Successful SAP ERP Implementation Partner Selection

SAP ERP Implementation Partner selection for a SAP project is complex and time consuming process. There are hundreds of SAP consulting firms around and thousands facts to consider when selecting a SAP implementation partner for your organization. SAP is a COTS (Commercial-Off-The-Shelf) product. Therefore you need to customize it up to an extent to suit your business. Customizations are more critical and it depends on the competence of the consultants.

Wrong SAP implementation partner can mess up your business by over customizing SAP or just install standard SAP system without any customization. SAP implementation is not another software project. It’s about business transformation.  Implementation partner selection becomes more significant therefore.

ERP Implementation partner selection must be done very carefully.  ERP Implementation partner should have a good understanding about the industry which they are going to implement SAP. Requirements and business processes are differ depending on the industry. Scope definition would be the most difficult and time consuming task in the preparation of a SAP project.

First to defining the Scope

Defining the scope for SAP project is different comparing to a usual software project. We can define the exact scope before going into an ordinary software implementation. However an organization’s business process will be changed with the implementation of SAP unlike ordinary information system.  With the implementation of SAP the organization will adopt SAP’s 40 years proven best business practices. Therefore possibility of changing the scope which defined initially is very high.

Normally new business requirements are coming up in the Blueprint stage. New business initiatives or enhancements for the existing business processes will be added to the business.  These kinds of changes are very difficult to predict and include into the scope previous to kick-off of the project because generally business users does not have a thorough knowledge about the functionality of SAP.

Users are normally unfamiliar with the terminology of SAP. Many users tend to assume SAP as an ordinary software project. Result of the unawareness of the users is an incomplete RFP(Request for Proposal) document.

Trying to freeze the scope without knowing the functionality of SAP broadly will be disadvantageous to the user. Furthermore trying to define the scope prior to the SAP project without knowing it will be a painful exercise to both the Vendor and User Company. Most of the SAP consultants are much aware of the business processes but there may be some unclear points even with them. Every business is doing their unique business.  SAP is a different system and it has defined its own unique functionality.

It is extremely difficult for a vendor to define the scope by just looking at the processes of a business. As a result of this you need months to discuss the business processes with the implementation partner prior to the project. On the other hand many vendors do not like to put a big effort to study the processes of your business since the contract has not been offered yet. Result of this is endless discussions with the vendors to define the scope. This will take a huge effort from the both sides.However some items in the scope of several items can be defined initially. (I.e. User Training, data migration Plan)

To Select the suitable Engagement Model

User can choose Fixed Fee engagement model or Time and Material Engagement model. This is not straightforward and simple decision. Users choose a decision between a ‘Fixed Fee’ or Time and Material (T&M) engagement model.

Fixed Fee Engagement Model

In this model the business user is asking the SAP implementation team to deliver the entire solution of SAP for a previously agreed price. This will not during the project. Therefore any change to the scope after the commencement of the product should be reviewed by change control committee. Simply, business user will have to pay to the SAP consulting company for his change requests.  This engagement model is more suitable when the customer and vendor can exactly define the scope of the project prior to the commencement.

SAP project is having a different and unique phase in its life cycle called Blue Printing. In this stage consultants will review the existing functionality of the business and suggest new functionality to increase the efficiency of the business. We can’t add these kinds of activities to the initial scope document.

This model is favored when the company requires only the standard product of SAP and when there is less number of RICEF objects.However if your business have unique functionality you will need more customizations. The disadvantage of this model is if is very difficult to exactly identify the number of RICEF of objects (Reports, Interfaces, Conversion, Enhancements, Forms) prior to the commencement. Specially it is difficult to count the number reports since SAP has its own set of standard set of reports. You need an enormous effort to make an exact list of reports you required for the organization. When the business user has freeze the scope vendor will try stick on to that scope in the implementation.

Time and Material Engagement Model

In this model business user agrees to pay for vendors based on the work that has been performed by the vendor. (Based on man hours) This method is preferred when the scope of the project is not clear at initial stage and where standard SAP package requires large number of custom developments. Some processes of the business may be re-engineered in the blue-print stage and there may be processes which are not covered in the SAP standard product. In this case the development will require more number of RICEF objects for the enhancements.

Time and Materials contract would be more suitable for this kind of scenarios.  Project manager should carefully evaluate the scope and the budget of the product. Resources will be allocated and estimated cost will be calculated for the added scope in the development stage. T&M engagement model is recommended for a SAP kind of a project by the experts of the industry.

However pros and cons of these two types of engagement models will be depending on the political and cultural nature of the company.

Also See: ERP implementation failures – List out the reasons