Academy of Better Business

SAP roll-outs: opportunities and threats

Specifics of SAP implementations in international companies

SAP roll-out does not have to mean incapacitation of a local company by stiff corporation standards not adapted to the local specifics.

In many SAP system implementations carried out in branches of international companies, ready-made solutions originating from head office of the given company are used.

Projects of this type, defined as “roll-out” (i.e. expansion/extension of the existing solution by a new branch), are characterized by specific conditions.

They are connected, among others, with stronger formalisation of the implementation process, emphasis on standardisation of solutions and on adjustment to corporate core model of the system, as well as involvement of foreign consultants from the corporation.

The study below presents various models of SAP system roll-outs, depending on the degree to which corporate standards are transferred within implementation onto the Polish company, and with respect to the degree of corporate consultants’ involvement.
 
This material also provides a description of typical threats connected to roll-out projects, as well as the benefits which may be achieved through the application of corporate standards.

We have also included certain recommendations: how to manage SAP projects of a roll-out type so that the work of three parties – company, corporate consultants and local implementation companies supporting the venture – could proceed efficiently and bring measurable benefits to the company.

What is the roll-out type implementation?

The expression “roll-out” refers to ventures consisting of implementation of the system based on a certain ready-made and already configured within the system business model of a company.

The model defines the established operation standard within the corporation, implemented with participation of internal consultants, who have worked out the model solution and deal with its migration to other companies of the group.
 
A standardised business model which then constitutes the basis for roll-out, should encompass the following components:

• documentation and configuration of the business processes flow in the SAP system,
• SAP organisational structure and guidelines for modelling the local organisational structure of the company within the system,
• set of standard reports, forms, interfaces, and other functional extensions,
• set of standard roles (user authorization profiles),
• templates and examples of project documents to be used in other “roll-out” projects, in order to ensure uniform documentation and project status reporting within all projects at a corporate scale.

In the past, “model” solutions almost always came from the head office of a corporation; in recent years, there have been many cases when a different branch/country was chosen - quite often branches in Poland - for working out the model and its first implementation. 

Participation in a roll-out project at such an early stage gives an opportunity of stronger influence on the target scope and shape of the worked-out model, however, it means bigger work intensity (instead of “copying” the solution, it has to be “built” from the beginning).

Such projects are therefore more similar to classic SAP implementations and they are not the subject of this article.

Various roll-out models

Several types of roll-out projects may be distinguished with respect to the approach to standard business models of a company operation:  

• “Off-the-peg” roll-out implementation, where a model solution is ready and, so to speak preconceived, and the goal of the project is adjusting the company to the ready business model. The implemented system should comply with the standard to maximum and changes are limited to the minimum related exclusively to the local and absolutely binding legal regulations (concerning external reporting, taxes, remuneration, etc.). In the adjustment process: organisation <-> system,greater emphasis is placed on implementation of organisational changes in the company than on adjustment of the system.
• Roll-out implementation with a ready model solution, yet the goal of the project is the implementation of the system which is a combination of the corporate requirements and the business practices of the company implementing into the system, and which - despite the fact that they are different from the standard - allow achieving a competitive advantage on the local market.
• Roll-out implementation with a preceding standard project, the purpose of which is to work out a common model of operation for a group of enterprises. Having worked out and implementated the model in a pilot company (or several) and introduced changes resulting from experience from the first implementation, the standard model is rolled out to other companies of the group.

With respect to the degree of corporate consultants’ involvement, roll-out projects are divided into:

• Roll-out implementation with a leading participation of corporate consultants. International corporations often establish their own implementation companies within the group. In such a project, the involvement of local implementation company consultants is mainly to ensure taking account of the the particular local market specifics and legal requirements during the implementation.
• Roll-out Implementation with a leading participation of a local implementation company. The implementation company carries out work and corporate consultants mainly transfer their knowledge on the standard solution, and then, at particular stages, they control the course of work and compliance of the implemented system with requirements resulting from corporate standards.

Methodology of roll-out project and “classic” implementation

In case roll-out assumes adjusting corporate model to the specifics of a company, implementation is carried out on the basis of methodology modified against standard implementation methodology.
With the assumption that the standard business model is ready and available, the following changes appear at particular implementation phases:

Project preparation phase. At this stage, it is necessary to check whether the corporate solution includes its own implementation methodology and procedures. The local implementation partner (if the project assumes such partner’s involvement) should be granted access to the corporate methodology description in order to prepare in advance its team for the working standards required by the corporation (i.e., project documentation format, rules of configuration coding, programs’ naming conventions, etc.).

Blueprint definition phase – as the blueprint solution is ready, the chief role of the implementation teams is to check its compliance with the actual company’s operations manner, to identify differences and take decisions in which fields adjustment (extension) of the model will be made and in which the company will be adjusted (organisational changes).

Prototype development phase – includes introduction of changes into configuration and extensions for the differences between the standard model and the company’s operation model approved for implementation.

Final preparation phase – when preparing end users, ready (if such exist) training materials and instructions may be used; most often such materials require translation into the local language and supplementation with the differences stemming from local changes being introduced to the system; in most cases, it is the local branch of the company to decide whether preparation of instructions and carrying out training for end users should be entrusted to its own project team or to the implementation partner.

System start and operation phase – the new system operations support is carried out mainly by the internal corporate structure of a help desk (if such an organisational unit exists within the group); usually, certain time is chosen for handover of the project support to the central support organisation after closing the first month-end perios in the new system (i.e. 6-8 weeks after start-up).

Tasks of corporate consultants

In SAP roll-outs, assuming the possibility of adjusting corporate standards to the operations model of the local company, corporate consultants provide added value to such implementations through the following activities:

• transfer of knowledge on the manner of operation of other enterprises (branches) within the corporation – on the basis of experience of branches which have already implemented the corporate solution,
• transfer of knowledge on the model solution, available in the system (blueprint documentation, configuration, functional extensions),
• managing or carrying out particular implementation activities and tasks (especially in the blueprint phase, less often in the phase of prototype development and final preparation for the production start-up),
• transfer of knowledge concerning experiences from implementation in other enterprises within the group (problems and methods of solving them, corrective and preventative actions),
• control and audit of the achieved implementation results and ensuring compliance of the system implemented in the enterprise with the standard solution

Benefits from roll-out project

Roll-out type implementation may be a chance for an enterprise to take advantage of already worked-out best practices, as well as to limit the costs of implementation and maintenance of the system. Benefits from roll-out include usually:

• standardising ways of operation and reporting results of particular enterprises within the corporation,
• facilitating communication between different branches and between branches and the head office thanks to the introduction of common terminology and result assessment criteria (as above),
• streamlining the flow of processes and functions of the local company according to the best business practices of the international corporation,
• limiting costs of implementation – reduction of the total number of consultancy days in the project through using the ready-made blueprint solutions as well as configuration and extensions of the system,
• reducing the implementation time (as above),
• reducing costs of system maintenance through utilization of central servers for the entire group of companies, support of production work and system development by the corporate consultants, using advanced solutions the implementation of which, at a smaller scale, would not be cost-effective (i.e. secondary data centres, advanced backup and data recovery solutions, 24/7 technical support for the system, etc.).

The aforementioned benefits stemming from roll-out implementation are achievable with the following assumptions:

• there is a group of companies with a similar operations model within a corporation/capital group and the aim of the corporation is standardise operations of particular companies according to a uniform business model,
• standard business model is available in the form of an already configured IT system or it will be worked out within the current project (based on a selected existing company within the corporation or on a target vision of a model company operations),
• methodology of proceeding for the subsequent roll-out implementations has been worked out by the corporation and communicated to the branches which will take part in the following implementations.

If any of the above-mentioned criteria has not been met, it is recommended to involve a local implementation company as a national advisor for the company’s branch before starting the implementation in order to ensure proper communication with the corporate head office – at the level of detailed solutions and requirements concerning the SAP system.

Threats related to roll-outs

Carrying out SAP roll-outs is connected with certain threats - the smaller the decision-making indepen-dence of a company (local company of the corporation) in comparison to the head office deciding on the manner of implementation, the bigger the threat.

The following aspects are worth mentioning:

• corporation imposing solutions which operate well abroad, however, due to various reasons, may not be suitable to be used on the local market; standardisation of processes without taking account of differences constituting the competitive advantage of a particular enterprise on the local market,
• insufficient participation of consultants who could ensure consideration  of all regulations and requirements of the local law in the system,
• meeting the reporting requirements for the corporation is the implementation’s main objective, whereas streamlining business processes of the company is treated as a secondary objective,
• implementation of a foreign language system and documentation by foreign-speaking consultants, without adequate translation into the local language; lack of support by local consultants who could serve as “translators” between the business language of the company’s employees and the foreign language terminology concerning the IT system (translators who do not know the specifics of the SAP systems and its terminology are not able to provide appropriate communication and correct understanding between all parties),
•  unclear, imprecise breakdown of competencies and responsibilities between corporate consultants, company’s employees and the local implementation partner.

How to manage a roll-out?

At present, roll-out implementations constitute about half of all SAP system implementations carried out in Poland.

That is why it is even more important to work out an operations model which will enable meeting the corporate requirements, and at the same time, allow the local company achieving new (or at least maintaining the existing!) business benefits.

Utilization of a ready-made model in the SAP system, standardisation of business processes within the group, ability to limit costs and reduce the time of implementation are undoubtedly advantages of roll-outs.

Nevertheless, in order to succesfully avoid the described threats, it is necessary to clearly define the roles which should be performed by each of the parties of the project in the implementation – i.e. corporate consultants, company’s employees, and local implementation partner.

Taking part in an undertakings carried out by at least three (and not two, as it is in the “classic” implementation) parties brings additional challenges concerning communication and decision-making processes (i.e. formalised implementation scope change approval as compared to corporate solutions).
 
Experience shows that companies which resigned from the support of a local implementation company or were not able to use such support due to the decision of their corporation, have difficulties with system start-up, use and development.

Therefore, it’s important for the people managing a roll-out to ensure  participation of a competent local implementation company, which thanks to its experience in roll-out implementations (in the country) will be able to support the success of such an undertaking.