Eursap’s Ask-the-SAP-Expert: Alisdair Bach
Eursap’s Ask-the-SAP-Expert is designed to give you up-to-date information on the latest SAP news, featuring key thought leaders in the SAP space, as well as regular interviews with the best SAP consultants in the business.
This month, we feature Alisdair Bach, a top SAP influencer and business transformation expert. Alisdair is based in the UK and specialises in stabilising difficult SAP projects through innovation and effective SAP enterprise architecture via his company, Dragon ERP.
Hi Alisdair, firstly thank you so much for taking the time to talk to us. It’s traditional for us to begin with a get-to-know-you session. Can you tell our readers a little bit about yourself by giving us your elevator pitch?
Hi Jon, and thank you for the opportunity to share some of my thinking about all things SAP.
I come from a hybrid military and accounting background, that need for detail with a high degree of command and control has made me the SAP technocrat I am today.
Your SAP CV is long and extensive, Alisdair! What was your first experience with SAP?
I had been involved in the computerisation of the UK tax system and then moved into accounting where I specialised in the early digitalisation of the finance function for large UK listed companies. Back then in the late ’80s, no one in the UK had really heard of SAP or ERP and digitalisation was very niche. Back then there simply wasn’t the need or appetite to invest in business transformation.
In 1990 I was recruited by McKinzie to help their brain trust teams (I was the one that made the tea and coffee) transform complex clients with SAP R2 and then early R3. This included carve outs, greenfield and turnaround delivery across Telco and Defence, including WolrdCom, Global Crossing and Marconi. If you’re as old as me those names will resonate and, in every case, SAP provided a level of accounting oversight and rigour never seen before.
Even back then SAP was seen as a sound finance domain target operating model product to leverage. McKinzie instilled the notion of the organisational drumbeat, what a target operating model is, the people, process, tech and data stuff. They instilled the robust Mckinsey 7 business transformation methodology which has stood the test of time, as has SAP’s ASAP now rebranded “Activate”.
I wrote a blog this week for CFO’s and CIO’s explaining what a finance target operating model is, and how SAP S/4HANA and SAC supports every element of the FinTom in support of BPO’s, retained finance and Finance Shared Service models.
I contextualise the finance TOM, as the “Finance Domain Product” and it will include:
• Finance Enterprise Structures such as COA, Cost Centres structure, Profit Centres
• Finance master data governance
• General Ledger Accounting, GL Rec and intelligent journals
• Intelligent AR, AP
• Sales Order Processing / Contract management
• Revenue Recognition
• Cash book management
• Treasury management
• FX daily, monthly or preferred real time
• Asset Accounting
• Inter, Intra
• Controlling, COGS, COPA
• Daily Close, Period Close
• Project and Product
• Accounting standards
• Process Controls Framework
• Fund management (A US construct)
• Financial, Planning and Analytics
• Greenline / Carbon accounting
• JV accounting
When you look at that list, there are enhancements from the functional baseline established by R2, but not that many. The tech wrapper is constantly evolving but the process core remains the same.
McKinzie drummed into me the construct that SAP was not tech, it was a target operating model and that most if not all large and complex organisations could readily adopt SAP ERP to drive innovation. Sadly, it has taken SAP nearly fifty years to get onboard with that message, as we saw back in 2022 with the signing of the SAP McKinzie alliance to further refine the SAP TOM. I can touch upon this further when we discuss it.
After that, I have spent time with some amazing clients and consultancies. I loved my time at Druid, TCS, Fujitsu, IBM, Axon and Bluefin, and though they have left their DNA on me, PwC is the professional baseline I aspire to maintain.
You’ve been involved in the business transformation business since before S/4HANA was around. Presumably, some of the clients you helped back in those days are now re-executing their business transformation journey with S/4HANA now?
Jon, many have, some are and at some point, all will.
I tell customers to ignore the constant scare mongering around ECC6 support. We have been there so many times before with SAP and the honest answer is legacy SAP customers will go when they are ready and not before. “Give me a poorly documented and supported ECC system and I’ll give you another decade and get you to the point where you can deliver ongoing plug and play digital SAP kaizen” – that used to be my stock message regarding S/4, but we have been on a journey with S/4 and SAC. We are now reaching a level of product maturity linked to the purchase of Signavio that makes the case for S/4 adoption compelling.
The case for S/4 is being driven not by SAP who, to be fair, are truly hopeless at evangelising the value of S/4 to any audience with day jobs. Instead we have seen a number of leaders in the eco system demonstrate how to drive business value from S/4: the stand outs for me are Mark Chalfen at PwC, David Lowson at Cap, Steve Ingram at Deloitte and Alexander Greb at Westernacher. I may joust with them on LinkedIn but invariably they are right and have done remarkable work to move the debate from vacuous IT savings through to tangible value chain process level innovation.
The S/4 glide path has been truly disrupted by the emergence of the hyper-scalers and SAP’s relationship with them. At the same time SAP failed to articulate clearly the value of SAP Cloud Platform (SCP). I have evangelised SCP as SAP’s greatest product innovation since R3 back in the early ’90s. Essentially, early S/4 was ECC and the value proposition sat firmly in SCP. So this led to a lack of focus from SAP on S/4, and a level of indifference from existing customers. SAP had lost its wow factor and the hyper-scalers had been allowed to park their tanks on SAP’s lawn, offering SAP customers access to competing services at a far lower price point.
So we now have a situation for many legacy SAP customers, whereby the decision to move to S/4 is not a simple one and instead is linked to other drivers such as their platform strategy, mega trends and the constant need to evolve the business model to deal with ongoing global disruption and the need for operational resilience.
Moving to S/4 in whatever colour you fancy – green, blue or brown – is still highly disruptive to organisations that have been process and people optimised for decades – they simply don’t have the capacity and capability for large change programmes. I do a lot of work with CIO’s and CFO’s helping them on the journey and what I often see is a sense of overwhelm, whereby what should be an easy conversation on their SAP roadmap quickly shifts to the detail. For many, they simply don’t have the answers to define a long-term roadmap. This is where Dragon comes in. We think tactical low risk evolution and innovation, going back to the basic enterprise architecture nudging principle, moving at the pace of the organisation with the ability to constantly change and evolve the roadmap whilst delivering rolling plug and play innovation.
So going back to the question, yes, they are, and I would say 100% will move to S/4 in some form over the next decade.
You’ve worked on a contract basis as well as a permanent basis. Which is your preference in this industry and why?
I prefer “Contingent Worker” – it enables me to add real value and uphold my professional values and standards. It enables me to witness first hand a multitude of industry sectors, operating models and corporate cultures and compare their strengths and weaknesses. I continually learn from them and at the same time get hands on SAP transformation experience. I also get to meet lots of great people on the journey.
I think there is another dynamic, I call it the “Nanny McFee” fractional model: when you need me and my skills I’m here – and when you don’t, I’m not. Itelligence were masters at this, dipping in and out, working at the speed of the customer. You don’t need an army to deliver SAP. Well, just the right people at the right time – I call these guys force enablers.
I enjoy helping new smaller customers – £400m+ – embrace SAP and the SAP ecosystem. SAP S/4HANA public cloud is as good as it gets, and it’s well suited for growing organisations, unicorns and carveouts. Due to their size, they are resource lean and lack a transformation delivery DNA – they don’t have the capacity or capability to adopt SAP even with Rise. I’m able to offer them help on where and how to start the SAP journey, define their target operating model, target enterprise design, SAP adoption roadmap and implementation approach. I effectively set them up for success and this is often using a fractional consulting model.
You must have seen a lot in your time, Alisdair. I’m asking you to dish the dirt now: what’s the strangest or funniest thing you have seen in the course of your SAP career?
Strangest thing I see is the use of the term “SAP tooling” instead of “business transformation”. This essentially equates to, “this is an IT led programme, we haven’t engaged the business properly, we have no idea about the impact of the programme on the business so we are simply going to say SAP is an IT tool and dump it in to an unsuspecting business.” And we wonder why 70% of SAP programmes struggle. I see this as an absolute abdication of responsibility by the CIO, SI and SAP for not speaking out.
Funniest thing? Constantly seeing huge multi-million-pound programme’s running with no detailed plan, no resource profile, no dependency management and no critical path, but lots of PowerPoint – and the customer wonders why they are constantly out of control and over budget. One of the things I’m passionate about is the codification of SAP programmes. When all is said and done, SAP delivery should be highly commoditised and industrialised, and we should be able to track every element of the programme’s delivery through real time metrics, burn downs and burn ups. This is the Axon influence, seeing huge programmes managed from dashboards and one of Dragon ERP’s USP’s.
And how about now? Talk us through what Dragon ERP has to offer.
Dragon does one thing and that’s act as a one stop shop SAP delivery house. We help complex organisations safely adopt and maximise their investment in SAP. We want CFO’s and CIOs to know there is a disruptive independent business innovator out there that can help drive rapid low risk business value. As we say, “less consulting puff more SAP delivery firepower.”
What we are not is a generic management consultancy or a recruitment agency trojan acting as a body shop. We work on the basis that SAP is a once in a generation investment to move to a best of breed target operating model. Once on SAP we advocate constant Kaizen to enable business resilience and innovation.
We don’t think of ourselves as a system integrator – I hate that term as it fuels the “SAP is IT and tech tooling” mindset. We see ourselves as Target Operating Model Innovators and business Integrators.
We are taking SAP adoption and delivery back to best of breed basics, as per the old days when Axon and Bluefin excelled at low-risk SAP innovation and delivery. The entire delivery model was codified, doing the detail, breaking every element of the delivery lifecycle into metrics which can be tracked real time.
It’s truly bonkers that customers are investing in SAP to maximise their data but allow this huge investment to roll with little or any focus on the data that drives the delivery critical path.
There is a fantastically cruel calculation to prove a programme is mis-reporting status and that’s called “earned value.” It immediately proves the poverty of the programme leadership, and it only takes a nano-second to calculate.
Dragon ERP is about having an honest conversation with CFO’s and CIOs in terms of the “art of the possible” based on detail. We do a lot of work in the SAP S/4 migration space primarily because unlike the R/3 to ECC migration there is no one fit for all migration path and the things that shape an SAP roadmap are highly complex.
We specifically call out the need for a more pragmatic plug and play innovation methodology to leverage the best of SAP Cloud in support of Digital Kaizen driving business value. We have little interest in any conversation that positions SAP as tech. We are heavily focused on helping SAP make the case for SAP S/4 Public Cloud, which is as good as it gets, and I’m happy to debate this with anyone. Every conversation starts with what is the business outcome.
You’re also pretty active on social media platforms such as LinkedIn. Is that a way to get the Dragon ERP message out there, or do you see it as a way of sharing knowledge backwards and forwards with other members of the community?
Both! Even pre–Dragon ERP I was a prolific blogger on SAP and transformation trends.
Working with the SAP influencer community (set up by SAP legend Wouter van Heddeghem) we can share great innovation across a vast LinkedIn network. SAP and the mega trends move quicker than most folk can keep up with, so we help keep the ecosystem informed and up to date. You also have to pay credit to SAP and the content issued by them on a daily basis, from SAP blogs to videos and OpenSAP free training. The investment in good, informative content is massive so we help spread the word.
As for Dragon ERP, it’s about establishing the brand and connecting with CIO’s and CFO’s so that they see there is a disruptive SAP innovator out there that does one thing – and that’s business innovation using SAP. I’m a technocrat so it’s all about the detail, the quality and about having standards. We have honest conversations and don’t always tell the client what they want to hear – and the social media content embeds this message.
You’ve been in the consultancy business for some time. Can you give us your overview of the SAP job market. Is it all smiles or is there an impending feeling of doom?
I think it depends. If you’re a contractor or perm in general, the global SAP market is booming wherever you are. But it’s clear there is a mega resource shortage issue out there already and it will only get worse. I know the major SAP SI’s are struggling to recruit and retain talent, and this will slow down the move to S4 and increase TCO.
The proven ability of good SAP resource to work remotely significantly enhances the value proposition for contractors and for the end customer as well. There is great talent out there. Dragon ERP has invested in building out delivery capability from Eastern Europe, Turkey, Central and Southern America and SE Asia, which speaks volumes about SAP’s global footprint and the depth of skilled resource available. Not only does this enable a follow the sun delivery model, it also means you can offer customers a competitive price point without diluting quality.
I think the UK job market has some specific issues caused by IR35 and procurement. So I’m seeing in the UK a switch from specialist SAP recruiters that get the industry and add real value to their customer, to more generalist bucket shops that treat contractors like commodities. I tend to ignore the latter.
Q1 2023 hasn’t seen the tsunami of expected S/4 programmes. Everyone is thinking about defining their SAP S/4 migration strategy, but few are pulling the trigger yet which is frustrating. But in general, it’s a great time to be in the SAP ecosystem.
Let’s talk SAP S/4HANA. The uptake of S/4HANA amongst ECC6 customers is steady but not spectacular. Is the future bright? Or do you see customers coming to the end of their love affair with SAP?
That makes me smile. Love affair with SAP! That’s like saying your best pal is the dentist.
Business transformation is hard, poor consulting principles and standards over the last few decades reduced the SAP conversation to price point and SAP being seen as tech implementation, an IT project poorly implemented with little focus on the operating model, business adoption, operational readiness and embedding and sustaining the change. I exclude PwC and Cap from that statement as they have led the resurgence in switching the conversation back to business outcomes.
The stat is 70% of SAP programmes fail to achieve their required outcomes (in the first instance) and before there is a howl from your readers asking me to prove it, SAP published that stat as part of an early BTP marketing campaign, which means SAP implementation tends to leave a deep scar in the organisation’s DNA. But like the dentist, you know those fillings are needed or the tooth removed and once done the pain becomes a distant memory.
But I don’t see any loss of love for SAP. Ultimately the bulk of ECC customers will move to SAP S/4 by the end of the decade. That’s primarily because SAP keep innovating the process core, and BTP side car provides the muscle to make the case for SAP post ECC compelling.
There is a further dynamic to consider and that’s the love private equity has for SAP. The ability to carve out an acquisition onto a standard SAP Target Operating model has reduced the need for McKinsey, Bain and BSG. This significantly reduces the acquisition costs and enables faster TSA close out. I think the love could switch to a full-blown romance/romcom if SAP could just slow down the pace of product innovation and clearly explain the product range, and how it links together in the form of a very clear TOGAF architecture.
As for RISE, it’s logical but to focus on something that should have been put in place a decade ago is slightly bizarre. The messaging remains at best ambivalent and does little to engender the love.
What do you think are the things which differentiate SAP from other ERP vendors in this crowded marketplace?
The best scalable intelligent ERP solution on the market by a country mile. If SAP don’t get S/4HANA Public Cloud to land, then it’s a major leadership failure. There are a few other points which differentiate SAP:
• Leadership, mass and scale: SAP, for all its faults, is helping influence and lead the global economy. Let’s not forget the detail: 99 out of the top 100 global companies run SAP (showing my age again), 92% of the global 2,000 run SAP. Globalisation was enabled by SAP and SOA.
• During the pandemic the global economy kept on going because most of it sits on semi-autonomous SAP systems.
• Working with the UN and World Economic Forum to accelerate the shift to NetZero and the circular economy, fully built into SAP.
• Working with McKinsey on refining operating models.
• Working with major IT clients to take mega trends and to commoditise them for the entire eco system to leverage.
• And a huge investment in people training, upskilling and contentc – it’s not difficult to get into SAP if you want to.
Quite simply, SAP are always ahead of the curve. Where SAP go, the rest follow.
Do you have a personal favourite SAP S/4HANA innovation?
I have two. S/4HANA Public Cloud, its best of breed Industry 4.0 ready TOM makes it as good as it gets, scalable, extendable, and puts an end to legacy IT departments. The only problem is you can’t do a brownfield migration to the public cloud, only PCE or pseudo on prem platform. Fix this and you will fix the public cloud uptake. Mark Stanley at Pumpkin specialises in SAP infosec and will help any CIO or CISO with their S/4 infosec or data residency concerns.
Secondly, I’m a production planning geek so love the beast that is SAP IBP. I love the inclusion of Advanced Available to Promise in S/4 from 2021 onwards.
It’s not S/4 but I think one of the least understood SAP solutions that will add big value if S/4 didn’t hog all the airtime, is SAP Data Intelligence Cloud (on BTP). It’s the “Intelligent” SAP data lake/mesh enabler. It’s interesting that SAP’s new cloud data warehouse product Datasphere will co-exist with SAP Data intelligence, which I struggle to understand.
And by the same token, what is it you would change about SAP if you could?
Messaging! I’d like Christian to stick me on the board to help him once and for all explain what SAP really is, its business value, simplify the product offering and slow down product innovation. Stop the sugar coating and make the messaging simple and compelling.
SAP should be less focused on tech. SAP is the digital double of the business and SAP needs, in every conversation, to explain in business terms what SAP delivers and its business value. Currently, you have to dig and dig for this.
They should also have less focus on the S/4HANA curse. SAP have worked so hard on raising awareness of the S/4 brand that people have forgotten S/4 is just the core of an extensive operating model taxonomy, supporting all elements of the enterprise. Every day I speak to CIO’s and CFO’s who only think in terms of S/4 – this has to stop. As I note below, S/4 has got to be diced up into logical lines of business domain cloud apps as part of a One SAP composable Industry 4.0 target operating model. This will drive revenue.
There should be more focus on what a clean core really means and why it matters. This is essential for me. Slow down product evolution – “Product Singularity” is an issue, the pace of product change and evolution is running too fast (faster than the ecosystem) and customers can consume and make use of, which makes it a wasted investment. The strategy has to be to aligned to the one stop shop composable solution model, which will make it easier for customers to adopt plug and play elements, under Rise and as a service. For example, do we really need “Datasphere”?
Product overlap is also an issue for SAP. We often see multiple SAP solutions competing to deliver the same outcome, which makes it really difficult for the client to select the right product. Try to explain SAPs data and analytics strategy – good luck! They should also stop the inane obsession with the cloud. It’s pointless and confusing, no one in the business cares about tin, db.’s or hosting. It’s all irrelevant. The value is not in the cloud. It’s in platforms and the conversation has to shift to what platforms offer the business. BTP isn’t a true platform – it’s really a hybrid industry 4.0 micro services hub and positioning as a platform does it a disservice. SAP need to drop the Cloud from the conversation and go back to what the composable application delivers in business context.
Stop the constant product and service renaming, it drives everyone crazy, examples being we went from Rapid Deployment solutions with SAP best practices, to Best Practices Model company with industry solutions, through to the enterprise management layer (EML)! SAP best practices seems like a simple name to remember, so don’t overcomplicate the product base. A further example would be SAP Cloud DW which is now SAP Datasphere!
Finally, SAP should actually see an announcement through. SAP have the attention span of a goldfish! Christian is constantly spot on with his themes but seldom drives them through to completion. For example, in 2020 the theme was sustainability: S/4 with the Sustainability Control Tower is light years ahead of the competition, offering a total carbon footprint/Greenline/NetZero/circular economy offering. This is huge – a massive business benefit – but lost in a load of ESG messaging. Another example would be the Alliance with McKinsey and the messaging around the SAP TOM, and how the two organisations were going to work together to refine the TOM further. For me that’s a massive pre-sales coup and this has now fizzled out and we are back to talking S/4 Cloud.
In summary, pick three themes and stick to them. If I were on the board I’d focus on:
– Clean Core and Best of Breed McKinsey Industry 4.0 Ready Target Operating model
– Sustainability/Carbon accounting/Net Zero
– Enabling operational resilience and digital kaizen
All enabled by a platform – no need to keep drumming the cloud message.
I’m going to ask you to look ahead another 17 years now, to when SAP S/4HANA will become out of mainstream maintenance, in the year 2040. How do you imagine our ERP landscape looking like? Will it be all AI and ML and RPA?
Great question, and it’s something you can clearly see evolving, I’ll stick my enterprise architect’s head on to explain.
As we saw from the carve up of C/4HANA, composable plug and play SAP is the way forward, with BTP as the core. By 2040 everyone will be on a platform, quantum computing will be the infra foundation and SAP will have become totally composable with S/4 following the C/4 path and being carved up into cloud modules easy for plug and play. AI and ML will be built in, but I don’t think that’s the sexy bit. I think the real value will be the autonomous fully integrated supply chain and business networks, daily close, proper real time data analytics (S/4 has never been any more real time than R/3 was).
SAP will have merged with Microsoft, BTP will be embedded in Azure, SAP will no longer host. Microsoft will provide the next generation Quantum database, replacing HANA, and with that the awfully confusing SAP Cloud and HANA branding will disappear and be replaced by a clean suite of composable business domain apps.
I think the means of implementation will change and will become more autonomous. We are starting to see that with Signavio and intelligent data mining, so SAP adoption will be easier and the programme failure rate eradicated.
By 2040 SaaS will be the norm. It should be now, but IT organisations are dinosaurs wholly resistant to change. For some reason, IT is still not seen as part of the business, part of the operating model or a cost of sale! A major failure on the part of CIO’s. But the fundamentals of an ERP are the process and data core, not the tech meta that orchestrates and enables, so the SAP ERP of 2040 from a consumer perspective will be very similar but autonomous (and I don’t mean UX).
Business Transformation is your business now. What advice would you have for customers who are stuck on heavily customised versions of ECC6, and fearful of the cost and change management involved in a move to SAP S/4HANA? In other words, where do they start when building up a business case?
I spend a lot of time talking about this subject, it’s a really complex conversation and only the serious players seem to want to give the subject the deference it deserves – in that it’s not about the means of migration, more about what the outcome be and the value of clean core.
The going in message should be: Don’t be scared and don’t feel ashamed if your ECC is heavily bespoke. Don’t rush into the wrong decision – defining a SAP roadmap and S/4 business case is a highly complex puzzle. Give yourself the time you need, the predicted migration tsunami will settle. And please consider and fully carry out value discovery around moving to a clean SAP core. The investment now will enable business resilience for the decade to come.
Discuss a self-funding model, consider early benefit identification: it’s essential because it clearly provides the justification for more funding. It also enables the customer to consider various deployment options to manage the disruption, adopt a bi-model deployment model whereby the migration can be built into a more nuanced SAP roadmap, with the migration carved up into smaller logical packages realising tangible benefits early into the roadmap, enabling the SAP roadmap to become self-funding.
Be brave! The “Clean Core” is misunderstood. What we are striving to achieve is helping the client move from a legacy industry 3.0 operating model to an Industry Intelligent Autonomous 4.0 operating model. Many brownfield lift and shift SAP migrations cost a lot, still cause significant disruption and only provide the customer with an interim Industry 3.5 operating model. Essentially all that effort for little if any gain. Take your time and define the real business value, break it down per business domain. Process mining tools like Signavio help drive out value chain innovation with the identification of evidence based tangible benefits.
Let’s talk tactical and strategic BUSINESS drivers for the migration – the why! This will determine the right S/4 migration path and SAP Roadmap:
– Regularity compliance (Brownfield tech migration)
– Business or investor appetite
– New business models (green, brown, blue or hybrid)
– Continuous Improvement (Kaizen) driven by megatrends
I do a lot of talking about the industry 4.0 Target Operating Model. I take the time to explain what this means and to establish the Roadmap/Migration Outcome as a “TOM Product”, helping establish the concept of a SAP product owner within the organisation.
The organisation can’t be worse off by migrating to S/4: that has to be a red line, which immediately leads to the old RICEFW conversation. Moving to a clean core shouldn’t be an issue. As an SAP Enterprise Architect, this is the most fun element of defining a SAP S/4 migration strategy – working out how to replace legacy developments of whatever flavour with SAP standard. Now when we say SAP standard, we are we saying S/4 plus friends. That’s another awkward conversation with the client, explaining that when SAP say S/4 they don’t mean S/4, they mean S/4+++.
Let’s also not forget, we aren’t just migrating the ERP – we need to factor in the migration of PO to CPI, making any brown or blue migration immediately more complex. Also, we should not forget there isn’t a 1 to 1 mapping of ECC6 to S/4, so we often see elements of greenfield SAP satellite implementation on a brownfield migration.
You will pay for business change whether you like it or not. You have to invest in business change to avoid operational disruption and reputational damage, that’s just a hard red line – ignore the pre-sales hype, as anything to do with SAP will be disruptive. 70% of SAP programmes struggle to deliver their required outcomes, seldom the fault of the SAP product or the SI. The fundamental resistance by the customer to invest in the appropriate level of business change is primarily because the business case for SAP was weak. To push through the programme, the true cost of implementation was masked, and business change is always the first casualty. I have audited over 250 ERP programmes and this comment is evidence based. If you want a great example search for the Under Armour implementation.
We need to explain to the customer that there are lots of bits of the jigsaw to consider. What may seem like a cast iron case to go brown may end up green, so it’s important not to pre-judge your approach. I have developed an SAP roadmap business case methodology which defines in detail the steps required to define not just a business case but the extensive list of supporting products that support it.
Let’s tackle the scenario we often see whereby the ECC system is heavily bespoke. A heavily bespoke SAP system is NOT a bad thing. SAP ERP is a generational investment. The same as a battleship. RICEFW is a reflection of an organisation with an embedded kaizen culture. It means the organisation is semi-automated, people and process optimised, which places a major risk on the organisation being able to sustain a migration. If the RICEFW is still in use, then the organisation has really been able to sweat its SAP ECC asset. So it necessarily follows that we have to prove the value of replacing the RICEFW so that we can move to a clean core. I’m often shocked at how little work is put into replacing the legacy RICEFW items. As a pragmatist, one would say the Bluefield pick and mix approach is most likely to be the most attractive in terms of adding value whilst minimising business disruption.
Let’s move onto the next bit of the puzzle – the customer no longer really understands the detail behind their as-is SAP ECC system and have a poorly documented operating model, with only standard operating procedures being maintained. To move to S/4 in any flavour we really need to understand the as-is operating model and how it is used by the business. I have repeatedly said, “give me your poorly maintained and documented ECC system and I’ll give you another 10 years.” I can normally do this for about £500k including DB and platform migration, plus spinning up BTP. It’s a relatively simple job to audit and document the as-is operating model and map and current SAP utilisation. It’s an important step and often overlooked, I suspect because it adds cost to a very skinny migration budget.
SAP programmes of any flavour that don’t invest in understanding the as-is and jump straight into “S/4 fit to standard gap-fit” without a significant business change wrapper will fail. Let’s talk driving benefits. Firstly there is little if any IT benefit case, primarily because most as-is SAP service models are underfunded and the move to a platform, and RISE as an example, will define the true cost of IT ownership. Invariably it will be more not less. All benefits will have to net off the cost of business change management. The more you move from your as-is SAP operating model, the greater the change management cost. The more automation you fail to replace, the greater the TCO will go up. It’s an awkward conversation.
When you look at S/4 and the wider set of SAP cloud apps that replace ECC, there is a lot of business value. But most are linked to changing the business model, so again the case for change will determine the value driven from to-be SAP. As a realist, I would say if you have no major business drivers for change then there is little point of pursuing a complex S/4 migration. By keeping it as like-for-like as possible, the time, cost and disruption is minimised, and you continue to get real benefit from the RICEFW taken across. Most of the value sits outside of S/4 and can be easily linked to longer term business continuous improvement. S/4 is not the primary catalyst for Kaizen – BTP and a move to a platform is.
To soften the brownfield messaging and move to a cleaner core using Signavio and SAP migration tooling, we can drive out value chain benefits right across the process taxonomy. But the more we innovate the greater the change management cost. Often the upfront as-is discovery and change management investment in the programme is ignored so as to mask the true cost of implementation, with subsequent delays caused by fit-gap signoff and operational adoption delays, surfacing the true cost of implementation. But if you do have a clear business model case for change, then the benefits become far more compelling. We can really drive detailed EBIDTA and liquidity value, by using Signavio to give us the ability to reimagine the operating model. This is SAP at its best and it’s a really complex undertaking with lots of moving parts. There will still need to be a discussion around legacy RICEFW and the value that can still be derived which will determine the right approach.
To summarise, speak to a proper SAP product expert, take your time, and define a long-term vision, the case for will be whatever the business deems necessary.
How can Dragon ERP help these customers in their quest for an S/4HANA business case?
Dragon ERP provides a fixed price tailored SAP Businesses and Roadmap service. We call it “SAP Roadmap architecture as a service.”
We help define a low-risk business case for change, with a supporting roadmap and strategy. Enabling the migration from legacy SAP ECC6 to an Intelligent Industry 4.0 SAP Cloud Target Operating Model.
We provide an independent service aimed at existing SAP customers. The catalyst conversation is “where to start and how to start” – we take them on the entire journey. When, you talk business case, a lot of people don’t really understand the volume of detail required if you are really seeking a huge capital investment in the re-imaging of an organisation. The output and its quality are crucial, and we actually use the UK Government’s HM Cabinet Office “Green Book” business case because of the level of detail contained.
We deliver a comprehensive set of detailed design and governance artefacts, following our hybrid Business Change, Six Sigma, TOGAF, ITIL, SAP Activate & Signavio best practice methodology.
Refined Vision and detailed scope:
• As-is Enterprise discovery and view
• Value Proposition
• Target Operating Model Vision
• Target Enterprise Architecture
• Enterprise nudging roadmap
• Costings & resource demand
• Industrialised delivery model
• Obligations to enable success
• SI Selection and RFI
• Licensing model – RISE
• Benefits Case and Change Impact
• Green Book Business Case
The question we always ask our experts! What advice would you have for new SAP consultants just starting out, or established SAP consultants facing new challenges?
For newbies, whether you want to be a basis bunny, developer, data scientist or BA, firstly take a step back and take one of the excellent OpenSAP Enterprise Architecture courses. Get to understand what a target operating model is and how complex organisations are structured, operate and the myriad or business models they support. SAP consultants are business surgeons, and like any nurse or doctor they need to really understand the patient and their required outcomes before they can treat them.
Then deep dive the SAP product range and understand the value proposition and business domain alignment of each product.
For existing consultants, the process core is constantly evolving. So functional analysts need to stay fresh and invest in their own development, and the need to deep dive every release note. For techies, with the rise of BTP SAP Cloud, platforms, and microservices there is a need to stay on top of the constant shift to supporting mega tech trends – training is key.
Like SAP, we don’t need to reinvent ourselves – we simply need to refine and practice continual personal kaizen.
My real top tip is finding an area of SAP you really have a passion for and work hard to be a leader in that area.