How to Determine The Appropriate Staffing Level for SAP DP

Executive Summary

• There are essential factors to the staffing requirements for SAP DP.
• Why SAP DP is more expensive to support than other forecasting applications.

What is Staffing Level Required to Keep SAP DP Working?

Most companies I have worked with are unfamiliar with how much work and workforce are required to implement SAP DP and keep it working for its full life-span. When companies choose SAP DP, they must recognize that they have selected one of the highest maintenance solutions available on the market.

I can only think of one that may be comparable, and this is SAS. However, this is for a different reason. SAS is designed for clients that need and want to create custom forecast models. This requires professional mathematicians’ staffing, so it is probably not a fair comparison to DP, which is running canned statistical forecasting models.

Staffing Models in Demand Planning

The staffing that I see in companies for demand planning is utterly inadequate for the task of maintaining the forecasting solutions that have been selected. Many of the problems that demand planning faces generally are due to both a shortage of personnel and a shortage of the right type of personnel. I am not sure where all the people trained in US universities in mathematics work, but it does not seem that many works in forecasting in supply chain organizations.

Most companies do not have people in the supply chain organizations who understand their forecasting software models. They cannot perform factor analysis or begin to use causal or regression forecasting techniques. If you find yourself in a similar boat, it is essential to get your employees skilled in basic forecasting mathematics, and this requires active training, not merely an APICS certification. APICS is too often used as an inexpensive band-aid to cover up poor hiring practices and relative disinterest in more serious investments into individuals. Companies also get an enormous amount of free work from people that get APICS certified.

How Much Money Lost to Bad Forecasting?

What is so amazing about this present state of affairs is that improving forecast accuracy by just a few percentage points can quickly pay for more personnel, better systems, etc. As measured by the contribution to the business’s profitability, forecasting departments in supply chain organizations should have carte blanche with funding.

For a company with a few hundred million dollars in inventory in their system, a forecast improvement of just 3% can reduce inventory by 6 million dollars, which is typically valued at 25% benefit to the business (cost of capital, obsolescence, etc..). That leaves $ 1.5 million to spend on forecasting per year to get that 3% improvement. The numbers add up pretty quickly when the topic turns to forecast improvement. Every company I have worked with can improve their forecasting by more than 3% but merely making better decisions regarding software selection and maintenance.

Staffing SAP DP

Companies most often want the panache of the SAP name, but most often are not interested in changing their staffing model to deal with SAP DP’s realities. They need to because SAP DP imposes a very significant maintenance load on the company over and above other solutions. This is based upon direct observation from many accounts over a ten-year period.

What Is The Right Level of Support for DP?

I recommend two full-time on-application DP support personnel that are primarily technical. One can be stronger on the data side and one stronger on the functionality side. A third resource can be across another application like SNP or PP/DS and can take some management functions, but must explain the solution and explain changes in answer to the business. They must also obviously be able to communicate with and have the respect of the technical consultants. This role is required but under-staffed. However, it is a vital role. Using nonhome country language-speaking technical APO experts who like to configure the solution and explain and socialize the solution has been tried and has proven wanting. As with all the SAP planning modules and any planning application, DP requires at least one resource whose first language is the home country of the implementation. The ultimate resource is for the maintenance of the integration. DP is integrated into SAP with the CIF. I consider the CIF a Pandora’s Box of problems, and therefore no longer recommend using it. But it is what most accounts use, and depending upon the number of SAP modules implemented typically requires one resource to keep it up and run.

This is to clear the queues and adjust them for system copies and other maintenance and changes. Below is a graphical representation of this staffing model described above.

Cost Calculation

I have developed the spreadsheet below, which is part of the TCO analysis I have performed for four APO modules. Here is the link to the demand planning analysis article. It has made some assumptions about what different things cost. You can see that the total resource allocation for DP for support numbers 2.8 versus 1.5 for a best breed solution. SAP is more expensive to support as well as implement.

Staffing Level Duration

This staffing must persist for the life of the application. Without this staffing, the DP implementation will gradually fall into disrepair. It will lose all credibility with the demand planners who will circumvent it with Excel or other legacy forecasting solutions (and paste the results into the planning book).

This happens all the time. Unfortunately, too many companies that follow a “slimmer” staffing model attempt to implement DP and always run into problems. I have seen DP rendered as nothing more than a barely used statistical engine at too many clients, and in a way that sets the company’s forecasting capability back to a level before the entire DP implementation, that I am now extremely prescriptive as to what is required to keep the DP implementation working. It is time to inject reality into DP staffing. If the slimmer staffing model is desired, then choose a different solution. However, if DP is desired and selected, staff it in a way described in this article.

Conclusion

One of the biggest problems plaguing IT organizations is that expensive solutions are selected, and a great deal of money is put into implementing them, and then support is not adequately funded. This places companies on a merry-go-round of attempting to replace systems that were deemed flawed, but for which a large portion of the problem with the system is that it was not appropriately maintained.

A better approach is to buy a less expensive solution that can be fully funded for its entire life-span. However, this is not done because companies are not made aware of how much effort and expense are involved in maintaining these systems.