Companies warned over custom SAP costs

Companies warned over custom SAP costs

Summary: A consultant has warned that companies may be overspending on their SAP deployments due to poor planning

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Around 90 percent of European SAP customers could save six- or seven-figure sums each year by avoiding the creation of bespoke code on top of the ERP platform, an IT consultant has claimed.

According to a study undertaken by IT consultancy West Trax, released last week, companies could see their SAP development, support and maintenance costs fall by using standard software more efficiently and upgrading more often. West Trax, which specialises in SAP deployments for large companies, said the study was based on the logs of 245 SAP systems operating in 13 different industries in the UK and Germany.

The study showed that 45 percent of the SAP deployments of the financial services firms thast were surveyed contained bespoke code created by the end-customer. Energy companies were next, with 40 percent, followed by telcos and services-based organisations, at 38 and 37 percent respectively.

"There are two elements here — people often do a lot of customisation and don't use a large proportion but still maintain it anyway, while others use customised code where they could use standard code," said David Long, chief executive at West Trax.

Companies have also failed to introduce effective business process re-engineering or change-management strategies when implementing their original SAP systems, West Trax claims. This means that they either had to customise applications to conform with existing ways of working or they found that staff used workarounds, which they were subsequently forced to support, said West Trax's Long.

The study found that the majority of those surveyed use only about 25 percent of the sections of the SAP deployments they have created in-house on a regular basis, while more than a third of such applications were never accessed at all. "In every case, 50 percent of customised code only ran about 20 times in a quarter, which is once a working day, if that. But if you break it down, you find that 90 percent of that 50 percent is accessed zero times per quarter. Therefore, our recommendation is that companies see if it's possible replace these programs with standard code," Long said.

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Winfried Rapp, SAP's chief financial officer for the UK and Ireland, agreed that organisations would benefit from reducing current levels of custom code usage. He said that the introduction and use of bespoke applications is most closely linked to inefficient or broken business processes but admitted it is necessary in some situations.

"It's always a balance to understand your own processes, fit them around a standardised product and see how they best come together. Matching business processes with IT products is a complex task and you can do it in quite different ways depending on the situation," he said. "This is why people often purchase and build on the expertise we've gained in implementing software with similar customers."

As well as spending money on creating bespoke code, West Trax has warned that companies are not fully utilising all the functionality in the core SAP packages. The IT consultant cites comments made by SAP's UK managing director Steve Rogers at an SAP user conference last year. "I find it frustrating that the majority of you only seem to be using a modest slice of the software you have acquired," Rogers is reported to have told the audience of SAP users.

While the functionality of particular applications such as goods management and sales and distribution is used heavily, the same is not true of areas such as personnel administration and development, West Trax said.

Topic: Apps

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