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SAP Brazil Nota Fiscal: Hybrid Architecture Overtakes OnPremise and 100% Cloud Offerings

by Steve Sprague, Vice President of Product Strategy, Invoiceware International

August 21, 2013

There is a definite trend for companies using SAP to move away from managing in house software solutions because of the maintenance difficulties imposed by the changing legislation in Brazil.  Many companies looked at Brazil Nota Fiscal over the past few years as just another invoice process and compliance solution that could be managed by internal staff. However, as more organization move business processes into shared services and look to consolidate on single instances or regional instances of SAP, they are finding that the true cost of ownership is extremely high.  

The reasons for the out of control costs for On Premise Nota Fiscal solutions include:

  • Constant Change
    • As an example, the Brazil SEFAZ released new requirements at the end of 2012 that created brand new upgrade projects. On average these would last 2 to 3 months and cost $100-150K US dollars or more to apply.
    • In 2014, all SAP customers will be faced with version 3.1 which will be mandated by December 2014. The SEFAZ calls this the largest upgrade since 2.0 in 2010 – what will that cost companies?
    • Centralized ERP System
      • Many companies since 2008 have been on a mission of centralizing operations onto a common ERP platform; the problem that was unforeseen is the constant change management issues from country legislation. When the local teams managed their own systems, corporate didn’t see the constant requirements, but now a Mexico change or a Brazil change disrupts the whole COE (Center of Excellence); the speed of change is not easily applied to a centralized SAP system that needs process controls to manage.

So companies turned to 100% pure cloud providers, but they found these EDI type VANs were not the best answer either- why, two reasons:

  • Customized ERP
    • NO TWO SAP systems are the same and getting an SAP system to work with the cloud provider’s standards is 80% of the implementation and change management headache.  Unfortunately, well the government is standard – connecting a company to the government system is not.  Non-standard integration scenarios stem from companies having their own internal processes and more importantly end customer requests. Cloud and EDI providers typically run from non-standardization and force that part of the implementation and maintenance to the end user. So in the end, what value was really provided? And yes, you just created a monitoring issue, a support situation where people will point fingers at each other for a failed invoice, and a change management and testing nightmare as you now have two parties involved.
  • Shipping is Affected
    • In Brazil, if you don’t have your signed DANFe on the truck, you can’t ship.  If you rely on a 100% cloud provider and the network is down, your internet is down – you can’t ship.  Brazil offers a model call “Contingency” where you can print a special piece of paper and as long as you have power to your printer, you can still ship. Solutions will then automatically reconcile those nota fiscals when the network comes back online. A 100% cloud solution cannot provide on premise contingency.

So the Hybrid Architecture is the strategy winning the day. By providing the best of both worlds, SAP COE are turning to this implementation model to manage local government issues such as Brazil Nota Fiscal. The hybrid model has an on premise component that:

  • Manages the unique configurations of an end user’s SAP system
  • Buffers the centralized SAP system from forced upgrades when the government announces changes
  • Relieves the SAP COE from having to understand, interpret and implement the local changes into the corporate SAP system. This on premise component manages the “Delta” and change management so you don’t
  • Manages the internal printing network & allows “Contingency” printing if the network is down

 

Combined with the power of a network which brings:

  • Economies of scale to the operating cost (i.e. all companies use the same government web services) – why would you want to support those and monitor those connections on your own.
  • Support infrastructure for the entire process – so your local teams can access support in a local language and your SAP COE can call in English. And most importantly, the hybrid provider is a Single Source for Support – no finger pointing.
  • Guaranteed compliance – the service monitors the changes and will implement them so you don’t have to throughout the year

 

Key Take Away: SAP Brazil Nota Fiscal needs a Hybrid Architecture

  • On Premise is expensive to maintain, disrupts the change management and COE standard upgrade policies, and doesn’t take advantage of any economies of scale which creates out of control costs
  • A 100% cloud offering still leaves your IT team supporting 80% of the work (i.e. figuring out how to get your SAP system integrated with the government processes) and has no way of providing on premise contingency (i.e. means that if the network is down – you can’t ship)
  • Hybrid Architecture – is the way forward
    • Eliminates SAP issues
    • Eliminates the IT staff from having to react to constant changes in legislation
    • Allows for on premise contingency
    • Takes advantage of economies of scale
    • Provides the benefit of the managed service support so you have help when something goes wrong
    • And when you add it all up, lowers the total cost of maintaining SAP in Brazil especially when running a centralized version (i.e. COE – Center of Excellence)

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COMMENTS

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Gulshan Batra

9/25/2013 9:07:11 PM

Interesting take, even though not entirely original. The article correctly identifies the basic limitation of a 100% cloud offering - the necessity of being online, all the time. In mainland first world countries like US and some EU members this works fine, but for the rest of the world, online is still not a given always. All cloud adapters need to watch out for this basic presumption. However, I wonder how can the author say that a hybrid architecture eliminates SAP issues. Also, "no network" basically stops the entire ERP processing for a 100% cloud solution, not just the shipping activity. There needs to be a level of inbuilt redundancy in cloud for mission-critical activities.


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