value management: value discovery - · pdf filebuild value based detailed architecture and...

SAP Value Engineering

February, 2013

Customer Enablement Program Value Management: Value Discovery

© 2011 SAP AG. All rights reserved. 2 Confidential

Agenda

Introduction: Value Management

Value Discovery: Innovation Canvas and Strategy alignment workshop

Value Discovery: Benchmarking

Value Discovery: Business case


SAP

Investment

Cycle

Too often companies do not achieve expected value via

IT-led transformations

Long, risky and

expensive projects

Unrealized

value

Current practices

automation vs SAP

Best practices

Software project

rather than business

transformation

SAP involvement

decreases after the

investment decision

Low business

satisfaction

Lack of Business &

IT alignment

Lack of business commitment

and executive sponsorship

SAP customers want secured business outcomes


Value leakage across the portfolio of projects

20-25%

Poor absorption

and value tracking

Expected Value Poor selection

and prioritization

Implementation

changes

100%

10-15%

Realized value

50-65%

5–10%


SECURE

SUCCESS

Assess and prioritize opportunities with

business benchmarking

Build the decision case and set success KPI’s

Define the target architecture and the

high-level roadmap

Value Partnership Services

Establish Value Management

Office, governance and KPIs

scorecard

Build value based detailed

architecture and roadmap

Define optimized Business

Process

Assess Delivered Benefits

Optimize TCO

Optimize business value

(continuous process

improvements / Benchmarking)

1. Prepare Future

2. Secure Investments

3. Optimize Current

SAP Impact

Investment

decision

Roll-out

Go Live

Search for

opportunities

SAP Value Management Best Practices to secure potential

value


0

5

10

15

20

10%

Improvement in process

management*

8%

IT investments

2%

% Improvement in

productivity

IT investments combined

with improvements in

management practices

2%

8%

Business and IT alignment is key for project success

* Key performance improvements i.e. Lean Manufacturing, Performance Mgmt., Six Sigma.

Source: “When IT lifts productivity”, The McKinsey Quarterly, 2004 Number 4

IT

Processes

Synergy

IT and business initiatives are not aligned

Joint initiative business and IT

20%

2X

Value

growth


Significant Experience in Driving Value Management

Benchmarking

Value Lifecyle

Manager Platform

Customer

Engagements

Over 20,000 customer engagements (more

than 500 in utilities)

Over 5,000 CXO interactions per year

Over 12,000 benchmarking participants

Benchmarking and best practices in

over 20 functional areas

Over 50,000 industry and process-specific

pain points and best practices

Nearly 15,000 individual operational metrics

SAP

Value

Management

SAP’s VM methodology combines expert resources, benchmarking, and an

advanced web based framework to help customers identify, quantify, and

realize business value.


Services and Support

Quality Assurance, Value

partnership, MaxAttention

Continuous Advisory Support

(Technical, Functional,

Business Improvement

Architects)

On Board Expertise on

Demand • Business Transformation

services

• SAP Consulting

• Education

• AGS

What could we do to secure value realisation

Value Management

Office

Manage, measure and report

on benefit realization of KPI’s

and Value Drivers

Establish a complete set of

scorecards & dashboards to

manage KPI-driven services

Dashboard reporting enabled

for Steering Committees

across active projects

Governance Model

Establish Global

Governance to monitor

and manage programs

in alignment

Deploy Governance

bodies and roles on

customer and SAP side

to steer the

engagement effectively

Ensure close alignment

between customer and

SAP at all

organizational levels


Gartner on SAP Value Management


What instruments could be used for driving the value

Key Customer Questions How VE addresses them?

1

Customer innovation workshops

How can we take

advantage of technology

innovation

1

1

Value Roadmapping How do we realize the

Value?

4

Business Transformation Studies

How do we measure

attainment of realised

value?

5

1

Business Case

What is the potential

value and return on

investment?

3

1

High-Impact Strategies

(Performance Benchmarking)

How do we compare and

where are the

opportunities?

2


Agenda





Innovation Canvas – Strategy alignment

13

https://saptube.pal.sap.corp:50000/saptube/main?guid=IPAD_Shorter_Safran_SAP__Strat_Partnership20121018235036

https://saptube.pal.sap.corp:50000/saptube/main?guid=IPAD_Shorter_Safran_SAP__Strat_Partnership20121018235036


Agenda






Importance of Benchmarking

Benchmarking is one of the key disciplines that comprise the Value Management discipline

Key Findings

Ranked as the most important

management tool by executives

Fundamental to achieving cost

reduction targets

More frequent, comprehensive

measurement drives better

performance improvement

Source: Bain & Company: Management Tools and Trends 2011

Benchmarking

Strategic Planning

Mission and Vision Statements

Customer Relationship Management

Outsourcing

Balanced Scorecard

Change Management

Core Competencies

Strategic Alliances

Customer Segmentation

1

2

3

4

5

6

7

8

9

10


Performance Benchmarking by SAP Overview

Established end of 2004

Complimentary service

Available to SAP and non-SAP customers

Overview

Reach

Content

Coverage

Over 10,000 participants from over 3,000 companies

Global: in 2010 over 60% participants from outside NA

Partnerships with ASUG and other user groups

Studies available in 12 languages

Over 30 business process assessments

Over 700 KPIs, over 1,000 Best Practices

Over 300 peer groups


Available Benchmarking and Best Practices Surveys

Financial Excellence

Finance

Financial Compliance

Financial Performance and

Risk Management

Public Sector: Finance

Finance Shared Services

Superior Customer Value

Sales Effectiveness

Customer Contact Center

Customer Service and

Support

Consumer Products: Trade

Promotions Mgt.

Product and Service

Leadership

Product Lifecycle Mgt.

Responsive Supply Networks

Supply Chain Planning

Warehouse Mgt.

Transportation Mgt.

Retail: Integr. Demand and

Replenishm. Plan.

Oil and Gas: Primary

Distribution

Fashion: Supply Chain

Planning

Professional Business

Networks

Operational Excellence

Manufacturing

Procurement

Fashion: Procurement

Lean Enterprise

Healthcare: Accountable

Care Organizations

End to End Processes

Enterprise Healthcheck -

Manufacturing

Enterprise Healthcheck -

Services

Public Sector Healthcheck

Order to Cash

Fashion: Order to Cash

Retail: Merchandising

Private Equity: Operational

Assessment

Best People and Talent

HCM

Talent Management

HR Shared Services

Strategic IT

Business Intelligence

Enterprise Information

Management

High Performance Analytics

Enterprise Mobility

Total Cost of Ownership

Best Run IT

Value Management

Enterprise Architecture

Implementation Services

High Performing Assets

EH&S Compliance

Enterprise Asset Mgt.

Utilities: Optimized Asset Mgt

and Operations

Benchmarking Survey

Best Practices Survey

Industry Specific Benchmarking Survey


What do participants receive?

• Online survey capabilities

• Survey submission support

• Survey validation

• Confidential benchmarking report

• Interactive benchmarking model

• Results read-out

• Industry and other peer analysis

Supply Chain Planning Benchmarking

Results

SAP Value Engineering

ABC Company

March 8, 2011

SAP CONFIDENTIAL - Page 6 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.

Benchmarking Results and Value Potential:

(MTS) Benefits Range1 of

KPI Benchmark Performance Potential Benefit (in millions)3

On-Time Delivery Performance-To-

Customer Request Date (by total

orders delivered) (in %)

Increased customer satisfaction

Total Inventory – Days Of Supply (in

days)

Inventory Carrying Cost (% of

revenue)

Bottom 25% Average Top 25%


Benefit of Closing Gap to Top 25%

Benefit of Closing Gap to Average


81.0 97.089.1 90.0

2.0

141.9

3.0 1.02.0

121.1 45.681.3

0.0 3.0

29.9 47.5

29.9M 50.5M

3.0

47.5

0.0

29.9

-

1) Benefits totals may not add up exactly from subtotals displayed on this page as they are calculated based on exact, not rounded numbers

2) Full KPI results can be found in the detailed benchmarking assessment

3) All currency in this report is in US Dollar

Performance of Primary KPIs2 and Potential Benefits (in millions of selected currency)

SAP CONFIDENTIAL - Page 15 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.

SCP: Improved Best Practices Adoption Drives

Value

0

1

2

3

4

5

6

Sales and Operations Planning

Demand Planning and Forecasting

Inventory Planning

Supply Planning Distribution Planning

Customer Collaboration

Supplier Collaboration

Transportation Planning and

Vehicle Scheduling

Production Planning and

Detailed Scheduling

Order Promising SCP Performance Management

Avg - Coverage Top 25% - Coverage Company Importance Company Coverage

Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses (Peer Group P1)

1 = No Coverage5 = Full Coverage


Benchmarking Customer Use Cases

Business Case Foundation Measure KPIs & best practices maturity to uncover value gaps

2

Value Realization KPI and process measurement before or during a transformation

3

On-going Performance Management Comparison of current performance to past performance

4

Opportunity Identification/Prioritization Identify key areas of process improvement opportunity

1

Simpler, cost-effective benchmarking options are enabling

customers to benchmark more broadly and proactively


SAP Value Management Center (VMC): Next generation benchmarking and value management platform

End-to-end benchmarking support: from Enrollment to Insight

Unmatched Customer Experience

Web portal and iPad Application

Online survey catalog: 25+ business processes1

Self-service survey completion

Flexible peer group selection

On-demand performance assessments & insights

World-Class Content & Tools

One of industry’s largest database of metrics, best

practices, high impact strategies

Centralized content library to support robust peer

groups

Global & Scalable

Multi-lingual, multi-currency

Central interface to support management of multiple

assessments: cross-division/geography, over time (1) Top 10 surveys will be available initially


Align Supply to

Demand

Benchmarking Diagnostic using High-Impact Strategy Framework Example Inventory Reduction

Inventory Days

of Supply

Value/KPI

High-Impact

Strategies

Reduce Variability

in Execution

Implement a

Collaborative

Demand Planning

Process

• Customer data captured directly

from external feed e.g. EDI

• Dynamic and frequently updated

forecasts

• Forecasting at SKUs / inventory

location granularity level

Actionable Sub Strategies Enabling Best Practices

Enabling Solutions

Integrate Supplier

Network

SAP Solutions to Enable High-Impact Value Strategies

Design Source Make Store Move Sell

Collaborative Demand & Supply Planning

Logistics & Fulfillment Management1

Manufacturing Network Planning & Execution

Supply Network Traceability

Service

Service Parts Planning & Logistics

66 88 - 25%

Forecast Granularity /

Inventory Days of Supply*

Low High

• Gain visibility into customer

demand and actual sales

• Build forecast collaboration

capabilities with sales & finance

• Incorporate new product

introductions, promotions and

sales force judgment into

forecast

• Manage inventory and

replenishments for key

customers

Note: *Consumer Products, North America and EMEA


Agenda






Why Does

Need to Change?

Your bullet points here -1



How Can SAP Help?




What Benefits Can

be Realized?

Recurring annual benefits of $XXX M – $YYY M and one-time benefits of $XXX M – $YYY M

Five year NPV of $XXX M, IRR of XXX% and a 3-month cost of delay of $XXX M

Evaluation over a 5 year period with a payback period of XXX months

Top 3 impact areas:

Area 1

Area 2

Area 3

Executive Summary

ABC


How Can

Mitigate Risk?

Industry best practices based VSAP implementation methodology

Phased rollout plans with ongoing business commitment

Readiness and risk assessment

How can

realize business value?

Leadership and stakeholder alignment, business ownership and end-user education

3 levels of governance – enterprise, program and operational

Identification of tangible KPIs and Best Practices for ongoing monitoring

Value Management Office (VMO) made up of IT and business

Executive Summary

ABC

ABC


Our Understanding of

Key Strategic Goals

ABC

Your goal -1




Your goal -2




Your goal -3




Creating Value

for

Shareholders


ABC's Estimated Benefit

$26.76 M Potential Annual Benefits:

Potential One-Time Benefits:

$44.63 M

$22.00 M $36.67 M

$26.76 M Annual and $ 22.00 M One-Time

LOB/Solution Area Conservative Likely

Manufacturing

All Solution Areas $26.76 M $44.63 M

Total $26.76 M $44.63 M

Supply Chain Planning

All Solution Areas $22.00 M $36.67 M

Total $0.00 M $0.00 M


Project Cost Estimates

Key Assumptions:

The software license and related consulting cost estimate provided is intended for ROI development and order of magnitude purposes

Business process change must occur before implementation. Significant change management might be required throughout the project

Please refer to appendix for additional detailed assumptions

Cost Estimates

Cost Category External Internal Total

Capitalized Implementation Costs $2.50 M - $2.50 M

Software License Expenditure $5.00 M - $5.00 M

Hardware Expenditure $4.00 M - $4.00 M

Other Capital Expenditure - - $0.00 M

Expensed Implementation Costs - $1.10 M $1.10 M

Software Maintenance Costs $5.28 M - $5.28 M

Hardware Maintenance Costs $2.20 M - $2.20 M

Software Subscription Costs - - $0.00 M

IT Support Costs - - $0.00 M

Other Costs - - $0.00 M

Total $18.98 M $1.10 M $20.08 M


Benefits Costs Analysis Indicates Very Compelling Project

Economics

5-Years Project Economics

NPV 82.28 M

IRR 852.73%

Payback 0.11 Years

3 Months Cost of delay 2.06 M

Benefit Assumptions

Your assumptions here

After Tax Cash Flows ($ Millions)

-4,02

22,00

26,7626,76 26,76 26,76

-6,26-4,70

-1,70 -1,70 -1,70

26,76

0 1 2 3 4 5

Total Cost One-Time Benefits Annual Benefits

value management: value discovery - · pdf filebuild value based detailed architecture and...

Documents