle, BAN etc . Imagine the complexity it adds in terms of masterdata migration . Thats a small project in itself within the project .
  

• Managing user expectations - Managing user expectations in such engagements are very critical . There will always be resistance to change. In such engagements the users on both sides ( the source and target systems) are well conversed with SAP . Normal consulting approach of " SAP works that way" just doesn't work . Instead the approach of explaining the bigger picture and best practices acts better in clearing apprehensions .
  

• Effective staffing- Effective staffing is the most important thing in such projects . You need an experianced and matured team to handle such a transformation . Rampup and rampdown approaches at key milestones are key to manage cost and seamless execution .

Now that the implementation is over , the next challenge is to protect the investments made in a harmonised system . To acheive that , one must address the need for suitable change and transport management processes , a vigilant governace modle and consistent comprehensive SAP configuration management. Moreover, the latter should include the objects related to process documentation, the documentation in general, and test management.

The above is just a prespective from the point of view of a solution consultant like me . There are many more ofcourse , that people at different levels in the project hierarchy have experienced.

Future of SAP - My Thoughts

Change is the only permanent thing in life - and so is our means of earning livelihood .Its been a long and eventful journey from R/2 to R/3 ECC . History tells us every downturn brings in opportunities .They also say the way business is done, while we go down the trough, changes dramatically when we come out of it .


This makes me think how's SAP going to be perhaps five / ten years down the line. Definitely the standard R/3 is here to stay but the way SAP works may change a lot .With software as a service (SaaS) and platform as a service (PaaS) increasingly becoming poplular its just a matter of time when we see SAP on the "Cloud". If the last decade belonged to expensive ERP suits, the next decade can well see a shift of power towards inexpensive SaaS offerings in enterprise solutions .

The next wave of ERP solutions is going to be more affordable and focused towards small and medium scale industries . SAPs Business One , SAP by design ,CRM on demand are some of the products that's trying hard to enter that segment . In fact, SAP by design is a kind of SaaS where SAP maintains and manages the database and the user-company pays $149/month for each of its users . No headache of upgrades, support or maintenance or even investments on costly servers and networks - just pay as you go . But still these models couldn't cut much ice in the industry . Though cost of hosting and maintenance has come down drastically, but still its not enough to call everyone to the party . Perhaps once the hosting platform becomes a shared service platform for many customers,the transaction costs would come down and it would be an incentive for small enterprises to jump the bandwagon .

SAP has recently acquired the a start up firm called Coghead that specializes on SaaS offering in e-commerce. Surprisingly, SAP disengaged from all SaaS offerings of Coghead and made it clear to customers to look out for alternatives . However, SAP retained all the engineers of Cohead and might be working on their competency to develop a platform which so far has been an underdeveloped strategy.

As the cloud grows and IT heavy weights like Google, Microsoft , Salesforce.com ,Oracle jostle for space , and the industry still waits patiently for a clarity, SAPs sudden entry in the cloud may be like the arrival of a new beautiful girl in campus . I am sure many would like to date her and some may burn fingers . There is a huge pent up demand for freedom - freedom from the hegemony of the proprietary
ERP solutions that's known for their expensive upgrades, potential for high cost overruns and in some cases even unjustifiable ROIs.

There are some fundamental risks in enterprise solutions being offered on the cloud . Some of them are data security, disaster recovery, business discontinuity in case of the service or vendor fizzling out, regulatory compliance , sense of selling yourself to the idea of one size fits all etc . I am sure the product and service providers are preparing to address these concerns and have a thought process in place which will crystallize as time progresses. Not all clouds are public , there are private and hybrid clouds too which can address some of these fundamental questions .

As of now, Bill McDermott of SAP and Larry Ellison of Oracle publicly says SaaS for ERP is a pure disillusionment. Though it may be a road full of mines, everyone in backroom has a strategy and ambition to take a stroll down the road. If the current recession transforms into a L shaped deflation then this trip down the road may be taken sooner than expected .

Whether it would be another growing bubble waiting to burst or a huge leap of faith ...no one knows , but its true that hope and faith is with which the earth moves . Watch out for this space !

Sources : Informationweek, Zednet,Opsource