The Impact of SAP Implementation on Organizational Structures

Yousef Ahmed Al-Sharif IT, Section Head,SAP Sipchem, Saudi Arabia 10 March 2009

SUG-MENA 2009, March 9-11 Manama, Bahrain

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Crisis Yields Opportunities

In this economic downturn, business is slow everywhere. The Focus Howhave to make SAP ato serve. Product Customer-service specialists fewer customers designers are seeing their project portfolios shrink. Computer successful implementation? programmers are spending fewer hours writing code.

If you're in a similar position inis your unit, don't let downtime become The talk now the Cost wasted time. Use it to work intensively and deliberately on strengthening your managerial knowledge and skills.

How to sustain it and best utilize it?

Practice will pay off in the long run -- if you do it right. Apply these principles Make it a habit. Then, when it's time to perform for real (delivering a presentation, conducting a performance review), you won't feel the pressure. Experiment with making small changes that add up. Get feedback (for example, from a trusted peer) on whether you're actually improving.
--- Harvard Business Publishing

Key Benefits of SAP

SD MM PP FI CO AM

SAP R/3
QM PM HR IS PS

IM

The Focus now is: How to sustain the Business Units implementation? Integration. Business Process Control Productivity

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Questions?
Is there any risk in regard to the system sustainability?
Business Process

Are we facing problems in day to day operations?

Questions?
G. Manager

Have we considered the existing Org Structure after SAP implementation?

Finance

IT

HR

How are We satisfied?

Key Sustainability Components!

Technology SAP System Business Business Processes

People Resources Request

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Model of Typical Org Structure

Same Organizational Structure Before & After SAP Implementation

Shared Services Concept

President

Shared Services

Production Department

IT

FINANCE

HR

Plant A

SS Structure +SAP committees

SAP Power User SAP Business Owner
Main Responsibilities : Approve Business processes changes

SAP Steering Committee

Main Responsibilities: First Line Support

Main Responsibilities

Guide the SAP future at the organizaiton

If such committees & group are not reflected officially in the Organizational Structure, the burden will be on IT department

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Impact of the typical Org Structure after SAP (Real Pains) Pain: limited use of SAP best
Pain: Big resources needed for the support & Enhancements has no single owner

Support & Enhancement

practice, Diversion from base configuration

Implications: People from IT department will bear the burden to call the business owners, functional managers to max utilization

Implications: IT People will lose focus on system

?
Requests

Changes

SAP Utilization

Pain: Who should do the test and verify?

Implications: Backlog increase

Sales

R&D

User Involvement & Training

Pain: User turnover and the need for proper training

Purchasing

Materials Management

Production

Pain: Coordination between functions like payroll & finance, Material master & other master data admin
Implications: People (IT, Business)as a resource need to make a lot of efforts to coordinate the integration

Business Processes Integration & coordination

Implications: IT people to take the responsibility

Change Management Role

Preparation Blue Print Realization Final Preparation Go-Live & Support

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Possible Org Structure & Job design

Task requirements

Technology

Job design factors

Ability and skill

Managerial decisions: 1.Division of labor 2.Departmental bases 3.Departmental size 4.Delegation of authority

Dimensions of organization structure: 1.Formalization 2.Complexity 3.Centralization

Organizational effectiveness: 1.Production 2.Satisfaction 3.Efficiency 4.Adaptiveness 5.Development 6.Survival

Technology Environmental uncertainty

Organization design factors

Strategy

Managerial choice

Fig.1 Organizations:Behavior,Structure,Process by J.Gibson

Technology

as an important Factor

Job Responsibilities
Technological factors Social setting differences

Task factors

Job analysis

Job design

Perceived Job content

Job performance

Human factors

Individual differences

Fig.2 Conceptual Model of Job Design & Job performance by J.Gibson

Possible Org Structure & Job design

SAP Section or Department?

SAP Competency Center

System Utilization Department

SAP Training Unit

Business Analyst Job

Power User, Key User Job

Business/Process Owner Job

SAP Trainer Job

SAP Org Structure Fit

SD MM PP FI

SAP R/3
IS

CO AM
PS IM

x Fit Z Y A B

QM PM HR

Process

Business Process

User

Data

Agenda
1. SAP importance as one of the leading edge ERP 2. SAP sustainability in our organization? 3. Model of typical Organizational structure (Hierarchy)
Normal Functional model Shared Services model Shared Services model with SAP Business Owners and Users committees

4. 5. 6. 7. 8.

Real Pains! Possible Org Structure model to combat drawbacks Possible jobs, Functions and its related responsibilities RESULTS AND DISCUSSION of some of the hypothetical studies A Recommendation to SAP AG

Hypothetical Studies*
ERP System Impact on Organizations
SAP system will affect organizations & improve those areas that are

IP model

tied to organizational effectiveness measures related to IP model

SAP system will affect organizations & improve those areas that are

RG Model

tied to organizational effectiveness measures related to RG model

A successful implementation of ERP system has to be followed by

HR Model

organizational changes efforts that will improve org effectiveness associated to HR model

A successful implementation of ERP system has to be followed by

OS Model

organizational changes efforts that will improve org effectivness associated to OS model

IP:Internal Process, RG:Rational Goal, HR:human Relations, OS:Open System

*Study by Jonas Hedman & Andreas Borell 2003

Recommendations for SAP AG

SAP to consider the org structure & Job design options as part of best practises packages.

Thank you!