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SAP Customer Success StoryLife Sciences Pharmaceuticals

MERZ GROUP

CARVING OUT AND UPGRADINGSOFTWARE BRINGS MAJOR BENEFITS

Given the success of the migration

effort, Im certain well be teaming

up with the System Landscape

Optimization group again in the

future. Tanja Ludwig-Neubauer, Project Manager for HR,Merz Group Services GmbH

SAP Solutions and ServicesHCM migration service from the SystemLandscape Optimization group

Implementation Highlights Completed smooth transition ahead of

schedule Migrated configuration settings and HCM

data to an upgraded system supportingUnicode

Utilized excellent teamwork, with rapidresponses by the experts from SAPConsulting

Why SAP Extensive expertise, real-world experi-

ence, and proven migration technology Specific proposals with a detailed project

timeline

Benets Significantly enhanced flexibility by

implementing a separate HCM system Simplified maintenance of HCM software Accelerated provision of new HCM

functionality

Existing EnvironmentSAP R/3 software (functionality now foundin the SAP ERP application)

Third-Party Integration Database: Oracle Hardware: Hewlett-Packard Operating system: Microsoft Windows

Company Name: Merz GmbH & Co. KGaA

(Merz Group) Location: Frankfurt am Main, Germany Industry: Life sciences pharmaceuticals Products and services: Pharmaceuticals,

skin care and dental products, anddisinfectants

Revenue: 610,5 million Employees: 2,289 Web site: www.merz.com

Implementation partners: SystemLandscape Optimization group from SAPConsulting, Merz Group Services GmbH

Challenges and Opportunities Reduce the impact of downtime involved

in maintaining human capital management(HCM) software

Implement data-protection and access-control mechanisms in a more practical,efficient way

Facilitate rollout of HCM functionality tointernational subsidiaries

Objectives Carve out HCM functionality from the

core enterprise resource planning (ERP)application and run it in a new, separatesystem

Migrate all current and historical data tohelp ensure continuity

Upgrade to the latest release of the SAPERP Human Capital Management solution

Convert to Unicode to streamline supportfor new languages

QUICK FACTS

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Headquartered in Frankfurt am Main,Germany, the Merz group specializesin pharmaceuticals, over-the-counter

drugs, and dentures, as well as disin-fectants and cleaning agents. Productsrange from innovative treatments fordementia and dermatological disordersto popular consumer brands. A globalplayer, Merz has subsidiaries in severalEuropean countries, Mexico, and the

United States. With a total workforceof over 2,200, the group postedrevenues of 607 million in fiscal year20072008.

Challenges Created by the Application Landscape

SAP software for ERP has played acentral role at Merz for over a decade.In 2004 the group implemented theSAP ERP Human Capital Management(SAP ERP HCM) solution. SAP soft-

ware is currently used by 15 Merz sub-sidiaries outside Germany. However,

having HCM and ERP software withina single application landscape broughta number of problems. First, there wasthe issue of upgrading: Merzs HR

managers wanted to exploit new func-tionality offered by the latest releaseof SAP ERP HCM such as country-specific payroll accounting. This en-tailed moving up to the latest releaseof the SAP ERP application. But Merz

had no immediate plans to upgradeits core ERP software.

Whats more, whenever legislationaffecting payroll accounting waschanged, the entire system had to beshut down to import the necessarysupport packages. As this downtimeimpacted Merz staff in multiple timeszones, finding suitable maintenance

windows was far from easy. Having justone application landscape also created

significant challenges in the area ofuser authorization. For example, tosafeguard sensitive HCM data, suchas executives salaries, Merz had toseverely curtail access rights for allusers, hampering routine maintenance.

To overcome all these issues, Merzdecided to decouple its HCM and ERPsoftware. HR specialists at Merz GroupServices GmbH the company respon-sible for the groups SAP software investigated options for implementingthe latest release of SAP ERP HCM asa separate system, hooked up to thecore ERP application via standard inter-faces. And with expansion into easternEurope on the cards, it also made senseto convert to Unicode, streamliningthe addition of new language support.

In the past, every time Merz GmbH & Co. KGaA (Merz Group) up-dated its HCM software to meet new legal requirements, it had toschedule a full system outage and find a maintenance window thatavoided impacting staff at sites worldwide. But not anymore the

System Landscape Optimization group from SAP Consulting helpedMerz to carve out its human capital management (HCM) softwarefrom the core enterprise resource planning (ERP) application and runit in an upgraded stand-alone system. The result: easier maintenanceand administration plus faster provision of new functionality.

The migration specialists from SAP had a firm grasp on the issues involved.

We were particularly impressed by their experience, proven methodologies,

and the detailed project timeline they presented to us.Hilke Roeder, Project Manager for HR, Merz Group Services

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Extensive Experience, ProvenMethodologies

Three consulting companies were invitedto submit proposals. After careful con-sideration, Merz opted to partner with

the System Landscape Optimizationgroup from SAP Consulting. The migra-tion specialists from SAP had a firmgrasp on the issues involved, recallsHilke Roeder, project manager for HR

with Merz Group Services. We wereparticularly impressed by their experi-ence, proven methodologies, and the

detailed project timeline they presentedto us. Moreover, the service fromSAP supports direct transfer of data toa system running Unicode and a newerrelease of the HCM software enablingMerz to combine the migration andupgrade, saving time and money.

Based on tried-and-trusted standard-ized migration and conversion technolo-gy, the System Landscape Optimizationgroups HCM migration service pro-

vides a clearly defined process thathelps ensure a smooth transition anddata consistency. Project tasks are

mainly handled via remote services, with SAP specialists working at thecustomer site where required.

Fast, Cost-Effective Support fromthe Migration Experts

At the kickoff workshop, the stakehold-ers finalized the project plan and de-fined all tasks. Merz Group Servicesorganized and supervised the initiativeand handled the upgrade and Unicodeconversion. The SAP consultants ana-lyzed the software and migrated config-

uration settings and master and trans-action data. The System LandscapeOptimization specialists from SAP

were certainly quick off the mark. Theycompleted the first test migration justa week after starting the analysis,recalls Tanja Ludwig-Neubauer, projectmanager for HR at Merz Group Services.

Merz Group Services conductedacceptance testing with key users fromHR and integration tests with otherdepartments. All activities were sched-uled to avoid disrupting monthly payrollruns. To up the ante, we made our

To up the ante, we made our real-life test cases more complex and

created additional ones. . . . When we compared the payroll accounting

figures with those from the source system, we found they were

identical right down to the last cent.

real-life test cases more complex andcreated additional ones includingsickness, retroactive adjustments, andpartial retirement, says Roeder. Andthe results were impressive. For ex-ample, when we compared the payroll

accounting figures with those from thesource system, we found they wereidentical right down to the last cent,reports Roeder.

A Smooth Transition Completed Ahead of Schedule

The consulting team from SAP wasrelatively small, helping ensure fast,effective communications. Whats more,the combination of on-site and off-site

resources delivered tangible benefits.The remote service was a big plus,cutting down on travel expenses. Andthe experts from SAP always respondedpromptly to our queries, reportsLudwig-Neubauer. We couldnt faultthe support we received, she continues.When we ran into issues, the special-ists from the System LandscapeOptimization group had a solution thenext day if not sooner. Speaking fromexperience with other projects with

various partners, Id grade this one A+.

The original project schedule includedtwo test cycles and a full dress rehearsal.However, as the test results of the firsttwo cycles had been spot-on, this laststep was omitted enabling the newsystem to go live a whole month earlierthan planned. The transition couldnt

Hilke Roeder, Project Manager for HR, Merz Group Services

When we ran into issues, the specialists from the System Landscape Optimi-

zation group had a solution the next day if not sooner. Speaking from

experience with other projects with various partners, Id grade this one A+. Tanja Ludwig-Neubauer, Project Manager for HR, Merz Group Services

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products and services mentioned herein as well as their respectivelogos are trademarks or registered trademarks of SAP AG inGermany and in several other countries all over the world.

Business Objects and the Business Objects logo, BusinessObjects,Crystal Reports, Cr ystal Decisions, Web Intelligence, Xcelsius, andother Business Objects products and services mentioned herein as

well as their respective logos are trademarks or registered trademarksof Business Objects S.A. in the U nited States and in several othercountries all over the world. Business Objects is an SAP company.

All other prod uct and ser vice names m entioned are the trad emarksof their respective companies. Data contained in this documentserves informational purposes only. National product specicationsmay vary.

These materials are subject to change without notice. These materialsare provided by SAP AG and its affi liated companies (SAP Group)for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions withrespect to the materials. The only warranties for SAP Group productsand services are those that are set forth in the express warrantystatements accompanying such products and services, if any. Nothingherein should be construed as constituting an additional warranty.

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have been smoother and has certainlydelivered in terms of continuity andefficiency. The data was identical, andthe new release has the same lookand feel as the HCM software the us-ers formerly deployed. In fact, the

changeover was so transparent thatsome employees accidentally loggedon to the previous system after lunchon day one and called to ask where thedata theyd entered that morning hadgone, says Ludwig-Neubauer. Otherdepartments and senior executives

were pleasantly surprised by how quick-ly the project was completed. Andthey were impressed by how little thechangeover impacted them.

Greater Responsiveness, GreaterFreedom

One year after completing the project,the Merz Group is more than satisfied

with the results. Having a separateHCM system makes us far more respon-sive to changes and new challenges,says Ludwig-Neubauer. And thecarve-out has brought other benefits.We can now install support packages

whenever we want, without impactingnon-HCM processes or staff at inter-national subsidiaries. Thats a hugeadvantage, explains Ludwig-Neubauer.

Access control is now much morestraightforward and efficient, sinceuser authorizations can be assigned inaccordance with real-world needs.Moreover, the international rollout ofthe new HCM software is well under

way. Payroll accounting functionality isalready up and running in Switzerland,for example. Going forward, we planto implement even more new HCMfunctionality, such as support for train-ing and event management, employeedevelopment, and e-recruiting, saysLudwig-Neubauer. Given the successof the migration effort, Im certain wellbe teaming up with the System Land-scape Optimization group again in thefuture.

50 092 446 (08/11) 2008 by SAP AG.

All rights reserved. SAP, R/3, xApps, xApp, SAP NetWeaver, Duet,PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP

products and services mentioned herein as well as their respectivelogos are trademarks or registered trademarks of SAP AG inGermany and in several other countries all over the world.

Business Objects and the Business Objects logo, BusinessObjects,Crystal Reports, Cr ystal Decisions, Web Intelligence, Xcelsius, andother Business Objects products and services mentioned herein as

well as their respective logos are trademarks or registered trademarksof Business Objects S.A. in the U nited States and in several othercountries all over the world. Business Objects is an SAP company.

All other prod uct and ser vice names m entioned are the trad emarksof their respective companies. Data contained in this documentserves informational purposes only. National product specicationsmay vary.

These materials are subject to change without notice. These materialsare provided by SAP AG and its affi liated companies (SAP Group)for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions withrespect to the materials. The only warranties for SAP Group productsand services are those that are set forth in the express warrantystatements accompanying such products and services, if any. Nothingherein should be construed as constituting an additional warranty.