How to Maximize the Benefits From Your SAP Investment

1. How to Maximize the Benefits From Your SAP Investment Jim Shepherd Senior Vice President AMR Research

2. 1. Extend your deployment • Capitalize on the “network effect” • Metcalfe’s Law: • The value of a system increases as the square of the number of users of the system • Each incremental user, department, or location significantly increases the aggregate value of your SAP system

3. 2. Rationalize your application portfolio • Integrating & supporting 3rd party apps is a poor investment • Heterogeneous systems: • Constrain process improvement • Slow response to change • Lower employee productivity • Complicate reporting and analysis • Functional breadth is why you bought from SAP in the first place!

4. 3. Consolidate systems & processes • Better internal control & visibility • Allow resource sharing & leverage • Reduce IT costs • Enhance customer service • Improve supply chain speed & efficiency

5. 4. Improve business processes • Design new “end-to-end” processes • Capitalize on SAP’s best practices • Look for self-service and automation opportunities • Extend processes to customers & suppliers • Develop organization & metrics for continual process improvement

6. BP Improvement BP Improvement BP Improvement BP Improvement BP Improvement Financial Shared Services Strategic Sourcing Site 5 Site 1 Site 3 Site 6 IT Savings Site 2 Site 4 Phases of Deployment Value Phase I Scattered Instances Phase II Consolidation Phase III Ongoing Improvement

7. Phase II Phase III 2/3 of Benefit Additional Net Income Reduced Materials Costs Business Cost of Consolidation Operating Expense Reduction Typical Benefits Realization 500 450 400 350 300 Benefits ($M) 250 200 150 100 50 0 IT Operating Expense Reduction

8. Process ImprovementOffice CPIO Business Unit BU Leader Process Owner Process Owner Process Lead Process Lead Business Unit BU Leader Process Lead Process Lead Projects Organization Processes Process ImprovementStructure “One Company” Executive Committee CxOs Program ManagementOffice Program Director Finance Director IT Governance Council Information Technology (IT) CIO Process Lead Process Lead

9. Benefits Require the Correct Metrics High “Definition of Victory” 3) Improved Process KPIs 2) System Adoption Business’s Ability to Control 4) Actual Financial Returns Measure for Accountability Measure for Credibility 1) Schedule & Budget Low Low IT’s Ability to Control High

10. 5. Convert data to information • Business monitoring & intelligence • Planning & analysis • Re-engineer decision making processes • Push information to managers, users, customers, suppliers, etc. • Take advantage of SAP products (BI, SEM, MIC, Portal, Analytics, Roles, etc. • Investigate 100’s of partner products

11. 6. Capitalize on SAP’s R&D investment • You helped pay for it – use it! • SAP investing > $1B per year • New and improved functionality in existing products • Enhanced vertical industry functionality • New complementary products • Better technology • Learn what’s new since you bought it

12. 7. Spend more on training & education • Application knowledge starts eroding immediately • Establish formal user certification requirements & enforce them • Educate process leaders on new releases, products, & best practices • Employee education is a great investment

13. 8. Network, network, network … • 80,000 installations + 12 million users = lots of experience, best practices, and real credibility • Try to connect with other SAP customers at executive, IT, and business process levels • Focus on innovative business processes – not “how much are you spending”