In The New Services Paradigmblog I described how SAP Services addresses customer requirements by shifting from traditional build-to-order implementation methods focusing on delivering resources to new innovative and simplified delivery approach focusing on delivering outcome. In this article I would like to give you some more details on what outcome-based approach actually means and what it is good for.
Imagine you have a set of requirements/characteristics for buying a new TV. You want it to be a particular size, very slim, having enough slots to connect to your other devices and have a set of other features like integrated Wi-Fi etc. In addition you expect a clear outcome like low energy consumption resulting in lower running costs, having more relaxing time by watching high quality picture and of course, having a happy partner
Would you imagine building the TV from scratch to fit your exact description? Very unlikely, I am sure you would do some survey and find TV that fits your expectations. In many cases you might need to come to a compromise, it might not have a perfect size or come without Wi-Fi transmitter but it still fulfils all your other criteria so you will buy the standard product and enhance it with some connectors if required.
Can you apply this analogy to any other product? I am sure you do. We are used to standard in our daily life; it is everywhere so why not leveraging it in our Services business?
A bit of History
Until 2008 many companies bought standard software and then spent enormous budget on hiring consultants to modify the software to fulfil their specific requirements. With the 2008 economic downturn and arrival of modern technologies (e.g. mobile business, cloud computing and big data), traditional methodology and professional services engagement models have come under greater scrutiny. Effort-based time and materials projects are no longer meeting businesses’ needs and budget management. SAP then started creating packages where service offerings are wrapped around a product and sold to the customer at fixed price. These services proved to be highly successful and formed a foundation for outcome-based services delivery. These services normally come with fixed scope, predictable costs and predicted outcome. In the meantime the portfolio of these services grew significantly; we have hundreds of services that address customer pain points.
So how can we apply “TV” analogy to our Services Business?
In the same way as you have a set of requirements and expected outcomes when choosing home appliance, companies have a set of requirements and expected outcome to solve their business problems. In the same way as you are looking for the right appliance, we can address business requirements with one or more services (SAP Rapid Deployment solutions). Do they always fulfil all customer requirements? Probably not. However, they focus on standard solution and industry best practices so why not going for a standard solution if it addresses 80% of your business requirements. I had many discussions with customers over the last few months and they all mentioned: “We might have so many requirements, but we expect you to show us industry best practices and case studies and we might come to a compromise”.
In the picture above you can see example from warehouse management solution where your requirements will be addressed with one or more SAP Rapid Deployment Solutions that work seamlessly together and each SAP Rapid Deployment Solution have a very clear predicted outcome.
In case you are not convinced yet and think that 80% of a solution is not good enough, you can still go for standard service (= home appliance) and fulfil the missing functionality or do any modifications with effort-based time and materials approach – we call them Design Based tasks.
With this new delivery approach we can preassemble a combination of SAP Rapid Deployment solutions in record time and you can get access to fully integrated technical foundation in a matter of days. If you compare it to the traditional approach, it will take close to 3 months for 10 consultants to install, configure and activate business processes and integrate solution.
Outcome-based services combined with pre-assembled services are the new reality for consulting projects.