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4 Steps to a World-Class COE for Midsized Businesses

by Yosh Eisbart

April 1, 2008

You don’t need the resources of a Fortune 500 company to have an effective SAP center of excellence (COE). Following this advice will allow you to build a COE that matches your requirements and budget.
 

Going live with an SAP implementation is a tremendous milestone and an investment that every company wants to support properly. One way to provide that support is to create a center of excellence (COE). While your company does not have to be in the Fortune 500 to have a COE, mid-market organizations face different challenges than larger ones. Their limited resources, funds, and ability to attract SAP talent require a different approach.

A midsized company can build an effective COE by following these four steps:

  • Choose the proper model for your organization

  • Build the COE team

  • Pick the right time to implement the COE

  • Determine how the COE will manage change

To illustrate this process of creating a COE, I’ve crafted an example company: Orly Manufacturing (OM). OM is a midsized organization that has less than $1.5 billion in revenue per year and specializes in the design and construction of yoga mats. OM recently completed an SAP full life cycle implementation. Soon after go-live, OM realized that they had yet to define a long-term SAP production support strategy. Recognizing the urgent need, OM is in the process of investigating both what model best suits their needs and how best to create it. I’ll break down each of the four steps for building an effective COE. By going through this process, a midsized company, such as OM, can get a great deal of support from its COE. First, let’s look at the three models available for a COE.

COE Models

The right model for a midsized business highlights the challenges that your organization must address. A precursor to the more tactical four-step COE building process articulates these needs. Although each organization has its own concerns, the core purpose of a COE falls into one or more of the following three functions:

Break-Fix

In the break-fix model, the COE exists solely for production support. As end users identify flaws in the system, the production support team addresses and repairs them. Depending upon the volume, sophistication, control measures, and so on, issues are identified, tracked, prioritized, and resolved. The COE does not address enhancements or modifications to the system beyond error resolution. Another team deals with them or they are simply not done.

For some mid-market organizations, the break-fix is the only appropriate model. The determining factors for employing the break-fix model are internal resource bandwidth, assuming an internal IT staff performs these services, and budget.

Production Support Plus

In the production support plus model, the COE’s scope of services is expanded beyond error resolution. How much it expands depends on each business’s needs. For example, one organization might choose to use its COE for smaller enhancements only. Another company might task its COE with major SAP initiatives (e.g., SAP ERP Central Component [SAP ECC] upgrades, module implementation, and system integration). Mid-market organizations might find this expanded role challenging if they chose to perform these services internally, based on the factors of budget and internal resources described above.

Help Desk

Depending upon the size and needs of your COE, you might require some form of help desk. For the mid-market segment — i.e., fewer end users or phone calls — a small help desk (perhaps shared services) might be sufficient or completely out of the question based on budget and resources.

Let’s explore how OM chose to address this: OM made both a significant investment and strategic business decision when purchasing SAP. By implementing SAP, OM chose to drive all business through SAP as opposed to a subset of their processes. OM believes that its production support needs should not be limited to “keeping the lights on.” OM expects to build on its SAP investment through both small and major enhancements in the future. Therefore, the break-fix model simply is not robust enough to handle additional business demands. OM currently has a help desk service center responsible for addressing all end-user questions; a unique SAP help desk isn’t required.

Using OM’s long-term strategy, the production support plus function is the best choice. The section below reviews the factors involved in this decision.

Step 1. Choose the Proper Model

After defining the strategic purpose of your COE, the first tactical step is choosing a model that suits your needs. The table to the right shows the key factors that you must consider when selecting the appropriate model. The third column provides examples of how OM addressed each factor.

In this table, there are several key determining factors that require additional detail. Let’s dig deeper.

In House or Outsource

Contracting off-site IT services is an established practice that the mid-market employs. By using external IT organizations for SAP services (whether implementation or production support), you entrust your SAP application services to firms specializing in SAP technology. Opting to engage an external partner for COE services depends on several factors:

  • In-house expertise: Does your internal IT staff possess the necessary skill sets to perform COE responsibilities? If not, is hiring internal resources an option?

  • Bandwidth: Does your IT staff have the time?

  • Long-term strategy: Is your organization strategically looking to build your production support core competencies or to leave systems work to external providers?

  • Volume: Based on the volume, does an external partner make sense? Is it the only viable solution?

  • Cost: Is leveraging a third-party partner cost effective or cost-prohibitive? What is the potential full-time equivalent (FTE) cost, which likely already has a limited mid-market IT budget?

Scope

While some COEs focus on technical-related responsibilities (e.g., Basis, ABAP, security, DBA, and server storage), others expand their scope to functional-related support activities (e.g., Financial Accounting, Sales and Distribution, Materials Management, and configuration). Again, mid-market constraints influence the scope greatly. For instance, OM had to decide what the true breadth of production support for its SAP environment was. Should the company attempt to cultivate some of the skill sets in house or hire new employees to support a subset of its production support needs?

Remember, OM did not want any internal resources supporting its install. On the contrary, OM wished to focus its employees’ energies on its core business, manufacturing yoga mats. Therefore, the decision on scope was simple: Include all SAP functionality. If OM possessed some of the skill sets , such as technical ABAP and Basis resources, internally, perhaps it could have limited the scope to exclude these responsibilities, but this was not the case.

How May I Help You?

Defining the service-level agreements (SLAs) and hours of operation is fundamental in ensuring that clear expectations exist with your end clients — the SAP end users and the business. Setting clear, understood, and agreed-upon expectations ensures consensus on issue resolution. It is imperative that you involve all necessary stakeholders (e.g., project sponsors, project managers, and CIOs) in defining the service-related criteria.

Different SLAs change the vigor of your COE. For example, if your organization requires immediate attention to all issues, which is a highly unlikely scenario, someone must man the COE 24 hours a day, 7 days a week, 365 days a year. If, however, the business only requires a response within 48 hours, which is another unlikely scenario, coverage of 5 days a week, 8 hours a day would suffice. The reality is that the SLAs for the required COE workforce usually fall somewhere in between these time requirements.

Location

Where the COE team physically resides is important. A decentralized or distributed COE team provides varying levels of COE access. Depending on your organization’s corporate culture and the actual size of your mid-market IT staff, you must define what the interaction between the COE and the organization at large is.

The corporate culture of OM is informal and the organizational structure is flat. Employees have direct access to executive management. In fact, the corporate culture encourages the sharing of ideas and discourages politics and bureaucracy. Therefore, the COE location is not important, meaning that OM could have an off-site COE. If, however, an organization possesses a corporate culture where management closely monitors employees and meticulously observes work effort, an on-site COE might be the only option management supports. Remember that no decision is made in a vacuum. Therefore, cost is always a relevant factor. In the case of OM, the company chose an off-site COE model.

Step 2. Build the COE Team

In the legend of the Knights of the Round Table, King Arthur and his knights held watch over the kingdom as its protectors. Like King Arthur’s Court provided protection over the kingdom, the COE similarly ensures no harm comes to your systems. Comprised of a COE team (the knights), integration manager (King Arthur), and control advisory board (the Round Table), the COE structure is designed to provide the highest level of service and protection. Each component within the COE team achieves a distinct purpose. Collectively, they cover every aspect involved in production support. Within the mid-market kingdom, this becomes especially true.

The Knights

The Knights of the Round Table acted as an extension to King Arthur’s strength. Each knight possessed a unique talent. The COE team behaves in the same manner. After defining the provided scope and breadth of services, the COE can define the proper skill sets. If the COE is solely responsible for technical-production support, you must bring those skill sets into the team. Likewise, if the COE offers functional services, you must also include the proper functional-configuration skill sets. Are help desk resources required? You must mobilize all required skill sets, ensuring capable COE support.

Choosing the right resources to comprise your COE is crucial. Below are several key characteristics that each COE member must possess:

  • Competency/experience: Each member of the COE team must be an expert within his or her respective skill set and possess the needed experience. The end-user community will look to the COE to address and resolve its issues quickly. Choosing inexperienced and unknowledgeable COE resources will frustrate the end users and lengthen resolution time.

  • Desire: Not everyone is cut out to be a COE team member. Some employees will not want to be part of a production support organization. Some employees might view such an organization as boring and a path to nowhere. If selected employees are not happy with their given roles, they will either fail to produce, leave, or request to be transferred.

  • Customer service skills: Ultimately, the COE is a service organization and service organizations require customer service skills. No matter how talented and competent, not all employees possess the proper interpersonal skills to interact with end clients. If COE resources are rude or unresponsive, the end-user community could justifiably become hostile towards the COE team member and your greater COE organization.

King Arthur

King Arthur reigned over the kingdom because of his wisdom, experience, and strength. The COE integration manager needs to possess similar characteristics. Organizations often overlook or misunderstand the role of the integration manager. Cost constraints sometimes make this role challenging to justify. Within the mid-market, however, the integration manager is truly an invaluable resource.

This role is worth its weight in gold. Experienced in years of SAP implementations, the integration manager must understand deeply the touch-points across SAP and the interactions between the various modules. Although the integration manager does not need to be an expert in everything, which is impossible, he or she must be familiar with how the components interact. If the integration manager is not familiar with the intricacies of implementing SAP, he or she can jeopardize system integrity, stability, and business process functionality. In essence, the integration manager acts as a “super-connector,” involving all of the key COE team members affected by system modifications. Below are several key traits that every integration manager needs:

  • Deep understanding of SAP’s integration points: By definition, the integration manager must understand the integration within SAP systems. Every modification in one SAP component has the potential to affect other areas. This understanding allows the integration manager to bring in the right folks with the related skill sets, ensuring that the COE team represents all interested parties.

  • Customer service: The integration manager is just as much a customer service manager as a systems manager. Because the integration manager is the primary representative of the COE, he or she must possess strong interpersonal and communication skills.

  • Presence: Everyone looks to the integration manager as the face of the COE. Therefore, confidence and presence are fundamental qualities of a great integration manager. Presenting a calm, collected, and strong persona instills confidence in both the COE and the end-user community.

  • Political savvy: Because the integration manager must work with a larger pool of people, he or she needs to possess the proper political skills to maximize the COE’s product as a whole and minimize any conflict impeding performance. The political acumen needed is greater than for the normal IT manager; the integration manager must navigate across a myriad of headstrong teams.

The Round Table

King Arthur’s Round Table ruled collectively with wisdom, fairness, and strength. Led by the integration manager, the control advisory board (CAB) is responsible for maintaining the integrity of the system. This board comprises essential individuals who possess experience within each of the implemented components. Key subject-matter experts represent their respective teams’ interests. Typically, the CAB has one fundamental team member from each of the respective areas, as well as any additional key stakeholders holding a vested interest in the SAP productive environment. This might include SAP project managers of other impacted projects, non-SAP system owners, or the project sponsor.

While the business user community identifies enhancements, the CAB first reviews the change requests. After evaluating their validity and system impact, it approves or rejects the change requests and prioritizes them accordingly. This is all the more reason why the team makeup is so crucial. If you do not include all necessary parties in the change request evaluation, you could miss concerns that are important to business users outside of the COE.

My example company, OM, understood the importance of placing the proper team representatives on the CAB. OM believed that one way to build trust and confidence in the COE was to include key business users outside of the COE. Therefore, OM invited each of the managers responsible for various parts of the business. Because every employee was familiar and competent in SAP, these business managers understood both their business needs and how these needs translated into the SAP system.

Rounding out the CAB, OM included the integration manager, the IT development manager, the IT infrastructure manager, key business managers, and the CIO. Because OM is a small organization, this structure granted OM visibility into all potential areas affected by system changes.

Step 3. Pick the Right Time to Implement the COE

While it is never too early to begin thinking about how your organization should implement the COE, building it out too early can result in COE-team burnout. Waiting too long, however, can result in problems. As a rule of thumb, mid-market companies should begin seriously discussing the COE approach during the realization or implementation phase.

During this time, you can assign the COE integration manager, enabling him or her to begin conceptualizing items such as the scope, services, and SLAs. Furthermore, the integration manager can start to design the organizational structure, ensuring that the team represents all appropriate SAP skill sets.

If organizations are planning properly, some form of a COE should be in place prior to go-live. Ideally, you should mobilize the core of the COE during the testing phases of the project. This strategy provides the most successful environment for several reasons:

  • Knowledge transfer: Bringing in core COE team members during the project’s implementation and testing phases allows them to learn on the job. This provides a deeper understnding of their ultimate support responsibilities.

  • Practice: The more exposure the COE team has to the system, the greater their understanding of the system’s functionality. Some organizations use their COE prior to go-live for project-related support. This works very well within the mid- market because it fosters learning prior to go-live.

  • Organizational acceptance: During the implementation, end users are most familiar with the project team. Sometimes these project team members transition to the COE. When this is not the case, however, end users must look to new contacts for production support. Integrating the COE into the later phases of the implementation assists in this transition and facilitates end-user acceptance.

  • Training: Mobilizing the COE prior to go-live assists the COE in building logistical operational experience. Phone system operation, ticketing tool system ramp-up, triage procedures, and so on are givens that your organization must master. Working with the COE team to make these procedures second nature enables the COE to focus on resolving end-user issues, not COE support functions.

Step 4. Manage Change

Establishing the proper infrastructure, mobilizing the appropriate resources, and bringing everything toge- ther at the right time are all key pieces in developing an effective COE. Regardless of your team’s exceptional skill sets and impeccable timing, the inability to effectively manage change can be paralyzing. Two key factors, change management tools and change management processes/procedures, ensure that you have equipped your COE to deal with change.

Choose Your Weapon

Using change management tools helps in effectively managing change for a mid-market organization. Ticket-tracking systems are efficient ways to capture change requests and follow them through the modification process. Due to the constraints on the mid-market from a resource perspective, these tools — some inexpensive — can provide much needed accountability tracking. By documenting, tracking, assigning resolver groups, and managing change requests from the end-user community, the COE is able to effectively manage and report on all changes.

A host of error-resolution ticket-tracking systems are available, such as Track-IT and Remedy. These ticketing software systems provide the COE with an independent error resolution tracking tool. Such tools enable organizations to easily capture, track, and report on issues. Among other benefits, this type of tool provides invaluable information on the COE performance, the issues the organization is encountering, and the areas for improvement.

Beyond the Day-to-Day Issues

While the COE should address day-to-day issues directly, major modifications to the system require a different mechanism: the CAB. The CAB’s role is to address any enhancements, major modifications, or significant change requests to the productive environment. Depending upon the role of the COE, this may include additional projects, both small and large, for your SAP system.

The CAB meets frequently, typically weekly, to discuss proposed changes. During this standing meeting, representatives from the COE team and other vested individuals, such as external stakeholders, present requested changes to the CAB. During the requestor’s presentation, the CAB asks questions to understand fully the scope of and rationale for these changes. The CAB then assigns approved proposals a priority in conjunction with existing change requests and subsequently, the appropriate team members work on the proposals.

While managing change is the entire COE’s responsibility, its coordination and direction rests solely on the integration manager. The integration manager is crucial to effective change management.

Because the integration manager interacts with all parties, both external and internal to the COE, this individual must possess excellent customer service skills, including humility, patience, political acumen, and interpersonal, communication, and listening skills. The integration manager must also be respected and perceived as confident, competent, and fair because he or she acts as the primary gatekeeper of the production environment.

While this job description sounds like the resume for Superman, these individuals do exist. It just requires either finding them or proper grooming.

Handing Over the Keys

Most mid-market organizations, such as OM, are so focused on delivering successful SAP implementations that they ignore, neglect, or minimize the importance of building a successful production support mechanism. Larger organizations possess armies of employees, time, and treasure. The mid-market simply is not afforded this luxury. Typically tactically focused (“task at hand and then move on!”) as opposed to strategically focused, the mid-market still needs to define an approach for the post-go-live world.

It is amazing to think that after investing so much time, money, and energy into an implementation, a company would not do its best to protect and maximize that investment. Imagine purchasing a premium high-end sports car and failing to find the best mechanic or ignoring engine warnings. Your car might run well for a while, but without the proper maintenance, your Ferrari will end up being an expensive paperweight.

Conversely, spending the time to analyze, understand, design, and ultimately build a comprehensive COE as OM did ensures that your mid-market organization is properly prepared to both support and enhance your SAP investment.

Key Factors for Choosing a COE Model
Determining Factors Alternatives Orly Manufacturing Example
Resource pools • Internal resources
• External resources
• Hybrid
OM has limited internal resources and therefore has chosen to use external resources.
Skill sets available • Internal resources have the proper expertise
• Internal expertise does not exist but the organization
is looking to build the skill set
• Neither
Not only does OM have limited internal resources, but those resources are not skilled in SAP functionality.
Bandwidth • Internal resources possess allotted bandwidth
• Internal resources will be brought into these roles
• External resources will be used
OM resources do not have enough bandwidth to handle the COE responsibilities.
Corporate strategy • Build expertise in house
• Outsource completely
• Hybrid
OM’s corporate strategy is to focus on the core business process and engage external services for SAP support.
Anticipated volume • 24x7
• Large
• Small
• Help desk required
OM anticipates that the volume will be constant (40 tickets/day) but not excessive. No extra help desk services are needed.
Resource cost • Executive management has allocated a large budget
to hire an internal workforce
• Internal resources are deemed too expensive
• External resources are deemed too expensive
OM executive management has budgeted for external resources.
Scope and responsibilities • Production support only
• Production support plus
OM requires a comprehensive model that expands beyond break-fix.
Service levels • Defined (SLAs) based on a criticality categorization OM has a standard set of SLAs defined for other areas of their IT support services. These standard SLAs will be used for its SAP needs.
Location • Distributed
• Centralized
• “Anointed” (corporate headquarters or geographical
location dependencies)
• Production support only
OM has multiple locations across the United States where SAP users reside. However, OM believes that a centralized location would be ideal.
Yosh Eisbart is the SAP service line director for COMSYS IT Partners with more than 13 years of SAP delivery experience. He has worked on many SAP projects since the days of R/2, ranging from full life cycle implementations and upgrades to Center of Excellence build-outs. Yosh is responsible for driving COMSYS SAP Services, including its mid-market COE service offering. His extensive knowledge and experience have enabled clients to maximize SAP’s strength in the mid-market space. You can reach him at yeisbart@comsys.com.

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