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Next Generation Global Shared Services Lessons Learned from SAP’s Rollout of Shared Services for Finance

Martin Vajdl, Managing Director SSC Prague and Head of Global Procurement Operations

October 17, 2013

SAP AG

© 2012 SAP AG. All rights reserved. 3

Agenda

SAP Today

Evolution Global Finance Shared Services

Procurement Shared Services

Success Factors & Transformation

Outlook

2

3

4

1

5

© 2012 SAP AG. All rights reserved. 4 Internal

SAP Procure-to-Pay – Scope of Coverage Overview of Key Facts and Figures for 2012

65,000+ SAP employees worldwide

> 607,000 Received Invoices

16.3bn Revenue (2012)

>490,000 Purchase Order Line Items

3.6bn Spend (2012)

>791,000 Trip Entries in 2012

14,000+ Suppliers worldwide

400 FTE are working for P2P

ASIA PACIFIC 14% EMEA 55% AMERICAS 31%

Spend by Regions 2012


Evolution of Global Finance and Procurement Engine for process standardization, shared services and automation

2004 2005/ 2006 2007 2008 2003 2009 2011 2013

HOME RUN

Last mile

of our

FRBT 2.0

Centralized

Controlling of

Corporate

Units

Globalized

Procurement

worldwide

Shared

Service

Centers

for APJ,

EMEA & LA*

Globalized

Governance,

Risk &

Compliance

worldwide

Globalized

Facility &

Real Estate

worldwide

Global

Finance &

Admin.

Global

Field Finance

Global

Controlling

Global Legal

Global Tax

Global Treasury

Global Shared

Service

Execution of

Location

Strategy for

Global Shared

Services:

enhanced

service portfolio

* Asia-Pacific-Japan (APJ), Europe-Middle East- Africa (EMEA), Latin America (LA)

2005

Original

Vision of Finance

Finance Run

Better

Together

(FRBT)

Customer

Centricity

Operational

Excellence

People &

Organization

2011 Acceleration of the

Vision of Finance


Agenda

SAP Today




Outlook

2

3

4

1

5


The Evolution of Shared Services From Mono-Functional to Global Shared Services

Compliance

Scalability

Cost efficiency

E2E processes standard

Change & Agility

Mono-functional Shared Services

Multifunctional Shared Services

Global Shared

Services Management

Evolve toward a lean organization

Scale with future growth Quick integration of M&A

Reduces cost of doing shared services

Increases productivity and market share

Reduce cost of doing business

Improve key financial KPIs with consolidation and harmonization

Drive

Efficiency

Drive

Effectiveness

Competitive

Advantage

F&A HR IT Procure -ment

Facility


Global Finance Shared Service Organization Current Landscape

PRAGUE • 217 employees

• 27 nationalities

• Average age 30,2

• 76% female, 24% male

DUBLIN (Ireland) • 32 employees

• 9 nationalities



SINGAPORE • 56 employees

• 10 nationalities



BUENOS AIRES • 140 employees

• 9 nationalities



Order-to-Cash

Procure-to-Pay

Record-to-Report

UTRECHT (Sybase)

• To be closed by end of 2013

HONG KONG (Sybase)

• Closed in 2013

Manila (Successfactors)

• 59 Actual FTE, 80 FTE YE2013


• LoBs: Learning, Support HR, F&A

(T&E; FP&A Reporting); Marketing

Vancouver • Closed in 2010


SAP Shared Service Center Evolution

Standardized processes

Regional process responsible

5/24 support

CFO as a decision supporter

Regional resource leverage

Lean

Global E-2-E process standards

Global process ownership

7/24 support

CFO as a business partner

High economies of scale

Simple

FROM …

Fragmented processes

Local process responsible

Individual local support

F&A as a steward

Less scalability

Complex

Single Shared

Services Global Organization Process Driven

© 2012 SAP AG. All rights reserved. 10 Internal

Realized Benefits besides increased

Quality and Compliance Savings Through Salary Differential and Business Process Reengineering

FTEs in

Country Organizations

FTEs transferred into

Shared Service Center

2005 2006 2010

1) FTE = Full Time Equivalent 2) Business Process Reengineering 3) Average annual savings are 8% acc to Deloitte 2011 Global Shared Services Survey Results

Migration and

Realization of

labour arbitrage

Automation and

BPR2) realization

> 30% less total cost3

approx: 20m savings p.a.

Shared Services Center FTE1

Country FTE1


Agenda

SAP Today




Outlook

2

3

4

1

5


Shared Services Can Support a Variety of Functions

Throughout an Organization…

HR

HR Direct

Data

Maintenance

Payroll

Benefits

Mobility

Recruitment

Training &

Learning

F&A

Accounts

Payable

Accounts

Receivable

Travel&

Expense

Vendor

Requests

General Ledger

IT

Incident Mgmt.

Infrastructure

Mgmt

Application

Mgmt

Procure-

ment

Fleet Mgmt

Purchase

Logistics

Supply Mgmt

Event Mgmt

Sourcing

Real Estate

Office Mgmt

Property Mgmt

Restaurant &

mail services

Relocation

Infrastructure

and technical

facility Mgmt

Multifunctional

Shared Services Management

Governance Risk Mgmt Compliance Performance Mgmt SLA cockpit

Ma

ture

SS

C f

un

cti

on

s

Cu

rren

t tren

d o

f SS

C fu

nctio

ns


Evolution of Procurement towards Strategic Function Shared Services as Enabler

Strategic relevance of procurement

within a company

time

Operational Partner

Tactical Partner

Strategic Partner

Time spend on

operational

procurement

tasks

Time spend on

strategic

procurement

tasks

Time spend on

tactical

procurement

tasks

Time spend on

operational

procurement

tasks

Time spend on

strategic

procurement

tasks

Time spend on

tactical

procurement

tasks

Time spend on

operational

procurement

tasks

Time spend on

strategic

procurement

tasks

Time spend on

tactical

procurement

tasks

In order to enable procurement staff

to focus on value adding strategic

tasks, procurement shared services

strives to leverage existing resources

to the best extend in order to

efficiently handle operational

procurement processes

Today 2015 + until 1950 1950 - today


Procure-to-Pay @ SAP – Goals and Structure

• Cover all units of SAP centrally

with prioritized geographies

• Leverage purchasing power and

driving sustainable savings

• Deliver best-in-class

procurement processes and

highest possible service levels

to internal customers

• Mitigate risk to SAP

• Be a fair partner to our suppliers

44 Locations Worldwide

Procurement

Shared

Services

operational

procurement

CPO & P2P Business Owner

Category

Procurement

strategic and

tactical sourcing

Operational

Shared Service*

accounts

payable

*reports solid line into Global Finance Shared Services Organization


Procurement Shared Services Benefits and Challenges of Procurement Shared Services

Benefits Challenges

• Increased standardization

• Higher degree of automation due to

consolidation

• Economies of scope and scale (improved

efficiency and effectiveness)

• Easier Process Performance Measurement and

Analytics

• Workload balancing around the globe possible

• Full transparency on spend, master data and

compliance

• Change Management and top management buy-

in to implement Shared Services

• Different local cultures, business practices, and

legal requirements

• Eliminate “Shadow” processes and process

inefficiencies (Business process reengineering)

• Difficult to get skilled and experienced project

resources

• Service level and charging model

Shared Services definition: Concentration of company resources performing activities, typically spread

across the organization, in order to service multiple internal partners at lower cost and with higher

service levels, with the common goal of delighting external customers and enhancing corporate value


Procurement Shared Service Center (SSC) Models Three models can be differentiated: local, regional and global

Local Set-Up (Centers) Separate SSC per location providing

individual services to local subsidiaries

Regional Centers Regional SSC providing services to all

subsidiaries within a specific region

Global Center One Global SSC providing services to all

subsidiaries globally

Ge

og

rap

hic

sc

op

e

• Difficult to set-up global standards

• Low degree of automation due to limited

transactional volume

• Customer proximity

• Easy adoption to local culture

Be

ne

fits

R

isk

s

• Regional standards instead of global

standards

• Collaboration between regional centers

• Good balance between customer

proximity and standard setting

• 24x5 service

• Time zone coverage (deliver 24x5

service)

• Business continuity

• Competition for skilled people in one

location

• Easy implementation of global standards

• High degree of automation due to high

transactional volume (lights out shared

services)


• Check quality of Shopping carts

• Perform PO management & processing

• Manage Procurement Cards (P-Card)

• Support RfX processes/e-sourcing (tactical support) for Commodity and Country

Procurement

• Execute vendor master management

• Execute material master data and catalogue management

• Execute Contract management

• Provide

• end-user support

• helpdesk functionality

• system support (power user)

• Support/manage M&A activities

• Provide quality management functionality

• Provide analytics (for Commodity/Country Procurement) on request

• Provide operational management for car fleet

1

2

3

Order &

request

handling

Master

data

management

Operational

Support

Current Scope of Procurement Shared Services @ SAP Request handling, Master data and Operational support


Agenda

SAP Today




Outlook

2

3

4

1

5


SAP runs SAP Five Game Changers within Procure-to-Pay….

2011 2013 and beyond

SRM

7.01

Cart

Approval

Mobile App

Supplier

Mgmt

Dashboard

HANA-

Based

Reporting

Ariba

Network &

Solutions


SAP Runs SAP / Ariba: Hybrid Model “Source to Pay” –

Orchestrating SAP OnPremise and Ariba OnDemand

Supplier

Supplier

Supplier

Purchase Order, Invoice

status

Invoices, Order Conf.,

ASN

SAP‘s end-to-end “Sourcing and Procure-to-Pay” process

SRM

Self

Service

Procure

ment

Strategic Procurement Operational Procurement Operational Shared Service

Ariba

Discount

Mgmt

ERP

Purchasing /

Invoicing

Master Data Governance

(MDG) – Supplier Mgmt

Vendor Invoice

Management

(VIM) by Open

Text

Ariba

Spend

Visibility

Ariba

Collaborati

ve

Sourcing

Ariba

Supplier

Information

&

Performanc

e

Managemen

t

Ariba

Contract

Manageme

nt

Ariba

Procureme

nt

Content

(Catalog)

Ariba

Service

Procureme

nt

C

all

-

off


Key success factors for building up a globalized Finance

& Administration organization

Communication &

Change Management

Leadership &

Management support

Standardization &

Automation

Project approach

adjusted to corporate

culture

Continuous improvement

of service quality


Agenda

SAP Today




Outlook

2

3

4

1

5


Consolidation

Re-organization and de-layering

New Location

Wage and real estate arbitrage

Re-engineering

Simplified, standardized system/process

100% Standard

Processes

Optimized

Service Portfolio

High

automation

Enterprise End-to-End

Process

Visibility, Governance

Lack of clarity in services, costs

Traditional Culture - Tenure, wages, back-office mentality

Exceptions Increase

TIME

VA

LU

E

| S

TA

ND

AR

DIA

TIO

N

|

AU

TO

MA

TIO

N

Shadow Cost Increase

Shared Services as driver for global

standards and value


© SAP

2008 /

Page

24

Migration approach per country: the better the preparation

the better the stabilization

•

• PEP migration team and SSC

team together with the

countries

• 1st post migration review

after 12 months

• Regular migration review

every year

• Start phase will be supported

by PEP team to set up the

cycle (together with SQM,

who will take over later on)

• Alignment with Country/LoB

• Preparation of migration

• Sign off Gap Analysis

• Finalize major IT implementations

• Kick-off meeting

• Gap Analysis per

process

• BPR validation +

implementation

• Hiring of new recruits

based on FTE results

• Training of new recruits

(4-8 weeks in Prague)

• Reversed

Workshadowing in

Prague SSC

• Close remaining gaps

for all processes

• SSC takes over operational responsibility

• Getting routine

• Continuous on-the-job-training and getting routine

• Ensure high quality

• Get feedback and collect all lessons learned

• Update on FTE Analysis

• Workshadowing of

trained new recruits in

the country

• Knowledge transfer

mainly of country

specific exceptions

• Maintain tracking and

status reporting

• Build up relationship to

local colleagues

• Close process gaps

• Sign off SLAs

• Knowledge transfer to new recruits is finalized

• Processes are ready for migration

Transition

Stabilization

Review Preparation Run

GO-LIVE

Phase 1 2 3 4 5

3-6 months* 8 weeks 2 – 3 weeks 8 -12 weeks 1-2 days every year

Tasks

Targ

et

• Stabilization of

processes and

transferred knowledge

• Support from senders in

Prague for 1-2 closings

(if necessary)

• Initiate service

monitoring, reporting and

continuous improvement

process

(I)

Potential

(II)

Feasibility

(III)

Planning

(IV)

Migration

(V)

Improvement

* Depending on the complexity of the country to be migrated


QUESTIONS

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