Do you know the ROI of your SAP investments?

Over the past two decades, there has been a dynamic evolution in SAP implementations. SAP has become synonymous with transformation, driving efficiency, integration and innovation in organizations worldwide.

Yet surprisingly, few organizations can confidently state the ROI of their SAP investments. Most companies focus on the success of the implementation, but need to put systems in place to measure results afterwards. Indeed, most definitions of “success” start and end with an on-time, on-budget implementation project, not the actual outcomes and business value it delivers over time.

We need to ask why this happens. Why do companies neglect to evaluate and measure the ROI of these multimillion-dollar IT investments?

Moving the spotlight to business value

It’s no secret that SAP implementations are complex, intricate and time-consuming. Understanding and addressing these challenges can contribute to a more successful value-driven implementation.

Several steps are commonly overlooked during SAP implementations, and neglecting these can have a significant impact on the value your program delivers. These include:

1. Inadequate analysis of existing business processes. Organizations have developed complex business processes involving various departments, technologies and workflows. These processes are usually a mix of formal procedures and informal practices that have evolved to meet the organization's unique needs. A thorough analysis of these processes is crucial because it provides a detailed understanding of how the organization currently operates. Inadequate analysis of existing business processes can lead to missed optimization opportunities and misaligning SAP systems with business needs.

   A comprehensive understanding of current processes is essential - an initial assessment using SAP Signavio might be worth considering.

2. Data quality. Insufficient attention to data quality and cleansing leads to errors, inefficiencies and challenges in effectively utilizing SAP. Inaccurate data leads to errors in reporting, potentially driving wrong decisions. Therefore, it is important to follow key strategies for ensuring data quality – data cleansing, data governance and quality metrics. By prioritizing data quality and implementing robust data governance practices, organizations can ensure the effective utilization of SAP systems, leading to better decision-making, increased efficiency and overall improved business performance.
3. Comprehensive organizational change management (OCM) and training. Poor software adoption leads to decreased productivity and system effectiveness. It can be seen even more often when companies with heavily customized systems transition to SAP’s or a partner’s industry best practices. Changes to business processes lead to users’ frustration and reluctance to accept changes, reducing the value of implementations and rollouts. Nevertheless, organizations should adopt SAP's and partners' best practices as a long-term strategy. This approach ensures ease of maintenance and reduces the need for support operations.

4. System tuning and post-implementation support. Once users start adapting to the new system, users will uncover some inefficiencies. Regular monitoring and timely resolutions are significant contributors to the overall success of the implementation. System improvements will be required to ensure best practices and redesigned processes fully support operations.

   Leveraging SAP Cloud ALM can be a game-changer to address these challenges. This tool provides intelligent support for application lifecycle management, offers robust monitoring capabilities and efficiently manages SAP landscapes. In addition, partnering with HCLTech, an experienced system integrator with a proven DevOps model, can further enhance the implementation process.

Five ways to derive maximum value from SAP implementations

Deriving maximum value from SAP implementations involves careful planning, effective execution and continuous improvement, which are all essential. Here’s how you can succeed in this journey:

1. Define a robust business case

   Organizations leverage enterprise systems and intelligent technologies (ML, AI, Chatbots, etc.) to gain a competitive advantage, increase operational efficiencies and customer satisfaction and reduce spending. A well-defined business case serves as a roadmap for successfully introducing a new SAP system, providing clarity, justification and a framework for decision-making - ideally aligned to an organization’s strategic objectives - throughout the implementation process.

   1. Collect data: The most crucial step is collecting the correct data to demonstrate potential benefits and justify the investment. Organizations must
      • Identify data requirements
      • Gather existing data
      • Benchmark against industry standards
   2. Conduct a thorough assessment by evaluating existing processes, systems and data.
   3. Understand pain points, inefficiencies and areas for improvement. This assessment helps to identify the key areas where new implementation(s) can deliver value.

   The importance of a solid, value-led business case can’t be overestimated. Businesses and their models are constantly evolving, and this evolution needs to be reflected in your business case. So, be sure to keep in mind future growth strategies and rapidly changing consumer preferences when building your business case.

   For example, one of my recent clients, a Fortune 100 Company, was forced to change its business model and start selling its services on a subscription-based model, moving away from a traditional transactional model. Revamping all systems was challenging because of the complexity of new processes and because some systems were dated, did not have new architecture principles and were customized. By taking the time to develop a comprehensive business case based on their latest model, they were able to maximize the value derived from their SAP implementation and position themselves for long-term success in an increasingly competitive business landscape.

2. Find the right implementation partner and prototype

   Choosing the correct implementation partner can be challenging. Brand recognition doesn't always guarantee the best fit. It's essential to focus on the individuals who will collaborate with your organization. Meeting the team that will manage your project is critical. A suitable partner should have a track record of success in your industry. Equally important is having committed professionals who will support you and deliver value throughout the project.

   Explore proof of concepts (POCs) and demos in collaboration with a system integrator. There are many instances where POCs have significantly paved the way for successful implementations. These POCs act as initial trials or showcases to confirm a proposed solution's feasibility, functionality and effectiveness. By conducting tests on a smaller scale, organizations can accrue valuable insights into the potential benefits, value and costs associated with a full-scale deployment.

3. Formulate a strategic implementation plan

   Formulating an SAP implementation plan requires meticulous planning and a strategic approach. At the heart of this process lies the crucial step of defining clear goals, objectives, value drivers – and the precise outcomes you want to achieve, whether IT or business.

   One essential step involves establishing metrics and Key Performance Indicators (KPIs). This begins during the discovery and design phase. Setting baseline metrics for the identified value drivers to bolster the business case. For instance:

   1. Value drivers encompass various aspects such as business process optimization, real-time reporting and analytics, cost reduction and efficiency and technology infrastructure modernization
   2. Qualitative KPIs may include user satisfaction, change management success and business alignment metrics
   3. Quantitative KPIs could cover areas like return on investment, compliance and audit readiness, data analytics and reporting capabilities, user productivity and adherence to budgetary constraints

   Establishing the right Organizational Change Management (OCM) strategy is crucial during SAP implementations due to its vital role in ensuring the successful adoption and utilization of the new system. Gathering feedback from all stakeholders is essential, allowing for swift adjustments to mitigate resistance to change effectively. It's crucial to pay attention to the advice of your consulting partner and integrate their expertise with your company's distinct characteristics. Rather than imposing your methods onto your partner, embracing and integrating their suggested approach is imperative after thorough evaluation.

4. Measure results after the implementation.

   Organizations can become so intensely focused on delivering projects that this dedication overshadows the business value these projects are meant to deliver. Organizations must take the time to pause, reflect and assess the outcomes and impacts of their newly implemented operating models. This reflection is crucial for ensuring that the projects align with their overarching objectives and continue to drive progress effectively.

   How do you ensure that value is being tracked after deployment is completed?

   Companies should use a framework and tools or processes to evaluate outcomes. For example, at HCLTech, we use our Value Sentinel framework, a key component of our overall Business Transformation Framework. HCLTech’s Value Sentinel is designed to help organizations track and optimize the value of SAP investments by providing comprehensive insights into systems performance, usage and costs.

   By leveraging this solution, customers can improve operational efficiency, reduce costs and make informed decisions to maximize the value derived from SAP projects. Importantly, it helps customers capture KPIs and track their benefit hypothesis with a proven scientific approach, tools and templates.

   Integrating these frameworks into SAP transformational projects is crucial to ensuring that value is monitored comprehensively from the start of the implementation journey to its completion.

   Understand that the implementation doesn’t end with go-live. Organizations tend to overlook the importance of this exercise when KPIs are only loosely established. This is generally due to insufficient planning for post-implementation evaluation, cost concerns and, most importantly, the overemphasis on implementation completion.

   Leaders need to understand that go-live is not the end of the process but rather a significant milestone that leads the post-implementation phases of the project. The next phase after the go-live is application support and maintenance, which is often when corrective actions like process optimization, training or system enhancements address identified issues and improve results.

   Because the implementation partner often transitions to another system integrator more experienced at providing support, it’s crucial to coordinate both partners to ensure that any incremental enhancements needed to meet the intended objectives and adhere to established KPIs are completed successfully.

   Finally, demonstrate how the monitored metrics directly contribute to tangible business benefits. For example, connect cost reductions to improved profitability or link efficiency gains to increased customer satisfaction. This linkage ensures a clear understanding of the impact of metrics on overall business outcomes.

5. Increase KPI targets to drive continuous improvement.

   To foster continuous improvement, increasing KPI targets is crucial, driving higher performance standards and efficiency. Organizations can refine processes based on data insights, user feedback and emerging needs by identifying areas where performance lags to realize value fully. Organizations must:

   1. Identify areas where performance lags or value is not fully realized
   2. Continuously evaluate, track the defined KPIs and refine your processes based on the insights and data generated by the deployed system
   3. Regularly engage with users and gather feedback to enhance system usability and address emerging needs
   4. Identify areas for further optimization and implement changes accordingly via change requests
   5. Explore intelligent technologies to fine-tune operations further and enhance processes

   Remember that value tracking of your investment should not start after it goes live — it must start even before you kick off a project. To maximize savings and derive optimal value from SAP implementations, organizations must employ a robust framework before, during and after implementation projects to maintain focus on KPIs and established metrics.