Knowledgebase  »  Volume 7 (2009)  »  Update 4

Structured Portfolio Review Reduces SAP ERP HCM Costs and Increases Returns  

by Kieren Beltrame and Sven Ringling, Senior Partners, iProCon Human Capital Management (April 2009)

Categories: HR, Implementations and upgrades

Cutting costs

Key Concept

The reasoning for the allocation of SAP ERP Human Capital Management and non-SAP HR information systems budgets is often only vaguely understood. A review of your portfolio of HR projects and improvements helps you to understand, manage, and provide value for your investment. When you perform a portfolio review, you can understand the nature of each investment and its value, cut spending on anything not delivering clear benefits, and find opportunities to reallocate funds to other projects that can achieve better returns.

Most companies overspend on and underuse their investment in SAP ERP Human Capital Management (SAP ERP HCM) and non-SAP HR information systems. When budgets were abundant, spending on SAP ERP HCM was often considered a fixed block of costs not touched in the budgeting round. In reality, much of the spending on SAP ERP HCM is discretionary and should be analyzed for its return and saving opportunities.

The current economic downturn puts high pressure on managers responsible for IT systems (including SAP ERP HCM) to cut their costs significantly. Over the last 10 years, we have had insight into the spending of more than 100 organizations and noticed a myriad of inefficiencies. These inefficiencies include:

• Having consultants doing jobs employees could perform
  
  
• Purchasing oversized solutions or maintaining over-customized or chaotically customized systems with huge maintenance costs
  
  
• Managers starting big, complicated projects and overestimating what internal employees with limited experience in SAP ERP HCM can contribute
  
  
• Managers assuming that anybody can manage a project or change, and therefore since new staff are learning the real thing (i.e., system configuration), they can also take on new projects
  
  
• Oversized internal teams spending most of the time dealing with their own overhead. Often these teams may have been necessary during implementation projects when there was a lot of work and few experienced people. However, when the work lessens and people become more experienced, teams often build highly bureaucratic systems with complicated procedures for even the smallest change to the system. This can also result when consultants leave a project, but the red tape somehow stays. The team then spends more time with its own red tape than working on the system.
  
  
• Lack of knowledge regarding transfer and documentation
  
  
• Communication problems, such as other departments making assumptions about what the internal client wants, a general misunderstanding between technical and functional, or departments forgetting to share knowledge
  
  
• Constant change of direction due to a lack of strategy
  
  
• Using SAP ERP HCM for everything, even when oversized for a particular process
  
  
• Following a best-of-breed approach that doesn’t really apply and results in users creating numerous interfaces

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