Gap Analysis in SAP

Contents
What is Gap Analysis in SAP? …………………………………………………………. 1
Method of Fit Gap Analysis in SAP…………………………………………………….. 2
How to find “Gaps”? ……………………………………………………………….…. 4
Why do we need a local consultant? ……………………………………………………. 6
We have differences and what’s next? ………………………………………………….. 6

 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:

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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

Types of Project Method Most Suitable

Upgrade Project
Maintenance Project
Implementation Project
Optimization Project
Safeguarding project
Template Project
Simulation and Questionnaire
Simulation and Questionnaire
Hybrid is more intensive hence effective
Brainstorming
Simulation & Brainstorming
Questionnaire or Hybrid

 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

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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.

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 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:

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 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.

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 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

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