Professional Documents
Culture Documents
VALUE THROUGH
SAP
Executive Summary:
AA Corporation is a market leader in the manufacturing of various customized car
accessories to leading car companies and customers. Having plants located in multiple locations
and offices all around the world, the organization employs more than 10,000 people. SAP was
implemented to integrate the organization and was rolled out successfully. To keep up with
changing times and to consolidate the position at the top, a massive technological change is
intended to be carried out with the aim to automate the process from procurement to delivery,
create an e-commerce platform to enable customers design and customize the products, enable
the employees to be more mobile and move the applications to the cloud to save resources. The
various areas where the technology can be used to leverage more value is identified and suitable
products suggested which will help in improving the value of the organization by maintaining the
status quo of customer satisfaction.
Contents
Introduction:....................................................................................................................................1
SAP Business Value Lifecycle Model:............................................................................................2
Decision Making:.............................................................................................................................2
Self-service Tools........................................................................................................................4
Interactive visualizations.............................................................................................................5
Predictive Analytics.....................................................................................................................5
Social Media Analytics................................................................................................................6
Big Data Analytics.......................................................................................................................6
Automation......................................................................................................................................7
Financial Management (FM).......................................................................................................7
Manufacturing Operations Management (MOM).......................................................................8
Human Capital Management (HCM)..........................................................................................9
Connectivity:....................................................................................................................................9
ERP and CRM: Integration for business success.........................................................................9
Supply Chain Management (SCM) and Supplier connectivity..................................................11
Supplier Relationship Management (SRM)...............................................................................12
Innovation:.....................................................................................................................................12
BYOD........................................................................................................................................13
Responsive Web Design............................................................................................................13
Cloud Computing.......................................................................................................................14
The Internet of Everything.........................................................................................................14
3D Printing.................................................................................................................................14
Interconnected:..............................................................................................................................15
Conclusion:....................................................................................................................................15
References:....................................................................................................................................15
Appendix:......................................................................................................................................21
Appendix A 5 layers of SAP Business Life Cycle Model......................................................21
Appendix B SAP Lumira........................................................................................................22
Appendix C SAP Dashboards 4.1...........................................................................................22
Appendix D SAP InfiniteInsight.............................................................................................22
Appendix E SAP NetBase......................................................................................................23
Appendix F SAP Customer Engagement Intelligence............................................................23
Appendix G SAP MII with SAP ME......................................................................................23
Appendix H SuccessFactors...................................................................................................23
Appendix I SAP integrated with SalesForce..........................................................................24
Appendix J SAP SCM integrated with OpenText...................................................................25
Appendix K SAP SRM...........................................................................................................25
Appendix L SAP Afaria..........................................................................................................25
Appendix M SAP Fiori...........................................................................................................25
Introduction:
Enterprise Resource Planning (ERP) systems like SAP are used for integrating data
across the enterprise and to enable seamless automation of transactions across the business
functions. Even though we have our SAP system in place, the implementation in itself does not
guarantee return of investment from the system (Stratman 2007). 46% of the organizations have
an ERP system in place, but do not know how to derive value from it and improve their
organizational performance (Ifinedo et al. 2010). Considering this, a post implementation review
was carried out to see how much value we are extracting from our SAP system. On evaluating,
we learnt that even though we are en route to achieving the business objectives we started with,
but we can extract a lot more value from the SAP system. Using the current technologies, the
system can be leveraged and can help ourselves become more competitive. As per the RBV
(Resource Based View) strategy, for anything to be competitively capable it should follow the
VRIN (Valuable, Rare, Inimitable and Non-substitutable) criteria. Even though SAP is
commercially available for everyone, by tailoring the system to meet our business needs, we will
have a unique advantage over our competitors (Stratman 2007). The four key areas where
technology can be used to leverage the SAP system to gain competitive advantage are Decision
making, Automation, Connectivity and Innovation. In this paper we will analyze each of these
areas, how the SAP system can be used to deliver value on them and the various strategies
available using the help of successful industry examples.
Fig. 1: The SAP Business life cycle model (SAP Solutions - Application Management - NTT DATA
Business Solutions 'Support Advantage' - Australia SAP & Microsoft Gold Channel Partner, Enterprise
Resource Planning ERP 2014)
The 5 layer business model developed by NTT DATA represents the business value that
an organization gains to achieve at each level of the life cycle. Appendix A explains the value
generated at each level of the model. To be competitive and be the market leader, we need to
achieve the top of the pyramid. We have successfully stabilized and supported our SAP system
and in the following sections, we will see how we can use the current technologies to leverage
our SAP in the four core areas identified.
Decision Making:
Managerial activities in our organization consists of
Strategic Planning
Management Control
Operational Control (Lei & Kupusinac 2013)
The detailed real-time information from operations and the past managerial data can help
the organization in making strategic decisions. Business Intelligence (BI) is the tool that will help
the organization in managing and refining the collected information and make efficient decisions
(Ghazanfari et al. 2009). At the strategic level, BI enables to set specific objectives and follow
the realization of those objectives using the help of comparative reports and at the tactical level,
it helps in decision making within each business unit (Olszak & Ziemba 2007). Organizations
which have adopted the data driven decision making have 5-6% more output and productivity
than what was expected considering their other IT investments. It allowed them to improve their
product development and business process thereby maintaining a competitive advantage
(Forrester 2013). But it is imperative for us to have a clear strategy in implementing BI and the
various tools as 60% of the organizations fail to implement their BI projects due to poor planning
and thus do not meet the expectations (Hawking & Sellitto 2010). A clear strategy and successful
implementation, will not only make the organization more agile, it will also give more control,
making the organization democratic, where decision making is not limited only to the top
management (Forrester 2013).
The key innovations of BI which can be integrated with our SAP system and derive more value
are:
Self-service tools
Interactive visualizations
Predictive analytics
Social media analytics
Big Data analytics(Forrester 2013)
Self-service Tools
Self-service tools are those that enable business analysts to build their own queries or
reports in a simple and easy manner. It allows easy understanding of data by better visualization
and provides ownership of the data to the users. The ease of usage, integration of data to business
models and enabling democracy in the organization makes self-service tools very valuable (Haun
2013).
improved their target accuracy of marketing campaigns by 300%, reduced customer churn and
thereby improving customer satisfaction (Tipp24.com: Quadrupling campaign accuracy 2014).
Social Media Analytics
With the internet penetrating into our daily lives and customers voicing their opinions in
the social media, it is imperative to gather data from social media sites and analyze. Mining the
sentiments of the customer will enable us to make informed decisions as customers are the key to
success of an organization. Identifying the relevant information, classifying its sentiment value
and measuring the influence in the social network are the key challenges which have to be
addressed to derive value from social media analytics (Lawrence et al. 2010).
Suggested Product: SAP NetBase (Appendix E)
Case Study: T-Mobile uses SAP NetBase to listen, engage and resolve what the customers are
talking about them in the social media. The data and analytics obtained from NetBase enabled
them to redesign several of their business processes to cater specifically to their customer needs.
This increased their social connections by 494% and their fan base by 845% (Nguyen 2014).
Big Data Analytics
Big data analytics techniques can generate a lot of value to the business with the Volume,
Variety, Velocity and Variability of the huge amount of data collected. Using the right techniques,
we can gain valuable insights which will help the organization in quickly identifying risks and
opportunities and using those information, can improve the predictive analytics of the
organization (Forrester 2013; SAP 2014l).
Suggested Product: SAP Customer Engagement Intelligence (Appendix F)
Case Study: German Football Association uses SAP Match Insights solution for football which
runs on the SAP HANA platform. Using the huge data generated from recordings, sensors in
balls and player dresses, it enabled coaches to process the data and assess key situations in
matches and thereby use the information to improve player performance. This enabled them to
reduce the ball possession time from 3.4 seconds to 2.3 seconds (SAPNews 2014).
Automation
ERP helps organizations integrate business activities electronically in a central data
repository. Data fed in a part of the business can assist another part in the business by
electronically updating records and reports. This automation results in numerous benefits for
example reduced administration expenses due to reduced labor hours, efficiencies and improved
data accuracy, better productivity, improved pace and quality of work, and quick accessibility of
data to all users. All these benefits lead to better output in areas of operational delivery,
product/service quality, speed of delivery, better customer service through better business
response time, improved decision making and last but not the least improved profitability for the
business (Langenhan 2009; Samaranayake 2009).
There are several case studies that demonstrate the benefits of automating back office
tasks by the use of ERP solutions. To stay ahead of the competition we will have to continue to
look for opportunities to automate repetitive tasks as much as possible. The key areas that benefit
immediately from automation are financial management and manufacturing operations.
Automation of the financial modules is a very good example to demonstrate how budgets and
movement of finance can be managed.
Financial Management (FM)
By utilizing SAP HANA in-memory computing processing, SAP and partner solutions
have solutions that can help an organization automate a considerable part of the expensive and
time intensive activities in the area of accounts, finance and bookkeeping area. For instance a
company can automate a wide range of activities like posting transactions to the general records,
preparing budget reports, generating and complying with the budget, managing accounts
receivables and payable. It also helps in invoicing and collections, foreign currency transactions
management, administration, tracking and recording of cash transactions and overall budgets.
Managing legal compliance to tax laws and other legislative protocols and accurate profit and
loss statements are other enhanced functions these modules offer (SAP 2014f).
Case study: HSBC bank is the world's second largest multinational banking as well as financial
services company. In HSBC SAP HANA NetWeaver (using ISO 20022 XML format) has been
implemented to communicate transactions between corporate clients, as well as for normal
customers. This has allowed customers to connect themselves via single point of entry into
HSBC worldwide banking. There was simplification visible in the managing accounts
receivables and payables, foreign currency transactions management, Administration, tracking
and recording of cash transactions and overall budget managing legal compliance to tax laws and
other legislative protocols. They also launched the tool BIS and IBAN solution in terms to
counter party verification which leads to more accurate and payment processing and transactions
(HSBC 2011; Savvas 2008).
Manufacturing Operations Management (MOM)
For any business these days the capability to effectively deal with all parts of the business
operations and to integrate individuals on the shop-floor or day to day operations to the upperlevel business chamber supporting the organization has become increasingly difficult.
Manufacturing Operations Management (MOM) solution offers a great solution by presenting
real-time view of actual reality of ongoing operations on the shop floor (SAP 2014h).
Suggested product: SAP Manufacturing Intelligence and Integration (MII) along with SAP
Manufacturing Execution (ME) (Appendix G).
Case Study: DHR and U.S. food and drug administration who were encountering difficulties in
their data management and was in need of a solution. As per legal requirements DHR was
expected to keep device history records to be maintained by the manufacturers by maintaining
their records for almost every batch unit or lot. It was earlier maintained by preparing paper
records, also the entire documentation was gathered in the final record which was then utilized
for executing entire work process. Then SAP HANA MOM was implemented which was having
eDHR in its functionality, It gathers all the essential required information in real time. DHR
implemented SAP HANA automated solution that not only allowed it to significantly reduce its
administration of paper based records but also helped it in complying towards US Food and Drug
Administration's requirements. At DHR all records are accessible now on demand and easily
maintainable (Lobo 2014).
Human Capital Management (HCM)
Our company has SAP modules to manage the human resource records. Whilst employee records
can be managed as an administrative task however companies these days see employees or their
human resource as a capital that needs to be nurtured, invested in, developed, challenged, success
planned and held accountable to harness their full potential. To achieve the full potential of ERP
we need to look at solutions to make this area more methodical (Baron & Armstrong 2007).
Suggested Product: SuccessFactors (Appendix H)
Case Study: Timken, a manufacturer of engineering products, implemented SuccessFactors and
achieved a multitude of benefits. These benefits ranged from accurate reports on employees
instantly as opposed to 3 weeks, employee remuneration and benefits driven through a single
system in a multi-lingual capability for more than 23 thousand employees, valuable insights and
analytics and ability to plan and deliver relevant training in a very timely manner (Vorse 2012).
Connectivity:
Connectivity alludes to the exchange of information/data in real time and provision
settings between various users in the business. Our user groups consist of clients or customers,
colleagues and suppliers. If our organization can achieve a higher level of connectivity and inter
operate ability whereby all users groups can benefit from each other's data inputs as well as
interaction records including important turn of events, this would allow our business to operate at
a very advance level of efficiency, speed and efficacy. Considering the size and volume of
transactions the only way we can really achieve it is by using SAP HANA in-memory and
integrated advanced solutions that will connect various parts of our business electronically to
ensure rapid conveyance of data and information to all intended users. This can be used in day to
day operations and strategic decision making (Richard, Thirkell & Huff 2007).
ERP and CRM: Integration for business success
As discussed earlier in this paper, SAP ERP allows for better connectivity between
various departments of the organization to aid flow of data. This helps in operationally managing
the ongoing affairs of the business. As ERP systems have evolved over the decades now ERP
offers functionality in the areas of business analytics, Manufacturing management, Plant
maintenance, Supply chain and so on. CRM on the other hand is excellent tools to manage
interactions inter and intra organization that leads to quality records and data. This can be
utilized to enhance product offerings especially around marketing campaigns and sales
management. Companies also report much higher levels of customer satisfaction and
engagement (Gneiser 2010).
These days ERP and CRM can work in conjunction to deliver business value and enhance
operational and strategic benefit. CRM and ERP applications can work collaboratively when
integrated and can fundamentally boost our output in various parts of our business, decreased
error rate, and achieve high levels of management effectiveness. An integrated CRM and ERP
solution can have a significant impact on the ROI of both solutions and enhance efficacy of both
applications (SalesForce 2014b).
Suggested Product: SAP integrated with SalesForce (as preferred CRM) (Appendix I)
Modules:
Business Management Module: Sales Function Modules and Customer relations
Suppliers Relationship Management Module
CRM Analytics: Reports and Dashboards
CRM Marketing: Marketing Functions
ability to hit 95% discount achievement rate as opposed to less than 50%. This resulted in tens of
millions of dollars in savings for Intel (Hannon 2011).
Supplier Relationship Management (SRM)
SRM modules serve the purpose of streamlining procurement. It helps in methodically
unifying and automating sourcing practices.
Suggested Product: SAP SRM (Appendix K)
Case Study: Lukoil Mid-East LTD is a large oil and gas field operator in the Middle East. With
expanding operations and a huge pressure on its ability to produce specific material yet flexible
supply it was becoming increasingly difficult maintain the quality of operation. They
implemented SAP SRM application and immediately saw a 15% faster purchasing process, 50%
more suppliers and 20% less errors in procurement paperwork (SAP 2014g).
Innovation:
In the highly competitive world, organizations have to be innovative to stay ahead of
everyone. The three dimensions of competitive space which gives a clear view about the
innovative strategy of the company are Customer Excitement, Competitive Leadership and
Portfolio enrichment (Bowonder et al. 2010). The business model of our organization revolves
around these pillars and we try to create and capture value in each of those dimensions
(Chesbrough 2007). Leveraging the current technology in these dimensions is the strategy we
can employ to stay ourselves ahead of our competitors (Bowonder et al. 2010). The top
technology trends are
Using the existing SAP system, we can leverage these technologies and gain more out of our
SAP system.
BYOD
This denotes policies that can be implemented in our organization to enable our
employees brining their own personal devices to engage in various work related activities by
accessing the various corporate resources. The corporate use of social networking and other tools
can also benefit us in terms of sales and marketing perspective also. This needs to be carefully
managed in terms of corporate confidentiality, employee productivity and information security
(Waterfill & Dilworth 2014).
Suggested Product: SAP Afaria 7.0 (Appendix L)
Case Study: NuVasive, a medical device company uses SAP Afaria to build one-stop-shop
mobile applications for their mobile workforce to help them in managing their daily field
operations and carry out the sales in much quicker and more accurate time frame. This has
decreased their administrative costs and improved their ROI by 15%. Also this enabled their
employees to carry their own personal devices and thus reducing the IT costs too (SAP 2013a).
Responsive Web Design
Having a web page which looks the same way in any device irrespective of the screen
size is called responsive web design. With the growth of mobile phones and tablets, each having
its own screen-size and resolution, it is necessary to have a fluidic website which can be viewed
across any device. With 40% of customers moving to other websites if the site is not mobile
friendly (WilkinsIT 2014), it is important to create an ideal viewing experience for the customers
and keeps their interest piqued. Also having just one website allows for easy maintenance for the
organization (Natda 2013).
Suggested Product: SAP Fiori (Appendix M)
Case Study: Colgate-Palmolive uses SAP Fiori to meet the high demand from the users who
bring their own devices to work. The leave request functionality was implemented to a selective
group of users and the ease of use with no prior training, helped people to access the application
anywhere they wanted in any device they wanted to (SAP 2014a).
Cloud Computing
Cloud computing is an IT delivery style where the various applications, data and other IT
resources of the organization are provisioned and provided to the users through the web as a
standard offering. It is used for managing high volumes of resources using the concept of elastic
scaling. Cloud computing reduces our costs by leveraging virtualization, standardization and
automation which frees valuable resources that can be utilized in new investments. Also it
enables the business to be more agile and provides flexibility in service which in turn optimizes
the business. With most of the suggested products based on cloud, it will help our organization to
become more efficient and reduce costs (Greggo 2009).
The Internet of Everything
Internet of Everything is linking of sensors in various physical devices, databases,
software, etc. through a wired or wireless network to the Internet. This generates Big Data
which can be used to various analyses (O'Leary 2013). This hyper connectivity is driving a
fundamental shift in how human beings connect with different things and devices, and drive
value for our societies. This will result in highly personalized customer experiences, high levels
of resource optimization and new levels of innovation. Using SAP HANA we can monitor and
analyze the large amounts of data for real time predictive insights automate our business
processes and help us to create new sources of revenue, new products and new products
(SapphireNow 2014).
3D Printing
3D printing, also called as addictive manufacturing is a process where a three
dimensional solid object is created using the help of a digital file. The additive process is used to
create the 3D object by laying successive layers of materials until the desired object is created
(What is 3D printing? 2014). Using Right Hemisphere with our existing SAP system will enable
in delivering an animated view of the products to our development and manufacturing team. This
also can be used to deliver a detailed view to the customers online and allow them to customize
the product to meet their needs. By automating with the MES system, the printing process can be
automated directly and can be used to manufacture using a 3D printer which will not only save
costs, but also improve customer satisfaction by enabling them to visualize and design the
product to suit their needs (Stackpole 2011).
Interconnected:
The success of the organization depends on how quick we can make decisions and
implement them to satisfy the needs of the customer. Decision making using BI is not possible
without the help of big data generated or the various customer insights obtained using the CRM
system. It is important for us to understand the value generated by each of the different products
to the organization and prioritize accordingly. Thus by optimizing our SAP system with the
suppliers and customers, enhancing our processes by automating them and leading by using
current technologies we will be able to make informed decisions which will enable us to sustain
as the market leader.
Conclusion:
With the world rapidly changing it is necessary for us to keep ourselves up-to-date to
maintain our position as the market leader. Even though we have our SAP system in place, we
have seen the various add-ons that can help out organization to grow. With internet, mobility and
cloud dominating every aspect of our life, it is necessary for us to leverage these technologies to
leverage more value out of our SAP system. Adapting to these technologies, not only improves
the business processes, it also will improve the satisfaction of employees, as it enables them to
view more detailed information and giving the belief of democracy. It is mandatory to provide
sufficient training to employees on the new add-ons to improve their productivity when they use
the system. By moving our solutions to the cloud and enabling mobility, our employees can be
more mobile and make decisions on the move. Also the implementation of new technologies can
be outsourced to reduce costs, focus on our core competencies and also gain superior technical
resources. Even though all these can be carried out by our competitors too, by tailoring the SAP
system to our needs and keeping ourselves up-to-date with the current technologies on a
continuous basis, we will be able to dominate our position as a market leader in the long run.
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Appendix:
Appendix A 5 layers of SAP Business Life Cycle Model
Stabilise The new technology (SAP) is implemented successfully and the organization
is stable on it.
Support The various bugs and issues arising in the software are successfully resolved.
Enhance The business processes are streamlined and new additional processes are
deployed into the business.
Optimise Having a high level collaboration with both customers and suppliers and
enabling the technology to gain competitive advantage by attracting new customers and
finding new suppliers.
Lead The SAP system is used strategically to make quick and accurate decisions and
enable the organization to be a market leader (SAP Solutions - Application Management -
NTT DATA Business Solutions 'Support Advantage' - Australia SAP & Microsoft Gold
Channel Partner, Enterprise Resource Planning ERP 2014).
Appendix B SAP Lumira
SAP Lumira is a tool that is used to provide solutions to the users according to their
queries in a visual manner. It is repeatable and self-service, which makes it easier for everyone to
use it. Its point and click interface and engaging visualizations will help our employees to
analyze the data much quicker to gain better insights and be more agile. It also helps to
accelerate decision making with immediate, data based answers even to complex queries and
being self-serviced, and even entry level employees can work more efficiently by aligning
themselves to the organizational strategies. Also, it can visualize huge amounts of data in real
time using SAP HANA (SAP 2014d).
Appendix C SAP Dashboards 4.1
This is data visualization software which allows us to create interactive dashboards and
also export them. It has various components to it like graphs, charts, etc. which is bound to our
data sources. These components display the information requested in a compact and visual
manner which will be easily understood by everyone. Also they can be drilled down to gain more
information and thus help in making informed decisions. There are many editions of the product
and depending on the cost and budget, can select the desired product (SAP 2014j).
Appendix D SAP InfiniteInsight
Formerly KXEN, SAP InfiniteInsight has moved the business view from the traditional
predictive analysis which is manual and repetitive to an automated manner to gain customer
insights and make decisions looking at the future. This tool will help us in automating our data
preparation, predictive modeling and deploying our tasks. It will also help in building
sophisticated predictive models in a short period of time and can scale it as per the data acquired
and gain insights from the thousands of variables present in it. It will also help in embedding
predictive analysis in our existing apps and processes (SAP 2014c).
improves strategic alignment by bridging the gap between strategy and execution and a 5.5%
increase in the time spent on setting the strategies. By optimizing the workforce, it increases
project completion rate by 14%, productivity by 5% and increasing the high performers in the
organization by 4.9%. The successful investment also added 1% revenue to the profit generated.
With all these benefits, if adopted successfully and utilized to its maximum, we can reap similar
results (SuccessFactors 2014).
Appendix I SAP integrated with SalesForce
With SAP already in place, integrated with SalesForce (as our preferred CRM) we can
achieve integration between the two and that will connect users in various parts of the
organization in real time. This ranges from employees, intra organization connectivity, connects
us better in the operational supply chain area, and allows us to capture 360 view of the customer
by which we can get remarkable ROI. The core reason these technologies will add value is the
ability to connect in real time and update all parts of the organization periodically.
SalesForce has an extensive suite of CRM Applications and products which allow for a
seamless integration into any business model including technical integration with SAP or most
well-known ERPs. SalesForce offers all the above mentioned modules along with strong
mobility/cloud solutions (Wepfer 2012).
low IT costs. The high customer satisfaction drives the sales through our online media and also
helps in acquiring new customers (SAP 2014k).