Readers know I am not what you would call a RISE with SAP fanboy. Or, to put it another way, I believe we must err on the side of careful-weighed pros and cons, not hype.
This goes for all enterprise technologies, from blockchain to AI, and it goes for RISE as well.
One of the best ways to do this is through customer use cases. To be fair, SAP has been very pro-active with us on that front (here's one of the prior use cases from our site; here's the SAP.com RISE with SAP customer story collection).
This time around, I had a video chat with Dave Elmer, CIO of Volumetric Building Companies (VBC). Elmer's team is set to pull the go-live switch on their RISE with SAP project soon. Here's the part that really grabbed me: they've done this without any consulting engagement from SAP, or any SAP services partners. You don't hear that every day.
SAP's Brian Duffy on RISE - is large enterprise cloud ERP getting traction?
Before we go there, a quick note from my prior catchup with Brian Duffy, President, Cloud with SAP. When I asked Duffy for the RISE with SAP update, he told me:
Obviously, we launched RISE with SAP at the end of January last year. We've moved, in total, 1,300 customers from that time... We started really getting the traction, as you know, in the mid-market section, with the partners we had there across the world.
As we got into the June/July timeframe, we started to see the offering moving up upstream into our large enterprise. We had customers like Siemens, customers like CVS in North America, AMD - really large ones, that are now embracing the RISE journey.
RISE projects in the large enterprise raise a crucial market question: are we turning the corner on cloud ERP adoption in that market? Duffy's answer indicates change, but more like a gradual shift:
The customers who are still here, they're reaching out now. If they're a large one, maybe they won't move everything, but we'll start to look at a piece where we can prove out the value, that we can drive for either one business unit, or one segment, and we'll prove that out - and come back and work on the rest.
Duffy had a glowing report over the partner alignment with RISE, but since VBC didn't use a partner on their project, let's hold on that one. Turning back to VBC, what were the motivations for this S/4HANA project? To answer that, we start with Elmer, who describes himself as a "newly-minted CIO," brought on board because of VBC's growth (Elmer was formerly part of Katerra, which was acquired by VBC in 2021).
Moving to S/4HANA with RISE - do ERP customizations inhibit growth?
As CIO of VBC, Elmer takes a different approach. He wants to get out of the customization game, and build a "scalable platform" instead. To understand Elmer's S/4HANA game plan, we need to note this: Elmer is no stranger to S/4HANA implementations. VBC is actually his third S/4HANA project. Yep, that's the experience you need to pull back from external services.
One thing I like about the RISE with SAP messaging: SAP's insistence on getting customers on a path with fewer customizations. No, customizations aren't always evil; I won't get into a debate on that here. This does compel partners into new business models, but in my view, that's inevitable - and good for customers. But what does Elmer think? Why does ERP customization inhibit his growth? As he told me:
In the construction industry, there's many, many tools out there... They all have to be brought together to get the best value out of each one. Construction is so dynamic, and it changes often. The whole project can be 18 months in duration, which changes financials, which changes financials - there's lots of things that are changing all the time.
Overly-customized platforms don't play nice with each other:
We have bring together these four or five platforms, and have them all communicate effectively - that was the going-in position.
Why RISE with SAP?
Elmer knew he wanted this S/4HANA system to be in the cloud. But why RISE?
Being a mid-sized company, having SAP manage the system aspect was a feature we wanted. Given our company size, we wanted a cost-effective way of being in the cloud, and getting all the benefits of being in the cloud - without adding a ton of staff or technical expertise.
It's a misconception that mid-market companies are less complex. VBC is not a typical construction company - they have a fully-automated factory in Tracy, California as well. Their RISE with SAP footprint needed both construction and manufacturing capabilities."We go from design, through manufacturing, through construction," says Elmer.
And does that differentiate VBC?
I think when you're in urban settings, and high-cost, skilled labor areas, yes, we are. Because our modules come 90% complete. It's basically a finished product, ready to stack, and then just do the fit-out.
So far, it's working:
We're trying to become urban area, mid-market, low-income housing, hospitality housing that's completely done, where we can cut the construction time down by 40% - because we are sending complete units.
So you take on a major S/4HANA project - with no outside consultants. How do you go about that? How do you get your internal team in play? Turns out Elmer did a lot of the heavy configuration himself. But you still need a team to roll out a project like this. Elmer's advice for other customers:
I think the lesson learned is: make sure you have the right internal talent, that can do the configuration yourself. It definitely cuts down build time, because having somebody that's industry-relatable, that understands the config can speed this up immensely.
As of this writing, VBC's S/4HANA go-live is set for April 22. Are they going to pull it off?
I think we're on track. The teams are learning the areas each week. They're becoming more fundamental in their areas, to understand exactly what they're doing. This is a walk before you run type of scenario.
RISE with SAP emphasizes their "best practices" portfolio. VBC has deployed 37 of those processes so far. But Elmer has deep experience in S/4HANA config - so did those best practices really help him? Or did he know what to do? Elmer responded:
I think the business processes are really good; they're a really good starting point of how you want to turn on each system.
Don't reinvent the wheel, warns Elmer:
For me, personally, you should stick to the basics, and the basic outlines, because SAP has 80,000 customers. They've already figured out purchase orders, sales orders. You should focus on the stuff that differentiates your business, not the stuff that they've already laid out.
The wrap - on Industry 4.0, and the biggest RISE with SAP challenge
I asked Elmer: is Industry 4.0 a relevant term for VBC? He responded:
I do think this is Industry 4.0. There's going to be a lot of edge work that's going to be done, for moving file types and other things to machinery. The core is financials, manufacturing, production planning, warehousing, and then our Industry 4.0 comes later on, which will be a full MMI stack that can communicate to machines, turn on automation, complete the loop back to the core system.
Elmer's in-house implementation seemed to be going surprisingly smoothly. I asked him: what's been the hardest part of RISE with SAP? He told me the trickiest part has been hammering out all the granular details of cloud and systems management. What is his team responsible for, and what is SAP responsible for:
Well, I think it's just the unknown of what RISE does, versus what the customer knows. If anything; it's differentiating the boundaries of both sides... You're figuring that out on both sides as you go. It's all fairly new.
How did Elmer solve that? By hammering out the details in weekly meetings, directly with SAP. Most RISE with SAP customers will have a services partner in the mix. Prior to speaking with Elmer, Brian Duffy and I had something of a debate on the partner adoption of RISE, and partner attitudes towards RISE. But the truth is, I'm still gathering perspectives from a slew of partners (and I'm hearing a wide range of plans and opinions). I'll look to chase that down at Sapphire - Orlando edition.
The use cases I take on are typically post-go-live, so we can dig into the benefits accrued to the business (or not). But I do make exceptions, and that includes this type of project. Why? Because many SAP customers still have questions on what RISE with SAP is, and what a RISE project looks like. As RISE customers get further along, I'll look to flesh out the post-go-live part of the story.
As RISE moves upmarket, talking to larger customers about their pros and cons will be important. But with VBC's nuanced business model, they are definitely putting RISE and S/4 to the test. Let's see how this goes.
End note: for those wondering, the Philadelphia-based VBC is running RISE on AWS EC2. The system will support 500 employees. ASUG members can read more on this story via ASUG's piece on VBC.