Real-time information instead of islands of data

The SAP Business ONE system provides better information in real time. Therefore, it helps to minimize the risk involved with the daily decisions the entrepreneur or business owner has to make.

Many business owners have taken a don't-fix-it-if-it-is-not-broken approach and stay put with their solutions that are already in place. The solutions are most often a combination of a small accounting package and some home-grown software to fix a business need. As their business evolves, new solutions are added, which will lead to a patch-worked solution. In order to make the right decisions, usually Excel reports are created to analyze data for reporting. You may also consider license requirements, different platforms, and programming languages that ultimately lead to a scattered environment with a high cost.

In this environment, manual steps are often required to synchronize data. Extra effort is needed to prepare the reports and they are never 100% accurate. This is not exactly a 360-degree view of a business. However, a complete view of the key performance indicators of a business is precisely what is required to make the best decisions.

The patchwork approach of managing a small business facilitates the status quo environment. However, in today's business world, change is a permanent factor. The scenario mentioned above most commonly leads to islands of data and inadvertently tends to paralyze the business as key information is not obtained. This happens because the existing system produces not enough or too much information in multiple locations.

The aforementioned scenario, which is described as islands of data, also surfaces in the best-of-breed approach. The best-of-breed, also known as the best-in-class approach, is a valid strategy for larger companies where software solutions are selected on a departmental level in order to meet the needs of every individual in a department.

The departmental level that contributes to the value chain of a business is described as an enterprise resource. Traditionally, enterprise resources were highly specialized and disparate systems. Companies were faced with systems that could not easily communicate. It was virtually impossible to obtain real-time reports because the information was hard to integrate and analyze. On the one hand, the systems produced a massive amount of information, and on the other hand, the information could not be used as it was impossible to integrate the data with the other information sources.

SAP is founded with the vision to overcome the disparate islands of data, and therefore, enable the analysis of the right information. This vision has lead to the early development of the SAP R/2 and R/3 systems. The R/2 System was mainframe-based. With the continuing trend towards client-server architecture, the R/3 Solution was developed by SAP. The R/3 System established the term ERP (Enterprise Resource Planning). With this approach, real-time reporting became a reality and enabled the companies which were formerly paralyzed with their status quo system to grow their businesses.

Positioning SAP Business ONE against mySAP—All-In-One and Business ByDesign

The foundation of this concept is that though each department has unique requirements which need to be met. There are also similarities that are industry independent. The R/3 system provided workflows and business processes for the most common industries.

During implementation, the relevant processes are selected, activated, and then adjusted for the business. Today, those available processes can be selected via interactive solution maps.

At present, the R/3 System is called mySAP ERP. A new, enhanced functionality is added by SAP to the mySAP solution. Traditionally, the R/3 System required massive consulting power to implement. In order to meet the requirements of companies with an industry focus, SAP established the SAP All-In-One Solution. This is a template-based version of the standard SAP R/3 System. The all-in-one templates are usually represented by SAP Partners who have a key expertise in a specific industry.

SAP Business ONE takes those concepts and applies them in a compact package. Therefore, if your company is using multiple systems and struggles with Excel reports and manual data synchronization, then SAP Business ONE is the ideal solution to integrate all those disparate islands of data into one system with real-time data.

Consequently, what was once available only for large enterprises is now at the fingertips of small- and mid-sized businesses.

However, it is important to note that the SAP Business ONE System, unlike the SAP All-In-One Solution, is not based on the R/3 system. The SAP Business ONE Solution is a new development that does not use any code base from R/3. Previously, SAP was mostly able to service large corporations. In order to move to a smaller business, the template version of R/3, called All-In-One, was established. However, since All-In-One is actually using the same code base, it requires significant resources to implement and manage.

The SAP Business ONE Solution is positioned at the other end of the scale for small- to mid-sized businesses. This leaves a gap, which is filled by SAP, with another solution called Business ByDesign. Business ByDesign is a solution that can be accessed via a browser and is used as a service.

Therefore, the SAP Solution scale starts with SAP Business ONE to SAP ByDesign, continues to SAP All-In-ONE, and ends with SAP mySAP. However, there are overlapping areas and the selection of the right package must be based on individual requirements.

Real-world note

I recently talked to a family owned furniture business and they explained that they tried to grow their business. The business owners intended to manufacture a custom furniture set and distribute it via wholesalers. However, they ran into some problems and were not able to cope up with the results. They learned their lesson and now are happy to be back where they were before. Consequently, they established the notion that they do not want to grow anymore as it imposes a big risk on their business and family.

The frustrated owner explained that they had the following key problems:

In order to meet the projected demand, they kept a large inventory of their products. They also hired an additional sales person to manage the new sales activity. The previously working systems suddenly slowed down and caused major hiccups during operation. They were not able to provide an accurate delivery status for customers. Their inventory was too high on the one hand, and too low for urgent deliveries for important wholesale customers. Then, the sales person left and all their contacts and communication was lost too.

An important law of nature is that you either grow or die, and this furniture business certainly tried to grow. However, they almost ruined their business over it. Their system was designed for status quo and could not handle growth. Their entire operation ended in chaos due to the addition of a bit of change.

This example showcases the importance of an integrated approach with a system that is ready to grow from the outset. The only foundation for growth is to keep it simple and leave room for expansion.

Business hell versus profitable growth

Ultimately, a business owner who seeks to grow his or her business may realize that the current system which appeared to be working was actually not working. Without the right information, growing a business is like trying to grow for the hell of it. Mostly, people get what they ask for. Therefore, if you grow your business for the hell of it, you may end up getting business hell. The key is to accomplish profitable growth.

If you believe your business is any different, then consider the following list of islands of data:

• QuickBooks accounting system
• ACT! CRM system
• Excel reports
• Access inventory database
• Web presentation with newsletter subscription
• Web e-commerce store with online orders
• Outlook emails
• Office documents on the server

Please evaluate the following screenshot that shows a fairly standard situation with too many Islands of Data:

Now, please review the most obvious communication channels and workflow situations:

It is obvious that there is no room to grow.

SAP Business ONE is a single package that can cover all of the Islands of Data above and integrate them into one data source for real-time reporting. In the chapters to come, we will showcase how SAP Business ONE is simple. In addition, as outlined above, complexity may surface even in a simple environment if the dots are not connected in the right way.

Consequently, the key is not to grow your business because it may grow into a business hell. It is rather a profitable growth. What is profitable growth and how can we get there?

What is profitable growth

Analyzing past and present data based on a real-time integrated system, such as SAP Business ONE, provides the starting point for profitable growth. SAP Business ONE provides elaborate reporting and analysis functionality to satisfy the changing information needs of the business.

It sounds very straightforward. However, it is the key problem in today's business solutions. In order to get the right reports, the system must be designed to automatically gather the relevant data that will be used for reports.

When designing an integrated system, it is crucial to plan ahead. The most critical step to get started is knowing the design of the Chart of Accounts. It provides the foundation for all of the transactions that will be managed later in the system. Each transaction generates financial data, which flows into the previously designed chart of accounts.

The CoA (Chart of Accounts) design is often overlooked. However, it may also lead to overdesign once attention is given to its design. It is considered a good practice to follow a simple design. In addition, it is worth noting that the CoA is strictly meant for financial data compliance. Therefore, the data collected here is the basis for tax filing. However, an integrated ERP system should also provide an information system for internal controlling.

Consequently, we utilize the CoA that follows a simple design and also implements a controlling system that will collect data for reporting. It is the controlling system that will provide information for all departments on a daily basis.

ERP systems are only as good as the data entered into them. Therefore, the initial design and setup to create the framework that will hold the data is important. The collected data will be in all the right places for further analysis and decision making. SAP Business ONE will provide all of the reporting data in real time.

What is real time

The term real time is used in different areas of Information Technology. In production environments, real time describes a guaranteed response time within a given time frame. In the ERP world, real time means that there is no synchronization or separate programming required to obtain all of the information. Every report in the system has access to all the information immediately.

Establish metrics—the cost of no investment

Once the information skeleton with the CoA and controlling is implemented, the business is ready for growth. At this point, it will be possible to continuously collect data and make all the right adjustments.

It will be the end of growing for the hell of it, and the starting point of profitable growth. It is important to quantify each potential problem area, and therefore, document the monetary improvement as that is the ultimate goal to streamline the business operation in the most efficient way.

The following are some example questions that can be answered with the collected information:

The list above is also a reference to sample questions for businesses that are too busy for an integrated system. It clearly shows the potential cost of no investment. It may be worthwhile to calculate the cost of no decision in case you are on the verge of deciding on a new system. The purpose of a new SAP system is to save costs, which will enable a profitable growth.

By assigning a monetary value to each non-efficient process, the business owner will be able to justify the relevant improvements.

With the right reporting data, this change management is a part of the system operation. What is called total quality management in larger companies is a consequential side effect of an integrated system.

Designing "metrics" for your own business

The following items summarize the process you can use to design metrics for your own business:

Therefore, before we apply this knowledge to our case study in the next chapters, you may want to review your own system and see if you have a CoA and a separate Controlling system that allows collecting data as the system is used.

What is prototyping

Prototyping is the iterative process of designing a system based on user feedback. In software development, there are similar flavors for this to address the specific user type. These flavors are called rapid prototyping and extreme programming. Extreme programming uses an iterative design approach to gradually add one feature at a time to the initial prototype, and attempts to minimize irreducible complexity.

In the SAP Business ONE project environment, a combined approach has proved to be successful. It has proved important to get users up and running as soon as possible. Therefore, the SAP Implementation guide covers the essential steps to get the system up and running quickly. Users go through this wizard-style interview process and provide the configuration parameters. The system is then ready to be adjusted in the prototyping mode. Therefore, a project starts with a quintessential analysis based on a questionnaire and is followed by a Prototyping phase.

This goes in line with other IT-related project management methodologies. For example, in software development projects, the so-called waterfall model historically gathered a complete set of requirements for a software project. Once complete, the software development process would start. This led to the same problem as described above for the SAP projects. In order to follow this analogy, we may consider the latest software development principles as a guide to where the SAP project management may go.

Extreme programming is a practice to create immediate results for the end user and add features as the user actually works with the quickly assembled solution.

The virtual enterprise

Another dominant trend is described as virtualization and service orientation. The enterprise of the future is a virtual enterprise. How does SAP address this trend? The virtual enterprise is characterized by disparate entities that work independently, but exchange information to produce integrated services and products. SAP has developed the Enterprise Service Architecture (ESA). This architecture provides a platform for independent systems to produce and consume services on a single integration platform.

Therefore, the future system will allow large-scale SAP systems to be integrated with services produced by other vendors. In turn, this will extend the integrated business workflows further into specialized solutions that address industry-specific requirements.

Interestingly, the foundation of the ERP system was to overcome disparate, specialized solutions and integrate them into a single system. Today, again the market requirements force businesses to consider specialized solutions for a specific need. However, with the knowledge acquired in previous iterations of this process, the platform for integration is already established as the ESA.

In order to adapt this to the small business owner, we are using the template concept for SAP Business ONE in this book. This way, the entrepreneur will have the toolset to cope with changing market needs and set the foundation for growth.

SAP 100-word definition of SAP Business ONE

100-word business positioning statement:

Designed exclusively for small businesses, SAP Business One is a single, affordable business management solution that integrates the entire business across financials, sales, customers, and operations. Combining with additional industry-specific capabilities, SAP Business One can adapt to your unique and fast-changing business needs. With SAP Business One, small businesses can streamline operations, act on instant and complete information, and accelerate profitable growth.

SAP® Business One is delivered by experienced local resellers and is trusted by thousands of small businesses around the world.

Why projects fail?

Now, a final word about why projects fail which may help to understand the possible factors that may lead to a failing project. With this knowledge, potential issues can be addressed in the early phases of an implementation project.

The key problem with ERP implementation projects is to manage the right expectations. Since the SAP Business ONE system has a complete feature set for all of the departments in a company, it is easy to underestimate the required service for an implementation. Therefore, a proper project plan should include a set of specifically defined services and the configuration. However, a proper project specification should also define what is specifically not included.

It is vital that the ROI for a planned project has a monetary value associated with each section of the implementation. It is also vital that each section of the project implementation is measured against a timeline, available resources, and a budget.

This leads to the ultimate problem area in each project—the budget. For obvious reasons, the budget must be right. Therefore, the implementation partner and the customer must complete their due diligence to make sure that a project is not underestimated. The infamous fixed priced proposal with rather undefined specifications is almost guaranteed to lead to problems down the road.

Finally, a key success factor for a successful project is to have the support of C level and all the departments that are involved or affected by the implementation.