SAPC BAIO 053 Consulting Effort Pricing Considerations

SAP Business All-in-One Solutions for Midsize Enterprise Package Implementation Effort & Pricing Considerations

CSE Portfolio and Operations

Objectives

At the end of this presentation you will:

Understand the guiding principles for determining the effort and price of your service offering as part of an SAP Business All-in-One solution

Lesson Overview Diagram

Some Examples

SAP Business All In One Solutions: An introduction to the new Approach

Summary of approach

Food for thought: Planning Effort & Pricing

Implementation Service Package

Collection of defined services at a set price to deliver in a prescribed manner a pre-determined, pre-tested and pre-documented SAP solution.

Success Factors for Service Package = “Built-in Expertise” Solution scope is pre-determined (Viable solution for target market) The assumptions are known and documented All the necessary content for an efficient delivery is already created

The deliverables are complete and fully documented Many components are re-used

The services are pre-determined, documented and packaged Tested to assure quality and reduce the risks Has a prescribed implementation roadmap. ASAP Focus Methodology (12-

14 weeks) Value proposition with initial selling price for the implementation known and

communicated. Ratio 1:1 Software: Implementation Delivered by a team trained on it’s prescribed delivery and solution content

Transform Selling & Implementation Approaches

..., Blueprint, Realization, ...

Different every time

..., Realization, ...

Volume business

BlueprintSAP Best Practices

+Service Packages

+ASAP Focus

SME Solution Center

Traditional ASAP

Sell Software

Sell Services

Demo Software

Joint sellSoftware & Services

Prototype demo

Delta requirements & Pre-Project activities

Traditional: Large Enterprises : Ask model

SAP Business All-in-One Solutions: Midsize Enterprises : Tell or Designed model: Built-in Expertise

Follow-on …

ASAP Focus Methodology

Design


Some Examples


Summary of approach


Food for Thought when Estimating Implementation Effort

Accept to change your paradigms. Use the new approach when determining project effort. The consultants WILL NOT spend a lot of time getting the system ready

You have to determine your implementation package initial price up front, so that they can be presented during the first meeting with the customer.

Your initial implementation package price is the door opener based on your assumptions. It will likely be adjusted base on delta requirements and on the customer environment (different from the initial assumptions). Make it an attractive door opener.

Consultants configuration skills need not to be very deep but wide. Assign consultants accordingly. We need Consultants with people skills. As such, 1 consultant can easily handle all financials and 1-2 consultants can handle logistics, 1 consultant for the technical aspects.


During the project, if you, for some reason need deep skills, you can always bring in an expert consultant for 1 day and resolve the issues.

When making an effort determination, have the following thought in mind:

A 14 weeks project = 70 days. If the configuration is loaded during the first 5 days, What will the consultants do for the remaining 65

days?" Understand the Gas principle: If you plan the realization

phase to be 7 weeks, it will take 7 weeks. If you plan the realization phase to be 20 weeks, it will take 20 weeks.

Consider if the project team members can be part time (x days/w) This is volume business. Plan for project team members to work on more than 1 project concurrently.

MOST IMPORTANT: If the team is highly motivated with an attitude of "We can make this", than they will!!!


Most of it depends on the preparation you do upfront ONCE, for ALL the projects. (Volume business) Make your prices for profits, but do not inflate your prices to cover your learning curve.

Make your Implementation service package show the value of a FOCUSED first implementation (quick ROI) WITH follow on projects (incremental).

Price Delta Requirements during Delta Requirements!

ASAP Focus Methodology Overview

RealizationFinal

PreparationGo Live & Support

EvaluationPre-Project Activities

Delta Requirements

Evaluation Roadmap Implementation Roadmap

time

Project Preparation

Customer Qualification

Position Solution & Services

Delta Requirements

Sessions

Create Preliminary

Proposal

Finalize Proposal

Customer Signs offBlueprint

Assemble Statement of

Work

General Project Management

Data MigrationWorkshopActivities

Project Team Training

Position OCM

Set Up System Environment

Project Standards & Procedures


ConductKick off Meeting

DEV Infrastructure

Setup


Review ProjectPreparation

Phase

QAInfrastructure

Setup

Validate Org.Structure &General Settings

Delta Realization

Validate Solution

Organizational Change

Management

Integration &Acceptance

Tests

Prepare Cutover & Production

Support

Review Realization

Phase


End User Training

Check Org.Change

Readiness

Create & StaffHelp Desk

Check SystemReadiness

Cutover toProduction

ProductionSupport


Project Closing

Customerqualified

StartContractsignature

Projectkick-off

Go-Live

Go Live Readiness

Check

About 10-15 days

Charging for Delta-Requirements & Pre-Project

Include all the associated costs in your SAP Business All-in-One Solution. Charge to customer separate from your overall price but ask for payment only if they do not buy from you

Include Delta requirement costs in your overall SAP Business All-in-One Solution but charge separate for delta requirement design

It is recommended to always include the Pre-Project customer guiding effort in your overall SAP Business All-in-One Solution (about 5 days)

Fixed Price and “A la carte” Pricing

The customer may be asking for “Fixed price”, but

We have a poor history with “Fixed price” contracts

Here are some of the reasons: With ASAP project, you really find out about scope during the project, which may be

substantially different than the initial understanding Large difference between the RFP and the blueprint 1 price for the whole project leaves room for misunderstanding of “What is in” and “What is

out” No rigorous change request management

Fixed Price and “A la carte” Pricing

We need to position the following concepts: Focus implementation is an aggressively priced base offering for quick ROI Pricing "A la carte” provides attractive options

Positioned during the sales cycle May later be used during project when Customer cannot meet his commitments

You want to offer a menu of services to the customer. This drives the point that he controls the overall price be electing to buy the service or to do it himself

You provide the customer transparency of pricing for a given service The customer accepts to trade flexibility (now) for money. Flexibility will be great with follow-on projects Fix price is not an approach to get all you want for that initial price.

Benefits Having smaller chunks of services makes it easier to define the specific deliverables for the price Itemizing some services with a price makes it quite clear that it is not included in the base offering

Stay Away …

Do not advertise a number of days like: “Complete ERP implementation in 100 days …” It draws to much attention towards a number of days … Customer will divide total value by number of days … Customer will expect you to do this numbers of days … as a minimum

Avoid using “Baseline” This is NOT a good value message, Use “SAP All-in-One ERP Solution”

In Summary

Price your packages according to the new approach, this is not a traditional pricing inline with the ASAP approach

“A La Carte” offerings to establish “Value” for a “Set price”

Be aggressive in pricing: Dedicated team will greatly improve your productivity and profits. Software:Services = 1:1

Remember the 3 Mid-Market fears: Too Complex Too Risky Too Expensive

This new approach has to overcome those fears or “No Deal”

Don‘t expect different results if YOU keep doing the same thing!


Some Examples


Summary of approach


Example Offer: Scalable, Open, ERP based

Financials

HardwarePre-install on

IBM/DELL or HP Wintel HW

$ 50 k

HardwarePre-install on

IBM/DELL or HP Wintel HW

$ 50 k

Hosting

$15 K+ $10 k/m

Hosting

$15 K+ $10 k/m

Financing

Financing for SW, Maintenance &

Consulting

Financing

Financing for SW, Maintenance &

Consulting

Financials

Distribution

Financials

Distribution

Manufacturing Elapse : 12 weeks

Implementation: $ 175 k

Project Team Training:$ 14 k

1 PM, 1 FI/CO, 1 BASIS

Defined S

cope

Com

merc

ial

Opti

ons

Elapse : 14 weeks

Implementation: $ 350 k

Project Team Training: $ 20 k

1 PM, 1 FI/CO, 1SD, 1 BASIS

Elapse : 15 weeks

Implementation: $ 450 k -

Project Team Training: $ 25 k

1 PM, 2 FI/CO, 1SD, 1 PP, 1 BASIS

BI

EP

BI

EP

BI

EP

BI

EP

Data Migration “Gold”$ 5 k

Data Migration “Gold”$ 5 k

Change Management$ 15 k

Change Management$ 15 k

SAP All-in-One ERP Solution

A la Carte

End User Training$ 750 / User

End User Training$ 750 / User

Technical Install$ 3 K

Technical Install$ 3 K

Example: IM&C – Service offering

In basic scope* Options “A la carte”

Project Management

Delta Requirements Workshops

Implementation of defined scope

Technical installation of system

Key-User training on the job

End user Documentation

Predefined sheets for data migration

Predefined Test catalogs

Predefined Forms & Printouts

Go-Live Support

End user training

Automated Data Migration

Custom Forms, Reports and Interfaces

Custom Authorizations

Hosting

Financing

Change Management

Post Implementation Support

Consulting Deliverables

* Deliverables in English

Assumptions (Example extract)

The following assumptions were made when estimating an implementation for the SAP All-in-One ERP Solution. Changes to any of these assumptions would alter the accompanying estimate: Implemented in 1 country (and 1 site) for ~100 concurrent users The estimations are based on the use of SAP Best Practices Functional Scope of the implementation is based on mySAP ERP 2005; any other components of the

mySAP Business Suite and SAP R/3 HR are out of scope unless specified Additional processes that are out of scope need to be requested through the change order process and will

be included once approved and billed on a time and material basis No modifications, enhancements or user exits will be made to the SAP source code and data dictionary Estimates do not include Business Processes Reengineering activities The estimations assume that the client will provide a knowledgeable counterpart who is familiar with

general SAP basis technology and entry-level knowledge of required SAP ERP modules and components SAP reserves the right to roll a consultant off at any time, as required

Assumptions: Organizational Structure – Financials

Client

Controlling

Area BP01

Company

Code BP01

Company

Code BP0X

Credit Control Area BP01

Financial Area BP01

Company BP0001

OperatingConcern BP02

Personnel Area BP01

Personnel Subarea 0002

Intercompany Processing

Personnel Area BP0X




Assumptions: Legacy Data Migration

SAP provides automated data conversion routines to load many of the data objects required to support the various processes. SAP will provide a data migration tool knows as the LSMW (Legacy System Migration Workbench).This tool is available to licensed SAP customer at no charge.

Legacy Data Conversion Guideline:Type Guideline Strategy

Material Master < 10,000 LSMW

Customer Master < 10,000 LSMW

Vendor Master < 10,000 LSMW

Material Price < 10,000 LSMW

Customer Material Info Records < 1,000 LSMW

Freight Surcharges < 250 LSMW

Discount Pricing Conditions < 1,000 LSMW

Sales Deals/Promotions < 1,000 LSMW

Purchasing Info Records <1,000 LSMW

Bill of Material (BOM) < 1,000 LSMW

Max number of levels in the BOM structure < 10

Reference Operation sets (template routings) < 10 Manual

Routings < 1,000 LSMW

Max number of operations per routing < 5

Work centers per plant < 30 Manual

Work center hierarchies < 10 Manual

Cost centers < 30 Manual

Activity types < 5 Manual

Profit center < 30 Manual

Legacy Transaction Data Conversion Guideline:

Legacy Transactions Conversion Strategy

Open purchase requisitions Manual

Open purchase orders Manual

Open sales orders Manual

Open sales contracts Manual

Open quotations Manual

Open Accounts Receivable LSMW

Open Accounts Payable LSMW

Inventory balances LSMW

Open Production orders Manual

SAPC BAIO 053 Consulting Effort Pricing Considerations

Documents

Transcript of SAPC BAIO 053 Consulting Effort Pricing Considerations