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Educated & Empowered People

The Key to Driving Business Value from SAP

By
Jason Dyer
Maximizing SAP Software

For organizations that run SAP, the system, and teams to support it represent significant investment; as much (more in some cases) as adding manufacturing capacity or warehouse space. Make no mistake, SAP is an asset much like a new machine or warehouse automation equipment, and with that level of investment, it is imperative that companies leverage the tool to drive business value.  While SAP boasts a robust suite of functionality designed to optimize business processes, underutilized potential can lead to a cascade of negative consequences. In this article, we’ll explore the hidden costs of underutilizing SAP and how an effective education program can improve business maturity and drive tangible value.

The High Price of Low Utilization

Traditional SAP implementations often prioritize transactional execution, leaving business teams without the knowledge required to leverage SAP's full capabilities to run the business day-to-day.  Whether not employing certain modules, or not understanding the wealth of reporting and analytics available to drive process improvement and optimization, companies too often find that while the implementation may have gone well, the aftermath isn’t so great.  The system works, but the expected business outcomes never seem to materialize.  This gap manifests in several ways:

  • Custom Development Overload: When business teams lack confidence in SAP's ability to meet their needs, they bombard IT with custom development requests. This constant strain on IT resources diverts focus from core tasks and introduces maintenance complexities.  IT will often push back and advocate for standard, but sometimes it just becomes easier to develop something new.  This often perpetuates with more requests building on the first, and in a world with more and more rapid upgrade cycles, this is becoming an even bigger issue.
  • Shadow IT: Frustrated by perceived limitations of SAP, business users may resort to "shadow IT" solutions – spreadsheets and home-built databases, or 3rd party software applications. These solutions create data silos, hinder visibility, introduce potential security risks, and often result in the need to integrate these tools with SAP, which adds even more burden on IT.  There are seemingly endless solutions vying to fill perceived gaps in SAP’s capabilities, often targeted at business leaders who may not even realize that SAP has the functionality they need if they would just ask.  Too often I’ve heard “our tool has native SAP integration; you won’t even need your IT team to implement it!”  It never seems to work out that way.
  • License Underutilization: Paying for unused licenses is a drain on your bottom line. When users abandon SAP in favor of workarounds, the organization loses the return on investment for those licenses.
  • Decreased Productivity: Inefficient workflows and a reliance on workarounds impede productivity and hinder your organization's ability to compete effectively.

The Power of Enabling Value Creation

By prioritizing education and fostering a culture of empowerment and continuous learning, organizations can transform their SAP investment from a complex transactional recording system to a powerful business tool. This empowered workforce understands how to leverage standard functionality, reducing reliance on costly customizations and simplifying maintenance. With increased confidence in SAP's capabilities, the need for workarounds and "shadow IT" solutions diminishes, fostering data integrity and streamlined processes. Additionally, with everyone now working consistently in SAP, organizations can optimize license utilization, ensuring they receive the maximum value from their investment. Ultimately, effective education translates into a more efficient and agile organization, with improved business performance through better decision-making, based on accurate data.

The impact is demonstrably positive. Studies show that organizations implementing robust education programs typically experience significant, quantifiable results, including:

  • 15-20% inventory reduction within 12-18 months: This translates to significant cost savings. By understanding how to identify opportunities, then properly utilize master data settings to drive business rules, organizations can optimize inventory levels, reducing carrying costs associated with excess stock. Additionally, empowered users can identify and eliminate obsolete or slow-moving inventory, further streamlining operations. (Source: Reveal Client Case Studies)
  • 1-2% decrease in procurement spending: Improved data visibility, empowered by effective education, allows for better analysis of supplier performance and pricing trends. This empowers procurement teams to negotiate more favorable contracts with suppliers, leading to a 1-2% decrease in spending. (Source: Studies on Improved Data Visibility and Procurement Performance.
  • Enhanced Throughput and Inventory Turns: Streamlined processes achieved through effective education led to optimal production cycles. Improved understanding and utilization of production planning capabilities in SAP allows for better resource allocation and scheduling, optimizing production flow, and building more at the pace of customer demand. This translates to improved inventory turns, meaning organizations can utilize their existing stock more effectively, and improve on-time performance. (Source: Research by APICS and similar organizations on Process Improvement and Production Metrics)

A team equipped with the knowledge to utilize SAP effectively fosters a sense of ownership and increases process consistency. People become more confident and take greater responsibility for the system and the health of the overall business process it serves. This not only improves morale, but leads to fewer errors, improved data integrity, and a higher level of business maturity.

A Reveal transformation goes way beyond transactional execution. We teach your team the ins and outs of using SAP to run the business. What master data settings are needed to achieve the behavior we’re looking for from a given material? How do I decide what lot size to use?  What is the right level and strategy for safety stock?  What in the world is “dead stock” and why should I care? When should I consider using consumption-based planning in MRP?  Wait, SAP really can perform finite scheduling? Beyond SAP, we dig into core supply chain principles, and teach the team how to work together in an integrated, collaborative fashion to drive improved business results, all in a learn-by-doing atmosphere where concepts are introduced, and then immediately applied in the live system so the impacts are felt right away. People emerge from a transformation loaded with deep knowledge of SAP, empowered to think critically about daily supply chain challenges, and prepared to collaborate with each other in ways many never knew were possible. This comprehensive approach is why our clients are able routinely recognize such incredible business results, with no new software investment; in fact, we often find they have fewer technology tools in the mix after realizing how much more SAP can do for them.  Educated and empowered people; significant, tangible business results. This is achievable.

Investing in Your Most Valuable Asset: Your People

By prioritizing education and fostering a culture of empowerment and continuous learning, organizations can unlock the true potential of their SAP investment. Empowered people lead to streamlined processes, improved decision-making, and a more competitive organization. The key to maximizing your return on investment in SAP lies not just in the technology itself, but in equipping your people with the knowledge and skills to leverage it effectively.

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SAPinsider Supply Chain Management Summit 2024

May 1, 2024
May 2, 2024
Marriott Chicago O’Hare, IL
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