MUFI Rating & Risk – SAP ECC

MUFI Rating & Risk – SAP ECC

MUFI: Maintainability, Usability, Functionality, Implement ability

Vendor: SAP (Select For Vendor Profile)

Introduction

SAP ERP is the largest in scope and best selling ERP system in the world. SAP as a company became the largest enterprise software vendor in the world by its early success as an ERP software vendor, and they continue to have 25% of the market for ERP software. Considered a leader in the ERP space, however as with Oracle, at this point, they only make minor changes to their ERP systems. They primarily use it as a cash cow to grow the company in a different direction. SAP ECC has had the lowest user satisfaction for quite some time. However, this has not negatively affected their ability to be the tier 1 ERP leader, which should give some inkling as to how much users factor into ERP software selection decisions.

Application Detail – ECC/R/3 (aka SAP Business Suite)

SAP is well known for being complex to implement and difficult to configure. Configuring any area within SAP will take longer than in any other ERP system that we have ever tested. SAP also ranks as the most challenging application to troubleshoot. SAP ERP has the broadest amount of functionality of any ERP suite. Still, the system is inflexible, and customization is expensive – on reason being that ABAP, which is the SAP development language, is far less efficient to code in than more modern programming languages. To minimize customization – SAP follows a marketing construct that is repeatedly used throughout the company called “best practices.” This proposes that all the best ways of doing things have already been set up in SAP, so there is no reason to diverge from SAP’s approach. This means the changes are requested to be made to the business process. There is never any evidence to support best practices, and in fact, many of the ways that SAP does things are anything but best practices. Academic research provides very little support for the concept of best practices, finding them almost exclusively lacking in evidence. As used by SAP, the philosophy of best practices is empty hyperbole used to entice customers and to make excuses for its lagging functionality and frequent inability to meet business requirements.

On average, between 87% and 96% of customers will moderately or heavily customize SAP ERP. This extensive customization combined with the many changes that are required on the part of the business makes SAP ERP implementations long-term endeavours – and increases their failure rate. Many attempts have been made to speed up the implementation of SAP ERP. SAP developed the ASAP methodology in the late 1990s, and various consulting companies have proposed their SAP methodology improves implementation speed – but SAP ERP implementations have stayed about the same both in length and in failure rate.

MUFI Scores

All scores out of a possible 10.

Vendor and Application Risk

Software Decisions Risk Defined: (See This Link for Our Categorization of Risk)

SAP ECC is, on average, the longest to implement all the ERP systems. It is the most complex ERP system with the most functionality. However, after decades, it is clear that companies that implement SAP ECC do not improve their condition by implementing the software. However, an original proposal for using SAP ECC has been that it would substantially improve operations.

Another flawed proposal is that a company should implement SAP ECC first and then it will be in a better position to implement other applications. There is also no evidence for this, and our research indicates that companies that use SAP ECC are in a worse situation to implement different applications. The final argument that SAP ECC has financial functionality that is highly differentiated is also false, with best of breed applications like Intacct exceeding SAP ECC’s financial module. A full explanation and evidence for these statements are far beyond the scope of this rating of ECC. However, it is explained and supported in detail in the book The Real Story Behind ERP: Separating Fiction from Reality.

Likelihood of Implementation Success

This accounts for both the application and the vendor-specific risk. In our formula, the total implementation risk is application + vendor + buyer risk. The buyer specific risk could increase or decrease this overall likelihood and adjust the values that you see below.

Risk Definition

See this link for more on our categorizations of risk. We also offer a Buyer Specific Risk Estimation as a service for those that want a comprehensive analysis.

Risk Management Approach

SAP ECC are some of the riskiest IT implementations that exist. They are so problematic because SAP’s functionality is difficult to configure and to use, and because the applications tend to have so much breadth. Another major problem is that the major consulting companies primarily implement SAP ECC – and they treat their tier 1 ERP projects as cash cows – actively extending the projects to maximize their billable hours. The tier 1 software vendors have done very little to make their software more implementable and more usable.

The main objective should be to keep SAP ECC from “taking over the company,” and this is a challenge. SAP, like Oracle and several other ERP vendors, uses ECC as a wedge to sell in what are often inappropriate applications to ERP customers using the faulty logic of integration costs savings (how flawed this logic is, is explained in our Solution Architecture Packages). This is a strategy based on leveraging previous investments to influence future investments and is about harnessing the buyer into bad decisions. The best way to get value from SAP ECC is by controlling its scope and by controlling SAP to prevent them from taking over the company’s IT spend.

Finished With Your Analysis?

To go back to the Software Selection Package page for the Big ERP software category. Or go to this link to see other analytical products for SAP ERP ECC/R/3.

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References