Lessons from the National Grid v. Wipro SAP Lawsuit

Lessons from the National Grid v. Wipro SAP Lawsuit

Just after writing about the well-publicized SAP failure at Lidl, news broke about a settlement in the National Grid v. Wipro SAP lawsuit. Long story short, Wipro agreed to pay $75 million to National Grid to settle the case. (Read the original article here).

Overview of the National Grid v. Wipro SAP Lawsuit

Since I am a frequent SAP expert witness on the most well-publicized SAP lawsuits, I took a particular interest in this case. Here are some of the key facts regarding the situation:

  • National Grid spent close to $1B in total costs on their SAP implementation
  • National Grid paid Wipro over $100M in services to support the implementation
  • They also had Ernst and Young helping with the implementation
  • By the end of the project, the company was spending roughly $30M per month supporting the upgrade to SAP
  • After go-live, National Grid’s period-end close process ballooned from 4 days to 43 days
  • National Grid’s post go-live accounts payable processes resulted in 15,000 unpaid supplier invoices

What Can We Learn from the National Grid v. Wipro SAP Lawsuit?

Most SAP implementations are difficult, but this one clearly got out of control in a big way. There are some lessons here that we can all apply to our projects, whether that be an SAP S4/HANA implementation or any other ERP implementation or digital transformation:

  • Choose the right ERP software. You may be considering SAP vs. Oracle vs. Microsoft Dynamics for your digital transformation. Or perhaps you are considering Infor, NetSuite, Workday, or some other solution. Whatever the case may be, you will want to make sure you choose the right technology for your organization.
  • Choose the right SAP system integrator. You may be considering SAP system integrators, such as Deloitte vs. Capgemini vs. Accenture or other firms. There are a lot of them out there, ranging from the conglomerates to the niche players. Either way, be sure to find the one that is the best cultural fit for your organization and its needs.
  • Put the right project governance and controls in place. There is no reason this project should have spiraled out of control the way it did. Proper project governance, controls, and risk mitigation would have likely prevented this disaster. Invest in third-party, independent SAP or ERP project quality assurance as an insurance policy.
  • Remember that you are in charge of your project – not your system integrator. You may not be the SAP or ERP experts in the same way your system integrator is, and that’s okay. But that doesn’t mean that you aren’t responsible and accountable for your digital transformation. Rely on independent experts such as our team at Third Stage Consulting to keep your system integrator and overall project on track.

Conclusion

The final lesson above is the biggest one: this is your project. It’s not your system integrator’s project. It’s not your software vendor’s project. It’s yours. You are the one who needs to make sure things stay on track and deliver the true transformation you are looking for.

If things aren’t going well, then fix it before it’s too late. Better yet, take the proper steps to ensure these sorts of problems don’t occur in the first place. When compared to the time and cost of cleaning up an ERP failure, it’s a lot cheaper and faster to implement technology right the first time.

Lessons from an SAP Failure at Lidl

Lessons from an SAP Failure at Lidl

By now, you may have heard about Lidl, the German retailer than spent 500M Euros ($580M USD) on their SAP failure. As painful – and unbelievable – as it is to read about, there are some good lessons from SAP failure that we can take away from this story.

I generally prefer to focus on the positive and learn lessons from SAP S4/HANA implementations that haven’t failed. However, looking at extreme cases of SAP failure often underscore why critical success factors and implementation best practices are so important. It also shows how important it is to have a strong implementation team to help you through the process.

Here are five lessons that we can learn from this SAP failure. These lessons are relevant whether you are implementing SAP S4/HANA, Oracle Cloud ERP, Microsoft Dynamics, or any other ERP software:

1. Organizations are often unwilling to change the way they need to, which can lead to SAP failure

The story cites an interesting example of how the company refused to adapt to SAP’s standard inventory management based on retail price, versus Lidl’s tradition of basing on purchase price. I don’t know how big of a deal this was to Lidle, or whether they could have realistically been expected to change, but it shows how even the smallest details can disrupt a project.

It also underscores the damage and risk that can be caused misalignment between business operations and software functionality. If not managed correctly, digital transformations can get sideways very quickly as a result. Organizational change management is one of the most important ways to reconcile these inevitable differences that every ERP project faces.

2. Software customization can lead to SAP failure

Along those same lines, customization is a risky way to reconcile your off-the-shelf ERP software with the realities of your business. Our research shows that 90% of organizations customize their ERP software to some degree. But, should they? That’s a different question.

Customization creates headaches by breaking other parts of the software, introducing risk to implementation, and making ongoing maintenance very difficult. It is important to have stingy project governance processes in place to validate and rationalize any requests to change the way the software was initially built.

And here’s an important takeaway: too much customization is often a symptom of not having a good enough organizational change management strategy and plan in place. Ensuring you have SAP implementation readiness is an important way to mitigate this risk (learn more in the below video).

3. Choosing the best SAP system integrator is important, but not the only answer

Choosing the best SAP system integrator is important, whether it be Deloitte, Capgemini, Accenture or another firm. However, this is just one component of a successful ERP project. It is important to not have blind faith in your integrator, because they won’t solve all of your problems, either.

4. The trickle-down effect of executive misalignment can lead to SAP failure

Lidl experienced quite a bit of executive turnover throughout their transformation. It is difficult to maintain alignment and momentum against this backdrop. As executive priorities and personalities change, it is highly likely that your ERP project will become misaligned with those new people. This is where projects often fail.

No one wins when a project is misaligned with executive priorities. Resources aren’t committed to the project the way they need to be. The project team lacks clear direction. Project and software decisions don’t tie into bigger-picture business decisions that need to be made. I could go on, but the point is that executive misalignment can derail projects like these.

5. SAP software works

According to SAP, 80% of the retailers in the Forbes Global 2000 are SAP customers. This suggests that grocers like Lidl are successfully using the software. Even setting this statistic aside, there are thousands of organizations that are successfully operating on SAP S4/HANA and other legacy versions of the software. Simply put, the software works.

The more relevant question is: does or can SAP software work for your business? Are you willing to do the hard work required to reconcile the inevitable differences between your business and the vanilla software? This is where so many organizations fail. It sounds like Lidl was one of them.

Conclusion

In my years analyzing failures as an SAP expert witness, I have seen more than my share of disasters like this one. The good news is that failure can be avoided. It all comes down to how you plan and execute proven best practices.

Here are few of them: our lessons from 1,000+ ERP implementations.

Why Your SAP System Integrator Isn’t the Silver Bullet You’re Looking For

Why Your SAP System Integrator Isn’t the Silver Bullet You’re Looking For

Choosing the right SAP system integrator is as important – if not more important – than the choice to deploy S4/HANA in the first place. Unfortunately, the right choice here doesn’t solve all of your problems, either.

We work with plenty of clients who spend considerable time evaluating Deloitte vs. Capgemini vs. Accenture and other SAP system integrators. This is indeed an important activity, but even these best SAP system integrators have competency gaps to be filled.

This is an important aspect of ensuring a successful SAP S4/HANA implementation. Your system integrator is an important piece of the puzzle, but it’s up to you to put together the puzzle and fill in the missing pieces. Recognizing this early on will help you develop a more complete, realistic, and effective implementation plan to start.

Here are some of the areas where SAP system integrators typically need help:

Program management and governance

SAP system integrators are typically strong at managing their own project teams and activities, but those are part of a broader program that needs to be managed. Internal resources, risk mitigation, and non-technology related activities all need to be integrated into a single program. It is up to you, the implementing organization, to create an overarching program governance structure and plan that pulls together various workstreams and resources.

Independent project quality assurance

SAP S4/HANA projects can get off track pretty quickly. As good as your system integrator may be, they are too entrenched in the functional and technical details of your program to recognize risks percolating along the way. And, they are only as good as their last few S4/HANA implementations. For this reason, it is important to have a third-party provide SAP project quality assurance to act as an extension of your program management office to keep your project on track. Independent experts such as Third Stage Consulting can help in this area.

Strategic organizational change management

We find that Deloitte, Capgemini, Accenture, and other SAP system integrators are fairly good at tactical organizational change management, but not at the more strategic aspects. For example, you will need to address organizational design and job descriptions as part of your digital transformation – something that falls outside the realm of SAP organizational change management. This is especially true for organizational change on global SAP implementations.

Also, it is important to recognize that system integrators are typically very good at what they do (functional and technical SAP consulting), but not so good at what they don’t do (organizational change management). This is where independent, third-party expertise can help. Companies such as Third Stage Consulting can help provide organizational change competencies required for success.

Data cleansing and migration

SAP system integrators often treat data conversion as an afterthought. As long as the software works, what difference does the data make anyway, right? Not really. Data is a key component for keeping your business running smoothly during the transition. It is also the key to taking advantage of predictive analytics, machine learning, business intelligence, and other advantages of the software.

Dedicated focus on data cleansing and migration will be key. Your legacy data probably needs some TLC, so ensure that you have someone helping you through the process. Data is typically on the project critical path, so delays in this area are more likely to delay the overall transformation program. There are independent third parties specializing in data migration that can help address this critical component better than your system integrator. Third Stage Consulting’s data team, for example, can help.

Building internal SAP S4/HANA competencies

Overdependence on SAP consultants is a problem that many face. Another common problem is deferring too much to your SAP system integrator because you don’t know enough about S4/HANA. Both challenges can be mitigated by better building your internal competencies to become self-sufficient sooner.

Taking time to build these internal competencies early on will help ensure success in the long-term. Knowledge transfer from your system integrator won’t occur through osmosis, so you will need something more deliberate. Below is an example of some of the activities we helped a recent client through as they ramped up their S4/HANA implementation.

These are some of the things required to augment your SAP system integrator’s deficiencies and make the best use of their strengths. This also helps ensure that you are being as effective and deliberate as possible with your system integrator.

What are you doing to better manage your SAP S4/HANA implementation and position for success?

Deloitte vs Capgemini vs Accenture: Which is the Best SAP System Integrator?

Deloitte vs Capgemini vs Accenture: Which is the Best SAP System Integrator?

Choosing the right implementation partners is arguably even more important than your choice of ERP software. If you are considering SAP S4/HANA for your organization, then you may be trying to determine the best SAP system integrator. You may be considering Deloitte, Capgemini, Accenture, or another SI.

A successful SAP S4/HANA implementation is largely a result of the system integrator you choose, so this is an important decision. With all that’s on the line in a complex digital transformation like this, this isn’t a decision that you will want to take lightly.

Here are a few things to consider as you explore the best SAP system integrator for your organization:

Evaluate SAP system integrators based on competencies and scale

First, you will want to evaluate your options based on the competencies of the system integrator team members. You will want to vet resources for criteria such as:

  • Global footprint consistent with your organization’s
  • Individual competencies of team members
  • Experience with S4/HANA, as opposed to older versions of SAP
  • Industry experience
  • Cultural fit with your organization

You will likely spend a good deal of money and time with your chosen system integrator, so it is important that they bring the right competencies to the table.

Consider all of your SAP system integrator options

I have seen too many organizations limit their options to Deloitte, Capgemini, Accenture, and other big system integrators. But there are plenty of other good options out there in the market. You can source SAP S4/HANA consultants from alternative system integrators, resellers, and independent third parties. And, there is no need to put all your eggs in one basket with one integrator.

Remember who is in charge of your SAP S4/HANA implementation (hint: it’s not your system integrator)

I have seen too many organizations entirely outsource their SAP implementations with a hands-off approach. Based on my experience as an SAP expert witness, this is often a recipe for failure. It is important that you and your team take ownership of the transformation. There is no one-size-fits-all answer to how to deploy SAP, so remember that you are in charge of your system integrator and other SAP consultants – not the other way around.

Understand your system integrator’s strengths – but also recognize their weaknesses

Deloitte, Capgemini, and Accenture are good examples of system integrators with very deep competencies in SAP. It is hard to find resources with as much functional and technical depth and quality.

But like every organization, these system integrators have weaknesses as well. For example, the big system integrators are typically not as good at things like:

  • SAP implementation readiness, to ensure you have a foundation in place to make the most effective use of your system integrator (learn more in our blog about how to plan for an SAP S4/HANA implementation)
  • Organizational change management, especially strategic items like organizational design and executive alignment
  • Data migration strategy and mapping
  • Establishing your internal SAP center of excellence
  • Building your internal IT organization to support SAP in the long-term
  • Knowledge transfer and documentation

Be sure to identify your system integrator’s weaknesses and augment with competent third parties. Third Stage Consulting is one such example.

Mitigate risk via independent SAP project quality assurance

SAP transformations rarely go as planned. While your system integrator is knee deep in SAP configuration, testing, and training, someone needs to focus on keeping an eye on the overall project. This includes identifying and mitigating risks as they arise. This helps mitigate risk, hold your system integrator accountable, and augment the project voids left by your system integrator. Companies such as Third Stage Consulting are good options to provide this independent SAP project quality assurance

Conclusion

Choosing your SAP system integrator is one of the biggest decisions you will make on your transformation. Whether you contract with Deloitte, Capgemini, Accenture, or someone entirely different, you will want to assemble the external SAP consulting team that makes the most sense for your organization.

Learn more about our 20 Lessons from Over 1,000 ERP Implementations.

Lessons from a Current SAP S4/HANA Implementation

Lessons from a Current SAP S4/HANA Implementation

There is no better way to learn from an implementation than from others who are currently learning from their own successes and mistakes. With this in mind, I recently spoke with a client to discuss their lessons from a current SAP S4/HANA implementation.

I recently wrote a blog about how to ensure a successful SAP S4/HANA implementation. This blog covers our perspective from working with dozens of clients that have implemented SAP in recent years. But learning from a specific client case study provides some unique lessons to augment more general lessons learned.

This particular organization is a $2B beverage manufacturing and distribution company on the west coast. They had been using JD Edwards and, in addition to S4/HANA, are deploying Ariba, SuccessFactors, and JDA.

Here are the key lessons from this client’s recent SAP S4/HANA implementation:

Understand the complexity of SAP S4/HANA

The person I spoke with was a very senior IT guy – and a very technically savvy one at that. Even someone as technically sophisticated as he commented on how complex S4/HANA is. As a consultant that learned an older version of SAP straight out of college early in his career, I can attest to that as well. This is especially true if you are also deploying SuccessFactors, Ariba, or other integrated systems.

It is important to recognize that SAP S4/HANA is more complex than most ERP systems – which can be a good thing – but that comes at a price. It is important to budget the time and effort required to fully define and test your integrated processes. SAP’s integration of business processes is a strength of the software, but it can also complicate and slow down your overall digital transformation.

Ensure knowledge transfer from your SAP system integrator

Many assume that they will learn from their SAP system integrator through osmosis. However, as this client is finding in the midst of his implementation, this just isn’t the case. His advice? Find ways other than “osmosis” to build internal SAP S4/HANA competencies.

Whether you are working with Deloitte, Capgemini, Accenture, or any other SAP system integrator, it is important that you take the time to learn the software. This will allow you and your project team to be more self-sufficient and to work more collaboratively in defining how the technology can improve your business.

Take ownership of and accountability for your SAP S4/HANA implementation

In addition to transferring knowledge from your SAP system integrator, it is also important to take control of your project. Regardless of your integrator’s competence, your internal team should own and direct the project. This is what the client did here. They used their SAP system integrator as a staff augmentation rather than to lead project. The company took ownership of the project plan and budget – not the system integrator.

This may be easier said than done. It’s difficult enough to find enough internal resources to support the project without building internal competencies. It’s also difficult to do when you don’t already have internal SAP competencies. But, the more successful you are in this arena, the more likely you will be to build for long-term success.

Understand the factors that will determine your SAP S4/HANA implementation time and cost

Most SAP S4/HANA implementations take more time and money than expected. This makes the estimation, implementation planning, and implementation readiness processes very important. Companies that have a good handle on these variables are much more likely to be successful. The client in this case was no exception.

Several factors are most likely to determine how much time and money your implementation will take. There is a direct correlation between how your organization rates in these areas and overall implementation time and cost. Be sure to get an independent, outside view from SAP consultants who can help develop a realistic plan and budget for your SAP S/4HANA transformation.

Build your SAP S4/HANA implementation project for long-term sustainability

There are two components to consider here. First, you want to ensure the overall project quality assurance of your SAP S4/HANA implementation. This will help ensure that your project stays on track, is aligned with your organization, and delivers the benefits you expect.

The second component of sustainability should focus on establishing a longer-term SAP center of excellence. This will ensure that your business and IT groups own the SAP solution and are proactively improving your team’s adoption of the technology over time. As the client in this case study found, long-term sustainability is one of the areas for immediate and long-term benefits. In his case, building internal SAP competencies is very different than the ones his team had built in JD Edwards.

Conclusions

There is no easy answer, best practices, or silver bullets to successful SAP S4/HANA implementations. But, we can always learn from the battle scars of others to pivot accordingly.

Learn more by reading our 20 Lessons from Over 1,000 ERP Implementations.

How to Find the Best Independent ERP Consultants

How to Find the Best Independent ERP Consultants

I’ve been an independent ERP consultant for over 20 years now. I hate to admit it, but my experience so far has left me a bit jaded.

I like to think I’ve always had the best of intentions with clients, but that vision was watered down at my previous venture. Unqualified managing partners and consultants – along with what I would consider poor business decisions – negatively impacted clients, in my opinion. This is why I spun off to form Third Stage Consulting earlier this year.

The good news is that there are a number of questions you can ask to avoid the same traps I’ve seen clients fall into. These will help determine whether or not you are adequately vetting a partner that can influence your level of success in the future.

  1. Are You Really Independent? With the diversity of technologies available as part of your digital transformation, it is important that your consultants are truly independent. Find out if they are partners of software vendors or resellers, or if they have affiliate companies that create conflicts of interest. You’ll want to know that your comparison of SAP S4/HANA vs. Oracle Cloud ERP vs. Microsoft Dynamics 365 vs. other ERP systems is unbiased and not influenced by under-the-table economic incentives.
  2. How Much Hands-On Implementation Experience Do Your Consultants Really Have? I am of the opinion that academic consultants aren’t of much value to most organizations. The best that I’ve worked with know how to marry theory with hands-on implementation experience. Be sure your consultants have implemented multiple types of technology – including the ones you are considering.
  3. How Much Attention Will I Get from Your Managing Partners – and Do They Understand Consulting? You want to know that your organization and project will get the attention of the top brass within your consulting firm. Be sure that you feel comfortable with their backgrounds and ability to help your project – especially when times get tough throughout your journey.
  4. How Much Time Will You Spend On-Site Getting to Know My Business and My Team? Consultants are not effective when they spend more time working from their ivory towers. Instead, they need to be on-site with your team, side by side, learning your culture, understanding the nuances of your operations, and giving you the high-touch experience that you deserve and are paying for.
  5. How Many Times Has Your Firm Been Fired by Clients in the Last 1-2 Years? There’s no better indicator of a consulting team’s abilities than by looking at recent client references. Ask the firm how many times they’ve been fired by clients in that last couple of years. Be very careful of the firm if they have a history of unhappy clients.
  6. How Many of Your Clients Over the Last 1-2 Years Will Provide Positive References? Some consulting firms bask in their glory days of when they used to do good work and use those references to help them win current work. Instead, look for references on very recent projects.
  7. How Much of Your Revenue is Derived from ERP Software Selection Projects vs ERP Implementation? Consulting firms without balanced experience and revenue from multiple phases of an implementation cycle are not credible. You want to know that your consultants don’t just do software selection and pretend to do implementations (or vice versa), so dig into the details of the type of work they actually do. Whether it is experience with SAP S4/HANA implementations, Microsoft Dynamics 365 implementations, or any other sort of digital transformation, your ERP consultant should have relevant hands-on experience.
  8. How is Your Company Perceived Among Industry Vendors, Resellers, and Competitors? Consultants that can’t play well in the sandbox with others are not very effective. Ask around to gauge perceptions among industry peers. If you hear negative feedback, just know that where there’s smoke, there’s usually fire.
  9. What Do Current and Former Employees Have to Say About Your Firm? A disgruntled workforce is one of the biggest detriments a consulting company can have. Read reviews on Glassdoor and Indeed, look at the company’s LinkedIn page to see if the company is growing or shrinking, and maybe even reach out to former employees on LinkedIn to get the inside scoop.
  10. How Much Turnover Have You Experienced Among Consultants and Executives over the Last 1-2 Years? A company with high turnover (more than 10% per year) has underlying issues. Look at the company’s LinkedIn page to find out how many have resigned in recent years. Also, beware of consulting firms with high turnover at the executive ranks.

Your ERP consultant should be on that you partner with for years to come. The best ones will make you successful, while subpar ones can undermine your success.

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