"Core system" customization vs configuration

Increasingly, ERP vendors have tried to reduce the need for customization by providing built-in "configuration" tools to address most customers' needs for changing how the out-of-the-box core system works. Key differences between customization and configuration include:

  • Customization is always optional, whereas some degree of configuration (e.g., setting up cost/profit centre structures, organisational trees, purchase approval rules, etc.) may be needed before the software will work at all.
  • Configuration is available to all customers, whereas customization allows individual customer to implement proprietary "market-beating" processes.
  • Configuration changes tend to be recorded as entries in vendor-supplied data tables, whereas customization usually requires some element of programming and/or changes to table structures or views.
  • The effect of configuration changes on the performance of the system is relatively predictable and is largely the responsibility of the ERP vendor. The effect of customization is unpredictable and may require time-consuming stress testing by the implementation team.
  • Configuration changes are almost always guaranteed to survive upgrades to new software versions. Some customizations (e.g. code that uses pre-defined "hooks" that are called before/after displaying data screens) will survive upgrades, though they will still need to be re-tested. More extensive customizations (e.g. those involving changes to fundamental data structures) will be overwritten during upgrades and must be re-implemented manually.

By this analysis, customizing an ERP package can be unexpectedly expensive and complicated, and tends to delay delivery of the obvious benefits of an integrated system. Nevertheless, customizing an ERP suite gives the scope to implement secret recipes for excellence in specific areas while ensuring that industry best practices are achieved in less sensitive areas.

Extensions

In this context, "Extensions" refers to ways that an ERP environment can be "extended" (supplemented) with third-party programs. It is technically easy to expose most ERP transactions to outside programs that do other things, e.g.:

  • archiving, reporting and republishing (these are easiest to achieve, because they mainly address static data);
  • performing transactional data captures, e.g. using scanners, tills or RFIDs (also relatively easy because they touch existing data);

However, because ERP applications typically contain sophisticated rules that control how data can be created or changed, some such functions can be very difficult to implement.

Advantages

In the absence of an ERP system, a large manufacturer may find itself with many software applications that cannot communicate or interface effectively with one another. Tasks that need to interface with one another may involve:

  • ERP systems connect the necessary software in order for accurate forecasting to be done. This allows inventory levels to be kept at maximum efficiency and the company to be more profitable.
  • Integration among different functional areas to ensure proper communication, productivity and efficiency
  • Design engineering (how to best make the product)
  • Order tracking, from acceptance through fulfillment
  • The revenue cycle, from invoice through cash receipt
  • Managing inter-dependencies of complex processes bill of materials
  • Tracking the three-way match between purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
  • The accounting for all of these tasks: tracking the revenue, cost and profit at a granular level.

ERP Systems centralize the data in one place. Benefits of this include:

  • Eliminates the problem of synchronizing changes between multiple systems - consolidation of finance, marketing and sales, human resource, and manufacturing applications
  • Permits control of business processes that cross functional boundaries
  • Provides top-down view of the enterprise (no "islands of information"), real time information is available to management anywhere, anytime to make proper decisions.
  • Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure.
  • Shorten production leadtime and delivery time
  • Facilitating business learning, empowering, and building common visions

Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data-tampering scenario, for example, might involve a disgruntled employee intentionally modifying prices to below-the-breakeven point in order to attempt to interfere with the company's profit or other sabotage. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other kinds of information security tools

Disadvantages

Problems with ERP systems are mainly due to inadequate investment in ongoing training for the involved IT personnel - including those implementing and testing changes - as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and the ways in which it is used.

Disadvantages

  • Customizsation of the ERP software is limited...
  • Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.
  • ERP systems can be very expensive (This has led to a new category of "ERP light" solutions)
  • ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure.
  • Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications.
  • Once a system is established, switching costs are very high for any one of the partners (reducing flexibility and strategic control at the corporate level).
  • The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale.
  • Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software.
  • Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and consolidation into a single enterprise may yield limited benefits.

Implementation


Businesses have a wide scope of applications and processes throughout their functional units; producing ERP software systems that are typically complex and usually impose significant changes on staff work practices. Implementing ERP software is typically too complex for "in-house" skill, so it is desirable and highly advised to hire outside consultants who are professionally trained to implement these systems. This is typically the most cost effective way. There are three types of services that may be employed for - Consulting, Customization, Support. The length of time to implement an ERP system depends on the size of the business, the number of modules, the extent of customization, the scope of the change and the willingness of the customer to take ownership for the project. ERP systems are modular, so they don't all need be implemented at once. It can be divided into various stages, or phase-ins. The typical project is about 14 months and requires around 150 consultants. A small project (e.g., a company of less than 100 staff) can be planned and delivered within 3–9 months; however, a large, multi-site or multi-country implementation can take years. The length of the implementations is closely tied to the amount of customization desired.

To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting; customization; and support. The client organization can also employ independent program management, business analysis, change management, and UAT specialists to ensure their business requirements remain a priority during implementation.

Data migration is one of the most important activities in determining the success of an ERP implementation. Since many decisions must be made before migration, a significant amount of planning must occur. Unfortunately, data migration is the last activity before the production phase of an ERP implementation, and therefore receives minimal attention due to time constraints. The following are steps of a data migration strategy that can help with the success of an ERP implementation:

  1. Identifying the data to be migrated
  2. Determining the timing of data migration
  3. Generating the data templates
  4. Freezing the tools for data migration
  5. Deciding on migration related setups
  6. Deciding on data archiving

Process preparation

ERP vendors have designed their systems around standard business processes, based upon best business practices. Different vendor(s) have different types of processes but they are all of a standard, modular nature. Firms that want to implement ERP systems are consequently forced to adapt their organizations to standardized processes as opposed to adapting the ERP package to the existing processes. Neglecting to map current business processes prior to starting ERP implementation is a main reason for failure of ERP projects. It is therefore crucial that organizations perform a thorough business process analysis before selecting an ERP vendor and setting off on the implementation track. This analysis should map out all present operational processes, enabling selection of an ERP vendor whose standard modules are most closely aligned with the established organization. Redesign can then be implemented to achieve further process congruence. Research indicates that the risk of business process mismatch is decreased by:

  • linking each current organizational process to the organization's strategy;
  • analyzing the effectiveness of each process in light of its current related business capability;
  • understanding the automated solutions currently implemented.

ERP implementation is considerably more difficult (and politically charged) in organizations structured into nearly independent business units, each responsible for their own profit and loss, because they will each have different processes, business rules, data semantics, authorization hierarchies and decision centers. Solutions include requirements coordination negotiated by local change management professionals or, if this is not possible, federated implementation using loosely integrated instances (e.g. linked via Master Data Management) specifically configured and/or customized to meet local needs.

A disadvantage usually attributed to ERP is that business process redesign to fit the standardized ERP modules can lead to a loss of competitive advantage. While documented cases exist where this has indeed materialized, other cases show that following thorough process preparation ERP systems can actually increase sustainable competitive advantage.

Configuration

Configuring an ERP system is largely a matter of balancing the way you want the system to work with the way the system lets you work. Begin by deciding which modules to install, then adjust the system using configuration tables to achieve the best possible fit in working with your company’s processes.

Modules — Most systems are modular simply for the flexibility of implementing some functions but not others. Some common modules, such as finance and accounting are adopted by nearly all companies implementing enterprise systems; others however such as human resource management are not needed by some companies and therefore not adopted. A service company for example will not likely need a module for manufacturing. Other times companies will not adopt a module because they already have their own proprietary system they believe to be superior. Generally speaking the greater number of modules selected, the greater the integration benefits, but also the increase in costs, risks and changes involved.

Configuration Tables – A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. For example, an organization can select the type of inventory accounting – FIFO or LIFO – it will employ or whether it wants to recognize revenue by geographical unit, product line, or distribution channel.

So what happens when the options the system allows just aren't good enough? At this point a company has two choices, both of which are not ideal. It can re-write some of the enterprise system’s code, or it can continue to use an existing system and build interfaces between it and the new enterprise system. Both options will add time and cost to the implementation process. Additionally they can dilute the system’s integration benefits. The more customized the system becomes the less possible seamless communication between suppliers and customers.

Consulting services

Many organizations do not have sufficient internal skills to implement an ERP project. This results in many organizations offering consulting services for ERP implementation. Typically, a consulting team is responsible for the entire ERP implementation including:

  1. selecting
  2. planning
  3. training
  4. testing
  5. implementation
  6. delivery

of any customized modules. Examples of customization includes creating processes and reports for compliance, additional product training; creation of process triggers and workflow; specialist advice to improve how the ERP is used in the business; system optimization; and assistance writing reports, complex data extracts or implementing Business Intelligence

For most mid-sized companies, the cost of the implementation will range from around the list price of the ERP user licenses to up to twice this amount (depending on the level of customization required). Large companies, and especially those with multiple sites or countries, will often spend considerably more on the implementation than the cost of the user licenses—three to five times more is not uncommon for a multi-site implementation.

Unlike most single-purpose applications, ERP packages have historically included full source code and shipped with vendor-supported team IDEs for customizing and extending the delivered code. During the early years of ERP the guarantee of mature tools and support for extensive customization was an important sales argument when a potential customer was considering developing their own unique solution in-house, or assembling a cross-functional solution by integrating multiple "best of breed" applications.

Commercial applications


Manufacturing

Engineering, bills of material, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects, manufacturing flow

Supply chain management

Order to cash, inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing, commission calculation

Financials

General ledger, cash management, accounts payable, accounts receivable, fixed assets

Project management

Costing, billing, time and expense, performance units, activity management

Human resources

Human resources, payroll, training, time and attendance, rostering, benefits

Customer relationship management

Sales and marketing, commissions, service, customer contact and call center support

Data services

Various "self-service" interfaces for customers, suppliers, and/or employees

Access control

Management of user privileges for various processes

History

The term "Enterprise resource planning" originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP). MRP evolved into ERP when "routings" became a major part of the software architecture and a company's capacity planning activity also became a part of the standard software activity. ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. ERP software can aid in the control of many business activities, including sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management

ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy systems. Many companies took this opportunity to replace such information systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time most companies had already implemented their Y2K solution.

ERP systems are often incorrectly called back office systems indicating that customers and the general public are not directly involved. This is contrasted with front office systems like customer relationship management (CRM) systems that deal directly with the customers, or the eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems

ERP systems are cross-functional and enterprise-wide. All functional departments that are involved in operations or production are integrated in one system. In addition to areas such as manufacturing, warehousing, logistics, and information technology, this typically includes accounting, human resources, marketing and strategic management.

ERP II, a term coined in the early 2000s, is often used to describe what would be the next generation of ERP software. This new generation of software is web-based and allows both employees and external resources (such as suppliers and customers) real-time access to the system's data.

EAS — Enterprise Application Suite is a new name for formerly developed ERP systems which include (almost) all segments of business using ordinary Internet browsers as thin client

Though traditionally ERP packages have been on-premise installations, ERP systems are now also available as Software as a Service.

Best practices are incorporated into most ERP vendor's software packages. When implementing an ERP system, organizations can choose between customizing the software or modifying their business processes to the "best practice" function delivered in the "out-of-the-box" version of the software.

Prior to ERP, software was developed to fit individual processes of an individual business. Due to the complexities of most ERP systems and the negative consequences of a failed ERP implementation, most vendors have included "Best Practices" into their software. These "Best Practices" are what the Vendor deems as the most efficient way to carry out a particular business process in an Integrated Enterprise-Wide system. A study conducted by Ludwigshafen University of Applied Science surveyed 192 companies and concluded that companies which implemented industry best practices decreased mission-critical project tasks such as configuration, documentation, testing and training. In addition, the use of best practices reduced over risk by 71% when compared to other software implementations.

The use of best practices can make complying with requirements such as IFRS, Sarbanes-Oxley, or Basel II easier. They can also help where the process is a commodity such as electronic funds transfer. This is because the procedure of capturing and reporting legislative or commodity content can be readily codified within the ERP software, and then replicated with confidence across multiple businesses who have the same business requirement.

Enterprise resource planning


Enterprise resource planning (ERP) is an integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex, expensive computer systems in areas which will not use their full capacity

Origin of the term

The initialism ERP was first employed by research and analysis firm Gartner Group in 1990 as an extension of MRP (Material Requirements Planning; later manufacturing resource planning) and CIM (Computer Integrated Manufacturing), and while not supplanting these terms, it has come to represent a larger whole. It came into use as makers of MRP software started to develop software applications beyond the manufacturing arena. ERP systems now attempt to cover all core functions of an enterprise, regardless of the organization's business or charter. These systems can now be found in non-manufacturing businesses, non-profit organizations and governments.

To be considered an ERP system, a software package should have the following traits:

  • Should be integrated and operate in real-time with no periodic batch updates.
  • All applications should access one database to prevent redundant data and multiple data definitions.
  • All modules should have the same look and feel.
  • Users should be able to access any information in the system without needed integration work on the part of the IS department.

Components

  • Transactional Backbone
    • Financials
    • Distribution
    • Human Resources
    • Product lifecycle management
  • Advanced Applications
    • Customer Relationship Management (CRM)
    • Supply chain management
      • Purchasing
      • Manufacturing
      • Distribution
    • Warehouse Management System
  • Management Portal/Dashboard
    • Decision Support System

These modules can exist in a system or utilized in an ad-hoc fashion.

Privacy and data security system


One of the primary functions of these tools is to collect information about clients, thus a company must consider the desire for privacy and data security, as well as the legislative and cultural norms. Some clients prefer assurances that their data will not be shared with third parties without their prior consent and that safeguards are in place to prevent illegal access by third parties.

Market structures

This market grew by 12.5 percent in 2008, from revenue of $8.13 billion in 2007 to $9.15 billion in 2008. The following table lists the top vendors in 2006-2008 (figures in millions of US dollars) published in Gartner studies.

Vendor

2008 Revenue

2008 Share (%)

2007 Revenue

2007 Share (%)

2006 Revenue

2006 Share (%)

SAP

2,055

22.5

2,050.8

25.3

1,681.7

26.6

Oracle

1,475

16.1

1,319.8

16.3

1,016.8

15.5

Salesforce.com

965

10.6

676.5

8.3

451.7

6.9

Microsoft

581

6.4

332.1

4.1

176.1

2.7

Amdocs

451

4.9

421.0

5.2

365.9

5.6

Others

3,620

39.6

3,289.1

40.6

2,881.6

43.7

Total

9,147

100

8,089.3

100

6,573.8

100

Implementation


Implementation Issues

Dramatic increases in revenue, higher rates of client satisfaction, and significant savings in operating costs are some of the benefits to an enterprise. Proponents emphasize that technology should be implemented only in the context of careful strategic and operational planning. Implementations almost invariably fall short when one or more facets of this prescription are ignored:

  • Poor planning: Initiatives can easily fail when efforts are limited to choosing and deploying software, without an accompanying rationale, context, and support for the workforce. In other instances, enterprises simply automate flawed client-facing processes rather than redesign them according to best practices.
  • Poor integration: For many companies, integrations are piecemeal initiatives that address a glaring need: improving a particular client-facing process or two or automating a favored sales or client support channel. Such “point solutions” offer little or no integration or alignment with a company’s overall strategy. They offer a less than complete client view and often lead to unsatisfactory user experiences.
  • Toward a solution: overcoming siloed thinking. Experts advise organizations to recognize the immense value of integrating their client-facing operations. In this view, internally-focused, department-centric views should be discarded in favor of reorienting processes toward information-sharing across marketing, sales, and service. For example, sales representatives need to know about current issues and relevant marketing promotions before attempting to cross-sell to a specific client. Marketing staff should be able to leverage client information from sales and service to better target campaigns and offers. And support agents require quick and complete access to a client’s sales and service history.

Adoption Issues

Historically, the landscape is littered with instances of low adoption rates. In 2003, a Gartner report estimated that more than $1 billion had been spent on software that wasn’t being used. More recent research indicates that the problem, while perhaps less severe, is a long way from being solved. According to CSO Insights, less than 40 percent of 1,275 participating companies had end-user adoption rates above 90 percent.

In a 2007 survey from the U.K., four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they’d installed. Further, 43 percent of respondents said they use less than half the functionality of their existing system; 72 percent indicated they’d trade functionality for ease of use; 51 percent cited data synchronization as a major issue; and 67 percent said that finding time to evaluate systems was a major problem. With expenditures expected to exceed $11 billion in 2010, enterprises need to address and overcome persistent adoption challenges. Specialists offer these recommendations for boosting adoptions rates and coaxing users to blend these tools into their daily workflow:

  • Choose a system that’s easy to use: All solutions are not created equal. Some vendors offer more user-friendly applications than others, and simplicity should be as important a decision factor as functionality.
  • Choose the right capabilities: Employees need to know that time invested in learning and usage will yield personal advantages. If not, they will work around or ignore the system.
  • Provide training: Changing the way people work is no small task, and help is usually a requirement. Even with today’s more usable systems, many staffers still need assistance with learning and adoption.

Social Media


Social media sites like Twitter and Facebook are greatly amplifying the voice of people in the marketplace and are predicted to have profound and far-reaching effects on the ways companies manage their clients. This is because people are using these social media sites to share opinions and experiences on companies, products, and services. As social media isn’t moderated or censored, individuals can say anything they want about a company or brand, whether pro or con.

Increasingly, companies are looking to gain access to these conversations and take part in the dialogue. More than a few systems are now integrating to social networking sites. Social media promoters cite a number of business advantages, such as using online communities as a source of high-quality leads and a vehicle for crowd sourcing solutions to client-support problems. Companies can also leverage client stated habits and preferences to personalize and even “hyper-target” their sales and marketing communications.

Some analysts take the view that business-to-business marketers should proceed cautiously when weaving social media into their business processes. These observers recommend careful market research to determine if and where the phenomenon can provide measurable benefits for client interactions, sales, and support.

Non-profit and Membership-based

Systems for non-profit and membership-based organizations help track constituents and their involvement in the organization. Capabilities typically include tracking the following: fund-raising, demographics, membership levels, membership directories, volunteering and communications with individuals.

Many include tools for identifying potential donors based on previous donations and participation. In light of the growth of social networking tools, there may be some overlap between social/community driven tools and non-profit/membership tools.

Strategy

Choosing and implementing a system is a major undertaking. For enterprises of any appreciable size, a complete and detailed plan is required to obtain the funding, resources, and company-wide support that can make the initiative successful. Benefits must be defined, risks assessed, and cost quantified in three general areas:

  • Processes: Though these systems have many technological components, business processes lie at its core. It can be seen as a more client-centric way of doing business, enabled by technology that consolidates and intelligently distributes pertinent information about clients, sales, marketing effectiveness, responsiveness, and market trends. Therefore, before choosing a technology platform, a company needs to analyze its business workflows and processes; some will likely need re-engineering to better serve the overall goal of winning and satisfying clients. Moreover, planners need to determine the types of client information that are most relevant, and how best to employ them.
  • People: For an initiative to be effective, an organization must convince its staff that change is good and that the new technology and workflows will benefit employees as well as clients. Senior executives need to be strong and visible advocates who can clearly state and support the case for change. Collaboration, teamwork, and two-way communication should be encouraged across hierarchical boundaries, especially with respect to process improvement.
  • Technology: In evaluating technology, key factors include alignment with the company’s business process strategy and goals; the ability to deliver the right data to the right employees; and sufficient ease of use that users won’t balk. Platform selection is best undertaken by a carefully chosen group of executives who understand the business processes to be automated as well as the various software issues. Depending upon the size of the company and the breadth of data, choosing an application can take anywhere from a few weeks to a year or more.

Types/variations


Sales force automation

The sales force automation (SFA) system provides an array of capabilities to streamline all phases of the sales process, minimizing the time that sales representatives need to spend on manual data entry and administration. This allows them to successfully pursue more clients in a shorter amount of time than would otherwise be possible. At the heart of SFA is a contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Many SFA applications also include insights into opportunities, territories, sales forecasts and workflow automation, quote generation, and product knowledge. Newly-emerged priorities are modules for Web 2.0 e-commerce and pricing.

Marketing

Systems for marketing (also known as marketing automation) help the enterprise identify and target its best clients and generate qualified leads for the sales team. A key marketing capability is tracking and measuring multichannel campaigns, including email, search, social media, and direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. As marketing departments are increasingly obliged to demonstrate revenue impact, today’.

Customer Service and Support

Recognizing that service is an important differentiator, organizations are increasingly turning to technology platforms to help them improve their clients’ experience while aiming to increase efficiency and minimize costs. Even so, a 2009 study revealed that only 39% of corporate executives believe their employees have the right tools and authority to solve client problems.“. The core for these applications has been and still is comprehensive call center solutions, including such features as intelligent call routing, computer telephone integration (CTI), and escalation capabilities.

Analytics

Relevant analytics capabilities are often interwoven into applications for sales, marketing, and service. These features can be complemented and augmented with links to separate, purpose-built applications for analytics and business intelligence. Sales analytics let companies monitor and understand client actions and preferences, through sales forecasting, data quality, and dashboards that graphically display

Marketing applications generally come with predictive analytics to improve segmentation and targeting, and features for measuring the effectiveness of online, offline, and search marketing campaign Web analytics have evolved significantly from their starting point of merely tracking mouse clicks on Web sites. By evaluating “buy signals,” marketers can see which prospects are most likely to transact and also identify those who are bogged down in a sales process and need assistance Marketing and finance personnel also use analytics to assess the value of multi-faceted programs as a whole.

These types of analytics are increasing in popularity as companies demand greater visibility into the performance of call centers and other support channels, in order to correct problems before they affect satisfaction levels. Support-focused applications typically include dashboards similar to those for sales, plus capabilities to measure and analyze response times, service quality, agent performance, and the frequency of various issues.

Integrated/Collaborative

Departments within enterprises—especially large enterprises—tend to function in their own little worlds. Traditionally, inter-departmental interaction and collaboration have been infrequent and rivalries not uncommon. More recently, the development and adoption of the tools and services has fostered greater fluidity and cooperation among sales, service, and marketing. This finds expression in the concept of collaborative systems which uses technology to build bridges between departments.

For example, feedback from a technical support center can enlighten marketers about specific services and product features clients are asking for. Reps, in their turn, want to be able to pursue these opportunities without the time-wasting burden of re-entering records and contact data into a separate SFA system. Conversely, lack of integration can have negative consequences: system isn’t adopted and integrated among all departments, several sources might contact the same clients for an identical purpose. Owing to these factors, many of the top-rated and most popular products come as integrated suites.

Small Business

Basic client service can be accomplished by a contact manager system, an integrated solution that lets organizations and individuals efficiently track and record interactions, including emails, documents, jobs, faxes, scheduling, and more. This kind of solution is gaining traction with even very small businesses, thanks to the ease and time savings of handling client contact through a centralized application rather than several different pieces of software, each with its own data collection system. In contrast these tools usually focus on accounts rather than individual contacts. They also generally include opportunity insight for tracking sales pipelines plus added functionality for marketing and service. As with larger enterprises, small businesses are finding value in online solutions, especially for mobile and telecommuting workers.

SAP Business Suite


SAP Business Suite is a bundle of business applications that provide integration of information and processes, collaboration, industry-specific functionality, and scalability. SAP Business Suite is based on SAP's technology platform called NetWeaver.

Built on an open, service-oriented architecture (SOA) – and powered by the SAP NetWeaver technology platform, SAP Business Suite offers companies an opportunity to transform business processes efficiently and integrate business processes that enable them to compete more effectively in their industry.

Customer relationship management

Customer relationship management is a broadly recognized, widely-implemented strategy for managing and nurturing a company’s interactions with clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Once simply a label for a category of software tools, today, it generally denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs.

Benefits

These tools have been shown to help companies attain these objectives:

  • Streamlined sales and marketing processes
  • Higher sales productivity
  • Added cross-selling and up-selling opportunities
  • Improved service, loyalty, and retention
  • Increased call center efficiency
  • Higher close rates
  • Better profiling and targeting
  • Reduced expenses
  • Increased market share
  • Higher overall profitability
  • Marginal costing

Related Trends

What trends are affecting CRM tools? Perhaps the most notable trend has been the growth of tools delivered via the Web, also known as cloud computing and software as a service (SaaS). In contrast with traditional on-premises software, cloud-computing applications are sold by subscription, accessed via a secure Internet connection, and displayed on a Web browser. Companies don’t incur the initial capital expense of purchasing software; nor must they buy and maintain IT hardware to run it on.

Challenges

Despite the benefits, many companies are still not fully leveraging these tools and services to align marketing, sales, and service to best serve the enterprise.

Tools and workflows can be complex to implement, especially for large enterprises. Previously these tools were generally limited to contact management: monitoring and recording interactions and communications. Software solutions then expanded to embrace deal tracking, territories, opportunities, and at the sales pipeline itself. Next came the advent of tools for other client-facing business functions, as described below. These technologies have been, and still are, offered as on-premises software that companies purchase and run on their own IT infrastructure.

Often, implementations are fragmented; isolated initiatives by individual departments to address their own needs. Systems that start disunited usually stay that way: siloed thinking and decision processes frequently lead to separate and incompatible systems, and dysfunctional processes.

Deployment and maintenance costs


SAP ERP systems effectively implemented can have cost benefits. Integration is the key in this process. "Generally, a company's level of data integration is highest when the company uses one vendor to supply all of its modules." An out-of-box software package has some level of integration but it depends on the expertise of the company to install the system and how the package allows the users to integrate the different modules.

It is estimated that "for a Fortune 500 company, software, hardware, and consulting costs can easily exceed $100 million (around $50 million to $500 million). Large companies can also spend $50 million to $100 million on upgrades. Full implementation of all modules can take years," which also adds to the end price. Midsized companies (fewer than 1,000 employees) are more likely to spend around $10 million to $20 million at most, and small companies are not likely to have the need for a fully integrated SAP ERP system unless they have the likelihood of becoming midsized and then the same data applies as would a midsized company. Independent studies have shown that deployment and maintenance costs of a SAP solution can greatly vary depending on the organization. For example, some point out that because of the rigid model proposed by the SAP tools, a lot of customization code to adapt to the business process may have to be developed and maintained.. Some others pointed out that a return on investment could only be obtained when there was both a sufficient number of users and sufficient frequency of use. Deploying SAP itself can also involve a lot of time and resources.

Advantages and disadvantages of SAP ERP

Advantages:

  • ERP allows easier global integration (Barriers of currency exchange rates, language, and culture can be bridged automatically)
  • Updates only need to be done once to be implemented company wide
  • Provides real-time information, reducing the possibility of redundancy errors
  • Creates a more efficient work environment making it easier for employees to do their job which leads to effectiveness
  • Vendors have past knowledge and expertise on how to best build and implement a system

Disadvantages:

  • Locked into relationship by contract and manageability with vendor - a contract can hold a company to the vendor until it expires and it can be unprofitable to switch vendors if switching costs are too high
  • Inflexibility- vendor packages may not fit a company's business model exactly and customization can be very expensive
  • Return on Investment may take too long to be profitable
  • SAP ERP implementations have a risk of project failure

SAP ERP

The SAP ERP application is an integrated enterprise resource planning (ERP) software manufactured by SAP AG that targets business software requirements of midsize and large organizations in all industries and sectors. It allows for open communication within and between all company functions.

SAP stands for Systems, Applications and Products (Systeme, Anwendungen und Produkte in der Datenverarbeitung, in the original German) in Data Processing. It uses the concept of modules ("individual programs that can be purchased, installed, and run separately, but that all extract data from the common database"). SAP AG, the company that provides the enterprise resource planning solution has upgraded the package and launched it as SAP ECC 6.0 in 2005. ECC stands for ERP Central Component. The purpose of positioning it as ECC is to enable SAP to build and develop an environment of other products that can function upon the foundation of the central component.

SAP's ERP solution includes several modules that support key functional areas - some of them are:

  • SAP ERP Financials
  • SAP ERP Logistics
  • SAP ERP Human Resource Management Systems

The evolution of mySAP ERP

SAP R/3 through version 4.6c consisted of various applications on top of SAP Basis, SAP's set of middleware programs and tools.

When SAP R/3 Enterprise was launched in 2002, all applications were built on top of the SAP Web Application Server. Extension sets were used to deliver new features and kept the core as stable as possible. The Web Application Server contained all the capabilities of SAP Basis.

As a result of marketing changes and changes in the industry, other versions of SAP have been released that address these changes. The first edition of mySAP ERP was launched in 2003 and bundled previously separate products, including SAP R/3 Enterprise, SAP Strategic Enterprise Management (SEM) and extension sets. The SAP Web Application Server was wrapped into NetWeaver, which was also introduced in 2003.

A complete architecture change took place with the introduction of mySAP ERP edition 2004. R/3 Enterprise was replaced with the introduction of ERP Central Component (SAP ECC). The SAP Business Warehouse, SAP Strategic Enterprise Management and Internet Transaction Server were also merged into SAP ECC, allowing users to run them under one instance. Architectural changes were also made to support an enterprise services architecture to transition customers to a services-oriented architecture.

SAP Business Suite


SAP Business Suite is a bundle of business applications that provide integration of information and processes, collaboration, industry-specific functionality, and scalability. SAP Business Suite is based on SAP's technology platform called NetWeaver.

Built on an open, service-oriented architecture (SOA) – and powered by the SAP NetWeaver technology platform, SAP Business Suite offers companies an opportunity to transform business processes efficiently and integrate business processes that enable them to compete more effectively in their industry.

SAP Business Suite has five constituents:

Critical success factors


In order to successfully implement SAP in an organization, there are several things that are of great importance:

1) Choose the correct SAP Consultants to have the correct blueprint. An SAP Consultant is a professional who has the skills to speak to the managers of a company and help them creating the blueprint. For this the SAP Consultant has the business skills of the business area he/she is working with, and also masters this area on SAP. For example, if this is SAP FI (accountancy) Consultant, this person is an expert on accountancy and payments, gained through experience or by the corresponding studies at the University. Also this person knows SAP FI because has gained by the corresponding training, or the course on the SAP Partner Academy or similar. Benefits: As this person knows about Accountancy he or she will understand the needs of the business and will bring it into reality. Screening Methods to Find the Right SAP Consultant

2) SAP R/3 implementation is not an IT project, in fact is an Organization Project impacting all levels of a company. So it is very important to get the support from all the people that are involved in implementing SAP, but more important the participation and commitment of all levels, specially managers, of the company.

3) The Blueprint is the keystone used as the lighthouse who must guide the whole project. A blueprint should never be a merely mapping of IT systems. In fact a blueprint is bringing the strategy of a company into execution through defining its processes across all business areas. Many projects have failed because the focus was on having people with SAP knowledge, but with no business skills and so defining something that works...wrongly. Just remember, processes must change across time, and a manual error automated could be repeated infinitely.

4) Always consider changing the way things have been done before implementing SAP. "This has always been done like this and the Consultant should replicate it on SAP" is the start of a big problem. SAP many times could save you time and money as it allows your organization to automate many processes.

5) Test the SAP hardware and software rigorously by testing your business processes, and to ensure that the end-users are ready to use SAP before going live, because there are many known projects that failed because of a lack of support and SAP knowledge.

6) Design and execute a Change Management Program by communicating as early as needed all the information that end users should have to accept the new technology and designing and executing a training plan in order to reassure a knowledge base within the organization

SAP systems and operations management


Next thing is to create a foundation for the SAP systems management and SAP computer operations, by creating a SAP operations manual and by evaluating SAP management applications. The manual is a collection of current state system documentation, day-to-day and other regularly scheduled operations tasks, various installation and operations checklists and how-to process documents.

Functional, integration and regression testing

Testing is very important before going live with any system. Before going live with a SAP system, it is vital to do many different kinds of testing, since there is often a large, complex infrastructure of hardware and software involved. Both requirements as well as quality parameters are to be tested. Important types of testing are:

  • Functional testing: to test using functional use cases, i.e. a set of conditions or variables under which a tester will determine if a certain business process works
  • Integration testing
  • Regression testing

All tests should be preceded by creating solid test plans.

Final preparation

agreements, will be met. This can be done with SAP’s standard application benchmarks, to benchmark the organization’s configurations against configurations that have been tested by SAP’s hardware technology partners. Again, a test plan should be created at first.

Prepare for cutover

The final phase before going live with SAP is often referred to as the cutover phase, which is the process of transitioning from one system to a new one. The organization needs to plan, prepare and execute the cutover, by creating a cutover plan that describes all cutover tasks that have to be performed before the actual go-live. Examples of cutover tasks are:

  • Review and update all systems-related operations procedures like backup policies and system monitoring
  • Assign ownership of SAP’s functional processes to individuals
  • Let SAP AG do a GoingLive check, to get their blessing to go live with the system
  • Lock down the system, i.e. do not make any more changes to the SAP system

Go Live

All of the previously described phases all lead towards this final moment: the go-live. Go-live means to turn on the SAP system for the end-users and to obtain feedback on the solution and to monitor the solution. It is also the moment where product software adoption comes into play. More information on this topic:

  • Product Software Adoption: Big Bang Adoption
  • Product Software Adoption: Parallel Adoption
  • Product Software Adoption: Phased Adoption

Setup SAP data center


The next step is to set up the SAP data center. This means either building a new data center facility or transforming the current data center into a foundation capable of supporting the SAP solution stack, i.e. all of the technology layers and components (SAP software products) in a productive SAP installation. The most important factor when designing the data center is availability. The high availability and disaster recovery requirements which should have been defined earlier, give a good idea of the required data center requirements to host the SAP software. Data center requirements can be a:

  • Physical requirement like power requirements
  • Rack requirement
  • Network infrastructure requirement or
  • Requirement to the network server.

Perform installations

The following step is to install the required SAP software parts which are called components and technological foundations like a web application server or enterprise portals, to a state ready for business process configuration. The most vital sub steps are to prepare your OS, prepare the database server and then start installing SAP software. Here it is very important to use installation guides, which are published for each SAP component or technology solution by SAP AG. Examples of SAP components are:

  • R/3 Enterprise — Transaction Processing
  • mySAP BI — Business Information Warehouse
  • mySAP CRM — Customer Relationship Management
  • mySAP KW — Knowledge Warehouse
  • mySAP PLM — Product Lifecycle Management
  • mySAP SCM — Supply Chain Management
  • mySAP SEM — Strategic Enterprise Management
  • mySAP SRM — Supplier Relationship Management
  • mySAP HCM — Human Capital Management

Round out support for SAP

Before moving into the functional development phase, the organization should identify and staff the remaining TSO roles, e.g. roles that relate to helpdesk work and other such support providing work.

Functional development

The next phase is the functional development phase, where it is all about change management and testing. This phase is depicted below.

Address change management

The next challenge for an organization is all about change management / change control, which means to develop a planned approach to the changes the organization faces. The objective here is to maximize the collective efforts of all people involved in the change and to minimize the risk of failure of implementing the changes related to the SAP implementation.

The implementation of SAP software will most surely come with many changes and an organization can expect many natural reactions, i.e. denial, to these changes. To fight this, it is most important to create a solid project team dedicated to change management and to communicate the solution vision and goals of this team. This team should be prepared to handle the many change issues that come from various sources like:

  • End-user requests
  • Operations
  • Data center team
  • DBA group
  • Systems management

Identify high availability and disaster recovery requirements


The next step is identifying the high availability requirements and the more serious disaster recovery requirements. This is to plan what to do with later downtime of the SAP system, caused by e.g. hardware failures, application failures or power outages. It should be noted that it is very important to calculate the cost of downtime, so that an organization has a good idea of its actual availability requirements.

Engage SAP solution stack vendors

A true sizing process is to engage the SAP solution stack vendors, which is the next step. This means selecting the best SAP hardware and software technology partners for all layers and components of the solution stack, based on a side-by-side sizing comparison. The most important factors that are of influence here are the estimated numbers of (concurrent) users and batch sizes. A wise thing to do is to involve SAP AG itself to let them create a sizing proposal stating the advised solution stack, before moving to SAP’s technology partners/SAP vendors, like Accenture, [[HP}] and IBM. A simplified solution stack is depicted at the right, showing the many layers for which software and hardware has to be acquired. Note the overlap with the OSI model.

Staff TSO

The TSO is the most important resource for an organization that is implementing SAP, so staffing the TSO is a vital job which can consume a lot of time. In a previous phase, the organization should already have staffed the most vital positions. At this point the organization should staff the bulk of the TSO, i.e. fill the positions that directly support the near-term objectives of the implementation, which are to develop and begin the installation/implementation of the SAP data center. Examples are: data center experts, network infrastructure experts, security specialists and database administration experts.

There are many ways to find the right people within or outside the organization for all of the TSO positions and it depends on the organization how much time it wants to spend on staffing.

Training

One of the most vital stages of the implementation process is training. Very few people within an organization are SAP experts or even have worked with SAP software. It is therefore very important to train the end users but especially the SAP TSO: the people who design and implement the solution. Many people within the TSO need all kinds of training. Some examples of these positions:

  • SAP Network Specialists
  • SAP Database Administrators
  • SAP Security specialists
  • Documentation specialists
  • Et cetera

All of these people need to acquire the required SAP knowledge and skills or even SAP certifications through training. Moreover, people need to learn to do business in a totally new way. To define how much SAP training every person needs, a company can make use of a skillset matrix. With this matrix, a manager can identify who possesses what knowledge, to manage and plan training, by defining the height of expertise with a number between e.g. 1 and 4 for each skill for each employee.

Project preparation


The project preparation phase, depicted below, focuses at two main activities, i.e. to make a setup for the TSO and to define a solution vision. These activities allow an organization to put in on the right track towards implementation.

Design and initially staff the SAP TSO

The first major step of the project preparation phase is to design and initially staff an SAP technical support organization (TSO), which is the organization that is charged with addressing, designing, implementing and supporting the SAP solution. This can be programmers, project management, database administrators, test teams, etc. At this point, the focus should be at staffing the key positions of the TSO, e.g. the high-level project team and SAP professionals like the senior database administrator and the solution architect. Next to that, this is the time to make decisions about choosing for internal staff members or external consultants.

The image at the right shows a typical TSO chart.

Craft solution vision

The second project preparation job is to define a so-called solution vision, i.e. a vision of the future-state of the SAP solution, where it is important to address both business and financial requirements (budgets). The main focus within the vision should be on the company’s core business and how the SAP solution will better enable that core business to be successful. Next to that, the shortcomings of the current systems should be described and short but clear requirements should be provided regarding availability (uptime), security, manageability and scalability of the SAP system.

Sizing and blueprinting

The next phase is often referred to as the sizing and blueprinting phase and forms the main chunk of the implementation process. The phase is illustrated below.

Perform cost of ownership analysis

This phase starts with performing a total cost of ownership analysis (TCO analysis) to determine how to get the best business solution at the lowest costs. This means to compare SAP solution stack options and alternatives and then determine what costs each part of the stack will bring and when these costs will be incurred. Parts of the stack are for example the hardware, operating system and database, which form the acquisition costs. Next to that, there should be taken a look at recurring costs like maintenance costs and downtime costs. Instead of performing a complete TCO analysis for various solution stack alternatives that would like to compare, it can be wise just to do a so-called delta analysis, where only the differences between solutions (stacks) are identified and analyzed. The image at the right depicts the essence of a delta analysis.

Activity table


The following table provides a summary of all of the activities that form the SAP implementation process. These activities will be described with more detail and elaborated with examples in the rest of this entry.

Activity

Sub-Activity

Description

Project preparation

Craft solution vision

Refine and communicate a SOLUTION VISION of the future-state of the SAP solution, to sketch a design that meets both business and financial requirements. The focus should be on the company’s core business and how the SAP solution will better enable that core business to be successful. Some of the guidance and key requirements for how to put together an ERP and SAP business case for ROI, business benefit, and success includes focusing on competitive pressures, value propositions, and how the solution enables success.

Design and initially staff the SAP TSO

Design and staff the key positions of the SAP Technical Support Organization (TSO), the organization that is charged with addressing, designing, implementing and supporting the SAP solution.

Sizing and blueprinting

Perform cost of ownership analysis

Perform a COST OF OWNERSHIP ANALYSIS to determine how to get the best business solution for the least money i.e. to determine where and when the costs are incurred within the context of the SAP solution stack.

Identify high availability and disaster recovery requirements

Determine all HIGH AVAILABILITY and DISASTER RECOVERY REQUIREMENTS, to plan what to do with later downtime of the SAP system

Engage SAP solution stack vendors

Select the best SAP hardware and software technology partners for all layers and components of the SAP SOLUTION STACK, based on a side-by-side sizing comparison

Staff TSO

Staff the bulk of the TSO, i.e. fill the positions that directly support the near-term objectives of the implementation, which are to develop and begin installation/implementation of the SAP data center.

Execute training

Train the various members of the SAP TSO, like data center specialists, high availability specialist and network specialists and train the end-users to give all the required SAP knowledge and skills

Setup SAP DATA CENTER

Build a new SAP DATA CENTER facility or transform the current data center into a foundation capable of supporting the SAP SOLUTION STACK

Perform installations

Install the (My)SAP components and technological foundations like a web application server or enterprise portal.

Round out support for SAP

Identify and staff the remaining TSO roles, e.g. roles that relate to help desk work and other such support providing work.

SAP functional development

Address Change Management

Develop a planned approach to the changes in the organization. The objective is to maximize the collective efforts of all people involved in the change and minimize the risk of failure of implementing the changes related to the SAP implementation.

Address SAP systems and operations management

Create a foundation for the SAP systems management and SAP computer operations, by creating a SAP OPERATIONS MANUAL and by evaluating SAP management applications.

Perform functional, integration and regression tests

Test the SAP business processes, by executing functional tests to ensure that business processes work, integration tests to ensure that the organization’s business processes work together with other business processes and regression tests to prove that a specific set of data and processes yield consistent and repeatable results.

Final Preparation

Perform systems and stress tests

Plan, script, execute and monitor SAP STRESS TESTS, to see if the expectations of the end users, defined in service level agreements, will be met.

Prepare for cutover

Plan, prepare and execute the CUTOVER, by creating a CUTOVER PLAN that describes all cutover tasks that have to be performed before the actual go-live

Go Live

Turn on the SAP system for the end-users

Table of concepts


The data table below provides a summary of all the concepts addressed in the process-data diagram.

Concept

Definition

CHANGE MANAGEMENT

***Activities involved in (1) defining and installing new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change; (2) building consensus among customers and stakeholders on specific changes designed to better meet their needs; and (3) planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another. (www.gao.gov)

CHANGE MANAGEMENT DOCUMENTATION.

All documentation that is required and being delivered whilst performing change management, e.g. the functional test cases and all the other documents a new end-user of SAP requires and the various tools and approaches used to manage change by the TSO. (Anderson, 2003)

COST OF OWNERSHIP ANALYSIS

Determination of where and when the costs are inquired within the context of the SAP solution stack and ongoing operations. The analysis addresses all internal and external costs, both one-time as well as recurring (Anderson, 2003)

CUTOVER

The process of transitioning from one system to a new one (Anderson, 2004

CUTOVER PLAN

All documentation related to planning, preparing and executing cutover, describing how to lock down the system from a technical change management perspective, preparing the TSO for its new role and rolling out the SAP graphical user interface to all future end users. (Anderson, 2003)

DATA CENTER

A data center is a facility used for housing a large amount of electronic equipment, typically computers and communications equipment. (www.wikipedia.org)

DATA CENTER REQUIREMENT

A requirement for the SAP data center, i.e. a physical requirement like power requirements, a rack requirement, a network infrastructure requirement or a requirement to the network server. (Anderson, 2003)

DISASTER RECOVERY (DR) REQUIREMENT

Requirement that focuses on downtime that lasts many hours to days or even weeks (Anderson, 2003)

FUNCTIONAL TEST CASE

A set of conditions or variables under which a tester will determine if a certain business process works (www.wikipedia.org)

HIGH AVAILABILITY (HA) REQUIREMENT

Requirements that describes the amount of time that the system needs to be available to satisfy the needs of the users. (Anderson, 2003)

INSTALLATION DOCUMENTATION

All documentation related to the installation of an end-to-end SAP solution (Anderson, 2003)

OPERATIONS MANUAL

The collection of current state system documentation, day-to-day and other regularly scheduled operations tasks, various installation and operations checklists and how-to process documents. (Anderson, 2003)

SAP

SAP AG is the name of the biggest European software company. The head office is in Walldorf, Germany. SAP was founded in 1972 as Systemanalyse and Programmentwicklung ("Systems Analysis and Product") by five former IBM employees in Mannheim, Germany. (www.wikipedia.org)

SAP IMPLEMENTATION PROJECT PLAN

A comprehensive project plan that contains all products that are delivered whilst performing an SAP implementation project (Anderson, 2003)

SOLUTION STACK

Set of software subsystems or components needed to deliver a fully functional solution, e.g. a product or service. (www.wikipedia.org)

SOLUTION STACK PARTNERS LIST

A list of all vendors that deliver the products that make up the SAP solution stack (Anderson, 2003)

SOLUTION VISION

A vision of the future-state of the SAP solution (Anderson, 2003)

STRESS TEST PLAN

A test plan that is focused at determining the stability of a given system or entity. It involves testing beyond normal operational capacity, often to a breaking point, in order to observe the results. (www.wikipedia.org

TEST PLAN

A detail of how the test will proceed, who will do the testing, what will be tested, in how much time the test will take place, and to what quality level the test will be performed. (IEEE 829)

TRAINING

The acquisition of knowledge, skills, and attitudes as a result of the teaching of vocational or practical skills and knowledge that relates to specific useful skills (www.wikipedia.org)

TRAINING PLAN

Consisting of training units, a training plan is the result of hierarchical decompositions of a training goal, tailored according to the learning preferences and prior knowledge of the trainee. A plan is the means by which the trainee satisfies the goal. (www.ece.eps.hw.ac.uk/)

TSO

Technical Support Organization. The people that are committed to implementation and management of SAP. (Anderson, 2003)

TSO CHART

A chart that depicts the structure of the TSO. (Anderson, 2003)

SAP Implementation


SAP Implementation is the whole of processes that defines a complete method to implement the Enterprise Resource Planning SAP ERP software in an organization. The SAP implementation method described in this entry is a generic method and not a specific implementation method as such. It is based on best practices and case studies from various literature sources and presents a collection of processes and products that make up a complete implementation method to allow any organization to plan and execute the implementation of SAP software.

Introduction

The implementation of SAP software, such as SAP R/3 is almost always a massive operation that brings a lot of changes in the organization. The whole process can take up to several years. Virtually every person in the organization is involved, whether they are part of the SAP technical support organization (TSO) or the actual end-users of the SAP software. The resulting changes that the implementation of SAP generates are intended to reach high level goals, such as improved communication and increased return on information (as people will work with the same information). It is therefore very important that the implementation process is planned and executed with the usage of a solid method. There are various SAP implementation methods. An example of how one company, Robert Bosch GmbH, implemented SAP R/3 over 10 years is available. This study shows that designing IT architecture is very critical in SAP implementation practices.

Competitive landscape


SAP competitors are primarily in the Enterprise Resource Planning Software industry. SAP also competes in the Customer Relationship Management, Marketing & Sales Software, Manufacturing, Warehousing & Industrial Software, and Supply Chain Management & Logistics Software sectors.

Oracle Corporation, SAP's major competitor, filed a case against SAP for malpractice and unfair competition in the California courts on 22 March 2007. The complaint alleged that a Texas subsidiary, SAP TN (formerly TomorrowNow before being purchased by SAP), which provides discount support for legacy Oracle product lines, used the accounts of former Oracle customers to systematically download patches and support documents from Oracle's website and appropriate them for SAP's use.. Later SAP admitted wrong-doing on smaller scale than Oracle claimed in the lawsuit.

SAP has admitted to inappropriate downloads; however the company denies the theft of any intellectual property.

SAP claims to grow organically in contrast to its main rival, Oracle, which has been spending US$20 billion since 2004 acquiring 30 smaller competitors. SAP was able to increase its annual profits by 370% since 2002.

In something of a departure from its usual organic growth, on 7 October 2007, SAP announced that it would acquire Business Objects, the market leader in business intelligence software, for $6.8B.

SAP provoked controversy and frustration among its users in 2008 by raising the cost of its maintenance contracts. The issue was the subject of intense discussion among user groups

The resulting pressure saw SAP and SUGEN (SAP User Group Executive Network) agree to a major benchmarking exercise to prove the value of the new support pricing policy to customers. In December 2009, SAP delayed its Enterprise Support price rises until agreement had been reached on the benchmarks and KPIs

In January 2010 SAP did a U-turn on Enterprise Support and reintroduced its standard support package for customers, saying the move was “a demonstration of its commitment to customer satisfaction”. The move to reinstate standard support – at 18 percent of annual license fees, “will enable all customers to choose the option that best meets their requirements,” the company said. SAP has also announced that it is freezing prices for existing SAP Enterprise Support contracts at 2009 levels.

Green SAP Labs


SAP opened in June, 2009 its new SAP Labs campus in Brazil, representing the first SAP Labs Center in Latin America and the eighth worldwide. The facility is located in Sao Leopoldo in the state of Rio Grande do Sul and employs 375 people. Of particular note are the building’s structure and interior, which are composed entirely of environmentally friendly materials. Since these materials were not available in Brazil, constructing the facility did not come cheap for SAP. However, Erwin Rezelman – director of SAP Labs Brazil – emphasizes that the project was an effort not only to create a “green house” in Latin America, but also to design offices with a pleasant work atmosphere.

SAP Labs Brazil has just received Leadership in Energy and Environmental Design (LEED) Gold certification for the building.

User groups

User Groups are independent, not-for-profit organizations of SAP customer companies and partners within the SAP Ecosystem that provide education to their members, influence SAP product releases and direction, exchange best practices, and provide insight into the market needs. Examples of User Groups are the Americas' SAP Users' Group (ASUG), the German speaking SAP User Group (DSAG), the SAP Australian User Group (SAUG) and the SAP UK & Ireland User Group.. Further SAP User Groups can be found at the List of SAP Users' Groups.

In 2007, the SAP User Group Executive Network (SUGEN) has been established to foster the information exchange and best practice sharing among SAP User Groups and to coordinate the collaboration with SAP for strategic topics.

SAP Labs Centers


SAP Labs is the research and development organization of the parent company. SAP has its development organization spread across the globe. Many, but not all, labs locations are hosting SAP Research groups.

Prominent labs are located in Europe (SAP Lab - Bulgaria) São Leopoldo, Brazil; Palo Alto, USA; Bangalore,and Gurgaon India; Ra'anana and Karmiel, Israel; Montreal and Vancouver, Canada and Shanghai, China. SAP Labs India is the largest development unit in terms of number of employees outside the SAP headquarters located in Walldorf, Germany. Other SAP Labs locations include France, Bulgaria and Hungary.

Each SAP Lab has prominent area of expertise and focus. SAP Labs in Sofia, Bulgaria for example specializes in development of Java based SAP software products. Whereas, SAP Labs in U.S. is famous for its focus on innovation and research.

Organization


Functional units of SAP are split across different organizational units for R&D needs, field activities and customer support. SAP Labs are mainly responsible for product development where as the field organizations spread across each country are responsible for field activities such Sales, Marketing, Consulting etc. Head office located in SAP AG is responsible for overall management as well as core Engineering activities related to Product Development. SAP customer support, also called Active Global Support (AGS) is a global organization to provide support to SAP customers worldwide.