delivering real-time business value for aerospace and defense

July 2013

Delivering Real-Time Business Value

for Aerospace and Defense SAP Business Suite Powered by SAP HANA

Public

© 2013 SAP AG or an SAP affiliate company. All rights reserved. 2 Public

The real-time opportunity

Globalization, worldwide market volatility, and

shrinking defense budgets are forcing aerospace

and defense (A&D) companies to adapt quickly and

streamline operations while continuing to innovate.

Increase market capture and create next-generation solutions

Execute complex programs on time and within budget

Develop a responsive supply network, reducing cost and risk


Becoming an innovation-driven enterprise Align business operations with customer needs

Manage

complex

customer

programs

Monitor and analyze high volumes of financial and

operational data for faster and accurate project progress

and status

Increase process efficiency in project management and

operations

Reduce cost of finance and compliance reporting for big

programs

Design, build,

and service

complex

products

Support lean initiatives and increase manufacturing

efficiency

Increase aftermarket profitability with real-time monitoring

of service operations and full customer insight

Plan, simulate, and run bigger projects in engineering and

manufacturing

Orchestrate

responsive

supply

networks

Sync demand and supply in real time, adapt faster to

disruptions, model alternative scenarios

Gain deep supplier integration for real-time collaboration

Get instant insight into supply chain risk and performance


SAP Business Suite powered by SAP HANA The next-generation business platform

Real-time business

In-memory

Business

transactions

Digital

connections

Collaborative

business

Cloud Social

Big Data Mobile

One platform bringing it all together

Advanced

analytics


Industry value map for aerospace and defense Enabling the innovation-driven enterprise

Technology

Solutions

Aftermarket Services

MRO Services and Lifecycle

Support

Service Parts Management

Equipment Visibility

and Performance

3D Business

Visualization Consumer Experience Analytics Enterprise Mobility

SAP HANA Platform

Managing Complex

Customer Programs

Collaborative Sales

Force Automation

Government Contracting

Program Management

Designing and Building

Complex Products

Product Development

and Compliance

Embedded Systems

Technology

Project Manufacturing for

Complex Assembly

Plant Operations and Maintenance

Responsive Supply Network

Collaborative Supply Planning

Supply Chain Execution

Supply Chain Analytics

People and

Talent Core Human

Resources and Payroll Talent Management

Workforce Planning

and Analytics

Finance Financial Performance

Management

Accounting and

Financial Close

Collaborative Finance

Operations

Enterprise Risk and

Compliance

Management

Procurement Supplier Discovery and

Lifecycle Management

Strategic Sourcing

and Contracting

Collaborative Invoice

to Pay

Commodity

Management

IT Management Application Lifecycle

Management

IT Infrastructure

Management

IT Service

Management

IT Strategy and

Governance

Application Develop-

ment and Integration

Data

Management

Time and Attendance

Management

Treasury and Financial

Risk Management

Procurement and

Order Collaboration

IT Portfolio and Project

Management


Industry value map for aerospace and defense Real-time value for key end-to-end processes

Technology

Solutions

Aftermarket Services

MRO Services and Lifecycle

Support

Service Parts Management

Equipment Visibility

and Performance

3D Business

Visualization Consumer Experience Analytics Enterprise Mobility

SAP HANA Platform

Managing Complex

Customer Programs

Collaborative Sales

Force Automation

Government Contracting

Program Management

Designing and Building

Complex Products

Product Development

and Compliance

Embedded Systems

Technology

Project Manufacturing for

Complex Assembly

Plant Operations and Maintenance

Responsive Supply Network

Collaborative Supply Planning

Supply Chain Execution

Supply Chain Analytics

People and

Talent Core Human

Resources and Payroll Talent Management

Workforce Planning

and Analytics

Finance Financial Performance

Management

Accounting and

Financial Close

Collaborative Finance

Operations

Enterprise Risk and

Compliance

Management

Procurement Supplier Discovery and

Lifecycle Management

Strategic Sourcing

and Contracting

Collaborative Invoice

to Pay

Commodity

Management

IT Management Application Lifecycle

Management

IT Infrastructure

Management

IT Service

Management

IT Strategy and

Governance

Application Develop-

ment and Integration

Data

Management

Time and Attendance

Management

Treasury and Financial

Risk Management

Procurement and

Order Collaboration

IT Portfolio and Project

Management

Highest real-time

business value

for A&D

1 2 4

3

5 6


Today

KPI improvements are high-level estimates and will have to be validated for each customer situation.

With SAP Business Suite on SAP HANA

Program management Business value for portfolio management (SAP Portfolio and Project Management)

Fact-based decisions require real-

time information on the status of

running projects, programs, and

proposals

Analysis of large portfolios in the

portfolio dashboards is time-

consuming, leading to lack of

transparency

Faster access to decision-making

information in dashboards, such as

status, timeline, financials

Accelerated dashboard performance

for comparison of large running

projects and proposals

Increase transparency for

decision making on

portfolio or

program level

Improve speed of

aggregating

financial, scope,

or resource

information

Aggregation of financials, such as

actual or planned cost commitments

along the investment hierarchy, takes

a long time for large portfolios

Outdated information on investments

increases efforts for reviews

Accelerated roll-up for financial and

capacity planning Information

Calculation of most important key

performance indicators (KPIs) based

on values from financial planning,

removing manual calculation

Enhanced transparency for holistic

monitoring of capacity demand and

supply at various levels of portfolio

hierarchy


Today



Project manufacturing for complex assembly Business value for project management (project system)

Long wait and locking times along

business processes hinder project

execution and impact flexibility to

react to deviations

Execution of complex engineer-to-

order/make-to-order (ETO/MTO)

processes is suboptimal, due to

unmanageable data volumes across

finance and logistics

Improved runtime of core project

management transactions, such as

resource-related billing, overhead

application, or progress analysis

Higher end-to-end process efficiency

and increased employee productivity,

improving work quality

Increase user productivity

and end-to-end

process efficiency

when managing

large projects

Improve transparency and

decision support to

quickly adapt to

critical alerts

Real-time analysis of high volumes of

data for complex, long-lasting

projects or cross-project monitoring is

challenging due to high data volumes

Due to missing 360-degree real-time

transparency across applications,

deviations in costs, time, resources,

or quality are seen too late in the

process

Acceleration of project info system and new project line-item reporting, delivering faster insights

Early insight into project risks, allowing timely corrective measures, highlighting deviations in real time

Planned: Project execution cockpit to enable project managers and staff to analyze status and progress of one or more projects end-to-end with real-time data


Today



Project manufacturing for complex assembly Business value for material requirements planning (MRP)

Decisions are often made based on

outdated information produced by

periodic MRP runs

There is no ability to replan quickly if

conditions change due to long run

times

Prediction of inventory coverage for

critical parts is difficult

There is no ability to replan if

conditions change during the

planning horizon due to long runtimes

Faster replanning allowing more

frequent MRP runs in shorter cycles

Faster reaction to demand changes

Reduction in inventory and safety stock levels

Fast simulation of different what-if scenarios

Accelerated calculations such as stock requirements and where-used lists, as well as early alerts on critical materials

Better synchronized demand and supply for global cross-plant planning, reducing “bullwhip effect”

Changes propagated faster through the supply chain, allowing such things as more frequent updating for supply network collaboration

Reduce days in inventory

and safety stock

1%–5%

Reduce

Improve

inventory

obsolescence cost

(% of revenue)

1%–5%

customer service

level and efficiency

when dealing with

engineering

changes


Today



Supply chain analytics Business value for supply chain monitoring

Near real-time information is lacking.

Batch jobs are used to extract data

from planning system to central

reporting, typically on weekly basis

There is no ad hoc operational

reporting

Reporting, queries, and dashboards

must be created by each customer

individually

It is not possible to run sub-daily planning jobs and analyze the results because of long data preparation times in the business warehouse

This prevents fast response to ad hoc queries from customers, which may result in lost sales

Decision support based on near real-

time information

Information updates possible via

delta capabilities

Built-in analytical reporting scenarios

provided with streamlined data load

Planned ability for customers to add

their own KPIs and dashboards

Advanced data retrieving and

computing functions of SAP HANA

used to optimize the reporting of

supply chain planning data

Reduce time spent compiling,

generating, and

waiting for reports

5%–10%

Increase

Optimize

visibility into key

supply chain

performance and

risk indicators

analysis

capabilities with

multiple levels of

aggregation and

drill-down

techniques


Today



Collaborative supply planning Business value for demand-driven supply chain

Accessing and effectively using

timely demand information from the

supply network are becoming more

and more difficult

Decisions are often based on

incomplete, inaccurate, and outdated

information

Hardware and system landscapes

are challenging to administrate

Increased business and expert user

productivity with faster planning

processes and improved user

experience, as well as by driving

rapid consensus across the supply

chain network

Near real-time reporting with faster

information analysis, leading to better

supply chain visibility and decision

making

Improved production and cost

efficiency due to simplified system

setup and administration, as well as

provision of a more robust planning

foundation

Reduce planning cycle

times

Increase

Reduce

supply chain

performance

total cost of

ownership


Today



Financial performance management Business value for planning, budgeting, and forecasting

Planning performance is limited to

online analytical processing (OLAP),

staged cubes for transactional and

master data

Data load performance is driven by

the amount of data extracted from

SAP Business Suite applications

Reporting, loading, and retraction

performance limits planning iterations

Drill-down within OLAP cubes and

navigation to SAP Business Suite

and online transaction processing

(OLTP) data occur within standard

times

Seamless replication of master and

transactional data from SAP

Business Suite

Availability of more granular data to

support planning

Big Data challenge negated, allowing

faster extract and DataStore object

(DSO) activation times

Iterative planning and real-time

simulation supported through

improved performance

Improved performance for drill-down

(expand) and consolidation (collapse)

Fast drill-through and live view of

transactional data in SAP Business

Suite

Improve financial

transparency

Reduce

Minimize

cycle times, month-

end closing times,

and manual effort

cost of financial

reporting


Today



Financial performance management Business value for profitability and cost analysis

Data latencies and processes delays

impact the ability to react to issues

and opportunities

Lack of data depth and user self-

service affects internal decision

making

Processes take a long time to run

Data queries are time-intensive

Data analysis is mostly manual

Substantial amount of effort (time

spent) does not directly add value

Resource efficiency and

effectiveness is suboptimal

Timely execution of critical business

processes that supports decision

making and increases the ability to

swiftly act (insight-to-action) in

dynamic market environments

Critical transactions and calculations

able to run quickly

Instant response times on queries

Prebuilt analytics to automate the

data analysis process

Leaner processes from data capture

through data analysis

Increased productivity through

process-optimized analytics and

mobile support

Improve cost and profitability

transparency

Reduce

Minimize

cycle times and

manual effort

cost of financial

reporting


Today



Financial performance management Business value for financial and managerial reporting

Risk of noncompliance occurs due to

unfulfilled audits

Much decision-relevant data is not

readily available

Data analysis is not supported or

automated

Batch jobs and reports take a long

time to run

Data analysis is time-intensive

A large number of time-consuming,

and non-value-added processes are

required to provide (access)

accurate, up-to-date information

Timely execution of compliance-

relevant validation tasks

Increased end-user satisfaction

(accurate, detailed, visualized, timely,

and actionable information)

Acceleration of key critical-path

processes and reports

Instant response time on most data

analysis queries

Workarounds and data latencies

eliminated

End-user data analysis through self-

service means (via

SAP BusinessObjects business

intelligence solutions)

Improve service-level

performance

Reduce

Minimize

cycle times, month-

end closing times,

and manual effort

cost of financial

reporting


Today



Accounting and financial close Business value for entity close

Process take a long time to run

Reconciliations are time-intensive

There is limited time for analysis

Inefficiencies occur due to manual

processes and low automation

Missing financial excellence

results in higher cost of equity

at the capital markets

It is difficult to support parallel

financial reporting standards on a

global basis and in simulation of

scenarios

More time for analysis, less over-

time, and earlier publishing of

financial results through faster

period-end processes and better

reconciliations

Increased efficiency through smarter

reconciliations and reporting,

reducing operating costs and

improving stakeholder satisfaction

Real-time analytics down to the

lowest level of detail – delivering

quality at source, transparency, and

process efficiencies

Reduce month-end

closing time

Reduce

Enhance

cost of finance

compliance and

accuracy


Customer case

Reference

US$100 billion

aerospace and

defense companies

• SAP HANA software, SAP HANA

platform, and SAP Business Suite

on SAP HANA

• Payroll

• Employee competencies

• Inventory and missing parts data

analysis

• Reduction of inventory levels and

customer delivery penalties

Annual

benefit

>US$200

million


Next step Business scenario recommendation and value discovery workshop

SAP offers a proven methodology and approach to

discover the customer-specific business

improvement areas and quantify value potential.

We suggest such a workshop with your

line-of-business and IT experts.

As starting point, we recommend a performance

and usage analysis of your current system.


Reference US$100 billion A&D companies Summary of validated scenarios (combined findings)

Feasibility

Bu

sin

ess v

alu

e

SAP HANA use cases mapped to industry value map end-to-end solutions

Legend

Lo

w

Hig

h

Low High

SAP Business

Suite on

SAP HANA

SAP HANA

products

SAP HANA

Platform

Phase – deployment road map Annual revenue: US$100 billion

Inventory and

missing parts data

analysis

Payroll

Employee

competencies

report

Reduce inventory

levels and

customer delivery

penalties

2 1

1

1

1 Short term

HR: Payroll (reduce payroll query wait time, reduce

time for it to create a new payroll report, reduce

time spent to consolidate payroll reports)

Employee competencies report (reduce

competencies query wait time)

SCM: Reduce inventory levels and customer

delivery penalties (reduce days in inventory;

reduce customer delivery penalties; reduce

inventory write-offs; reduce the cost of

developing BI reports; reduce data cleanse

costs; reduce IT spend on data integration)

2 Medium term

SCM: Inventory and missing parts data analysis

(reduce inventory and missing parts query

wait time)

SAP HANA Platform: customer-specific SAP HANA products: SAP NetWeaver BW on SAP HANA, high-performance applications (HPAs), apps powered by SAP HANA SAP Business Suite on SAP HANA

Scenario

(business value)


Note: Use cases in the global use case repository are captured directly from customers and internal SAP innovation

sessions and may not be completely validated.

Aerospace manufacturer: Employee competencies report Aerospace and defense

Business context and goals

Customer must constantly analyze the required employee competencies for aircraft engineering, production, assembly, and maintenance and assign the appropriate employees to the outstanding work

Based on actual and historical data, the customer also requires simulation capabilities to get insights into future competencies and hiring needs

Business challenges

When a query is run to find a particular competency on the overall customer scope, it takes more than 30 minutes to get a result

Data for reporting is not current 2,000 users are currently executing those analysis, with 15,000 expected in future It is difficult to execute simulation runs on future competencies and hiring needs

Process innovations

Competencies reports can be executed on real-time data and fast simulation runs with ad hoc input parameter settings to deliver high-quality results for future competencies needs

Contribution of SAP HANA

Reports will be compiled directly in SAP HANA database in the SAP NetWeaver Business Warehouse (SAP NetWeaver BW) application Provide competencies dashboard to top management Increase internal customer satisfaction Better analyze customer competencies capacity thanks to drill-down features Increase number of managers getting competencies information from 3,000 to 12,000

Value drivers/KPIs

Reduce competencies query wait time by 50% (KPI: Average competencies query wait time, in seconds)

Innovation scope

SAP HANA products (HPAs, apps)

End-to-end (E2E) solution

Aerospace and defense – workforce planning

and analytics

Value potential 3

Feasibility 1

Low High

1 5

Low High

1 5




Aerospace manufacturer: Inventory and missing parts analysis Aerospace and defense


Within the aircraft engineering processes, the inventory and missing parts must be monitored

continuously

Business challenges

Due to the cumbersome data loading process, updated information on inventory and missing

parts are only available on a monthly basis

Process innovations

Inventory and missing parts monitoring and analysis can be executed on data sets that are

updated daily


SAP NetWeaver BW powered by SAP HANA will improve layered architecture capabilities

Compile reports directly in the SAP HANA database

Help ensure accuracy of data

Help ensure a continuous data loading process for all supply chain management (SCM) data

Improve inventory and missing parts data loading frequency from monthly to daily

Value drivers/KPIs

Reduce inventory and missing parts query wait time

(KPI: Average inventory and missing parts query wait time, in seconds)

Innovation scope



Aerospace and defense – project

manufacturing for complex assembly

Value potential 4

Feasibility 1

Low High

1 5

Low High

1 5




Aerospace manufacturer: Inventory and missing parts analysis Aerospace and defense


During the aircraft engineering process, inventory and missing parts need to be constantly

monitored and analyzed

Business challenges

Due to complex and cumbersome loading and report generation process, data is only loaded

once a month in the SAP NetWeaver BW environment. Therefore, all report results are not

based on current inventory information

Process innovations

Missing parts data are loaded into SAP NetWeaver BW on a daily basis for better decision

support and fast analysis


Improve layered architecture capabilities for SAP NetWeaver BW

Enable compiling reports directly in the SAP HANA database

Enable SCM reporting to be based on near real-time data

Help ensure accuracy of data

Help ensure a continuous data loading process for all SCM data

Value drivers/KPIs

Reduce inventory and missing parts query wait time

(KPI: Average inventory and missing parts query wait time, in seconds)

Innovation scope



Aerospace and defense – service parts

management

Value potential 4

Feasibility 2

Low High

1 5

Low High

1 5




Aerospace manufacturer: Payroll Aerospace and defense

Innovation scope



Aerospace and defense – core human

resources and payroll

Value potential 3

Feasibility 1

Low High

1 5

Low High

1 5


Customer manages 4 billion payroll records. Those records are regularly loaded into an SAP NetWeaver BW system,

and reports need to be generated

Business challenges

Loading the payroll data from SAP ERP to SAP NetWeaver BW takes at 1.5 days each week, and during load time, the

BW system slows down performance for other reporting requests

Aggregated HR information is hard to get – have to launch several partial reports and consolidate them in Microsoft

Excel

Getting a report for the business HR team takes a long time

HR team cannot easily identify the several wage types represented in the pay slips of the country

Process innovations

HR team can report on daily updated payroll data with fast response time and the ability to drill down to any granular

level (no data aggregation anymore). Ad hoc slicing and dicing of the data improves the identification of wage types per

country.


Accelerate the loading of data using the customer-specific extractors

Increase response time for the reports – they can be executed on granular payroll data (no aggregation needed

Accelerate the loading of data using standard and customer-specific SAP NetWeaver BW extractors

Improve performance of HR system in SAP NetWeaver BW during the data loading (because of reduced time of

loading)

Increase internal customers’ satisfaction with better analysis of payroll data thanks to drill-down features

Produce the HR dashboard on the first day of each month (and not second or third)

Avoid BI system performance issues during working time (as it is the case today for monthly data loading)

Value drivers/KPIs

Reduce payroll query wait time by 50% (KPI: Average payroll query wait time, in seconds)

Reduce time for IT to create a new payroll report by 60% (KPI: Time required to create a new report)

Reduce time spent to consolidate payroll reports by 40% (KPI: Average time spent to consolidate partial reports in one

consolidated report)




Aerospace manufacturer: Reduce inventory levels and

customer delivery penalties Aerospace and defense

Innovation scope



Aerospace and defense – supply chain

analytics

Value potential 5

Feasibility 4

Low High

1 5

Low High

1 5


A leading aerospace and defense manufacturer’s teams need real-time analytics on inventory

levels and customer delivery performance. Significant customer penalties can be incurred if

delivery is late.

Business challenges

The existing legacy database takes several hours to produce weekly/monthly reports. New

reports can take several weeks to develop.

Process innovations

Real-time analysis of supply chain and customer delivery performance is required to support

working capital and operating cost reduction


SAP HANA can enable further innovation in analyzing/modeling business scenarios.

Value drivers/KPIs

Reduce days in inventory; reduce customer delivery penalties; reduce inventory write-offs;

reduce the cost of developing BI reports; reduce data cleanse costs; reduce IT spend on data

integration




Aerospace manufacturer: MRP Aerospace and defense


When this aerospace manufacturer produces a plane, its bill of materials (BOM) is highly

serialized and its MRP run takes about 50 hours to run for one plane. The company also needs to

synchronize the production with suppliers and subcontractors.

Business challenges

This long runtime doesn't allow the company to have a real-time and synchronized supply chain

with vendors and subcontractors when engineering changes are applied to the BOM

Process innovations

Run an MRP on SAP HANA and transfer the result to the ERP system


Speed up the process

Enable running more frequently

Value drivers/KPIs

Reduce out-of-stocks

Reduce errors during production

Innovation scope



Aerospace and defense – project

manufacturing for complex assembly

Value potential 4

Feasibility 4

Low High

1 5

Low High

1 5

delivering real-time business value for aerospace and defense

Technology

service management

infrastructure management

commodity management

project management highest

sap ag

program management designing

attendance management

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