An overview of the world’s leading ERP system

History of SAPSystems Applications and Products in Data Processing

German : Systeme, Anwendungen, Produkte in der Datenverarbeitung

Founded in 1972 by Wellenreuther, Hopp, Hector, Plattner and Tschira Re named in 1977 Before 1977 : Systems Analysis and Program Development

(German : Systemanalyse und Programmentwicklung)

SAP is both the name of the Company as well as their ERP Product

SAP system comprises of a number of fully integrated modules, which covers virtually every aspect of the business

Three systems developed : R/1, R/2, R/3

Trades on NYSE: SAP

What is SAP? (the software)Enterprise Resource Planning software

Quote-to-Cash (Revenue cycle)Req-to-Check (Expenditure cycle)Plan-to-Produce (MRP)Finance and Controlling

Massive accounting packageTool kitSeries of ModulesBought and customized to your business

Who Uses SAP?“the World’s best run companies….”80% of Fortune 500

CokeConagraCaterpillarExxon Mobile (over 60 instances)ChevronMarathon OilCooper IndustriesNikeGeneral ElectricBaker HughesEnron….?

SAP – ERP and Data FlowManufacturing most popular

Growth out of MRP

9 basic modules

Interconnected and independent

R/3

MMMM

FIFI COCO

SDSD PPPP

PLMPLM

QMQM WMWM HRHR

SAP – ERP and Data FlowData typesMaster data

Vendor masterCustomer masterMaterial master

Transactional dataSales ordersPayments

Meta data

SAP – ERP and Data Flow

Quote toCash

Plan toProduce

Requisition to Check

Sales Order

Sales & OperationsPlanning

DemandPlanning

InventorySourcing

MaterialRequirements

Planning

Delivery

Planned OrderProduction

OrderProduction

Control

PurchaseRequisition

VendorSelection

PurchaseOrder

Goods ReceiptInvoice

VerificationVendor

Payment

Cost Controlling

Financial and Logistics Reporting

Business Information Warehouse

BillingQuote CustomerPayment

QtC

PtP

RtC

SAP Modules

SAP R/3SAP R/3

FIFI

WFWF

PSPS

PMPM

WMWM

PPPP

MMMM

SDSD

HRHR

AMAM

COCO

QMQM

PP – Production Planning

WM – Warehouse Management

PM – Plant Maintenance

AM – Asset Management

PS – Project System

MM – Materials Management

SD – Sales and Distribution

QM – Quality Management

WF – Workflow

HR – Human Resources

CO – Controlling

FI – Financial Accounting

Other SAP OptionsOther Modules, Components, and Grids

CRMBI/BWTreasuryReal EstateEnergy productsSAP Business oneAFS – Apparel Footwear SolutionIndustry specific moduleGovernance, Risk and Compliance

Management DecisionsData driven analysis

What are important pieces of information for a material?

SAP material master 20 different views Average 20 fields per view Several views change by plant

Real time accounting informationAccounts ReceivableAccounts Payable

Management DecisionsProfitability

What is profitable?Who is profitable?Where are we profitable?

Dude, where’s my cash?Inventory – which materialsAccounts Receivable – which customersAccounts Payable – which vendorsOthers – prepaids, accrued payroll, other

expenses

Management Decisions - No MoreNo longer decisions!

When to payWhat to buyWhen to buyWhat to makeWhen to make itWhat to count (inventory stock take)Who to hire (always MBA students)

Management Decision ChangesRemoval of rote/routine decisionsChanges the types of decisions

From how much of product XTo should we sell product X

Flattens the organizationCreates new opportunities

How many analysts does it take…

Costs of Implementing SAPWhat does it cost?

HardwareSoftwareBioware

Cultural changesDifferent organizationChange management

Process changesWhere to start?

Cost of SAP deployment

SAP Implementation CostsAdult diaper time!$50-100 million, typicalBy experience of companies

One company, $50 million for current systemPrevious company, >$250 million

Everything in-house Highly customized

OthersHershey failed(Trick or Treat!)Enron went in smooth and easy

SAP Hardware CostsDo you have an ERP ready data center? – not in $50

MMFire detection and preventionAbove 500 year flood level?In hurricane, earthquake, or tornado zone?Do you have a hot or cold backup site?

$5-10 million depending on sizeMulti-mirroredReal-time backupApplication, database, load balance

Do you need new PC’s?

Software Costs$5-15 million up front

SAP licenses (various modules)Oracle or other database licensesBW or other analyticsAdministration toolsBackup and recovery software (real time?)

Annual licensing/maintenance fees 20%Hint – select the right state and download

Costs of SAP Expertise$10-25 million on hardware and software

$40-75 million on biowareSAP eliminates $10/hr data entry clerksNow you need $100,000+/yr Basis

administrators

Consultants can be expensiveYou want the expensive onesKnow business and technical

SAP ConsultantsLots of consultants

Few have the skillsFind, a finder!

Lots of billing ratesSAP Platinum consultant - $300/hrQuality, independent - $150/hrSomeone who read an SAP book – not worth the

timeGood consultants – know the business!

Technical aptitudeCommunication skills

Cultural ChangesImmediate fear

Job lossesJob changes

Management oversightDashboardsDrilldown

Allocation of costsData is a valuable assetCentralized/Shared processes and resources

Process ChangesWhat changes?

NothingEverything

Optimize your process first!StreamlineLeverage technologyOnly one big change

Document, document, documentCommunicate, communicate, communicate

SAP CareersSAP Business Analyst

Liaison between the business and the techiesGood communication skillsUnderstanding of local business and industry

practicesTechnical trackFunctional trackProject managementBest – Technofunctional that can manage

projectsIT DirectorConsultant

Benefits of mySAP ERP SAP ERP delivers a comprehensive set of integrated,

cross-functional business processes. With SAP ERP, we can gain the following benefits:

Improve alignment of strategies and operationsImprove productivity and insightReduce costs through increased flexibilitySupport changing industry requirementsReduce riskImprove financial management and corporate

governanceOptimize IT spendingGain higher ROI fasterRetain top performersProvide immediate access to enterprise information

Is it Worth It?

YES!!!If done correctly…

Eliminate non-value added stepsImprove management informationSignificant soft cost savingFocus resources