Cooper Industries’ Barbara McNally recalls the day she received the help desk ticket asking her to “get rid of this stuff.” That stuff was something she thought had been resolved during a big SAP divestiture project completed six months prior.
The Tools division had been split off from Cooper Industries to pursue a joint venture with Danaher Tools. As a result, Cooper Industries needed to remove the software associated with the Tools Division from the larger SAP system.
To accomplish this, a copy was taken of the entire SAP system and the Tools division isolated, carved out and moved (over four months’ time). The problem was the Tools division shared customers with other Cooper divisions. And the subsequent copied—and open—Tools transactions remained in Cooper Industries’ SAP system after the Tools division had been moved off. Those transactions weren’t open in reality, but this was obviously adversely affecting business for the other divisions—as Cooper’s customers’ credit limits and exposure still reflected those open transactions.
So here was the challenge for McNally: She needed to close the open billings, deliveries, and orders without generating new output that would confuse the customers.
“That was not an easy thing to do,” says McNally, who is the enterprise business systems lead at Cooper Industries. She then recalls that it took nearly 100 hours to resolve.
Where’s the Wiki for Divesting SAP Systems?
When it comes to integrating businesses into the SAP landscape, there’s lots of guidance. But McNally quickly found out there wasn’t as much guidance when it came to taking software out of the SAP landscape.
That’s most likely because every divestiture is so different, says Michael Romaniello, who has completed four divestiture projects through his career and now works as an SAP consultant at itelligence. Each has its own tone, its own flow. Or perhaps most of all, as McNally puts it, it’s because “it’s not easy. It’s really just hard work. There’s no magic to it.”
There may be no magic answer, but here are four tips to help make an SAP divestiture project successful.
1. Start Early—If Possible
SAP has a team within its consulting organization, called System Landscape Optimization, which helps clients handle, among other things, divestitures. This team of 200 serves around 800 customers a year, handling everything from smaller projects that can be accomplished remotely to larger ones that will ultimately transform businesses. There are other companies, of course, that perform this service as well.
This team can step in early on to provide pre-scoping services—even before the buyers are decided. Case in point: Its head, Alexander Rombach, is working with a client who is thinking about selling certain pieces of the company. SAP is leading the client through a process to extract the data out of existing systems to make available to a potential buyer so that the company could use it to evaluate potential purchases.
“That is an ideal scenario,” Rombach says. “Bring us early in the loop.”
2. Get Business Users from Both Sides Involved
McNally says one of the biggest mistakes was that Cooper’s project ended up being an IT-only one when, in fact, the team was dealing with business transactions. Technical, functional and business involvement is crucial to SAP divestiture success.
Approaching the SAP divestiture as purely IT-driven without consulting experts in the business can lead to the wrong approach, SAP’s Rombach says. He sees a tendency to have a hasty timeline and go for a very quick-and-dirty approach using homemade, uncertified tools, which can poorly affect audit compliance, for example. (SAP, naturally, sells its own software for SAP divestitures).
A best practice is to set up a steering committee that can drive regular reviews and track milestones, Rombach says.
In turn, the most successful divestitures have strong representation from both sides of the transaction—the former parent company and the new organization, Romaniello says. That includes strong technical resources from the former parent.
3. Make Sure to Secure the Right Skills
Speaking of technical resources, taking a back-up copy of an SAP database and restoring it on new hardware isn’t always straightforward, Romaniello says. It’s crucial to have the SAP experience, particularly strong Basis experience, to address any problems during database restoration.
It’s also important to have the lawyers associated with the divestiture present—Romaniello says having them around during the planning phase is helpful for the legal questions that arise.
Of course, a lot of the parameters for the project are dictated by the divestiture itself—i.e., the project timeline linking to what is agreed upon in the actual divestiture. That means the projects can be as short as two to three months, and there isn’t time to go through the traditional test cycles, Romaniello says. Having involvement from the users who know the software best is crucial, since you’ll be relying on their knowledge, past documentation and past test scripts.
“Otherwise, you’ll be shooting from the hip,” he says. “Getting users in there testing, during any testing phases you might have, is key.”
4. Plan for Post Go-Live Before Go-Live
Business users need to be involved through the whole project, not just during planning and requirements gathering, according to SAP’s Klaus Schmelzeisen, global head of Data & Technology Services (DTS). This will help guard against one of the chief reasons SAP sees for troubled divestitures: poor data quality and governance.
The advice would have helped Cooper Industries. McNally’s lesson learned from Cooper’s project? Make the transactional clean up of the company being divested part of the project.
In turn, there’s a loss of knowledge capital for the newer company supporting the system. The company needs to consider if there are additional business processes that it will need to control now that it is its own entity, Romaniello adds.
Above all, companies need to be flexible and expect bumps in the road.
“Always have some contingency built in,” Romaniello says. “There’s going to be things that pop up that you don’t foresee.”