How Penn State University modernized with SAP S/4HANA - and managed a remote go-live of a milestone project

Profile picture for user jreed By Jon Reed September 10, 2020
The pandemic has disrupted plenty of IT initiatives. During an in-depth interview, Penn State University's David Gray explained why this S/4HANA project was fundamental to the university's future - and how the entire project team stepped up.

David Gray, Penn State University
(David Gray, Penn State University)

What happens when you're doing a generational software SAP S/4HANA project, and Coronavirus hits? Do you postpone? Find a way to make lemonade?

If you're on David Gray's team at Penn State University, you finish the gosh darn project!

I'm always game to learn about successful projects completed in the face of adversity. But I find that ERP upgrades are too often about the platform, rather than the business benefit.

In other words: you modernize your ERP backbone during the upgrade, hoping for business gains going forward. But not long after their go-live, SAP quoted Gray as saying:

The functionality gained from this implementation project is a difference maker for faculty and staff across the university.

Making the business case - how you do ask your boss for a massive IT transformation?

On a recent Zoom call, Gray told me how they got there - and Gray should know. As the SVP for Finance and Business/Treasurer at Penn State University (PSU), he made the business case. So how do you ask your boss for $200 million - and a transformation that spans software systems and projects? That story goes back to 2012, soon after Gray joined PSU. As Gray told me:

Several months after I arrived, I went to President Erickson, our President at that time. I said, "Rod, I think the university needs to make a substantial investment in upgrading its core ERP systems, or we stand to have a significant failure." And, and he said, "Well, what do you think it would take David?"

I said, "Well, I think it would probably require a capital investment of something in the neighborhood of $200 million." He said, "Okay, well, let's let's go do it" - and that began our journey.

Gray is the right kind of finance leader to take that IT risk. I suspect his prior background in IT, including six years as the CEO of UMass Online, gave him the resolve to push for a modern architecture. Thus began a sweeping series of IT upgrades, starting with a new student information system. Gray's team opted for a best-of-breed model, rather than sourcing all their products through a single IT vendor. Another big project: an HR/payroll overhaul. Then, Gray turned his attention to ERP. RFP time:

We went through a very rigorous RFP process, and selected SAP S/4HANA as the product of choice. It was really not a hard decision for Penn State. We heavily-weighted qualitative criteria -  how well SAP matched our business requirements. Cost was a factor, but not by any means the most predominant factor.

As we looked across fourteen major categories of qualitative aspects of the application, SAP outscored the competition on thirteen of the fourteen. So it really was an easy selection process for Penn State, in terms of determining the vendor or the partner that had the best fit.

The S/4HANA project faces a remote imperative

And so Penn State launched their S/4HANA project, which they dubbed SIMBA (System for Integrated Management Budgeting and Accounting). The goal? Replace the university's entire thirty-year-old finance, procurement and budgeting systems. The decision worked out:

We've just come through all the stages of the project. We successfully went live the first week of July, and have been running very effectively on S/4HANA ever since.

Going back to his first PeopleSoft implementation at UMass in 2000, Gray picked up some key lessons. Lesson one: expect some glitches.

Every single project has its challenges. They all present in different ways. Hopefully, if you're smart, you have a great implementation team, and you have a good vendor partner, you get through those.

But this spring was a curveball for the ages: 

The one thing we never counted on with the implementation of S/4HANA was a major global pandemic. So here we were this spring, heading down the home stretch toward this July go-live, and we found ourselves going into remote operations mode.

Job one: protect students and staff. But the SIMBA project was hanging in the balance also:

We were not going to bring students back from spring break; they were halfway through the semester at the time. That was the week we decided to go remote. So the students finished out the last half of their semester using Zoom, and all of the workforce at Penn State went remote as well, including the project team for the SIMBA project.

The project team huddled (online) with their executive sponsors and decided: the only way was directly forward.

This was obviously not anything that we could have foreseen. But our project team, being very creative and very determined and with the full backing of the executive sponsors, myself and Provost Nick Jones, decided that we were way too close to the finish line to give up or delay us. Those kinds of decisions would have been costly.

One of the biggest challenges for remote ERP projects? Team training. Gray's team was ready to roll out training to their users, including an on-site component. They put a great deal of thought into which aspects of the training should be in-person. Not anymore. Working with their office of change management, they came up with a new training plan. Gray:

It was a mad scramble, but the team did a phenomenal job... Hats off to everybody who maintained great discipline and determination to see this project successfully across the finish line. Our implementation partner LSI Consulting was super throughout.

Reviewing the go-life benefits

And with that, the go-live happened. But what about those business benefits? One thing's for sure: if Gray's users aren't happy, they let him know all about it:

Faculty and staff in higher ed are anything but bashful. They're not the least bit afraid to voice concerns all the way up to, and including the President, if they don't feel they're being well-served, and certainly I've experienced that over the years. But I can tell you with a straight face  - and I think Provost Jones would tell you the same thing - that we've heard remarkably little from any end users about the rollout of S/4HANA. It's been extremely smooth. 

As always, there were some nits. In this case, the grant management functionality needed tweaking. But Gray says this was his smoothest go-live in twenty years - despite the circumstances. But what about that big pitch he made to move Penn State off of legacy systems? Is Gray seeing the payoff yet?

The investment was justified. Absolutely.  We were trying to bolt web front ends on to 1980s era programs. It's not our core competency... Students, faculty and staff all find S/4HANA, for the most part, intuitive and easy to navigate.

ERP must now pass the mobile-friendly user test:

That's crucial in this day and age, particularly for students, but even increasingly, for faculty and staff. They expect to be able to access all these systems with their mobile devices, from anywhere.

Modern ERP also has to move beyond its super-user base.

I've been through the training personally, and found it exceptionally easy to pick up on. I think that's the single biggest difference from the end user perspective, not somebody who's a super-user, but more a casual user that might need to get access to the system a couple of times a week... With a bit of training, they can become quite adept.

The wrap - business intelligence on deck

It's still early days to get deep into the business benefits of this project. For now, Gray says they are in a stabilization period. There is one more piece to go -  a budgets piece Gray hopes will be live by next summer. "We're very excited about that," says Gray, "Because it will provide us a multi-year platform for strategic budgeting, as well as down to the unit level."

One of the biggest issues with the best-of-breed approach Gray has chosen: the ongoing integration burden. Lately, I've seen some analysts minimize this, but APIs are not a magical cure-all. Gray acknowledged that integration headaches were a problem with the legacy finance system and their new HR payroll software. But with S/4HANA, it's gone smoothly:

Integration is critically important. We learned that the hard way with our HR payroll project, but really haven't haven't had those kinds of issues with SIMBA. Again - lessons learned.

Mapping out all the APIs with LSI Consulting has paid off. To this point, all integrations are functioning smoothly.

We mapped all those out early on, and they've all worked very, very effectively for us. Not only did we bring the project in on time, but under budget as well, so that was a win for us.

One of the keys to modern ERP ROI is changing reporting from a static process to something closer to real-time. Gray is looking forward to that. For him, the key is easily pulling data across their upgraded systems, for a cross-departmental view:

I think some of the very most interesting data doesn't come from within a single stovepipe, like finance, or HR or student, it comes from being able to work across those vertical stacks... That, to me, is where we as an institution will derive the most benefit as we go forward.

Given all the investments made, does Gray need anything else from SAP? No, he says, "We're good to go." But - he does want to see SAP's continued product investment:

We fully expect that SAP will continue to invest and make sure this state of the art application stays at the cutting edge, that they listen to us as customers - particularly as they try to really build out their toehold in large scale higher education institutions like Penn State.

So far, Gray says, so good. For my part, I'll be eager to revisit this after the budgeting piece is in place, and the business intelligence aspects are in use. Gray has ambitions for predictive analytics also - another topic to revisit.