sap roi - you cannot manage what you do not measure
DESCRIPTION
Maximise Your SAP ROI - Analyse Optimise Realise In a survey in 2010 by AMR Research, ASUG, and SAP, of 186 companies surveyed only 37% actually measured the business value from their ERP projects. Similar results have been reported in other reports and surveys. What’s the problem here? Organisations buy from SAP to benefit from highly standardised software and best practice business processes but In many cases business and IT executives lack appropriate metrics to evaluate and optimise how effectively their SAP systems are supporting their business operations after they go live. Major potential for improved business processes and reduced support and project costs are not recognised or remain unexploited.TRANSCRIPT
04.10.2012 Copyright Page 1 of 4
Maximise Your SAP ROI Analyse Optimise Realise
Maximise Value From Your SAP Investments
Why Do Organisations Not Achieve Planned SAP ROI And Benefits?
In a survey in 2010 by AMR Research, ASUG, and SAP, of 186 companies surveyed only 37% actually
measured the business value from their ERP projects. Similar results have been reported in other reports
and surveys.
What’s the problem here?
Organisations buy from SAP to benefit from highly standardised software and best practice business
processes but In many cases business and IT executives lack appropriate metrics to evaluate and optimise
how effectively their SAP systems are supporting their business operations after they go live. Major
potential for improved business processes and reduced support and project costs are not recognised or
remain unexploited.
What’s The Cause?
Leading analysts comment that 70 to 80% of SAP Application Lifecycle Management efforts focus on the
design, development, and testing phases of an implementation but post rollout operations, support and
project activities often represent 70 to 80% of lifecycle costs. As already noted, many organisations do not
measure the value derived from their SAP implementations after they go live. Over time this misalignment
of management focus results in sub-optimal business processes that are not aligned with changing
business requirements and unintended or inconsistent user behaviour.
04.10.2012 Copyright Page 2 of 4
Maximise Your SAP ROI Analyse Optimise Realise
What are the consequences?
West Trax International has completed over 1,500 analyses of SAP production system KPI’s for more than
100 companies in 13 industries. Typical issues identified using this benchmarking data include: -
More than 50% of the available and relevant standard SAP code was never used.
30-40% of all programs used during period analysed were custom code.
30-40% of custom code programs in the system were never used.
Unused custom code programs were maintained for months or years.
Missed opportunities to reduce support costs by €200,000 to over €1,000,000 p.a.
What To Measure?
SAP states that, “SAP Application Core Processes represent business process best practices. Depending on
the company type, these typically cover 70 % to 80 % of the company’s processes”.
Rule of thumb optimum standardisation levels of 70-80% are often quoted for SAP Application Core
Processes with non-standard functionality making up the remainder.
The West Trax benchmark data shows that many systems fall far short of these levels of standardisation.
Industry average KPI values range from 45 to 60% but sector worst case systems recorded standardisation
KPI values as low as 18 to 42%. However, as can be seen in Fig. 1, optimum values of over 70% are
attainable where appropriate measurement and management attention has been applied.
Slide 9 © West Trax International Ltd.
Standardisation Benchmark Data
Degree of Standardisation KPI
52.0
%
51.0
%
50.7
%
50.7
%
47.3
%
47.1
%
46.5
%
44.7
%
83.6
%
76.7
%
67.1
% 74.0
%
78.8
%
74
.7%
61.0
%
71.0
%
65.7
%
59.7
%
62.7
%
57.2
% 65.2
%
34.3
% 41.6
%
37
.8%
28.0
%
32.3
%
24.0
%
41.6
%
22.4
%
20.0
%
18.5
%
29.5
%
30.8
%
31.5
%
59.9
%
58.8
%
53.4
%
51.3
%
46.4
%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Au
tom
otive
Go
vern
me
nt
Ph
arm
a
Ma
nu
factu
rin
g
Telc
o
Che
mic
als
Hea
lth
ca
re
Con
su
me
r
Go
od
s
Se
rvic
e
Tra
nsp
ort
Fin
an
ce
En
erg
y
Insu
ran
ce
Average
Measured Best Practice
Measured Worst Case
Fig. 1
04.10.2012 Copyright Page 3 of 4
Maximise Your SAP ROI Analyse Optimise Realise
Another key indicator of value that is often overlooked is the amount of standard SAP functionality that is
available in the system and is relevant to the business but remains unused. This is software for which the
customer is paying licence and maintenance charges but gains no business benefit. The benchmark data
for this KPI shows very high levels of untapped potential exist in many systems. Industry average values
range from 68 to 88%. Sector worst case systems recorded unused standard potential values as high as 76
to 97%. Fig. 2 demonstrates that some customers have been able to deploy much more standard SAP
functionality, achieving unused potential values of 40 to 53%.
Slide 11 © West Trax International Ltd.
Unused Standard Benchmark Data
Unused Standard Potential KPI
67.6
%
67.7
%
68.4
%
80.3
%
83.5
%
83.8
%
84.2
%
85.7
%
88.3
%
52.6
%
40.3
%
40.3
%
52.3
%
69.2
%
66.8
%
67.1
%
68.8
%
72.7
%
77.2
%
75.6
%
79.7
%
82.7
%
75.7
%
85.7
%
94.1
%
87.1
%
91.0
%
93.7
%
93.9
%
89.5
%
91.8
%
89.2
%
97.4
%
88.6
%
96.9
%
74.1
%
77.3
%
81.8
%
84.3
%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Ph
arm
a
Ch
em
ica
ls
Ma
nu
factu
rin
g
Au
tom
otive
Co
nsu
me
r
Go
od
s
Se
rvic
e
Tra
nsp
ort
Te
lco
Insu
ran
ce
He
alth
ca
re
En
erg
y
Go
ve
rnm
en
t
Fin
an
ce
Average
Measured Best Practice
Measured Worst Case
Fig. 2
What Are The Conclusions?
SAP customers should aim to maximise ROI through optimal deployment of SAP Application Core
Processes and increased system standardisation levels. To exploit the full potential of Core Processes they
should identify where standard functionality can: -
Be best deployed to reduce costs, improve performance, increase productivity and enhance
consistency and quality of usage across the enterprise.
Replace custom code that does not provide significant value added.
Minimise interfaces to non-core processes such as Middleware, Legacy, and 3rd Party programs.
Be optimally applied during projects such as upgrades, consolidation and outsourcing.
04.10.2012 Copyright Page 4 of 4
Maximise Your SAP ROI Analyse Optimise Realise
West Trax provides unique SAP system KPI measurement and benchmarking services that help
organisations identify and quantify their potential to reduce costs, improve business processes and
enhance usage quality. These can be particularly valuable when preparing outsourcing, upgrade and
consolidation business cases and project plans and for monitoring the outcomes.
To find out more about how West Trax can help you increase value from your SAP systems please visit
www.westtrax.com , email [email protected] or contact David Long on +44 7774 808694.