Feds claim $87 million in cost avoidance through SAP project

An American SAP users group is turning the spotlight on the Canadian government at the Americas’ SAP Users Group (ASUG) conference next month with an award for significant business results due to an SAP implementation.

And while the benefits of developing a standardized implementation process for SAP have been reaped internally – it has resulted in $87 million in cost avoidance — it’s nice to see those efforts recognized by peers, said Joe Larocque, senior director of the integrated finance and materiel system program office, the federal government’s research and development office for SAP.

“Although this wasn’t a competition per se, it shows we can match up to the private sector, that we can be just as good as they are, and that when we’re on an even basis we can contribute significantly,” said Larocque. “One of the problems we have in government is we’re often hesitant to recognize our own achievements. For the government to be recognized by peers it really underlines what a government organization can do when it puts its mind to something and continues to support a good idea over a number of years.”

Larocque said that when the Canadian government first started implementing SAP software a decade or so ago, there were five system integrators to choose from. That gave departments lots of options — but also potentially lots of issues to deal with due to multiple configurations and methodologies.

“It quickly became apparent to the members of the departments at that time that they had a number of requirements in common — they needed to develop interfaces, for example to the Receiver General of Canada in order to cut our cheques, et cetera, so we asked ourselves why we should pay for this 15 different times,” he said. “It didn’t make sense to do it independently, so we decided to work together and fund the initial development of those requirements and that’s how we got started. Once they proved this could work, it started to grow.”

The standardized process relates to determining the business problems to be solved, but not all departments’ deployments of SAP are standard. Each runs its own installation and can make whatever changes are necessary to meet its own requirements.

“Now we’re at the point where we have a fairly broad footprint with standardized business processes and documentation that any department can use to improve their installation,” says Larocque. “Any new members who want to join our cluster can significantly reduce their costs.”

The figure of $87 million in cost avoidance was arrived at using a formula that takes into account the savings from not having to translate documents 15 times, nor conduct multiple analyses of policy implications. As well, there is reduced documentation for training materials and testing.

Larocque’s team, for example, was able to identify more than 1,000 issues that departments would have to look out for in performing the upgrade from SAP 4.0 to SAP Enterprise. “Individually they would to have each had to find and resolve those issues,” he said. “We were able to solve many of them, and in many cases say, “this is going to happen to you — you’d better be ready for it.’”

It’s not a 15 to one ratio of savings, though, he added. “Departments, because they have independent installations, still have to do their own testing. Not every department uses every solution we develop, and quite frankly, it takes longer and is more costly for us to develop something that meets the needs of 15 departments rather than one, so we usually use a factor of somewhere between eight and 10 on our new development for the cost savings.”

According to ASUG, there were nine submissions for this year’s Impact awards. Winners are chosen for their success in areas such as return on investment, strategic alignment, SAP product scope, improved services and best practices.

Mike Perroni, ASUG president and a vice-president in the information technology group at Halliburton, was not available for an interview at press time.

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