SAP implementations often fail to deliver expected benefits when led by IT departments. Instead, they succeed when driven by business teams, with streams such as Materials Management (MM), Financial Accounting (FI), Sales and Distribution (SD), and others managed from the business side. This post examines the drawbacks of an IT-led approach and the advantages of business leadership.
The Drawbacks of an IT-Led SAP Implementation
IT departments provide essential expertise in infrastructure, data migration, system integration, and security. However, when they lead the project, the emphasis tends to shift towards technical aspects rather than business requirements. Below are key issues with this model:
1. Misalignment with Business Processes: SAP systems are designed to reflect organisational workflows. IT teams may lack detailed knowledge of operational realities. For example, configuring the MM module involves procurement cycles, vendor negotiations, and inventory strategies. An IT-led focus might prioritise system performance over practical needs, resulting in inefficient processes that reduce user adoption.
2. Prioritisation of Technical Specifications Over User Requirements: Requirements gathering in IT-led projects often centres on hardware compatibility or coding standards, sidelining business input. This can lead to a system that is technically sound but impractical. In the FI stream, for instance, accounting teams require integration with regulatory compliance, but IT might optimise for database efficiency, causing delays and rework.
3. Increased Risk of Scope Creep and Budget Overruns: Without business oversight, projects can expand unnecessarily as IT identifies additional technical features. Industry data indicates that up to 70% of ERP projects exceed budgets due to such disconnects. Business-led implementations tie scope to measurable outcomes, such as improving order-to-cash cycles in SD or enhancing asset tracking in Plant Maintenance (PM).
4. Challenges in Change Management: SAP deployments require substantial organisational change. IT-led efforts may overlook training and user engagement, viewing adoption as secondary. This can foster resistance, particularly in sensitive areas like Human Capital Management (HCM), where lack of involvement undermines trust and long-term effectiveness.
The Benefits of a Business-Led Approach
Business leadership does not exclude IT; rather, IT supports execution while business defines the vision, requirements, and results. This model offers several advantages:
1. Alignment with Strategic Objectives: Business leaders in finance, operations, or procurement understand their challenges deeply. Leading streams like FI or MM ensures configurations support goals such as reducing procurement costs by 15% or speeding up financial reporting. This transforms SAP into a strategic asset.
2. Improved User Adoption and Ownership: Business involvement increases commitment to the project. Teams can lead requirements sessions, promote the initiative internally, and ensure effective training. In Production Planning (PP), for example, manufacturing specialists can tailor workflows to shop floor needs, making the system more intuitive and productive.
3. Quicker Return on Investment: Business-led projects emphasise iterative improvements and early value. Instead of a comprehensive rollout focused on technical milestones, functional modules deliver immediate benefits, reducing disruptions and allowing adjustments based on feedback.
4. Robust Governance and Sustainability: Business oversight strengthens decision-making for maintenance and upgrades. IT manages technical tasks, but enhancements, such as AI integration in FI, are driven by business priorities, ensuring the system adapts to organisational evolution.
Lessons from Practice and Recommendations
ERP projects under IT leadership frequently extend beyond timelines with low utilisation rates. In contrast, business-led examples, such as a retailer empowering its supply chain team for MM and SD streams, achieve deployment in under 18 months with high user satisfaction. Success relies on cross-functional collaboration.
For organisations starting an SAP project, form a steering committee with senior business sponsors. Appoint stream leads from relevant departments, with IT as facilitators. Methodologies like SAP Activate can aid this, combining agile practices with structured oversight.
In essence, SAP serves as a tool for business transformation, not merely technical implementation. A business-led approach maximises its potential, delivering sustainable value and minimising risks associated with IT-centric models.
