ERPs and SAP The Worlds Best Run Companies Run SAP

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ERPs and SAPThe Worlds Best Run Companies Run
SAP

• An overview of the worlds leading ERP system
• JR Batek, IT Audit Manager Cooper Industries
• Tim Guerinot, Sr. SAP Staffing Consultant
  Whitaker IT

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Introduction

• JR Batek, IT Audit Manager Cooper Industries
• 11 years of ERP experience
• 8 years SAP experience
• 6 years auditing SAP
• 2 years implementing SAP
• Tim Guerinot, Sr. SAP Staffing Consultant
  Whitaker
• 6 years ERP experience
• 3 years staffing SAP, all versions and modules
• 3 years selling ERP solutions
• Avoid adult diaper answers!

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Overview

• What is SAP and who uses SAP (JR and Tim)
• SAP modules and ERP information flow (JR and Tim)
• How managers use SAP and ERPs to make decisions
  (JR)
• Costs of implementing SAP
• Money (JR and Tim)
• Cultural changes (JR)
• Process changes (JR)
• SAP Careers (Tim)
• Wrap-up and QA
• Case discussion

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What is SAP? (the company)

• Started in 1972 five former IBM employees
• Top 5 software company (MS, Oracle, IBM, Google)
• Trades on NYSE SAP
• Headquartered in Walldorf, Germany (near
  Heidelberg)

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What is SAP? (the name)

• The good names
• Pronounced S A P NOT Sap
• Systeme, Anwendungen und Produkte in der
  Datenverarbeitung
• Systems, Applications and Products in Data
  Processing
• The other names
• Stops All Progress
• Start And Pray
• Software Acquires Problems
• Satans Accounting Program

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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 package
• Tool kit
• Series of Modules
• Bought and customized to your business

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Who Uses SAP?

• the Worlds best run companies.
• 80 of Fortune 500
• Coke
• Conagra
• Caterpillar
• Exxon Mobile (over 60 instances)
• Chevron
• Marathon Oil
• Cooper Industries
• Nike
• General Electric
• Baker Hughes
• Enron.?

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SAP ERP and Data Flow

• Manufacturing most popular
• Growth out of MRP
• 9 basic modules
• Interconnected and independent

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SAP ERP and Data Flow

• Data types
• Master data
• Vendor master
• Customer master
• Material master
• Transactional data
• Sales orders
• Payments
• Meta data

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SAP ERP and Data Flow
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Other SAP Options

• Other Modules, Components, and Grids
• CRM
• BI/BW
• Treasury
• Real Estate
• Energy products
• SAP Business one
• AFS Apparel Footwear Solution
• Industry specific module
• Governance, Risk and Compliance

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Management Decisions

• Data 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 information
• Accounts Receivable
• Accounts Payable

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Management Decisions

• Profitability
• What is profitable?
• Who is profitable?
• Where are we profitable?
• Dude, wheres my cash?
• Inventory which materials
• Accounts Receivable which customers
• Accounts Payable which vendors
• Others prepaids, accrued payroll, other expenses

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Management Decisions - No More

• No longer decisions!
• When to pay
• What to buy
• When to buy
• What to make
• When to make it
• What to count (inventory stock take)
• Who to hire (always MBA students)

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Management Decision Changes

• Removal of rote/routine decisions
• Changes the types of decisions
• From how much of product X
• To should we sell product X
• Flattens the organization
• Creates new opportunities
• How many analysts does it take

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Customer Profitability
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Product Line Profitability
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Inventory Balances
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Costs of Implementing SAP

• What does it cost?
• Hardware
• Software
• Bioware
• Cultural changes
• Different organization
• Change management
• Process changes
• Where to start?

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SAP Implementation Costs

• Adult diaper time!
• 50-100 million, typical
• My experience
• One company, 50 million for current system
• Previous company, gt250 million
• Everything in-house
• Highly customized
• Others
• Hershey failed in October (Trick or Treat!)
• Enron went in smooth and easy

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SAP Hardware Costs

• Do you have an ERP ready data center? not in
  50 MM
• Fire detection and prevention
• Above 500 year flood level?
• In hurricane, earthquake, or tornado zone?
• Do you have a hot or cold backup site?
• 5-10 million depending on size
• Multi-mirrored
• Real-time backup
• Application, database, load balance
• Do you need new PCs?

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Software Costs

• 5-15 million up front
• SAP licenses (various modules)
• Oracle or other database licenses
• BW or other analytics
• Administration tools
• Backup and recovery software (real time?)
• Annual licensing/maintenance fees 20
• Hint select the right state and download

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Costs of SAP Expertise

• 10-25 million on hardware and software
• 40-75 million on bioware
• SAP eliminates 10/hr data entry clerks
• Now you need 100,000/yr Basis administrators
• Consultants can be expensive
• You want the expensive ones
• Know business and technical

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SAP Consultants

• Lots of consultants
• Few have the skills
• Find, a finder!
• Lots of billing rates
• SAP Platinum consultant - 300/hr
• Quality, independent - 150/hr
• Someone who read an SAP book not worth the time
• Good consultants know the business!
• Technical aptitude
• Communication skills

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Cultural Changes

• Immediate fear
• Job losses
• Job changes
• Management oversight
• Dashboards
• Drilldown
• Centralized/Shared processes and resources

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Cultural Changes

• Unbelievable level of complexity
• Learn to speak SAPaneese
• Arguments change
• What is the correct authorization object?
• Which movement types are considered consumption?
• Allocation of costs
• Data is a valuable asset

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Process Changes

• What changes?
• Nothing
• Everything
• Optimize your process first!
• Streamline
• Leverage technology
• Only one big change
• Document, document, document
• Communicate, communicate, communicate

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Is it Worth It?

• YES!!!
• If done correctly
• Eliminate non-value added steps
• Improve management information
• Significant soft cost saving
• Focus resources

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SAP Careers

• SAP Business Analyst
• Liaison between the business and the techies
• Good communication skills
• Understanding of local business and industry
  practices
• Technical track
• Functional track
• Project management
• Best Technofunctional that can manage projects
• IT Director
• Consultant

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SAP Careers

• Salaries
• Business Analyst - 70K/year
• Basis 110K
• Functional 90K
• Project manager 80K
• Independent consultant
• Bill at 150/hr
• Take home 110/hr
• Less travel costs
• Approximates to 175K

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SAP Careers

• The downside!
• Lots of travel (good or bad)
• Long hours
• Work-life balance challenges
• Project work
• Projects end
• Jobs end
• Specialized knowledge not always transferable
• Great opportunities with great companies

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Wrap-Up

• What is SAP and who uses SAP (JR and Tim)
• SAP modules and ERP information flow (JR and Tim)
• How managers use SAP and ERPs to make decisions
  (JR)
• Costs of implementing SAP
• Money (JR and Tim)
• Cultural changes (JR)
• Process changes (JR)
• SAP Careers (Tim)
• Wrap-up and QA

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Instant Case Time!

• You are Ken Camarco, VP of Business Systems (CIO)
• Company decided to implement an ERP solution
• Chose SAP
• Using outsourced data center
• Which division(s) go first?