misc forrester sap competence center

June 8, 2004

SAP Customer Competence Centerby Byron Miller

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Helping Business Thrive On Technology Change

© 2004, Forrester Research, Inc. All rights reserved. Forrester, Forrester Oval Program, Forrester Wave, WholeView 2, Technographics, and TechRankings are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please email [email protected].

BEST PRAC TICES

EXECUTIVE SUMMARYThe operation of any ERP system is a complex undertaking, and SAP is no exception. A competence center lowers the risks and increases success rates by creating a focal point for expertise and vendor management across the company. There are a few constants across all competence centers, like very knowledgeable functional and technical support staff. Beyond that are many more competencies that range from managing input to SAP to managing SAP projects. The exact mix of these competencies and how they are organized are very dependent on the enterprise they serve.

TABLE OF CONTENTSCompetence Centers Normally Start From Pain

The Parts Of A Competence Center: The Basics

Beyond The Basics: Larger SAP Shops Need Coordination

Heterogeneous SAP Implementations Take On Business Issues

Governance — Reporting Structure Depends On Organization

RECOMMENDATIONS

Start CCC Now, Grow As Implementation And Company Grow

NOTES & RESOURCESForrester spoke with SAP clients through the inquiry process on competence center and support issues. Forrester also spoke with SAP.

Related Research Documents“The Benefits of ERP/CEA Shared Services Depends on Their Dimensions”December 30, 2003, IdeaByte

“CRM or ERP — It’s All About Process”November 6, 2002, IdeaByte

“Help Desk Staffing: Common Organizational Structures for Level One, Two and Maybe Even Three”February 22, 2002, IdeaByte

June 8, 2004

SAP Customer Competence CenterCompetencies And Organizationby Byron Millerwith Erin Kinikin and Liz Herbert

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Best Practices | SAP Customer Competence Center

© 2004, Forrester Research, Inc. Reproduction ProhibitedJune 8, 2004

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COMPETENCE CENTERS NORMALLY START FROM PAIN

Most competence centers are initiated in hopes of addressing known issues:

· High cost of ongoing support. Often the first words on an inquiry about competence centers are, “We are concerned about the high cost of supporting SAP. Would a competency center help?”

· Insufficient return on the investment. If cost isn’t first, then the issue is usually, “We don’t think we’re getting all that we should out of our SAP investment. Would a competency center help?”

While those are usually the two leading questions, there are also other issues:

· Runaway user requests. The user-requested changes are continuing to mount, and the team that is supposed to address them is getting further behind. What can be done to turn that around?

· High dependency on external support. The difficult problems are not being handled adequately. This is resulting in higher support costs because the issues then require third-party help at high costs.

· Lack of internal coordination of installations. Some enterprises have a lot of SAP systems and a lot of SAP expertise but find themselves in a position where the expertise is not being properly leveraged.

· Lack of focused coordination with SAP. Other large SAP installations are finding it difficult to get SAP’s attention. The core issue is often the lack of a coordinated front.

Then there are a lot of ancillary issues concerning organizational strategies and headcount benchmarks.

It would be naive to say that simply establishing a competence center will be the end of all of those issues. However, competence centers are often the key to making progress on tactical support issues and, more importantly, business process issues.

It would also be wrong to give the impression that all competence centers look the same. Effective competence centers are best designed around the organization(s) that they support. There are, however, competencies that must be present in order to fully use an SAP system. So we will start by describing the competencies that are the basis of a “competence center” and then placing them into a larger IT framework (see Figure 1).


© 2004, Forrester Research, Inc. Reproduction Prohibited June 8, 2004

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Figure 1 The Parts Of A Competence Center

THE PARTS OF A COMPETENCE CENTER: THE BASICS

The most basic aspect of a competence center is its people. There are three areas that must be present in every customer competence center (CCC) staff member:

· A high level of competency in his or her area of expertise.

· A mixed knowledge of both business and technology.

· Personal qualities of being service-minded, innovative in their thinking, and apt at teamwork.

Above the people aspects, competencies themselves can be divided into two basic groups: those that support the business and those that support the technology.

Source: Forrester Research, Inc.

Support desk

Development request coordination

Training

Consulting/development

Internal marketing and informationmanagement

Contract management

Projects and implementations

1-1Business support

Detailed SAP business process andfunction specification and design

SAP module configuration

Process and functional integrationwith non-SAP systems

Business process fulfillment testing

Tier two/three support (tier three only when there is an SAP support desk)

SAP architecture

ABAP and Java programming

Development and maintenance ofreleases including patches

Multi-instance coordination

DBA and data management

Performance monitoring and tuning

Security profile definition and maintenance

Technical support

Business support Technical support

Technical support

The basics1-1

Beyond the basics: Larger SAP shops need coordination1-2

Heterogeneous SAP implementations take on business issues1-3



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Business Support

This set of competencies is responsible for analyzing business processes that the enterprise has established and placing them into the context of an SAP system. Without this linkage between the business and the SAP functionality, the system will be much less likely to deliver the value intended.

· Detailed SAP business process and function specification and design. In small shops the competence center may bear much of the responsibility for helping to establish the business process framework. In larger shops it usually works with a business governance group to help guide them into a set of processes and functions that are needed by the business and supported by the SAP products with as little modification as possible. This requires in-depth knowledge of both the business and SAP, along with great analytic and negotiation skills. The task is to understand what the business is trying to do and put this together with the capabilities of SAP. Reframing what may be entrenched practice into a new paradigm is often difficult.

· SAP module configuration. This competency focuses on the SAP technology. This competency must be able to answer the question: “What is the very best way to configure SAP to fulfill this requirement?” It requires intimate knowledge of both what is possible to do in SAP and how to accomplish it with the least processing power and the best maintainability. Using R/3’s event steam, it is possible to have R/3 move people to a new cost center when it affects an organization change that is scheduled for 9:00 a.m. on Thursday the 12th. Some may find that useful. However, other long-running event streams can bring the system to its knees.

· Process and functional integration with non-SAP systems. When processes span multiple systems — either internally or externally — it is necessary to provide both the technical infrastructure and the business skills to create an integrated whole. This competency requires an intimate knowledge of the business, an intimate knowledge of SAP, and the ability to assimilate knowledge of other systems and see them as a collective whole. In other words, while requiring strong SAP skills, this competency requires a non-exclusive SAP mindset even when an SAP-centric strategy may technically be the right thing to follow.

· Business process fulfillment testing. A lot of testing is aimed at answering the question: “Does it work and does it scale?” This competency has a different focus:

“Does it fulfill the needs of the business in a way that invites adoption?” That is, will anybody want to use this thing to conduct business? This competency moves beyond understanding what must be done and crosses into issues of usability and intimate



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knowledge of the user’s work environment. Hence, this competency will spend a lot of time in the field with end users, making sure that the designs bring end user delight while fulfilling business needs.

· Tier two/three support (tier three only when there is an SAP support desk). The primary skills required for this competency are problem solving, interpersonal relationships, and facilitation. This competency works with the IT help desk and identifies the person to go to and when to get more complex issues resolved. It usually also involves working closely with SAP on process/function issues to solve less-frequently-encountered problems. When to involve SAP will be different for each competence center and will depend a lot on the level of competency within the center. Both overestimating and underestimating the competency levels can increase resolution time and cost.

Technical Support

This set of competencies is responsible for the tasks linked to system installations, upgrades, and maintenance (like importing corrections and tuning).

· SAP architecture. With the advent of SAP’s NetWeaver platform, SAP technology support requires knowledge of new components: SAP Web Application Server, SAP Exchange Infrastructure, SAP Master Data Management, SAP Business Information Warehouse, SAP Enterprise Portal, and SAP Mobile Infrastructure. Each one of these requires a set of competencies to support it. For example, SAP Web AS requires hardware, operating system, and database skills along with some networking skills —similar to any other application platform. In addition, some NetWeaver components — such as SAP BW and SAP MDM — will require significant interaction with the business support team and, perhaps, other specific teams like financial analysis (outside of the competence center) and data management (within the competence center) to fulfill the needs of the business. Lastly, there will need to be some who understand the stack as an integrated whole and across the applications that it supports — not all elements of NetWeaver will be supported by all applications equally well in the near term.

· ABAP and Java programming. The days of only needing to have ABAP skills are quickly disappearing. A significant portion of the analyst/programmers who need ABAP skills should also be developing Java and J2EE environment skills. It is doubtful that ABAP is going away anytime soon, but it is not doubtful that Java is here to stay. The company should have standards for when to use which. In the near term, ABAP is likely to remain the choice for intense processing requirements.



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· Development and maintenance of releases, including patches. This competency requires meticulous planning and testing. This competency is often staffed with a very senior person who does the planning in coordination with both business — who sets quiet periods when the business cannot be interrupted — and IT — which provides the resources for getting the job done. This competency often has junior people who do the legwork, as well as a lot of the testing. IT staff from all the other competencies are used to carry out the prep work. The most intense work is often done by the senior DBA staff during both the trial and actual migrations.

· Multi-instance coordination. There are many reasons for multi-instance deployment. Among them are: geographic deployment, line-of-business deployment, scalability deployment, and multiple component deployment as separate instances (for example, ERP and CRM). The competencies that are often sought are primarily related to integration. However, it is often a good idea to include data management and business process skills, especially if the systems do not deploy the same business processes. While a lot of enterprises don’t do this because of local deployment issues, it is highly advisable to include competencies that would try to keep the releases in sync and coordinate the patch levels across systems on the same release.

· DBA and data management. There is always the need for a dual competency of database prowess and a sophisticated understanding of how the ERP system stores its data. SAP is no exception. With the introduction of MDM, this competency may also be asked to take on the responsibility of managing the metadata and instance data across multiple systems when they are present. However, when MDM is present, the competency moves from being mostly a technical one to also having to navigate difficult political waters — including gaining agreement on who gets to view and update the data, how it is used, and how it is maintained.

· Performance monitoring and tuning. The competencies here would appear at first to be obvious. However, early on it is wise to use help from SAP. SAP can perform remote system monitoring and provide advance warning of potential problems through EarlyWatch. SAP also offers a software product called SAP Solution Manager that can be used to do a lot of diagnosis. Competency with these tools, as well as other tools like those from Mercury Interactive, is very helpful. When the systems are monitored on a periodic basis, the issues that are impeding performance or building up to a system failure are detected and resolved early. This is critical to maintaining high system availability. In one case in which we facilitated a review by SAP, the client was told that the system size had never been adjusted for the new processor environment. Making the change brought instant performance satisfaction.



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· Security profile definition and maintenance. Creating an effective and efficient security environment for an SAP environment can be very challenging. Maintaining role definitions centrally is very important. As anyone who has ever dealt with SAP’s security environment can tell you, the security definitions are very thorough but also an incredible amount of work. Central definition brings both uniformity and leveraged management. This competency requires a thorough understanding of the implications of a security profile change and how business is affected. This competency must help those who function in local security administration in assigning roles as well.

BEYOND THE BASICS: LARGER SAP SHOPS NEED COORDINATION

Beyond the basics there are the competencies to support a larger SAP shop.

Support Desk

One of the main tasks of an SAP competence center is handling questions and problems relating to SAP software. In a very small shop the questions may be directly posed to the business and technical experts. In larger shops it is generally necessary to establish a tiered support structure. In this case we are defining the support desk to be equivalent to the second level in a three tier support structure. The support desk usually has the same kind of expertise as the core of the competence center but at a less expert level. The support desk handles questions that the tier one help desk cannot answer and passes the very difficult or extremely urgent issues on to the tier three or core teams.1 In most organizations with competence centers, first-line support is generally via “super-users” within the business groups. The actual help desk within the competence center remains very small. There seems to be a minimum size help desk of about five. However, very large organizations seem to grow only to the high teens or low 20s (see Figure 2).

Development Request Coordination

CEA/ERP systems offer a lot of functionality that spans many parts of the business. As deployment broadens, often involving multiple locations, it is not unusual to have development requests to SAP that are duplicates and/or compete for attention. This causes both tension within the requesting company and confusion at SAP. An answer to this is a team within the competence center that coordinates all the development requests being made to the vendor. This kind of service implies that the team understands the dimensions of time criticality and the importance to the business and can represent them appropriately to SAP.



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Figure 2 Help Desk Sizes Remain Small Even As Users Grow

Training

Two kinds of training need to be done on an ongoing basis: 1) the training of project team members, and 2) the training of end users. There have been many articles written on how training contributes to the effectiveness of an ERP system. When broken down into its key elements, good training communicates the effective and efficient use of systems within the context of the business. Too often outside training does not effectively convey the business context. Training from within the competence center should be able to do both. The trainers can also be effectively used to gather information on what is difficult to use and what is difficult to teach. This feedback is an important indicator to the competence center that the system and the processes need to be fixed.

Consulting/Development

If the enterprise primarily runs SAP systems, this group may serve as the SAP project office actually executing the SAP projects itself. In the context of an enterprise that has a heterogeneous landscape, this group ensures that employees with business knowledge and SAP expertise are available to the project office for those projects that involve SAP systems.

HETEROGENEOUS SAP IMPLEMENTATIONS TAKE ON BUSINESS ISSUES

The third category of SAP competencies supports a large enterprise that uses SAP broadly and may also have other ERP vendors in the landscape.

Source: SAP Benchmark, November 2003 and Forrester Research, Inc.

0 5,000 10,000 15,000 20,000 25,000 30,000

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Number of users

Number ofhelp deskpersonnel

Help desk sizes versus number of users

Natural log trend line of data



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Internal Marketing And Information Management

In very large enterprises — like those with several divisions using systems from multiple vendors — it is often advantageous to have groups that market the various systems to the enterprise at large. These internal marketing groups often belong to the vendor competence centers. It is not the job of these groups to do hard sells. That job still belongs to the vendors. Rather, the internal marketing groups position the applications within the context of the enterprise. The groups stay informed of the proposed projects and hold demonstrations and host information forums. The groups also disseminate information on a regular basis to potential consumers of new functionality being provided by the vendor along with independent assessments.

Contract Management

Many enterprises have multiple contracts with a single vendor. Often there is little uniformity in the contract language and pricing. Large enterprises should have a single point of contract management for a vendor. Arguably this could also be placed in the procurement office. However, it seems that multiple contract problems exist even in the presence of such a function within a procurement office, hence the recommendation to place it in the competence center. The competence center usually has a better ongoing understanding of system usage that is necessary for the difficult job of managing and reporting contract compliance. The center also has a good understanding of the level and quality of support given by SAP, which aids in both managing SAP’s responsiveness and negotiating maintenance pricing. When such a function exists, it assumes the responsibility enterprisewide for the license and maintenance contracts and the conformance of the enterprise and the vendor to the contracts. Because the contracts cover multiple divisions, it is often possible for the overall contracts to be more stable than those negotiated by a single division. While any one division may be experiencing contraction in usage, the enterprise is often not experiencing it across all divisions, hence bringing more stability. Stability in the number of users is critical to maintaining the discount rates. Contract management is also responsible for providing the vendor with the latest information about contact persons, addresses, installation data, and so on.

Projects And Implementations

Individual enterprises tend to define projects differently. Every change is thought of as a project to some, while others tend to regard only the multidisciplinary changes as being projects. However, all enterprises have a threshold where a project administrator is required. New implementations and major upgrades are always in that category. It is at that point that the projects and implementations competency comes into play. The



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primary competency is managing the projects, usually staffing them with other competency staff in a matrixed organizational style. Some that we have seen maintain a base-level staff that is rotated through on a periodic basis.

GOVERNANCE — REPORTING STRUCTURE DEPENDS ON ORGANIZATION

Competence Center Organization Models

There is no such thing as a “standard” or “normal” competence center model. SAP recently did a survey of its competence centers and found the answers to the following two often-asked questions (see Figure 3):

1. To which internal business unit does your support organization report?

2. How is your support organization organized?

Every competence center has aspects that differ:

· Number of support groups. Some have all the applications in one support group, and others divide them by subcompetency. For example, HR would be its own competency with its own line management.

Figure 3 Structure Of Support Organizations

Source: SAP Benchmark, November 2003 and Forrester Research, Inc.

“How is your support organizationorganized?”

3-2

Central supportunit47%

Central butdistributed

34%

Shared servicecenter

8%

Decentralizedsupport units

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External service provider3%

Legally independentservice company

2%

“To which internal organization unit doesyour support organization report?”

3-1

To the ITdepartment

49%

To both38%

Directly to business13%



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· Staff. Some have full-time staff, while others are a mix of full-time and virtual. The virtual staffing seems to occur where there are multiple divisions that have their own SAP systems but rely on a central competence center. The virtual staff comes from the divisions, and they rotate in while staying on the books of the sponsoring organizations.

· Breadth of competencies. Some have all the competencies inside the center while others matrix to get them. Where SAP is the primary system, the competence center often has full technology support. When it is a multivendor environment, the technology staff often has a separate reporting line to the CIO with matrixed reporting of individuals to the vendor competence centers.

· Applications supported. Some are SAP-only and others are multivendor. While a multivendor competence center is rarer, some organizations put all the support for an application area, such as finance, in one organization, ostensibly to help with common business practices.

The list of differences is very long.

Forrester Guidance: Match Form To Organization

Our basic philosophy is that the form of the CCC should follow the form of the systems and the enterprise that it serves. Here are some examples (see Figure 4):

· Centralized CCC for a single-product-type firm with a single global instance. This type of company has products of the same type, like specialty chemicals. It also sells to a reasonably homogenous set of customers. It is able to define a single set of business processes that work well for it on a global basis. Accordingly, it has established a single global instance of SAP as well. It still needs a competence center, but most of its functions can be centralized because the processes are the same across the globe. An exception would be those aspects of the system that are still subject to regional mandates, especially government mandates. For those aspects of the system, it is wise to have regional satellite CCCs. However, the regional CCCs remain under the authority of the central CCC.



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Figure 4 Competence Center Structure Must Match Organizational Structure

Source: Forrester Research, Inc.

Single global instance competence center4-1

Diversified headquarters competence center4-2

SAP competencecenter

Businesssupport

competencies

SAPtechnology

competencies

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office

SAPrelationship

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Businesssupport

competencies

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Oil & gas SCM

Chemicals

Manufacturingdivision

Oil & gasdivision

Chemicalsdivision



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· Tiered CCC for a diversified product company with a tiered architecture. This type of company has enough differences within its divisions that having a global single instance does not make sense. The only thing that may matter to corporate is financial information — and sometimes HR. In that case it does not make sense to have a single CCC. Instead, there may be a CCC at the enterprise level that focuses on the administrative aspects if those are held in common. It may also have many of the SAP relationship aspects so that the enterprise presents a common agenda. At the least it should have a coordination role over the SAP relationship. Other CCCs will exist at the division level to handle the application aspects that are specific to their divisions. Within this tiered structure there may still exist gurus who work across the enterprise on SAP issues related primarily to what is now the NetWeaver stack. These gurus often report to the enterprise CCC, but not always.

R E C O M M E N D A T I O N S

START CCC NOW, GROW AS IMPLEMENTATION AND COMPANY GROW

· Don’t delay in starting the competence center. Clients that have one often wish they had put it in place from the start.

· Companies with revenues of $1 billion or more that have SAP as their primary ERP system should have a basic SAP competence center.

· Companies or divisions of more than $10 billion in revenue should have a full competence center.

· Companies with revenues of under $1 billion should have the beginnings of a competence center but rely on third-party support for much of the guru work.

· Keep the primary focus of the competence center on business process improvement; deliver on the tactical support issues in order to maintain credibility.

· Go through the SAP competence center certification process.



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SUPPLEMENTAL MATERIAL

Companies Interviewed For This Document

SAP

ENDNOTES

1 The number of help desk support levels and the responsibilities of each level depend on the type of support (desktop only or consolidated support for all employee problems), physical location of supported employees (all on a single campus or in multiple geographic locations) and the software in place for help desk automation and solution knowledgebases. See the February 22, 2002, IdeaByte “Help Desk Staffing: Common Organizational Structures for Level One, Two and Maybe Even Three.”

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