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10/22/2010
07:58 AM
Bob Evans
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Global CIO: SAP Shares Corporate Treasure With Customers

SAP's turning its massive database of customer best practices into a rich knowledge base for customers looking to turbocharge the performance of their businesses.

How does this help the customer?" Bouhdary said in a recent phone conversation. "And if people can't give you the answer in detail, then we should drop the project.

"For us, the purpose behind a new project should no longer be how much money we think we can make from the product, but rather how much value can it create for our customers."

Bouhdary says that SAP has accumulated enough experience in working with more than 2,000 SAP customers to know with certainty that the value-management approach produces significant business results.

A survey of more than 400 SAP customers that the company undertook with research firm AMR revealed that among companies with a value-management strategy and processes in place, 100% delivered projects on time or ahead of schedule; 88% delivered those projects below budget; and 60% extracted greater value than projected in the original business case, Bouhdary said.

"For lots of companies, they start off with a strong focus on value but then it slowly goes away and they are therefore unable to gain the maximum benefits," he said. "Our research shows that 87% of companies do a very thorough job at building the business case, but only 15% follow through and do a very good job at focusing on value in the actual implementation of the project.

"But where the results really show the need for end-to-end value-management programs is in the final phase of the project, which is optimization, because only 8-10% of companies retain their focus on value in this final phase.

"And so," Bouhdary said, "when they project is set to go live, they have no budget left, and the project doesn't live up to expectations, and it creates a culture where top executives become very leery of investing in further projects because the big payoff just isn't there."

SAP's value-management program has pulled together some impressive numbers and capabilities:

--More than 8,500 customers from around the world have completed the comprehensive surveys of how they use SAP products, and those respondents come from 25 industries. In the first half of this year, half of the completed surveys have come from India and EMEA.

--SAP offers more than 30 types of tailored benchmarking and best-practice surveys that can capture up to 700 KPIs and more than 1,000 different subset of best practices.

--Since the company launched its Value Academy workshops 18 months ago, more than 1,500 customer companies have participated. By the end of 2010, that number will exceed 2,000, and a total of 4,000 individuals from those 2,000 companies will have completed the program.

(For much more detail on the program from SAP, you can go to this portion of its website.)

One such Value Academy graduate is Anju Virmani, CIO of CargoJet, which handles global contract-shipments of a range of goods from zoo animals to hazardous materials.

"Within the SAP program, we compared our numbers with others from service industries—companies of similar size—and we found that the only area where we came up glowing was in A/R because most of our stuff is prepaid and we get about 80% of our revenue from 20% of our customers," said Virmani in a recent phone conversation from her office in Toronto.

"But other than that, there were many other areas where we learned we could find value. They were able to show us that if we implemented SAP best practices in finance, we could cut down on the time needed to close our quarterly books, and cut down our audit costs by providing our auditors with better information," Virmani said.

"They helped us calculate a payback period to see when our investments would pay us back with efficiencies—we could see that on a slide, the spot where we wanted to be—and showed us what things will look like two years down the road," she said.

"We're about 18 months into that, and our finance department has achieved significant time-savings to close our books. Our users were not terribly sophisticated, and it took a while to get them up to speed and see the benefits of doing things the right way. They told us it usually takes two or three years to reap the full value, and we're about 18 months into the project and we're definitely starting to see that."

Bouhdary is quick to point out that many of the elements of SAP's value-management programs are offered to SAP customers at no charge—the longer-term benefit, he says, is that "this creates a living and dynamic relationship across the value lifecycle and that leads to more value for customers over time."

In addition, SAP believes the program will help customers see SAP "as a partner for an extended journey instead of just as another vendor," particularly as those customers discover new ways to "make the leap from focusing all their time on things that are transaction-related and instead move up to analyses that are business-related."

And are there plans to weave the capabilities of value management into SAP's software?

"We intend to write these capabilities into our software with Sybase and Business Objects," Bouhdary said. "And not too long from now, we'll be able to build apps that have access to that rich content—that knowledge and data—that no one else could possibly know about. And that's going to be a very big competitive advantage for us.

"It's like what Apple did with the iPod: when technology meets music and content, and it's all defined by the customer, no one can compete with that."

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GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at bevans@techweb.com.

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