Counting Your ROI Chickens

This brief article is the third and final installment. In this discussion we present an overview of how ROI and TCO can be managed within an SAP environment.

As mentioned in the last installment; "ROI is in the eye of the beholder." But this is only partially true with SAP.

Based upon years' of implementation experience (and some hard-learned lessons), SAP has provided its customers with the tools to measure and manage their TCO - thereby accelerating their goal of achieving ROI.

In this article, we will look at what elements constitute SAP's response to achieving ROI by managing TCO.

Knowledge learned in this article can be put to use when:

• Executives require an understanding of achieving ROI within their SAP System
• Executives require an understanding of a preferred method to establish ROI within SAP

Remember: you must manage your TCO to achieve ROI.

ROI (within the enterprise resource planning universe) is generally approached from less a pure financial angle - ROI is typically computed from a business case perspective (often pre- initiative start).

With this in mind, an ROI business case will define the various business benefits and costs. These measurements are employed to justify the capital expenditures - along with on-going project resource commitments (time people and money).

Remember: ROI is also different from cost amortisation. ROI is concerned with improving a company's overall bottom line; not spreading costs over time and throughout a company's various divisions.

As mentioned earlier, ROI is approached from a business case perspective. Therefore, benefits and costs may be given a chance to offset one another. Below is an example how this can occur:

SAP's approach is somewhat unique: it employs its own CRM application to achieve managed visibility from within (and from without) SAP System. This means SAP clients can leverage their mySAP CRM to track, manage and either accelerate or plan for achieving ROI.

SAP's mySAP CRM application permits clients to identifying and quantify the various elements within the SAP life-cycle pattern - thereby allowing optimisation protocols to be brought to bear. This is especially helpful when the 'version-independent adapters' are taken into account (reduces TCO due to upgrades).

These life-cycle elements would include the initial purchase, implementation, go-live and the first few post go-live years.

This includes (from a 10,000 foot perspective):

• Capturing relevant business processes (recognized and prioritised for quickest ROI)
• Capturing ongoing projects and budgets (including SAP or mySAP CRM costs)
• Object definition
• Total current costs (including licensing)
• Revenue vs. sales
• Total costs of the implementation phases
• Accrued costs during the planning and conceptualisation phases

SAP further recommends employing the SAP Solution Manager with its Business Maps to illuminate various areas of optimisation (especially when revisiting e-business processes).

The Solution Manager promotes approximately 100 business scenarios (including almost 300 business processes) with accompanying documentation. This permits each SAP customer to approach ROI via the mySAP CRM application with confidence; they are using time-tested processes. For those of us who remember ASAP (Accelerated SAP); these processes are in-line with the ASAP Best Practice methodologies.

Finally, due to its unique collaborative abilities, mySAP CRM permits SAP clients to interact outside the walls of the firm. Taking into account varying DB configurations, data types (including metalayers and object definition variations) the mySAP CRM is a very forgiving application. Clients with dislike implementations or using 'best of breed' applications can benefit from the data points collected via the CRM application - reporting on these key performance indicators can help reduce vendor costs and thereby the SAP client's overhead in servicing its customers.

Achieving ROI has become something of a 'holy grail' - something keeping many beneficial initiatives on the shelf.

Remember: ROI is just one side of the TCO equation – it should not be the overriding factor.

Proper planning, realizing the benefits-side of the equation and having a long-range focus can make the difference from hoping to realizing ROI - and the realization you may have already achieved ROI!

So, if nothing else; this short piece should bring to the forefront the concept of "Eventual dollars returned are but one view of ROI."

Written by Geoffry Houze, Data Management Group Practice Manager