More acceleration for your on-premise ERP program with SaaS

Rather than considering SaaS the enemy of on-premise ERP, consider how you can leverage its capabilities to consolidate, optimize, and simplify your on-premise ERP systems to achieve a better, faster, more agile result.  On-premise ERP  is not going away tomorrow, at least if you run it well and provide the required agility to the business and SaaS can help.  The key is providing the right services levels across the entire environment.

In my last blog, 2-tier ERP: A cure for the smaller markets in a global implementation, I discussed how you can use a SaaS based ERP implementation to eliminate some of complexity of the implementing simpler, smaller markets.  The focus was geographic or unit based.  Similar logic can be applied to functionality.  Some Line-of-Business (LOB) applications and/ Human Capital Management (HCM) / Human Resources (HR) functions can also be pulled into SaaS.  The result is even more acceleration of your overall program.

Most of my clients are either using or reviewing the use of SAP SuccessFactors, SAP Ariba, and SalesForce as SaaS based LOB’s.  These 3 SaaS solutions show up repetitively at many SAP clients.  I am well aware SAP has CRM and even a CRM RDS (Rapid Deployment Solution) on cloud, including IBM’s SmartCloud and even CRM capability in Business-ByDesign, but SalesForce is dominant in the market and needs to be considered.  Clearly there all alternatives to these 3 SaaS solutions in the market.  I use them as examples and your company needs be responsible and do a comprehensive review of each area to find the exact solutions that best fit your company.  I’ll simply use these as common examples.

The idea is if you can remove the scope of configuring SRM with Ariba, most HR / HCM scope with SuccessFactors, and CRM scope with SalesForce, the reduction in scope in the core and plus making them parallel projects can enable the overall implementation to move far faster and introduce some heavily requested mobile capability.

erp - using SaaS functions

In addition, by using SaaS based products you can potentially lower costs of procurement, implementation, and support.  You definitely can accelerate the roll-out of these functions and bring significant mobile capability to business in these areas which might help your business case by bringing benefits earlier.  These 3 areas are especially important since the touch so many individuals with mobile roles.

By design, every SaaS program I’ve seen is heavily mobile enabled.  Mobile and cloud are ideally suited for each other.  The more recent thought process of agility and velocity drives a simpler and more targeted design for most SaaS solutions.  The SaaS thought process better fits the minimalist mobile screens than the idea of highly optimized processes found in most core on-premise ERP systems.  Cloud serves mobile well since it is equidistant to all devices.  Mobile devices are not clustered like terminals around headquarters based system which up until recent was the assumption for on-premise ERP.

Even if the SaaS implementation is a wash on cost, the acceleration of delivery and the enhanced mobile capabilities may push the business case over the goal line.  Keep in mind that the mobile applications are native to most SaaS applications so you don’t have to build up a support staff to maintain the mobile interfaces like with many ERP add-on products.  They are as native as browser support is in SAP ERP.  You still will need to manage devices and may even want to build, but the native mobile capability will lessen your IT support burden.

SaaS is not a panacea.  For companies who require extremely high complexity or significant optimization of processes, it may not meet their requirements.  If your company is sensitive to OpEx over CapEx (utilities generally prefer CapEx for IT) then SaaS may not be a good solution.  Finally, SaaS applications require integration, most likely you require some optimization (custom functions), and require good project management, organization change, communication, and training which is not significantly different with SaaS than with on-premise based implementations.  Maybe a simpler program can demand less of these soft skill deliverables, but it is not the “SaaS” that changes the effort.

In your next transformation program you should consider the use of SaaS based applications to remove scope, increase velocity and agility, reduce the overall program timeline, accelerate benefits, and potentially lower total costs.

In my next blog, I’ll examine how this idea can be applied to an existing SAP landscape requiring renovation, optimization, or simplification.

2-tier ERP: A cure for the smaller markets in a global implementation

Many companies over-engineer, over-build, and spend too much for ERP as they begin to implement smaller markets where the needs are relatively simple when they try to shoehorn them into the larger global ERP system.  Even after implementation, the smaller “units” often find it difficult to get their requirements met as they account for such a small percentage (%) of revenue.  One of the biggest hassles in SAP is security and separation of duty (SOD) which often requires smaller offices with just a few workers to have special profiles, multiple login’s, or some special process to fit into the bigger office process.  There needs to be a better way to meet the requirements of highly optimized larger markets with large work forces and smaller, simpler, and more fickle markets with smaller work forces.  A 2-tier ERP solution might be the cure.

Up to now, companies have spent billions on  ERP implementations resulting in significant results.  Specifically for SAP, many of the fortune 100 companies I work with credit some portion of their ability to keep up, survive, and some cases surpass their competitors to their SAP systems.  The most successful implement SAP using standardized processes, strong governance, and fewer, and fewer instances.  Companies with lots of instances often ask me what is the right number of instances.  It is the fewest number of instances which can meet your business requirements.  Not 1, 2, or any specific number, but the fewest.  Each company has to look at its own situation, goals, and markets; however, I believe implementing a cloud based ERP (SaaS) such as Business ByDesign (https://www54.sap.com/pc/tech/cloud/software/business-management-bydesign/overview/index.html) can make implementing or getting to “fewer” much more possible and ultimately better meet the requirements of all parties unilaterally.

In the examples below, the imaginary company has about 80 divisions, units, or countries (depends on how the company organizes and implements) it wants to implement.  A rough cut of revenue shows that 65% resides in top 10 and additional 25% in next group of 10 (11 – 20).  The last group of 60 only account for about 10% of revenue.  While this is fictional, it is a composite many of my experiences in the real world.  We often spend as much, or more, getting the last 60 units into core instance.

All in one ERP model
All in one ERP model

If we recognize that the goal of the fewer or even a global single instance is not simply being on one system, but to have consistent, audit-able processes globally, a new option opens up using a 2-tier ERP model.  Bottom line is in many of these smaller units, often countries, the objective is really to make sure the financial results are valid and that ultimately the CFO can count on them when he reports out to Wall Street.  Getting everything into single SAP system was the best way, and in some scenarios still may be the best way, but it might pay to look at a SaaS based ERP solution as shown below.

Two Tier (2-tier) ERP model
Two Tier (2-tier) ERP model

Often I’m asked, why not just take one of our ERP systems and make it the “light” ERP system and we can even place it on the cloud (IaaS/PaaS).  It does work, but it misses many of the advantages of moving to SaaS.  It is a good option if those other units require lots of optimization.  In contrast the SaaS option will provide a more generic solution focused at smaller organizations with shorter implementation periods, mobile enabled GUI, and pricing by user which may match the more volatile small unit markets where staffing may quickly shift up or down.  Finally, if you are already on SAP ERP, there are significant integration between SAP ERP and Busines ByDesign pre-built with new ones being rolled out in future versions.

I will continue to encourage clients to move to the fewest number of instances which can meet their business requirements.  Adding a SaaS based ERP system such as Business ByDesign could make that journey even simpler and faster.

Sharing the Righteousness of 4th of July

Happy 4th of July or American Independence Day to everyone.  Most of us reading this blog have a lot in comparison to the world or even in comparison to others in the USA.  Since I know more than a few of you personally, I know you are generous.  If you are going to share, be sure it counts.  Please take the time to understand where your generosity goes so that the righteousness you give goes to the people in need.  Unfortunately, some of the worst organizations profess to give to veterans who defend out shores, police who defend our streets, and firefighters who defend our homes, and even the defenseless like children.  

Please use site like Charity Navigator (http://www.charitynavigator.org/) to evaluate your choices.  At least ask what percent goes to overhead and fund raising.  The best organizations will easily give you a figure.  The worst are taking 99% of your money to pay themselves.  While I’m sure these people will rot in the afterlife, let’s deprive them in this life.

Give generously, but make it count.  Again, Happy 4th of July.

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