MUFI Rating & Risk – SAP ECC
MUFI: Maintainability, Usability, Functionality, Implement ability
Vendor: SAP (Select For Vendor Profile)
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 and 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, but 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 difficult application to troubleshoot. SAP ERP has the broadest amount of functionality of any ERP suite, but 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,” which 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. In fact, 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 make SAP ERP implementations long-term endeavors – 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 1990’s, 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.
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 of 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, a primary 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 other 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 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 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 implementations 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 faulty 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 leveraging 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.
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Software Selection Book
Enterprise Software Selection: How to Pinpoint the Perfect Software Solution Using Multiple Sources of Information
What the Book Covers
Essential reading for success in your next software selection and implementation.
Software selection is the most important task in a software implementation project, as it is your best (if not only) opportunity to make sure that the right software—the software that matches the business requirements—is being implemented. Choosing the software that is the best fit clears the way for a successful implementation, yet software selection is often fraught with issues and many companies do not end up with the best software for their needs. However, the process can be greatly simplified by addressing the information sources that influence software selection. This book can be used for any enterprise software selection, including ERP software selection.
This book is a how-to guide for improving the software selection process and is formulated around the idea that—much like purchasing decisions for consumer products—the end user and those with the domain expertise must be included. In addition to providing hints for refining the software selection process, this book delves into the often-overlooked topic of how consulting and IT analyst firms influence the purchasing decision, and gives the reader an insider’s understanding of the enterprise software market.
By reading this book you will:
- Learn how to apply a scientific approach to the software selection process.
- Interpret vendor-supplied information to your best advantage. This is generally left out of books on software selection. However, consulting companies and IT analysts like Gartner have very specific biases. Gartner is paid directly by software vendors — a fact they make every attempt not to disclose while consulting companies only recommend software for vendors that give them the consulting business. Consulting companies all have an enormous financial bias that prevents them from offering honest advice — and this is part of their business model.
- Understand what motivates a software vendor.
- Learn how the institutional structure and biases of consulting firms affect the advice they give you, and understand how to properly interpret information from consulting companies.
- Make vendor demos work to your benefit.
- Know the right questions to ask on topics such as integration with existing software, cloud versus on-premise vendors, and client references.
- Differentiate what is important to know about software for improved “implement-ability” versus what the vendor thinks is important for improved “sell-ability.”
- Better manage your software selection projects to ensure smoother implementations.
- Chapter 1: Introduction to Software Selection
- Chapter 2: Understanding the Enterprise Software Market
- Chapter 3: Software Sell-ability versus Implement-ability
- Chapter 4: How to Use Consulting Advice on Software Selection
- Chapter 5: How to Use the Reports of Analyst Firms Like Gartner
- Chapter 6: How to Use Information Provided by Vendors
- Chapter 7: How to Manage the Software Selection Process