For years CIOs have been under pressure to help cut costs, improve operational efficiencies, and automate the enterprise; CIOs implementing SAP have largely been effective at streamlining the back-office. They've also succeeded at optimizing the extended supply chain because SAP is well-suited to supporting execution activities, and therefore have been a good fit for reducing costs. However, times are changing.



Today’s CEO’s want to see the CIO focus IT efforts on revenue growth and profitability. With this focus, the CIO is being pressed to apply SAP solutions and information technology to more than just cost cutting, but rather to actively partner in the company’s profitability. An example of some of the key areas being discussed in senior level management circles are:

* Revenue growth

* Profit margins

* Customer acquisition and retention

* Sales conversion

* Customer profitability

* Product / product line profitability

* Incentive programs and monitoring

* Market penetration / market share

* Marketing program performance

* "Smart" growth (i.e. "good" customers vs. "bad" customers)

* Time to market

To successfully move IT and SAP in the direction of revenue and profitability growth it is important to understand where technology fits into the puzzle--, technology is not magic. When SAP is considered in its proper context as a "change enabler" or "change lever" rather than a "change driver" it is easier to understand how and where it can properly fit into a revenue and profitability context. In other words, technology works best when the rules, metrics, criteria, and the means to acquire, process, or analyze information which supports revenue and profitability are understood and defined.



For example, no amount of technology is going to make your sales people sell more if they are paid on salary, without commissions, and do not have objective sales targets and other performance measures. This comes back to the old adage of "what gets measured gets done" and it is no different with the sales force. However, depending on how you structure your sales and marketing programs SAP contains a number of tools, reports, resources, and other data analysis methods as well as bolt-ons like CRM to facilitate a change in sales and marketing programs and strategies.



What are the CIO and SAP Roles in Revenue and Profitability?



Personally I think it is healthy that C-Level sponsors should press IT in the direction of supporting and promoting revenue growth along with profitability, however, SAP by its nature is part of the execution processing and post-execution analysis process. This is where the expectation of driving revenue and profitability with SAP has to be decoupled from corporate planning and execution.



The reason SAP has worked well in reducing costs is because the reductions are based primarily on improving and integrating operational and accounting execution activities. Even the "planning" type logistics functions still don’t actually "plan" but execute "plans" either manually derived and entered into SAP, or derived from and generated by post-execution data analysis.



Using SAP to drive revenue and profitability growth requires building another layer of data collection, data analysis, "tools," and processes on top of the operational data that is processed. To work correctly this new revenue and sales support layer must be built on well defined sales and marketing programs and strategies that are then converted into processes with clear performance metrics and KPIs.



Sales and marketing must do their part in integrating their strategies into clearer plans, programs, metrics, KPIs, and other measurable criteria that can then be executed on with IT / SAP supporting these processes. ERP systems like SAP do not exist in a vacuum; they are dependent on data from plans, strategies, and historical analysis based on some concrete or perceived KPIs and business

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