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Lowest Cost per Hour Does Not Equal Lowest Total Cost


Over the past 12 months I have received many calls from companies, consulting firms, staffing agencies and recruiters to find SAP Sourcing/CLM resources.  Unfortunately, the majority of these calls focus solely on finding the lowest cost per hour consultant.  The pitfall of this approach is that, for new implementations especially, staffing the cheapest consultant does not result in the lowest total implementation cost for three reasons:

First, rework takes time and money.  If the consultant is using either “trial and error” or “learning on the job” approaches for configuration, development and data loads, it does not take long to exceed the cost of an experienced consultant that will do it correctly the first time.  Experienced consultants are not starting from a blank page and will not waste time on non-valued-added activities. We have been called in to many situations in which an inexperienced consulting team had designed and started implementing a solution that violated several best practices, which led to a waterfall of issues and defects that we were asked to fix. This situation should have been prevented in the first place through the use of expert consultants who have been implementing SAP Sourcing/CLM for many years.

Second, bad design decisions cannot be mitigated easily.  The Blueprinting phase is typically less than 10% of the total cost, but it directly drives the other 90% of the implementation.   The consultant leading this phase must have a deep understanding of the system and have seen the application working in the “real world” to be able to guide the client to the best design, to analyze and mitigate the risk of custom development trade-offs, and to be able to incorporate best in class business processes and compliance.  We at SMA Enterprises (http://www.smaenterprises.us) have conducted over 70 SAP Sourcing / CLM implementations over the last 15 years and none of them have been implemented in exactly the same manner – however, all of them have been successful.  In order to execute these phases effectively, real-world implementation experience is critical from the Blueprinting phase all the way through post-go-live support. 

Lastly, missed go-lives are expensive and potentially embarrassing.  The two issues above can easily lead to extended implementation timelines, resulting in additional budget requests for existing resources,  additional resources, and/or overtime. 

While we all agree that cost is an important measure, it is the total cost, quality of the implementation, and adherence to the timeline that are the most important factors. It may seem counterintuitive, but hiring the best qualified consultants with deep implementation experience will actually save time and money resulting in the lowest implementation cost.



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