What is Gap Analysis in SAP?

In simple terms Gap means small cracks. In SAP world or in Information Technology world, gap analysis is the
study of the differences between two different information systems or applications (ex; existing system or legacy
system with Client and new is SAP), often for the purpose of determining how to get from one state to a new
state. A gap is sometimes spoken of as "the space between where we are and where we want to be."
The process of gap identification between the current state & the future state or the desired state is the beginning
point of the school improvement process. The ground work for the improvement planning is laid when the deep
analysis of the factors that have created the current state is identified. The gap analysis process can be used to
ensure that the improvement process does not jump from identification of problem areas to proposed solutions
without understanding the conditions that created the current state.

The following guidelines are suggested for gap analysis in SAP by principals and team leaders who are charged
with developing campus improvement plans:
1) Identifying gaps does not mean that individuals are at fault rather it is a means of examining systemic factors
that contributed to the current state.
2) Using the scale to determine the current state is most successful if the group doing this work is assured that
they can be honest in their assessments without fear of retribution. One way to reinforce this is to have
participants write their ratings on stickier that are collected and posted on a flip with a scale drawn on it. This will
support anonymity. The evidence that is given to support ratings is usually delivered verbally, but it could be
written and collected in an anonymous process if the leader knows that individuals have concerns.
3) The information gathered in this process needs to be written up and reviewed by the team that is working on
the improvement plan. If questions arise from this review process, the team could outline a means of
investigating the issue to verify it.
4) The intent of this process is to gather information that will be used to develop a future or desired state based
on the indicators that are on the gap analysis worksheet. The team may decide to write additional indicators or to
revise existing indicators if it decides that the need exists.
5) As a result of identifying the gaps between the current state and the future state, planning teams can develop
a problem statement that summarizes the underlying structural issue that needs to be addressed. A root cause
analysis can then be developed in order to determine the factors that are crucial to improvement.
6) The factors that are identified are then used in the development of goals and objectives for the improvement
plan.

Method of Fit Gap Analysis in SAP.

1) Simulation Based – Plan -> Implement -> Analyze -> Capture

2) Brainstorming Discussion Based – Schedule -> Discuss -> Capture -> Analyze
3) Questionnaire Based – Analyze -> Formulate -> Answer -> Extract
4) Hybrid Type – Plan & Schedule -> Discuss & Formulate -> Answer & Analyze ->Extract & Capture

Recommendation for organizations implementing SAP

How to avoid problems during the implementation resulting from not identifying the local needs?
How to find and properly identify the differences between the SAP template system for the
corporation and local legal and business needs? The Fit & Gap analysis may be helpful – a standard
element of BCC Go Forward methodology for projects of rollout type.
Many Polish companies face the challenge of implementing the standard SAP system operating in a corporation.
Increasingly, they are not only the recipient of the system used in the international headquarters of the
corporation, but they are the owner of the template system (regardless of the fact, whether they are original
Polish companies or the Polish departments of the international corporations).

The implementation of such a project is an organizational and communication challenge both for the parent
company and for the local company, particularly if both companies are located in different countries. The parent
company is interested in the biggest possible adaptation of the local company to the corporation processes,
above all due to the requirement of process unification in accordance with the best practices operating in the
company.

The second essential aspect is also the optimization of the implementation, and hence its costs. But regardless of
how much the parent company would like to see the template as a consistent entirety, two types of differences
will occur:

 Legal Gaps – specific legal regulations, particularly in the financial, sales and human resources area (e.g.
correction invoice in Poland and credit/debit memo in Germany);
 the differences in the local business process (local gaps) – particular companies may have own business
processes that do not appear in the template (e.g. the unique production process in the corporation) or
other specific requirements not resulting directly from the legal regulations, but critical for the business
activity (e.g. special discount system for the key customer who has a large share in the company’s
turnover).
Many people participating in the project believe that each difference will cause the increase of the
implementation budget. However, it does not have to be the case. The awareness of the difference does not
automatically mean that it has to be implemented in the system.However, it means the possibility of selecting
the method of its processing:

 implementation in SAP system,

 leaving in the external system,
 manual processing outside the IT system or organizational change that eliminates the given requirement,
and presentation of the selected method to the persons from the local company.The experience shows that such
an attitude builds the confidence in the new system (“my needs are not ignored”) that essentially influences the
engagement of the persons from the local companies into subsequent project activities.

Prior the Fit & Gap analysis, the parent company should determine which areas of the system will be subject to
the analysis.It depends above all on the business profile of the local company

How to find “gaps”?

We know already that the differences definitely exist but how to define them? How to avoid problems during the
implementation resulting from not identifying the local needs? The Fit & Gap analysis may be helpful – a
standard element of BCC Go Forward methodology for the rollout project.

Prior the Fit & Gap analysis, the parent company should determine which areas of the system will be subject to
the analysis (will be implemented in the local company as a target).It depends above all on the business activity
profile of the local company – if it is for example a dealership, then the logistics processes will be included in the
scope of the analysis, and the production processes will be excluded.

The Fit & Gap analysis may be performed by the parent company organization or by the implementation
partner.If the partner is responsible for the execution, the trainings for the consultants in the area of the existing
template may be necessary prior the analysis (particularly if the documentation of the template is not available).

Fit & Gap analysis is divided into three stages:

Stage 1. Preparation of a solution template for the trainings. This stage includes gathering of the template
documentation (business blueprint, manuals, technical documentation) and preparation of the training system
(e.g. on the test system). The sample data (e.g. materials, customers, vendors) should be obtained from the
new company and loaded to the training system. It shall enable the employees of the local company to better
identify the discussed processes.
Stage 2. Training of the project team members (key users) in the scope of implemented processes in the
template system.The owners of the template business processes present the functionality available in the system
to the users from the local company.The implementation consultants, a particularly the consultants familiarized
with the local legal regulations, should participate in such a training.
In particular cases, if there is a problem in the local company to communicate in the project language, this stage
may be divided into two sub-stages: Training of the implementation consultants in the scope of template
processes executed by the owners of the processes in the project language, and then training of the members of
the project team from the local company by the implementation consultants in the local language.

Stage 3. Sessions of project teams devoted for the determination of the differences between the presented
processes and local needs.On the basis of the knowledge gained during the trainings, the employees of the local
company indicate the differences between the process modelled in ERP system and the process currently
operated in the company.It is necessary to indicate all perceived differences.
The decision, whether the difference will be implemented in SAP system or an organizational change by the
company will be required or whether the process will remain in the existing form, should not influence the fact of
registering the discrepancy. The reported differences should be registered, using the project tools applied in the
organization (e.g. a list of differences in SharePoint portal or at least common Excel sheet available in the
network directory). Each difference should be described by means of the following attributes:

 ID of the difference (GAP_ID) – numeric identifier,

 module – specification of the area, where the gap was identified (e.g.MM, FI),
 process that it refers to – specification of the process that this difference refers to (e.g. purchase of the
raw material),
 reporting person – full name of the person reporting the difference,
 business need – business justification for the existence of the given difference,
 type (legal, local) – information whether the given difference results from the legal regulations,
 priority (high, medium, low) – information on the degree of the significance of the difference,
 estimated workload of the implementation of the changes in the system (e.g. number of days of the
consultant work) – it allows to compare the significance of the change with the workload for its
implementation.
Additionally, the tool used for the registration of the differences should enable the changing of the difference
status (e.g. accepted, rejected, under analysis) and tracking of the change history.

The decision, whether the difference will be implemented in SAP system or an organizational change by the
company will be required or whether the process will remain unaltered, should not influence the fact of
registering the difference

“I do not understand the standard”

During the Fit & Gap analysis, it is necessary to consider several factors that may adversely influence its course.

In the international projects, one of the challenges is to determine the project communication language (usually
it is the English language) and the selection to the project team of the persons effectively using this language. If
one of the key persons does not communicate in the project language, it is necessary to devote time and budget
for the translation of the project documentation to the local language and again to the project language.
Additionally, the presence of the local consultant, knowing the language, may be necessary to perform the
analysis in the given area (in this case, an earlier knowledge transfer about the template to the local consultant
is to be taken into consideration).

An essential factor negatively affecting the success of the rollout projects is the fear of the changes that the new
system brings to the company. The trainings in the scope of the template system, which are the elements of the
Fit & Gap analysis, are a good practice to overcome these concerns.Additionally, making the system available to
the members of the project teams and encouraging them to self execution of the processes facilitate the further
communication.

Another factor is the difficulty in understanding the local circumstances by the international consultants. “We are
already integrated with this bank, so it will surely also work in Poland” - such a sentence is often heard from the
corporate consultants. They do not take into consideration that the same bank in different countries uses
different file formats for integration. Unfortunately, we often meet with similar simplifications and erroneous
assumptions that are identified only during testing or after going live. The engagement of the local consultant
allows to minimize the occurrence of this risk.

Why do we need a local consultant?

As illustrated by the examples cited earlier, the involvement of the local consultant is one of the key elements of
the success of Fit & Gap analysis (as well as of the entire project). What can and should be expected? Below, we
present three major tasks:

 Delivery of the gap list that occur most often during the implementations in the given country and/or in
the given industry (ready material for the discussion with the local company, checklist in order to ensure
that we have not missed something that might be important);
 Verification on a current basis of the requirements placed by the members of the project team (with
regards to the legal requirements) and suggestion of solutions generally applied in other local companies
instead of “reinventing the wheel” by the consultants from the corporation;
 Better level of communication with the employees of the local company (elimination of the problems
resulting from the language barriers).
We have differences and what’s next?
Each of the difference registered during the analysis should be then verified with regards to the reasons of its
operation:

 Does the current mode of operation result from the legal regulations?If yes, it is likely to take this
difference into consideration in the system. In the specific cases, it may be decided to implement the
given functionality outside the system.
  Does the current mode of operation result from the local organization? If yes – what happens, if the
process will be changed to comply with the corporate one? If the current process is better than the
corporate process, two scenarios are possible: Decision on the implementation of the change in the
system, but only for the local company or decision on the change of the template process (it cannot be
excluded that during the rollout the corporation will also learn something from its branches).
The entire Fit & Gap analysis should last from two to three weeks (depending on the complexity of the
implementation).Its result should be a list of all registered differences along with the information on the method
of their execution after the implementation.Since the implementation of these differences may influence the
processes that are already operating in other countries, it is necessary to remember to plan tests of these
processes prior going live (so called regression tests) for other countries using this system. But this is a step
belonging to the next stages of the project that will be performed much easier thanks to the reliably performed
Fit & Gap analysis.