The famous business adage holds that you cannot manage what you cannot measure. It’s a lesson that resonates with experienced SAP project managers, who recognize the need for accurate measurements at every phase of an SAP project.

Obtaining accurate and useful metrics was a particular challenge for one Canadian bank recently. The bank decided to replace its legacy core banking system with a suite of SAP solutions for the banking industry including SAP ERP 6.0, SAP Customer Relationship Management (SAP CRM), Banking Services 6.0, and SAP NetWeaver Business Warehouse business intelligence tools. The large scope of the project — and the short window in which the bank intended to achieve it — meant the project team needed to identify and track project metrics carefully. Scope creep, geographical distribution of the project team, differing definitions among project sub-teams, and varied project tools presented a major challenge for the bank’s project management office (PMO).

To combat these challenges, the bank’s SAP consulting team implemented an Earned Value Management (EVM) methodology. EVM is an approach that combines scope, schedule, and cost into a single metric — streamlining the process of tracking a complex project and ensuring that all project team members are on the same page. After implementing EVM, the bank’s PMO had a more accurate and objective measure of the cost, schedule, and scope of the ongoing project and was better able to plan for the project’s completion.

EVM was originally developed by the United States government in the 1960s, though it has been simplified by many project experts since then. Prashanth Harish, project manager for SAP Consulting – Global Delivery, recently shared with ERP Expert the 10 steps necessary to implement EVM on an SAP project.

Step 1. Identify the Customers Who Need Metrics

Many project managers collect as many metrics as possible to ensure that they have not missed anything. However, EVM metrics are expensive to collect, according to Harish, and should be considered only if you can identify customers that need them.

“If you don’t have a proper understanding of who these metrics are for, all the time and effort you’re putting into those metrics is a waste,” he says.

The EVM methodology was created to unify cost, scope, and schedule information into a single metric, so the SAP team at the Canadian bank identified PMO-level members and team leads as the only customers for the metrics. That way, Harish says, they were able to address issues quickly.

Step 2. Determine the Project’s Goals

Ideally, the project’s goals will be closely aligned with the company’s overall goals — however, you should find out what is most important before implementing an EVM methodology.

“Are you collecting these metrics to finish the project ahead of time or to lower costs? What is the benefit you are seeking with each metric?” says Harish.

While cost and scope were important to the bank, the schedule was the most critical metric to measure against.

Step 3. Identify a Baseline Scope

Because EVM metrics include several individual components compiled into one overall metric, it is critical to measure those metrics against what Harish calls a “fixed target.” Harish accomplished this by meeting individually with the various team leads on the project (including SAP ERP Central Component [SAP ECC], SAP CRM, and SAP ERP Financials) and developed a detailed work breakdown structure (WBS).

The WBS was broken down into four major deliverables, each of which included several tasks that acted as a baseline of work (Figure 1).

Figure 1

An example WBS broken into four major deliverables

Step 4. Identify the Status Reporting Tool

From Microsoft Project to spreadsheets, there were several widely-used tools for tracking the status of the bank project. To ensure consistency and prevent duplication of work, the SAP team mandated that all status updates be completed in SAP Solution Manager.

This proved a wise choice, as SAP Solution Manager gave the geographically distributed project team a central point through which status updates would be universally available.

“There were 60 to 70 people in Germany and India doing the development for the Canadian team,” says Harish. “They had been using SAP Solution Manager for some things already, but not really for the things we needed in order to calculate project status. For example, the functional specifications had to be approved by workflow in SAP Solution Manager. We just had them begin putting the status there too. It was a very logical thing for them to do.”

Step 5. Standardize Definitions for Measurable Goals

Tracking project progress is difficult if teams don’t agree on definitions for the completeness of discrete tasks. One team member may consider a task 75% finished once the coding is complete, while another may consider the same task only 25% complete (since it still must be reviewed, tested, and approved).

To ensure that all team members used the same definitions, the SAP team created an Earned Value Framework that clearly articulated the percentage of completion that would be associated with a given task. An example Earned Value Framework is shown in Figure 2.

Figure 2

A sample Earned Value Framework

Standardizing definitions allows project managers and team leads to accurately track the progress of project work, whether in the area of BI reporting, loans reporting, or any other area.

“Technologically the tasks are very different, but the milestones and processes are the same,” says Harish.

Step 6. Determine the Necessary Schedule and Resources

If the first five steps of the EVM methodology are all about defining project work, the sixth step begins the measurements phase, according to Harish. Here you begin to calculate how many resources you will need to complete the necessary work, how much effort will be required for each task, how much time each task will take, and other metrics.

For the bank project, the SAP team used the resource leveling functionality of Microsoft Project to determine the metrics. The tool allows project managers to estimate the completion date of a project based on available resources and model several different scenarios that may be faster to complete, less expensive, or less resource-intensive.

Step 7. Calculate Earned Value

To convert all the metrics collected in the first six steps into a single overarching metric, the SAP team modified the basic EVM calculation to the calculation shown below:

By dividing the total percentage of work completed by the percentage of time elapsed (from the beginning of the project realization date to the expected completion date), the team reduced thousands of individual metrics into a single number. An earned value of 100% means the project is on target. An Earned Value of greater than 100% means the project is ahead of schedule, while an Earned Value of less than 100% means the project is behind.

Step 8. Define Decision Criteria

Calculating the Earned Values associated with all project work gives management quick insight into which areas of the project team may be struggling, according to Harish.

For example, the sample charts in Figure 3 show the development progress of a group of teams on a global SAP project. You can see that three of the teams (AO, BA, and RICEFW) have Earned Value percentages of less than 100%, meaning they are not on track to complete the work as assigned. Having a simple metric such as Earned Value gives the PMO an opportunity to shift more resources over to the struggling teams in order to get the project back on track, says Harish.

Figure 3

Calculating EV for several project teams

Step 9. Use the EVM Metrics

The SAP team that aided the bank project used the EVM metrics to guide its decision making, working under the premise that past performance is a good predictor of the future. However, Harish cautions against governing project teams based entirely on the EVM calculations.

“EVM metrics are not a replacement for face-to-face communication. People deliver projects, not metrics,” says Harish.

Step 10. Incorporate Change Requests into the Project Scope

Scope creep is simply a fact of life for most SAP projects; however, it can be particularly harmful to EVM metrics that require fixed targets for scope, cost, and time. To prevent change requests from altering the baseline from which the project teams were working, SAP convinced the bank to treat any additional project requests as change requests. That way the SAP team was able to deliver the functionality as requested, yet hold on to the key EVM metrics.

“It is impossible to track progress when the target is always moving, so we decided to take all of the other stuff and track it separately,” says Harish.

Davin Wilfrid

Davin Wilfrid was a writer and editor for SAPinsider and SAP Experts. He contributed case studies and research projects aimed at helping the SAP ecosystem get the most out of their existing technology investments.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.