Why move from SAP R/3 to mySAP ERP?

1. How to make the case and persuade a Customer to move to mySAP ERP at the earliest opportunity…Issued by: Global Solution Marketing - ERP Why move from SAP R/3 to mySAP ERP? SAP Security Level: Internal Use Only

2. What is the document about? • This document is a sales-guideline and provides an overview on the key reasons why customers should move to mySAP ERP. • Therefore we focus on customer needs (installed base) and outline the benefits from a technical, business and maintenance point of view. These benefits are supported by the findings of a specially commissioned ‘mySAP ERP Customer Survey’ market research program delivered by Gerlach, Porst & Steiner in Nov 2004. • We identify the key reasons, why an SAP R/3 customer should do the transition to mySAP ERP, and also discuss how to deal with potential objections. • This guide is designed for SAP Sales Account Executives in SAP’s direct sales channels. • Slides are ‘SAP Internal Only’ or ‘CONFIDENTIAL’ and must not be used externally. Slides include Notes that may contain Company Confidential statements.

3. Introduction What customers want … what mySAP ERP offers Sell the transition story Transition options & transition support How to deal with objections? FAQ: technical aspects

4. INTRODUCTION

5. 1144 customers 414 installed-base customer conversions 730 net new customers ~85 % in mid market 589,6 million Euro achieved (286,8 million ytd) 44 live reference customers constant growth on rapid path mySAP ERP … TODAY* * Source: 03.12.04

6. mySAP ERP: the challenge for 2005 • €1.45bn mySAP ERP software revenue target • 10% of SAP R/3 licensed installed-base customers to convert to mySAP ERP license (30% in EMEA Central) • mySAP ERP contracts in Mid-market between 50 - 75 % depending on region • 150 reference customers SAP Security Level: CONFIDENTIAL

7. The business challenge of mature companies • How do you balance the necessity for efficiency, against the need for chaos to stimulate differentiation and growth? COREactivities help differentiate in markets to stimulate growth CONTEXT activities supportall your operations need to be efficient as possible Innovation Standard-ization Invention Commodi- tization Growth Efficiency Processes that generate new, additional value that attract and keep customers Processes that must run to enable you to satisfy your customers mySAP ERP for profitable growth

8. Key differences between SAP R/3 and mySAP ERP Client/Server Architecture Web Application Server Transactional user Data-centric Enterprise processes Real-time data processing Enterprise Services Architecture Designed for SAP NetWeaver Business user Message-centric End-to-end processes Real-time business

9. Installed-base customers Experience the same generic IT challenges: • Provide Scalable systems • Implement homogeneous systems infrastructure • Centralize systems • Replace Legacy • Reduce downtime • Reduce TCO Have pain points that are strongly related to their overall experience with SAP solutions so consideration needs to be given to: • Release version • Transition path • License issues

10. WHAT CUSTOMERS WANT….WHAT mySAP ERP OFFERS…

11. Customer needs – a deep insight • We have a clear insight in what our customers want. • We know about our customer needs and their requirements and we know, what kind of problems our customers face every day… • from ongoing ‘Customer Surveys’ • from day-to-day contact

12. Customer needs – mySAP ERP solution • Overview Customer Needs mySAP ERP solves this through: Better support for mgt. decisions Strategic Business Advantage Information in real time is one of the most important drivers for transition SAP BI and SAP SEM enhancing transparency and control Easy adaptation to change Flexibility and Adaptability Flexible IT infrastructure is also one important driver for transition • SAP NetWeaver allows quick adaptation of processes based on open and flexible application platform Better usability People centric approach Customers want their employees to have better access to all functions ERP Self-Services & Role-based Portals empower people by providing easy access and intuitive design

13. Customer needs – mySAP ERP solution • Overview Customer Needs mySAP ERP solves this through: Extension of processes Integration of business processes Integration of internal processes with customers and suppliers is getting more important Enhanced capabilities allow efficient interaction with business partners and support end-to-end operations Performance / Process Optimization Improved Productivity Customers need to constantly improve their operational excellence and reduce cost Enhanced capabilities are reducing operational costs More IT Efficiency at less cost Reduced TCOs Cost issues are an important driver to move to mySAP ERP SAP NetWeaver and content ready provided by mySAP ERP reduces development cost

14. Customers want … • Better support for management decisions • The right information in real time is one of the most important drivers for transition for our installed-base customers. Top of mind Statement: Introduction of new Solutions - BI 47 % Provide reliable Management reports 42% Comprehensive analytics & reporting capabilities 37% 26% Improved& faster decision making & control 20% Clear overall view of business processes 5% Integrated operational control and execution Source: Customer Survey 2004, installed base (19 interviews)

15. mySAP ERP provides … • Strategic Business Advantage • Better access to key internal/ external information across the business • Streamlined internal and external reporting • Real-time business information • Improved forecasting accuracy and timeliness • Shorter closing cycle times • Increased transparency and corporate trust • Improved decision support and control • Faster strategy execution SAP SEM Analytics

16. Customers want … • Easy adaptation to change • The most important drivers for transition is a flexible IT infrastructure, that allow fast and cost-efficient adaptations to change and new requirements. Reflect organizational changes 37% 32% Extend and integrate new requirements 20% Increase efficiency to cope with rapid growth 10% Be prepared for new opportunities 5% Reflect changes in business model Source: customer survey 2004, installed base (19 interviews)

17. mySAP ERP provides … SAP NetWeaver • Flexibility and Adaptability • Quick adaptation of processes based on an open and flexible application platform • Allows to consolidate and leverage existing assets • Increases implementation speed and continuous business innovation • Enables a new breed of applications • Reduces TCO • SAP Business Intelligence • SAP Enterprise Portal • SAP Exchange Infrastructure • SAP Master Data Mgmt • SAP Mobile Infrastr. • SAP Composite Applic.Framework • SAP Web Application Server

18. Customers want… • Better usability • Customers want their employees to have better access to all the functions and services they need for their work. • In fact, the top criteria to decide whether the IT system implementation is successful or not are: • 1) cost savings • 2) internal user satisfaction 42% Provide employees with intuitive usability 37% Give easy access to complete solution capabilities Source: customer survey 2004, installed base (19 interviews)

19. mySAP ERP provides … • People-centric approach • Easy access to information, applications and services • Intuitive design and navigation • Enables people to complete their jobs faster • Relevant budget, process and decision information always available • Information actively “pushed” out to user • Occasional users have easy access • Minimal training needed Role- based Portals Self- Services

20. Customers want • Extension of processes beyond the enterprise • Integration of internal processes with customers and suppliers processes is getting more and more important. 15% Collaborate with external partners 12% Integrate with other lines of business Source: customer survey 2004, installed base (19 interviews)

21. mySAP ERP delivers… • Integration of business processes • More efficient interaction with business partners • High level of third party integration in enterprise processes mySAP ERP HELPS PÖTTINGER BUILD COMPETITIVE DIFFERENTIATORS The online Web shop is perceived as a key competitive differentiator in Pöttinger’s partner program for dealers and repair shops: it allows users to identify spare parts numbers by drilling down to exploded drawings of Pöttinger machines, allowing users to “make things easier for themselves with Pöttinger.” Financial Supply Chain Mgt. e.g. Internet- Sales

22. Customers want • Performance / process optimization • Performance Management still is the focus of business executives. Top of mind Statement: General Cost Pressure / Consolidation 20 % 20% Increase efficiency to cope with rapid growth 20% Consolidate and leverage existing assets 15% Easy support of new business models Source: customer survey 2004, installed base (19 interviews)

23. mySAP ERP offers … • Improved productivity • Reduction of operational costs thanks to business performance improvement: • e.g. faster and more cost effective procurement process • e.g. speeding up sales cycle with on the spot, just-in-time information • e.g. reduce sourcing and administration costs via E-Recruiting e.g. self-service requisitioning e.g. Mobile Business

24. Customers want … • More IT efficiency at less cost • Cost issues are an important driver to move to mySAP ERP Top of mind Statement: Optimizing license cost 25 % 20% General cost pressure 37% Easy integration of other vendor’s applications 21% Low integration and operational cost 16% Reduced total cost of ownership 15% Managing exploiting IT landscape cost Source: customer survey 2004, installed base (19 interviews)

25. mySAP ERP offers … SAP NetWeaver • Reduced Total Cost of Ownership • SAP Enterprise Portal • SAP Master Data Mgmt • SAP Business Intelligence • SAP Exchange Infrastructure TCO today TCO 3 yearsfrom now 15% 85% 40% INNOVATION 60% OPERATION

26. SAP surpasses competitor offerings • Installed-base customers appreciate SAP´s good reputation • Unsurpassed integration within and beyond the SAP functions • Functional scope and depth • SAP is the international standard • SAP is a safe choice • Best in class solution • Flexibility to adopt / to support growth 62 % 31 % 25% 25% 25% 16% Source: customer survey 2004, installed base (19 interviews)

27. SELL THE TRANSITION STORY

28. The new technology platform is important for the future systems strategy Business Requirements SAP R/2 SAP R/3 mySAP ERP Service-Oriented Architectures Adaptable business Leverage StrategicValue  Integrated processes Client/Server Architecture Replace X Efficiency& Control CentralizedComputing Automation Advancement in Technology

29. Therefore it is important to move to ESA • What is ESA? And how does it work? • ESA or ‘Enterprise Services Architecture’ is an application architecture in which all functions, or services, are defined using a description language and have platform-independent interfaces Service Registry Publish a service description Request a service Service Provider Service Requester Bind to the service

30. Enterprise Services Architecture - Core Benefits • Business Agility • Easily change business processes • Increase implementation speed • Value Network Extension • Outsourcing/leverage business partner services • Provide/sell services to business partners • Continuous Business Innovation • Enable a new breed of applications (SAP xApps) • Allow various speeds for adoption of innovation • Leverage existing investments • Leverage existing SAP and 3rd party and legacy systems • Drive lower TCO

31. Explain the architecture of mySAP ERP mySAP ERP Edition 2004 Additional Components mySAP ERP Edition 2003 Self-Service Procurement Additional Components Internet Sales Self Services Application … and more Self-Service Procurement Composite Applications Internet Sales SAP ERP Central Component 5.00 Strategic Enterprise Management Self Services … and more SAP R/3 Enterprise Strategic Enterprise Management SAP R/3 Enterprise SAP ECC Extension Set SAP Enterprise Extension Set SAP Enterprise Extension Set SAP R/3up to 4.6C SAP ECC Core Switch Framework SAP R/3 Enterprise Core SAP R/3 Enterprise Core Application SAP Basis SAP Web Application Server SAP NetWeaver™ SAP NetWeaver™ ‘04 PEOPLE INTEGRATION PEOPLE INTEGRATION Multi Channel Access Multi Channel Access Portal Collaboration Portal Collaboration INFORMATION INTEGRATION INFORMATION INTEGRATION Bus. Intelligence Knowledge Mgmt Bus. Intelligence Knowledge Mgmt Master Data Mgmt Master Data Mgmt Life Cycle Mgmt Life Cycle Mgmt Composite Application Framework Composite Application Framework PROCESS INTEGRATION PROCESS INTEGRATION Integration Broker BusinessProcess Mgmt Integration Broker BusinessProcess Mgmt Technology APPLICATION PLATFORM APPLICATION PLATFORM J2EE ABAP J2EE ABAP DB and OS Abstraction DB and OS Abstraction

32. mySAP ERP Analytics Financials Human Capital Management Operations Corporate Services … and SAP NetWeaver – the new technology platform • Robust integrated platform • Ease of use through portal • Ease of collaboration • Streamlined Data Management • Powerful analytical platform • Streamlined and adaptive integration environment • Scalability & Performance SAP NetWeaver™ PEOPLE INTEGRATION … Self-Services, Collaborative Folders and Collaborative Projects… Multi channel access … Portal Collaboration INFORMATION INTEGRATION … Strategic Enterprise Management,Manager Self Services… Bus. Intelligence Knowledge Mgmt Master Data Mgmt Composite Application Framework Life Cycle Mgmt PROCESS INTEGRATION …Financial Supply Chain Management,Self-Service Procurement… Integration Broker BusinessProcess Mgmt APPLICATION PLATFORM …Self-Services,Adobe Printing Forms… J2EE ABAP DB and OS Abstraction

33. Analytics Strategic Enterprise Management Financial Analytics Operations Analytics Workforce Analytics Financials Financial Accounting Management Accounting Financial Supply Chain Management Corporate Governance Human Capital Management Employee Life-Cycle Management Employee Transaction Management HCM Service Delivery Workforce Deployment Self-Services and Roles in mySAP ERP Operations: Value Generation Procurement Inventory & Warehouse Management Manufacturing Transportation Sales Order Management Customer Service Operations: Support Life-Cycle Data Management Program & Project Management Quality Management Enterprise Asset Management Corporate Services Travel Management Environment, Health & Safety Incentive & Commission Management Real Estate Management SAP NetWeaver™ People Integration Information Integration Process Integration Application Platform Highlight the differences of SAP R/3 & mySAP ERP • The following slides highlight the new & enhanced capabilities … Self-serve portal increases flexibility and productivity Motivate employees to achieve, and design innovative reward strategies Streamlines invoicing and payment processes Extensive analytics, intuitively accessible portal's) Ensures adherence to new legal obligations Empowers employees and improves HCM, reducing costs Supports full procure-to-pay and order-to-cash processes Includes Internet Sales to boost revenues Unique set of value-added services to greatly improve management of resources and assets Mobile Infrastructure, portal connects people Aggregate and analyze information across technology and the organization via SAP Exchange Infrastructure Model, execute, and monitor processes across technology and the organization Open system architecture enables easier integration

34. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Intuitive design & navigation allows people to complete their jobs faster • Occasional users have easy access • Minimal training needed • More guidance • Less complexity • Reduced cycle times • Enhanced control • Self Services • Consistent Navigation and User Interface • Home Page concept • Area Page concept • Roadmap concept • Employee Self Services • Time-Posting corrections • Manager Self Services • Requisition Request • Equipment Management • Approval Processes • Interactive Forms / Portal Mgt. Capabilities for IT Staff

35. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Central point of access based on user role • Relevant budget, process and decision information always available • Information actively “pushed” out to user • Integrated knowledge management to find relevant structured and unstructured information quickly • Role Concept • HR Executive Role • Compensation Specialist Role • Plant or Production Manager Role • Purchasing Agent Role • Internal Sales Representative • Business Unit Analyst Role

36. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Improved decision support and control • Shorter closing cycle times • Improved forecasting accuracy and timeliness • Enhanced efficiency in finance processes • Enhanced usability and user guidance • Strategic Enterprise Mgt. • Balanced Scorecard • Briefing Book • Legal & Mgt. Consolidation • Integration of Statutory and Mgt. Consolidation • Consolidation of Investments • Data Collection Capabilities • Reporting Features

37. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Simplifies Data Management • Enables more flexible consolidated reporting and analysis • Supports transparency and fast closes • Improved employee productivity and reduced cost • Financial & Mgt. Accounting • General Ledger • Data Structure Standardization • General Ledger Extensions • Online Splits • Real-time Integration • Parallel Accounting • Fast Close Support • Fast Close Support

38. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Efficient processing of payments and irregularities • Improved liquidity planning • Consistent company-wide credit policy • Proactive credit risk management • Financial Supply Chain Mgt. • Credit Management • Electronic Bill Presentment & Payment • Dispute Management • Collection Management • In-House Cash • Cash & Liquidity Management • Treasury & Risk Management

39. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Greater scrutiny • Sarbanes-Oxley and Basel II compliance • Shareholder protection • Reduced risk of noncompliance • Reduced costs • Corporate Governance • Management of Internal Controls • Audit Information Support • Support for Whistleblower Complaints

40. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Find suitable high quality candidates to fill positions quickly • Align recruitment activities to enterprise strategy • Reduce sourcing and administration costs • Enable employees to pick up new skills with a combination of classroom training and E-Learning • Human Capital Management • Recruiting and Talent Mgt. • Talent Relationship Mgt. • Applicant Tracking • Analytics • Performance Management • Performance Appraisal Mgt. • Employee development • Attachment processing • Appraisal calibration • Template management • Enterprise Learning • Integrated collaboration features • Content integration / authoring • Portal based access for people with disabilities • Correspondence Management

41. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Improved transparency by real time connection of the physical world (cases, pallets,..) to business applications • Simplified internal logistic processes • Allows traceability of material flow with minimal TCO • Operations Value Generation • Order Processing using RFID • Documentary Batch

42. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Enhanced usability by integrating product, formula and quality definition and execution into one environment • Speed up development process by user guidance and provided automation of development steps • Simplified handling and easier use • Efficient document retrieval • Operations Support • Trials in Recipe Management • NPDI Process report • Recipe creation • Trial development • Information access

43. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Enhanced usability • Speed up development process • Intuitive handling • Optimized work-flow • Operations Support • Lifecycle Data Management • Simplified Document Mgt. • Internal & Ext. Document Access • CAD Integration • Product Modeling for Configurable Products • Collaboration with Partners & Suppliers • Guided Procedures

44. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Real-time collaboration • Manage resources across organizational boundaries • Integrates quality-relevant information into the product development process • Improved usability and user acceptance • Better system performance • Operations Support • Program and Project Management • Mgt. of Collaborative Projects • Resource-related Down Payments and Billings • Quality Management • Trial-specific Stability Studies • Quality Assurance and Control • Quality Improvement

45. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Provides all necessary information to carry out on-site service • Elimination of paper-based orders • Increased data entry accuracy • Automated and standardized budgeting processes • Improved efficiency Operations Support Enterprise Asset Management • Mobile Asset Management • Maintenance Cost Budgeting

46. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Easy and direct access to a range of travel services for employees • Improved user acceptance • Reduced administrative costs • Increased visibility of accounting data • Flexibility and fast content creation • Corporate Services • Travel Management • Employee Self-Services for Travel and Expenses • Mobile Travel Expenses • Environment, Health & Safety • Data Import from External Content Providers • Management of Incentive Compensation Plans

47. Sell the New & Enhanced Capabilities of mySAP ERP 2004 • Benefits • Ensured consistency in incentive compensation plans • Reduced administrative burdens • Better insight & enhanced transparency • Enhanced analysis options • Corporate Services • Incentive & Commission • Management • Calculation of Variable Compensation • Compensation Results Analysis • Real Estate Management • Space Management • Rental Vacancy Management • Rent Adjustments • Service Charge Settlements • Integration to Financials • Reports and Invoicing

48. LA LKA GA (National player) (Global player) (Multi-national player) Customer value perception on mySAP ERP Perceived value SAP Web Application Server SAP Web Application Server SAP Master Data Mgt. SAP Master Data Mgt. SAP Mobile Infrastructure SAP Exchange Infrastructure SAP Exchange Infrastructure SAP Enterprise Portal SAP Enterprise Portal SAP Internet Sales SAP Self-Services Procurement SAP Self Services SAP Enterprise Portal SAP Self Services SAP collaborative PLM SAP Strategic Enterprise Management SAP Business Warehouse Additional User Significant demand Strong demand

49. mySAP ERP 2004 Ramp-Up proves Next Generation ERP Success Technical Value High Cherry Picker Next Generation ERP Technical Upgrade Cherry Picker Low High Business Value = Customer

50. TRANSITION OPTIONSTRANSITION SUPPORT