Commoditized or Competitive Advantage? How to make your company’s “secret sauce” with your SAP investments
Recently, I observed a conversation on LinkedIn regarding SAP customization vs. standardization, which led me to remember an event from my childhood that best described that discussion.
When I was a kid, I lived on a long straight street in a town in Delaware where all the houses were small and quaint, and all had the same 3-bedroom ranch blueprint on a quarter acre plot. One of my closest friends lived three houses down from us with his six siblings and his parents. His mother, Anna, was from Italy while his father was from Delaware, and they ran a very traditional Italian/American household. They were an incredibly nice and warm family and always made me feel at home there, even with their seven children around.
One of the best things about being friends with her son was that I was fortunate enough to experience his mother’s red sauce. Simply put, it was amazing. It was vibrant red and had the perfect balance of smooth texture, level of spice, and consistency. My mother, once she had sampled it, even admitted how fantastic it was and conceded defeat in the sauce wars.
My mother would often ask for the recipe only to be informed that it was a family secret that was held close to Anna’s heart and that it had been passed to her over many Italian generations. Her kids didn’t know the recipe - she would only pass it to her family when she could no longer make the sauce herself.
Therefore, it was a shock when one day, in a perceived moment of weakness, she shared the ingredients with my mother and others. It contained tomatoes, garlic, onion, cloves, basil, salt, pepper, sugar, olive oil, and grated cheese—all readily available ingredients. My mother tells the story often of how after the ingredients were shared, Anna winked at them as if she knew something they did not. My mother attempted to make the sauce many times, always to have it come out tasting good, but never quite like Anna’s sauce. She finally came to realize why Anna winked: The way she put the ingredients together, the amount of cook time, the volume ratio of the ingredients, the specific tomatoes and spices that made up the “secret sauce.”
What Does Red Sauce Have to do with SAP customization?
The correlation here to building your business case for your SAP purchase, selecting the right SAP customizations and applications, and future business process decisions becomes apparent when we think about a company’s ways of working. It’s critical to understand what capabilities and processes in your organization are truly commoditized versus which of them provides a real competitive advantage. Do you want to be known for closing the books every month an hour faster than your competition, or would you rather know your customers better than those same competitors?
I’ve worked with multiple major brands in my career. They all, like most organizations, have been somewhat guilty of over-emphasizing the uniqueness of their business processes at the risk of losing sight of what matters most; the uniqueness of their products and services and the relationship with their customers.
This is where your specific “recipe” definition becomes a critical input to generating long-term value out of an SAP investment. At the same time, you are ensuring you meet not only today’s support requirements but create enough flexibility to support your ERP ecosystem into the future. The out-of-the-box capabilities within the SAP suite of applications have significantly evolved over the years to the point that you will gain significant benefits by merely using the latest toolsets. In one of my past high-volume environments, touching every sales order 17 times on average down to four by implementing SAP S/4HANA and SAP Customer Activity Repository (CAR) generates an incredible amount of cost savings and focus on solving true customer issues.
An application of the ingredients to your company’s specific “recipe” for SAP customization consists of the following:
- Create the same language (like the ingredients) by aligning business functions and technology on enterprise capability definitions through level 3 (Deliver to Omnichannel to Order Management as an example)
- Assign capabilities to business owners and establish their responsibility as the owner today and into the future of those specific capability decisions.
- Have the tough conversations on what capabilities can and should be commoditized vs. real competitive advantage. Govern and press hard to commoditize capabilities that are not directly associated with the products/services or customers/consumers. This is the first exercise that can have a significant impact on future costs, ease of adapting to changing business needs, focusing your resources on what matters most to your business, and on-going supportability.
- Map the defined and aligned capabilities to the SAP ecosystem’s ‘out-of-the-box’ capabilities.
- Partner with SAP to truly understand the current state and any existing product innovation roadmaps for all required capabilities. This becomes your baseline ‘out-of-the-box’ map where you can fully leverage items such as Rizing’s Launchpad product in significantly accelerating your program’s time to value.
- For any items that are commoditized capabilities and not mapped to existing or innovation roadmaps, consider as opportunities for co-innovation with SAP. This is a win-win model where it is your job to reach out to your industry (or utilize councils/forums/ASUG) to ensure that these capabilities are something your from which your entire industry can benefit. Keep in mind that we are talking about the “ingredients” here and not the “recipe.” You will get first-mover advantage on building your “recipe,” and you won’t have to spend a significant amount of money on custom developed solutions that increase cost and impact future supportability.
- For any items that are defined as a real competitive advantage, partner with SAP to identify where potentially disruptive technology such as machine learning, artificial intelligence, Internet of Things (IoT), Blockchain, or Intelligent Robotic Process Automation (iRPA) can have a positive impact beyond the out-of-the-box ecosystem. SAP has done a fantastic job in recent years, providing areas where custom code (fully supportable) is meant to live, such as SAP’s Business Technology Platform, SAP Analytics Cloud (SAC), SAP Cloud Platform (SCP), and SAP Fiori (User Experience).
- Continue to update and govern your company’s capability practices using the great knowledge your business capability owners bring to the table each day. Allow your SAP environment to do the heavy lifting and focus your attention on those capabilities and processes that provide the most incremental value to your products and services.
Read More: SAP Analytics Cloud Use Case
So the next time you and your company are making an investment decision in the enterprise technology space, consider that the way or “recipe” your company uses out-of-the-box processes. Your SAP software customization (or standardization), combined with how you customize your products/services and the consumer experience at the edge is truly your company’s own “secret sauce.”