SAP HANA Value Roadmap HANA Value Roadmap Aurelian Popa ArcelorMittal Europe CIO – Long Products A...

SAP HANA Value Roadmap

Aurelian Popa

ArcelorMittal Europe

CIO – Long Products

A trip from ‘discovery workshops’ towards a ‘Global S4HANA contract – bringing

full maintenance base to HANA including the S4HANA foundation ’ for ArcelorMittal

Executive summary

RECOMMENDATION

PROBLEM

STATEMENT

Consolidation onto a new

generation platform ensures no

“instant legacy” investment while

accelerating deployment and

encouraging earlier and wider

adoption through improved user

interface

Our analysis identified

significant productivity

opportunities in BI and “Shadow

BI” FTE efforts across all

geographies, including

Transversal, BD North, Long

Europe

An analysis of all business processes has been conducted by SAP to identify areas of HANA

coverage, optimizations and business impact

Workshops highlighted the

potential to simplify and optimize

current processes including

financial close, cash

management, customer

engagement, supply chain and

malfunction analysis

• Margin protection and productivity improvement: There is a renewed focus on improving productivity by

removing inefficiencies across the organization that would yield major benefits to margins.

• Price and currency volatility: Price and currency volatility will continue to challenge ArcelorMittal for the next

few years. New solutions are required to consider potential price and currency outcomes well beyond current

forward curves to strengthen pricing and volumes.

• Capital allocation: ArcelorMittal has entered a new era of focusing on margin quality over price driven volume

growth. Its decision makers have to balance divergent stakeholder demands with the ultimate goal of

maximizing returns.

Estimated Annual

Benefits (steady-state):

Reporting/BI: €…m

SRM: €…m

---------------------------

Outside-in business (full

roadmap): €……m

REPORTING

Productivity BUSINESS

Improvement

CONSOLIDATION

Facilitation

2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 2

How SAP HANA addresses ArcelorMittal strategic challenges

Simpler Landscapes

Analytics and

Transactions together

on one platform

Lower Total Cost of

Ownership

Lower data footprint,

ETL, setup, and admin

costs

Better Business

Decisions

Instant insight to action

from any device

Accelerated

Business Processes Real-time MRP runs,

financial close and stock

reassignment

New Business Models Enter new markets, address

new customers and build

new products

New Business

Processes , Customer Engagement

Intelligence, Fraud Management

Data Centre Readiness

Virtualization and

Tailored Data Centre

Integration

Flexible Deployment

Models

On-Premise, Cloud or

Hybrid deployment

SRM

CRM ERP SCM

PLM

SAP HANA

IT Value Business Value


ArcelorMittal internal HANA success stories ArcelorMittal Mines

Challenges

Reduce manual effort and time to consolidate and report on information

Provide one version of truth for the highest quality information

Improve the quality and integrity of reporting

Results

Deployed the SAP Business Planning and Consolidation application on the SAP HANA

platform and in the cloud. Common and automated processes across all mines

10X to 100X

faster

processing

75% faster reporting on consolidated KPIs

“Our strategy is to move all SAP applications to the

cloud using SAP HANA. The first step was this

successful 6 month project that gave us automated

processes and faster access to data. This is helping us

to innovate and make much faster business decisions.”

Yacouba M’Baye, Head of Mining SAP CoE –

ArcelorMittal Mines

Calvert

Challenges

Business spends more time developing spreadsheets than analyzing and making important

financial decisions resulting in wasted time, lack of confidence in data, impossible to respond to

changes in data

Results

Deployed SAP HANA Datamart

Extracting and reporting on global controlling data from 2 days to 30 seconds

Margin analysis reports in 10 seconds

All sales documents for full year refreshed in 2 seconds

20% IT cost savings annually

“The four letter word that summarizes the entire

projects is EASY. The CEO and CFO are thrilled.”

Richard Davis, Head of SAP Systems , AM/NS

Calvert

ArcelorMittal Flat Carbon Europe

Challenges

Remain competitive by exploring and using new state of the art technology and lowering overall

TCO

Increase throughput times of business critical ERP transactions

Results

Deployed the Suite accelerator – sidecar to SAP ECC

3-73x Faster transaction

processing

ArcelorMittal Long Carbon Europe (completed Proof of Concept)

Challenges

Leverage most cutting-edge IT

Increase operational speed and efficiency

Results

Deployed BW on SAP HANA for Billing and Sales processes

20X to 100X query

performance

5X to 11X data load time

Use case 1: Agile Financial reporting

Value:

• Increased efficiency / productivity of Finance FTEs (30%-40%)

• Increased efficiency / productivity of IT & Business Architects (40-50%)

• Reduced cost of finance

• Lower audit cost as % of revenue (typically 30-50%)

Problem Statement ArcelorMittal:

• Analyzing the impact of org changes is manual, time-consuming. No simulation is

possible.

• Management reporting based on aggregates with no possibilities to further drill

down

• Reporting driven primarily through BW, resulting in data latency

Solution (As Is > To Be ArcelorMittal):

• Impact of hierarchy changes on performance data can be calculated or simulated

immediately (‘what-if scenarios”)

• No aggregates means easier ad-hoc analytics and more agile report

development and change management

• Pre-built content and logical data model accelerate development of new reports

and more business self-serve

Discussion:

• Continued focus on operational efficiency, especially in light of increased FTE

costs (now higher in Brazil that in US)

• Increased demand for operational reporting with drill-down to individual

transactions to conduct root cause analysis previously not possible with

aggregates

• Self-service reporting and analytics interesting for all parts of AM Finance

1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE

L0 H4 L0 H4 4 4


Use case 2: Accelerated financial close

Value:

• Reduced time to close the books (typ 30-60%)

• Increased efficiency / productivity (30% Fin, 50% IT)

• Increased quality (50% lower GL posting corrections)

• Reduction in overtime costs related to close (40-60%)

• Improved timing of purchases and revenue booking towards end of month


• Accounting and Financial Close delivers the financial results of a group required

for the presentation to external and internal stakeholders

• Lack of transparency – no centrally managed financial close or status

• Lack of speed – long running processes delay the close, limited options for re-

runs to correct errors or deeper analysis

• Lack of speed – separate and disparate databases require intensive data copy

and reconciliation processes


• Accelerated processes providing more time for analysis, reducing overtime, or

earlier publishing of financial results

• Deeper & faster insight down to the lowest level of detail

• Common view across financials (invoice receipts) and logistics (good receipts) –

faster reconciliation and drill-through

Discussion:

• Cost center analysis (16h), 60000 materials leads to long material ledger

transactions

• 25-30 people involved from controlling enterprise wide.

Overtime during close period

• 20 days duration (monthly close, quarterly close, yearly

• Talked about Financial Closing Cockpit, and potential to improve end-to-end

process visibility

• Forex fluctuation during the day is reflected in nightly batch run, which at period

end close is not often enough

• Want opportunity to run simulations, multiple scenarios and faster integration of

Mergers and Acquisitions


L0 H4 L0 H4 4 4

6

Use case 3: Accounts receivables management

Value:

• Reduced Days Sales Outstanding (typ 5-10%)

• Reduced Unrecoverable Accounts Receivable (0.5-1%)

• Increased efficiency / productivity (30%-40%)


• Economic disruptions increases write-off risk, which requires more sophisticated

alerting mechanics

• Manual effort in assigning incoming payments to open invoices locks up

headcount in the receivables management process

• Cash tied up in days sales outstanding or bad debt – low working capital leads to

high external financing costs

• Inability to provide key information to sales and service teams to support

collections, credit and dispute management


• Real-time data availability and increased performance allows for continuous

monitoring of the receivable situation anywhere and anytime.

• Drill down from high level KPI view down to individual item

• Collections and sales interact on individual record, integrated in ERP

Discussion:

• Considered to be of strategic importance to CFO

• Not considered a major problem today, but any reduction of DSO would be highly

welcome in order to reduce working capital requirements


L0 H4 L0 H4 3 4


Use case 4: Cash management

Value:

• Reduce loan overhead due to more accurate cash requirements forecast [Loan

interests paid * Share of applicable operational loans – 5% * 1-2%]

• Improve margins by reducing sales & operations costs

• Faster identification and response to exceptions


• Treasury have a limited view of intra day position from the local markets

• Simple reporting of inbound and outbound cash flows possesses time lags,

inaccessibility to key data due to multiple company codes and currencies.

• Short term and rolling 12 month forecasts are increasingly difficult to produce

with higher market volatility

• Increased interest in using historical data to predict into the future


• Combines analysis of data from multiple company codes, currencies and sources

• Built-in automated variance analysis

• Ability to load/match historical cash flow data from GSAP and BCS and simulate

cash forecasting

• Smart Business Cockpit for end-to-end process visibility

Discussion:

• Three main areas of interest in Finance:

• Cash Management and Liquidity Forecasting

• Centralized and more real-time visibility of Bank Account balances

• Improved visibility of net foreign exchange positions in order to report accurately

and hedge more effectively


L0 H4 L0 H4 4 4

Examples:

• HANA trading POC : Finance Working Capital & HANA 60 day FE and P&L


Use case 5: Profitability analysis

Value:

• Reduce COGS [COGS * 0.5-1%] by optimizing supplier negotiations (eg

transport, labor, …)

• Identification of margin destroying customers and/or products [Operational

Margin * Share or negative margin sales 1-2% * Improvement 20-30%]

• Establish better pricing strategies [Operational Profit * Share of sales with better

pricing potential – 20% * Improvement 0.5-1%]


• Ability to carry out profitability analysis against a very small set of variables.

• The aggregate information about cost of goods sold does not give transparency

into the trends of cost elements in sales.

• Plan vs. budget in COGS difficult to determine.


• Net-Margin Analysis on HANA brakes COGS down into 30 different cost

elements and allows sales management and finance to discover sales costs

increases that do not adhere to the corporate strategy.

Discussion:

• Currently takes over 1 week to calculate profitability for 1 product, and therefore

only done once a month

• Interested in having a unified view of profitability across Financial and

Commercial teams; currently use different systems and different profitability

models

• Interested in higher granularity (currently only done at Product Group level, not

individual product), ability to run analysis with higher frequency and using

predictive capabilities


L0 H4 L0 H4 4


3

HANA - challenges

Requires specific skills

(Gartner) Currently, there are very few standards for in-memory technologies against which SAP Hana can be measured.

However, it is really the skills scarcity for new SAP Hana products and services that often constrains their adoption to more

leading-edge-type enterprises.

Adoption is slow

There is a technical excitement related to the HANA PoC followed by a long project time before we see first results. However,

in many cases the expectations are confirmed.

Specific hardware is needed

HANA currently runs on specific hardware to support the respective performances.


Architecture deployment options

Scenario I

Introduce HANA as sidecar for two purposes:

- Acceleration of specific business transactions

- Operational reporting via HANA Live

This will allow for addressing niche opportunities and capturing

linked business value, building up skill base with least impact on

the business

Current Implementations: BD North, Calvert

Roadmap: Latin America, Long Carbon Europe, Dofasco,

South-Africa

Scenario III

Suite on HANA Migration or new greenfield implementation is the

most comprehensive and immediate opportunity for business

process transformation and innovation

Current Implementations: Mining (greenfield)

Roadmap: Tubular (greenfield), BD North, USA

Scenario II

Migrate BW to BW on HANA. This will allow to capture the value of

increased BI productivity and efficiency, faster data loads and

reporting, simpler administration due to simpler architecture.

Current Implementations: Mining, Long Carbon Europe (PoC)

Roadmap: BD North, Long Carbon Europe, Dofasco, Ukraine, Latin

America

IIa IIb

IIIa

DBX

ERP

DBX

BW

HANA

Live

HANA

Acc

DBX

ERP

DBX

BW

I

DBX

ERP

HANA

BW

HANA

Live

HANA

Acc

DBX

ERP

HANA

BW

HANA

ERP

IIIb

HANA

ERP

HANA

BW


Walldorf Innovation Workshop


PaloAlto Innovation Workshop

An Enthusiastic, «beyond expectations» workshop!!!


South America HANA Value Workshop


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