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The Next Step to Advance Your Customer COE: Demonstrate Measurable Value

by Sheree Johnson | SAPinsider

October 1, 2010

A Customer Center of Expertise (COE) can help the IT organization demonstrate its value, while ensuring solution quality and keeping TCO in check. Past SAPinsider articles have explored how to set up a COE; this article dives into how to take your Customer COE to a new level. Learn how to set and manage KPIs to set the right priorities for continuous improvement.
 

The increasing complexity of IT solutions — along with conflicting demands to guarantee business continuity and drive innovation while reducing costs and risks — exerts pressure on today’s CIOs and their staff. To address these issues, the CIO must ensure efficient IT operations and continuous improvement based on an application lifecycle management (ALM) strategy.

Achieving these objectives becomes much more manageable when companies establish and rely on a Customer Center of Expertise (Customer COE). The Customer COE manages mission-critical IT operations, delivers business continuity and agility at the lowest possible TCO, and sets priorities for continuous improvement. By employing ALM processes and tools, COE organizations have:

  • Lowered the cost of IT operations while improving business continuity. Coca-Cola FEMSA, the biggest Coke bottler in the world, adopted strategic ALM processes for monitoring its business processes, systems, and interfaces. As a result, while its installation grew considerably in the last five years (with its database growing eightfold, and with five times as many users), its costs have remained relatively consistent, increasing by only 6%. In addition, by freeing up resources with automated monitoring, the company could focus on optimizing the technical performance of its business processes — its custom program runtime decreased from 11,602 milliseconds to 3,416 milliseconds, and the average dialog response time dropped by 0.2 seconds.
  • Improved business process operations. Newell Rubbermaid, Inc., a global marketer of consumer and commercial products, needed to minimize the negative impact of business process performance degradation, which delayed the consolidated invoice process and resulted in returned goods. Through technical performance optimization of the order-to-cash process, consolidated invoice creation was reduced from 10 hours to 20 minutes.

Customer COEs have proven to be key success factors in reducing the total cost of SAP operations and driving real business value. Establishing a single source of truth, standardizing processes with ALM, and aligning business and IT with integrated quality management are all main components of Customer COE success (see sidebar). But what’s the next step? To gain transparency into achievements and quantify value contribution to the business, organizations should establish a platform to measure their progress toward the objectives of their ALM strategy.

Why Measure the Success of Your Customer COE?

A measurement platform helps a Customer COE achieve its objectives by providing complete, reliable, and comparable benchmark data to gain transparency into continuous improvement. This includes internal improvements in efficiency of IT operations, as well as business benefits. Tracking the improvements is essential to any continuous improvement plan; it helps Customer COE organizations determine how close they are to reaching their objectives, and it helps quantify the business value of any improvements they’ve made.

However, many organizations struggle to determine what to measure and how to measure it. The appropriate KPIs should reflect the effectiveness of any corrective actions performed. In Newell Rubbermaid’s case, measuring KPIs — such as the overall CPU power growth rate — can identify opportunities for improvement in the performance of core business processes and provide focus for a business process operations strategy. Once these optimizations are made and further measurements are taken, the KPIs make it easy to see any efficiency gains.

To help companies arrive at the appropriate KPIs, SAP provides a measurement platform consisting of a set of recommended KPIs and detailed guidance on how to measure and report on these KPIs in SAP Solution Manager. The measurement platform is equipped with tools and content to track progress toward key objectives and assess improvements in IT application management, business process operations, and IT infrastructure management. The KPIs and their metrics are outlined in a white paper and can be downloaded from the SAP Service Marketplace at http://service.sap.com/alm (login required).

Expert guidance for setting up the measurement platform will also be available through SAP Enterprise Support in 2010 (see sidebar).

Take Your Customer COE to a New Level

As a trusted partner and advisor to the business, a Customer COE can demonstrate business value while ensuring solution quality and keeping TCO in check. Following these simple steps, the Customer COE will set the right priorities for continuous improvement and make clear the value and quality that IT brings:

  • Define: Identify the goal, scope, and expected benefits for improvement. Align to key business objectives, such as accelerating innovation,  and define easily assessible KPIs for these objectives.
  • Measure: Obtain comparable data for the KPI calculation. Ensure completeness and reliability through the technical implementation of usage scenarios in SAP Solution Manager. Use the KPI index provided by SAP for guidance on which data to collect. Document a baseline measurement, in terms of data source, selection criteria, and scope of measurement, to get consistent parameters for all subsequent measurements.
  • Assess: Analyze the KPI values, secondary data, and additional observations to investigate and verify cause-and-effect relationships. Seek root causes of any operational defects under investigation and determine steps to solve them.
  • Improve: Optimize operations based on the data analysis. For example, implement automated exception alerts to reduce the efforts needed to monitor tasks and detect and resolve exceptions more quickly.
  • Control: Monitor the adoption of all relevant changes in the improvement phase. Consider further adoption of the ALM processes to prepare for the next time you undergo the define phase.

Visit http://service.sap.com/alm to learn more.

Sheree Johnson (sheree.johnson@sap.com) is a Program Manager and Senior Consultant with SAP Active Global Support and is responsible for support development and delivery and for providing exceptional service to SAP customers. A 10-year SAP veteran, Sheree has been instrumental in developing and delivering customer-oriented support offerings, including those of the SAP Customer Center of Expertise (Customer COE) program. She continues to drive the exciting next wave of the program focused on the continual improvement of Customer COE organizations.

 

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