September 10, 2008

CIOs and IT Leaders - Having SAP Nightmares? Read on...

I've seen a lot of buzz around SAP and heard a good number of my customers/partners raise this concern in the past many months. I've also been following the series of articles by Thomas Wailgum at CIO.com on this topic. In this article, we'll try to take a few steps back in time, and understand how it started. We'll also see how it evolved over time. Towards the end, we'll also see, as leaders in the IT space, a way to tackle this. The its and this' refer to the ERP bugaboo.

It all started in the early 2000's, right after the dot com boom, when the senior IT management teams of many companies wanted to manage their wide spread businesses effectively. From a management perspective, they thought that having a single ubiquitous platform would help from both talent acquisition and software management perspectives. This was the time when SAP's ERP suite was launched (mySAP ERP was launched in 2003). This suite offered four individual solutions, each addressing specific functional areas, namely-
  1. Human Capital Management
  2. Financials
  3. Operations
  4. Corporate Services
Over the next few years, these customers of SAP were happy with their investment decisions. These companies started to implement these solutions for their enterprises. But slowly, over a period in time, these companies pretty much reached a stage where they completed implementations of these solutions. As their corporate footprint and needs increased, they sought SAP's assistance to deploy these solutions for the newly inducted companies as well.

In the background, there was this monster called complexity that was growing. SAP was continuously adding newer features and releasing newer versions of these solutions. With the new deployments of SAP's solutions, these customers slowly started to realize that they needed to manage these different versions of solutions across their enterprises. This is when SAP introduced their Netweaver integrated technology platform, which was intended to help manage this complexity of different SAP versions. However, they later chose to call this a service-oriented application and integration platform.

Assuming the above fixed the problem of complexity, these companies started to look at the other side of the business - beating the competition and creating a unique business value to their customers. This resulted in the business teams of these companies coming up with some strategic initiatives and strategic business processes. This is when the ball was thrown back to the IT Leaders and CIOs to think of ways to implement these strategic business processes.

Still enchanted by SAP's ERP solutions, these IT Leaders resorted to implementing these strategic business processes in the same SAP platform using the programming languages like ABAP, etc. Now, the monster started to surface again! This time, it came with a greater force and impact. With the existing complexity of managing different versions of the SAP ERP, the companies were now put through a challenge of having to deal with different versions and fixes of these individual custom processes/modules that were deployed to address their strategic initiatives.

Let us now try and remind ourselves that SAP ERP was designed to address the resource management related processes (related to corporate operations, financial processes, human capital managment and the like). These processes are typically found in every enterprise, whatever industry or business they may be. When we talk about strategic business processes, we refer to those unique business processes that help an enterprise/corporate differentiate itself from its competition. The truth is that SAP's ERP was NOT designed to handle this! So, it was a Square Peg in a Round Hole.

IT Leaders looked at managing complexity in the short term, but failed to see the complexity in the longer run. So, is there a way to tame this man-made monster called complexity? Yes, there is. Read on...

Start differentiating between your strategic business processes and your ERP processes. Keep the latter in your existing ERP and move the former to a common, enterprise-wide platform that conforms to IT and Industry Standards. It's very important to think about the IT and Industry standards because your enterprise is bound to have disparate lines of businesses and different softwares from different vendors. You will need to have a platform that will seamlessly integrate these different systems and software.

From an IT Standards perspective, Service Oriented Architecture (SOA) has is a proven approach that offers the maximum flexibility and seamless integration capabilities. Though SAP-AG chose to call their Netweaver platform as a service-oriented application and integration platform, it isn't really so. Just because your integration platform allows its applications to be exposed as Web-Services, does not mean that it is SOA compliant! To know more on the difference between SOA and Web-Services, read this article.

To summarize, take a closer look at your ERP usage and try to separate out those non-ERP business processes. Adopt the SOA approach to your enterprise's IT architecture. It helps your business and IT be more flexible, agile and robust.

For further reading:
  1. AMR Research article titled SOA will kill ERP
  2. Forrester Research on ERP and SOA
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