The Process Innovation Journey for SAP

1. The Process Innovation Journey for SAP Accelerate your path to Process Innovation…

2. Business Process Effectiveness is the Top Priority for Executives A Global Technology Survey found that “Improving business process effectiveness”ranked as the #1 priority for executives… but WHY? McKinsey Global Technology Survey, December 2011 , How IT is Managing New Demands https://www.mckinseyquarterly.com/High_Tech/Strategy_Analysis/A_rising_role_for_IT_McKinsey_Global_Survey_results_2900

3. A customer’s experience with an enterprise is based on the quality and consistency of the company’s critical processes

4. Typically process improvement as well as ERP has been managed in adiscrete and segmented fashion with limited visibility, governance and collaboration across organizations Operations Sales/Marketing Finance Human Resources Manufacturing Consumers and businesses tend to choose products and services based on their experiences and relationship with a company

5. Time in Motion Cloud SOA ERP BPM Lean 6 Sigma Value Integration Tools and methods for driving process improvement have also been implemented with a limited holistic and cross operational integration view…. ….resulting in sub-optimized islands of excellence that are neither holistic nor customer centric

6. Today, creating outstanding customer experiences requires broad Process Innovation that spans the entire organization • Respond and react to individual customer’s, segments or market needs no matter where in the organization they interact. • Interconnect and synchronize departments with enterprise-wide visibility to ensure consistency and outstanding client experiences. • Create collaboration and governance across departments & organizations to drive efficiency but more importantly effectiveness. • Manage for end outcomes enabled by consistent & value driven execution from the front office to the back office. Process Innovation

7. Business Rules Business Process Business Collaboration Governance Optimization Business Information Business Monitoring Business Analysis Business Content Process Automation Business Events Integration Process Innovation enables new forms of customer value to be identified with strategies for Unique Business Change Domain Expertise Organizational Enablement Process Innovation Innovative Business Change = Stronger Customer Experience Structured Experimentation E2E Process Optimization Adaptive & Integrated Operations Value-based Pricing System Revitalization Harmonized Systems

8. Integrated Business Applications Deliver Strong Value…and SAP is the best • Improve alignment of strategies and operations • Improve productivity and insight • Support changing industry requirements • Reduce risk • Improve financial management and corporate governance • Retain top performers • Provide immediate access to enterprise information • Give employees new ways to access the enterprise information required for their daily activities. SAP customers excel by taking advantage of SAP’s industry-specific knowledge, best practices and standardized processes – all codified into the world’s leading integrated application platform.

9. But…SAP implementations tend to drive standardization not Process Innovation Most SAP implementations are documentation-centric driving standardized processes that create a reliance on informal business processes and differences between organizations and instances. Every business strives to be unique, requiring heavy process customization for all but a very few, commodity processes making it difficult to invoke change, migrate to future releases and provide adequate real-time visibility. …all costing you customer centricity, flexibility, adaptability, time, money and lost business opportunities s

10. Because many SAP implementations are basic configurations avoiding customizations they do not meet initial expectations • Opaque SAP processes make process analysis and improvement difficult • Rigid SAP processes increase time to value • End-to-end processes are difficult to model, simulate and manage • SAP Enterprise Services are difficult to use and incomplete • Limited SAP process and real-time visibility causes risk to KPIs and SLAs • Low utilization of inline operational decision management limits productivity Source: Panorama Consulting 2010 ERP Report A solution to one or more of these challenges is required in almost every SAP implementation

11. Though SAP is on of the best enterprise wide solutions to improve business execution there is no easy way to implement or avoid customizations Solution Manager Blueprint Capability

12. Process Innovation requires balancing two methods to optimize business processes Packaged Applications • Improve 100’s of processes at once • Sunset inflexible legacy systems • Catch up to competitors • Huge multi-year projects BPM Tools & SOA • Adapt quickly • Outpace the competition • Process visibility across core & fringe application systems • Smaller, incremental projects BPM NaturalTendency NaturalTendency Process Optimization Approach A Process Optimization Approach B Non-DifferentiatingBusiness Processes DifferentiatingBusiness Processes Successful organizations will have a balanced I/T Strategy of SOA/BPM and ERP Consolidation

13. Examples of IBM’s Own BPM – SAP Projects and Benefits in 2011 • Mid-Market Deal Registration – Delivered $18.5M 2012 PTIby reducing deal registration cycle time with rules-based work-flow automation. • Supply Chain Alerts – Over $2M annual savingsfor timely notifications when supply chain disruptions occur. • Pricing estimator for Cross-brand solutions – Reduced pricing proposal implementation from 14 days to 1 day and deployment to new countries in days versus weeks. • GTS Cloud Sales Enablement – Integrated work-flow, rules and monitoring to reduce partner “register to welcome kit” cycle-time from days to hours. • GMU Geo Location Code Assignment - Geo location code is key enabler of GMU expansion. Eliminated manual process and enabled GMU reps to update rules directly and reduced cycle time to update and run rules from several weeks with many handoffs to just a week for more than 50 countries. • Infrastructure Optimization – Reduced cycle time by 75% to complete the analysis required to migrate from Physical servers to Virtual servers. Business Value Achieved

14. Process Innovation SD Sales & Distribution FI Financial Accounting MM Materials Mgmt. CO Controlling AA Asset Accounting PP Production Planning SAP Applications EC Enterprise Controlling SM Service Mgmt. PS Project System QM Quality Mgmt. PM Plant Maintenance WF Workflow HR Human Resources IS Industry Solutions Adaptive Case Management Process Innovation for SAP can be enabled with IBM Software and Expertise Process Discovery & Design Business Process Management Operational Decision Management Integration Analytics Domain Expertise Master Data Management Enterprise Content Management Organizational Enablement Business Monitoring

15. SD Sales & Distribution FI Financial Accounting MM Materials Mgmt. CO Controlling AA Asset Accounting PP Production Planning SAP Applications EC Enterprise Controlling SM Service Mgmt. PS Project System QM Quality Mgmt. PM Plant Maintenance WF Workflow HR Human Resources IS Industry Solutions IBM BPM V8 integrates seamlessly with SAP to improve your implementation and execution success Orchestrate SAP Services Monitor SAP Business Events Download processes from Solution Manager Upload processes to Solution Manager Retrieve Enterprise Service Definitions

16. IBM BPM can easily exchange Models with SAP Solution Manager SAP Solution Manager IBM Process Designer Business Process Hierarchy Lev 0 Project Process Application Lev 1 Business Scenario Lev 2 Business Process Process Lev 3 Process Step Activity, (Sub-)process, Service Implementation Contenteg. Transactions, Docs SAP Implementation Content IBM BPM maps its process elements directly to SAP Solution Manager constructs and performs bidirectional exchanges s

17. IBM offers a comprehensive solution to SAP implementation and process challenges

18. BPM Enhances the Value of Your SAP Investment

19. Applying IBM BPM to SAP Increasing Integration Modeling for Documentation Use an iterative, experiential-based approach to accelerate traditional SAP blueprinting Real-Time Monitoring Mine SAP business events to discover actual processes and act in real time to business challenges Guided Workflow Interactively guide end users through process steps to improve productivity, visibility and consistency Process Integration and Orchestration Optimize process steps to improve cycle time, manageability and visibility of key processes Automate complex decision making to reduce bottlenecks and improve business outcomes Inline Decision Automation Dramatically reduce the cycle time of high volume processes by reducing/removing human interaction Process Automation

20. IBM BPM Drives Stronger Business Results From Your SAP Implementation • ‘Live’ playback during all phases of process design and rollout • Reduce blueprinting time and costs • Deliver agile SAP business processes that are easy to change • Create market-differentiating SAP processes • Position your SAP implementation for continuous process improvement • Integrate SAP business activity monitoring Business users can directly drive SAP blueprinting, process orchestration and process improvement s

21. Next Steps + • Discuss with us how to provide you and your team with a demonstration or a detailed briefing • Discuss how we could assist with your SAP project • Let us lead your team with an in-house workshop s

22. Examples

23. SAP Process Documentation Is Usually Outdated by Months or Years 2012 2008 Without insight into the ‘real’ SAP processes being used in production, it is very difficult to initiate and build an effective process innovation program or to migrate to a newer SAP release.

24. A list of detailed business events, describing what was actually done by the user • Customer displayed (VD03) • Customer changed (VD04) • Sales order created (VA01) • Sales order modified (VA02) • Pricing Maintained (V0K0) • Sales order modified (VA02) • Notification previewed (IW22) • Order BPM cost estimated created (CK51N) • Sales order modified (VA02) • Customer displayed (VD03) + Ad hoc or added process steps Event-Based Business Monitoring Can Be Used to Uncover the ‘Real’ SAP Processes SAP can create and publish the business events needed to discover the actual business processes in production Which could be analyzed by a data analyst or process specialist to discovery real process structures

25. But SAP’s Business Monitoring Approach is Overly Complex …And lots of custom coding is required to implement

26. Business Monitor can be used to drive real-time insight that leads to continuous Process Innovation • Identify trends, forecast events, feed & correlate alerts to make key decisions for critical business situations and events in real-time • Completely non-intrusive to SAP – simply turn on the SAP Business Events needed • Easily customize dashboards to ensure targeted, relevant information • Easily create ‘shadow process’ views of SAP Business Events by associating milestones with changes in business state • Rebalance work loads on the fly • Leverage mobile

27. Most SAP implementations follow a traditional approach while using general purpose documentation tools Goal Setting and Scope Management • Most SAP customers use Office or Visio for blueprinting. • Some leverage Aris which is a documentation-centric modeling tool. • These tools encourage a documentation-centric approach to process management. • The typical SAP implementation approach is structured to drive configuration and not Process Innovation. • Approximately 40% of SAP customers use Solution Manager to maintain their process flows, which is used to document, but not control, the business process and can not provide execution of the process. Process Analysis SAP Process Library SAP Process Blueprinting (Powerpoint, Visio, Excel, Aris) SAP Solution Manager Configure Customize

28. A typical SAP process today A high level process blueprint is defined in Powerpoint, Visio, SAP Solution Manager or a modeling tool, including transactions: VD03 - Display customer master VA01 - Create sales order; VOK0 - Maintain Pricing; CK51N - Create Order BOM Cost Estimate IW21 - Create notification The implementation then relies on users to read, properly understand and comply with documentation by entering the proper sequence of transaction codes in SAP.

29. With this approach, how can you?.... • Quickly know the status of key processes? • Ensure that the process you designed is the process that is being executed? • Get real-time visibility into where workload or other bottlenecks are causing business issues? • Effectively reroute work to less experienced workers to reduce bottlenecks? • Know which process changes are most likely to help improve business performance? • Quickly rollout SAP process changes? • Quickly integrate new process workers into your business? Many SAP customers attempt to address these issues with customization.

30. Workflow in the traditional SAP implementation is paper based VD03 - Display customer master VA01 - Create sales order; • Process designers create SAP documentation (paper, Word, HTML, etc.) • Users are trained in how to use the SAP process documents • Some users comply with the process as designed, others create their own • Training time for new users is often lengthy • Difficult to move users from task to task, even in the same department • Little to no visibility of backlogs, bottlenecks, poor throughput and other process issues VOK0 - Maintain Pricing; CK51N - Create Order BOM Cost Estimate IW21 - Create notification

31. With IBM BPM 8.0 the picture is your SAPprocess • Import SAP or IBM best practice libraries • Playback any process – regardless of the level of detail and completion • Include real screens, mockups or images • Clarify roles, process steps, flow, KPIs and reporting • Process execution is logged • Process performance parameters are visible - KPIs are calculated & displayed in real time • See, feel and touch the process as it’s executing

32. IBM BPM Can Deliver Guided Workflow for SAP • Define process in BPM V8 • Define activities or steps to execute process – clarify roles, steps, experts, and KPIs. • Invoke correct SAP screen & transaction sequence for each process step, while gaining real time insight into business performance issues and opportunities • Process performance parameters are visible - KPIs are calculated & displayed in real time • If multiple instances exist process can execute at best practice while handling unique differences for each instance

33. Use BPM to Collaborate and move decisions to closer to the source Interact with other Participants via Stream of comments and attachments for process instance Get closer to your operations through on the go visibility into how, when and by whom process work gets done

34. IBM BPM automation or guided workflow improves SAP Value • Documented processes become orchestrated processes • Improve SAP process: • Visibility • Manageability • Reliability • Consistency • Audit-ability • Performance • Detect bottlenecks • Reroute process instances with capacity overload • Escalate problem processes • Initiate and track exception processes • Begin continuous process improvement

35. The Value of IBM BPM for SAP • Business performance • Agility • Flexibility • Visibility • Variability • Manageability • Audit-ability • Consistency

36. Use IBM BPM Throughout Your SAP Life Cycle A New SAP Implementation SAP Process Innovation End-to-End Process Integration Functional Extensions SAP Version Migration s Most SAP Implementations Benefit from IBM BPM at every life cycle stage

37. Large US Toy Company Improves SAP Supply Chain Processes to Reduce Costs Challenge: • Increase responsiveness with customers and collaboration with suppliers while utilizing previous investments in core enterprise applications • BPM Solution • Gathers the bill-of-lading information from freight forwarders and corresponding invoice data from SAP at the right time • Automatically prepares and routes all documentation required • Automates the reconciliation process required for all US Customs requirements, updating SAP at each milestone Benefits: • Increased productivity by 250 percent without additional resources being put into play • Reduced cycle times by 80 percent, from 12 days to only two • Improved overall business efficiency IBM BPM reduced dependency on phone calls, e-mails and paper faxes, while standardizing communication between employees and vendors with increased process visibility

38. Small Sample of IBM BPM SAP Customers

39. Next Steps + • Discuss with us how to provide you and your team with a demonstration or a detailed briefing • Discuss how we could assist with your SAP project • Let us lead your team with an in-house workshop s

40. BPM can help you maximize your investment in SAP customizations Total Cost • Top reasons for SAP customization: • Streamline or customize the SAP user interface • Streamline or customize the SAP process flow • Add complementary functionality • Integrate with non-SAP systems • SAP provides tooling to accomplish each, but not in the same tool • IBM BPM V8 provides all four capabilities in a single tool, driven by the process definition & innovation • Reducing SAP customization reduces cost and deployment time, while minimizing risks to future SAP updates Typical Customizations using SAP SAP Business Fit Flexibility Typical Customizaitons using IBM BPM & SOA Technologies