SAP Innovation Awards 2019 Entry Pitch Deck

Schneider Electric

Innovation in Control on Margin Deviations for Services

Innovation in control of margin deviations for services

Innovation in Control on Margin Deviations for Services

2

“Quote” Challenge

Solution

Outcome

Innovation in Control on Margin Deviations for Services

25% Customer Order

Changes process15% Margin growth

Great improvement in

communication between sales

and operations teams.

Schneider Electric

“This is a great step

toward digitizing the

analysis of the Margin

by job” Vincent

Barakat, Global Field

Services Finance VP.

“Definitely this new

tool is something we

have needed for a

long time and without

doubts will be of great

help for the economic

monitoring of

services”, Leonardo

Sansone, IT Project

Manager.

3

Partner Information

“”“Special thanks to our SAP expert (Guillermo) who made it happen”, Inès d'Agrain Blanchot, Finance BP, International, China & Operations

“This functionality to control gross margin deviation is receiving excellent feedback from the business / GFS Finance”, Jean-Pierre Samilo, VP Field Services Domain.

“Consolidating quoted/planned and actual costs will give a job-by-job financial understanding, allowing us to capture and control our costs through reporting and corrective action”, Jamie Evans, General Management | Cross-Functional Projects (Australia)

Schneider Electric

SAP Logistic Consultant

4

Business Challenge & Objectives

From the CRM (Salesforce) and the Mobility Tool (ServiceMax), planners manage work orders thatare mapped to SAP service orders, but could not obtain direct information to compare the versionof the quote cost with the actual cost situation. This was generating unexpected margin deviationsand communication problems.

Even after the work was done, there was no collective report to compare the final picture of thequoted costs and the expected quoted margin with the real cost and margin in a single reportingtool, so there was no way to compare the expected margin with the real final margin and analyzethese results by service offer, sales districts, business units, customers or periods. This lack ofvisibility prevented the Business from determining the best investment decisions and realprofitability.

Provide the planner with a simple tool to have visibility of the estimated costs and, therefore, take them into account as "objectives" when planning the work and execute it, in addition to being able to know the real costs that are generated.

On the one hand, each Front Office planner can access this information for each individual WO to verify the cost of the quote and compare it with the current cost.

On the other hand, the Controllers can visualize the a report with the final picture of all the costs, expected margins and current margins of all WO that have been executed, grouping them by several criteria such as sales team, territory, profit center, customer, service material and period.

Creation of a community of users to define strategies, procedures and global rules of sales and interactions with the clients so that they assume the changes in the prices in the cases of margin deviations caused by changes in the requirements of the client after the acceptance of the offer, and the issuance of the purchase order.

5

Project / Use Case Details

Schneider sends a sales representative to a customer in the Boston area.

The Request is to maintain a production line control panel.

The Sales Representative calculates 3 working days ($ 200 / d) and $ 100 battery and $ 150 breaker to replace in the control panel, plus $ 50 of total travel expenses (the total cost of the quote is $ 900).

The price offered was $ 1500 with an expected margin (backlog) of $ 600.

The customer accepts it and the order is created.

The Boston area planner receives the order in the CRM tool and calls the customer's contact person to confirm the intervention date.

The person mentions that the production lines work during the week, so the visit is only possible during the weekend.

With the new Margin Diversion Tool, the planner can verify (1 click) that the quote did not include the weekend rate (which is $ 250 / d). Therefore he detects a deviation of $ 150 ($ 50 x 3 days, new cost 1050) and asks the sales team for a change in the order.

After the negotiation, the new price was $ 1600 (the contribution margin was reduced to $ 850).

Now the planner assigns an available Field Service Technician to the work order.

The Field Service Technician receives the order on his IPad and accepts it.

As there were no company vans available that weekend, he rented a van increasing the expenses (from $ 50) to € 100.

6

Project / Use Case Details

The planner can check with the new Margin Deviation Tool a new deviation of € 50, so the new expected margin is now $ 800.

The Field Service Technician detects that one of the control panels also requires the change of its switch. This switch costs $ 50 and to change it, the Field Service Technician needs an additional working day ($ 150).

The planner can see with the Margin Deviation Tool a new deviation of $ 200, as well as can verify that the margin remains positive: $ 600.

The order is completed and invoiced. The financial team executes the global BI report and verifies that the expected margin for 2018 was 9M, but the final margin was 6M, and notes that the rate of many orders changed due to the execution that took place during the weekend and not always considered in the quote; so they ask the sales team to include this question during the quotation process. Also, the change is not good enough and they ask the Purchasing team to look for a new supplier.

This scenario is covered with the Margin Diversion Tool that allows all the stakeholders to verify the status of the cost of the order in a single (for planners) or global call (for Controllers) to SAP from the CRM and BI tools.

The quote information is entered into an easy t-code to be complied with any quote tool.

The cost is allocated in the standard SAP system and displayed in a special panel (future improvement with Screen Personas).

In addition, each SAP Federation is storing the information daily in a single table that is sent to BI, where the information is displayed in a global report (in Tableau) available for high-level analysis.

7

Project / Use Case Details

Users community

This project was also the kick-off for a Global Service User community that is now in full interaction and

offers excellent results such as:

- Help improve the solution and channel new global requirements.

- Answer specific questions from users to all (example: margin deviation %> 100).

- Define global strategies and procedures to manage the interactions of sales rules with customers to assume changes if the reasons of the

deviation are changes caused by the customer after the offer was closed or to determine a validated order change process.

- Announce follow-up initiatives (example: Australian E2E variation process project or global BI project).

- Report updates and improvements for each release new features of the functions and participate in global UAT to test new them.

- Share experiences and suggestions among countries on how to deal with deviations and improve sales and execution communication.

- Find global points in common.

8

Project / Use Case Details

History of success around the world

New Zealand started using the tool successfully and followed Australian Order Change action plan..

Contact: Debra Jones

USA is one of Schneider's major global service markets. They were the first users of the CM tool (Pilot). They have

entered more than 4500 orders in the last 6 months. All sales teams had been trained to enter estimates. Now they

have a clear visibility of the margins, understanding the deviation reasons and improving both the quotation process

and the execution process. In addition, now with this new visibility, the Business is moving to improve the variable

that produces more revenue based on territories, service offerings (SKU), sales districts and Customers.

Contact: Jae Kim

Australia was the second country to use this solution. As USA, they are very satisfied with the result and now that

they have visibility of the real margin for each execution, they are now implementing a follow-up project to determine

the actions in case of unexpected margin deviations, such as the renegotiation with the customer or adding

coverage clauses in the contract for changes in the initial price in sales documents.

Contact: Jamie Evans

Austria was the first non-E2E connected country that started using this tool and also the first country in Europe. The

answer is good and every day new orders are updated with the quote information.

Contact: Michaela Pribil

Argentina is also a non-E2E country connected. They are using the solution and also providing feedback to improve

the tool.

Contact: Leonardo Sansone

9

Project / Use Case Details

Future Roadmap - Countries that will start using the CM solution on 2019Germany defined budget and roadmap to implement. As they are in another SAP system (SAP BeNeDeSh), they need to copy

and paste the code to use the solution.Contact: Jan Megarry

The Netherlands will benefit from the implementation of Germany, following them in the use of the tool. At this time, they are

improving the allocation of costs to be prepared to implement the solution. Contact: Rob Oudhuis

Mexico is in the close target as they are working in SAP Bridge and with a similar structure than USA. Actually USA entered 2

quotations for them. The plan is to provide training and start during Q1.Contact: Gabriel Gutierrez

Singapore is also in SAP Bridge, so they are expecting to start during Q1. Contact: Doreen Chua

Same situation for Slovakia. Contact: Eva Klimova

Russia plans to start in parallel with the implementation of E2E, scheduled for Q1-Q2 of 2019. Contact: Zdenka Nekovarikova

France is in a similar situation than Russia, adding that they are adapting the service flows to be aligned with this solution.

Contact: Beatrice Charlet

Following Argentinean deployment, Chile will start during Q1 2019. Contact: Leonardo Gabriel Sansone

Iberia SAP system opened an internal demand for Capgemini to implement the solution in their SAP during 2019.

Spain, Portugal and South Africa are expecting to take advantage of the implementation. Contact: Meritxell Espinosa.

MEA SAP system opened a Change Request to introduce this tool in their system. MEA Business is pushing to prioritize

their implementation. Contact: Anees Ahmed

UK and Italy have their own SAP systems managed by Capgemini. Both countries received the Level of Effort Analysis and

have been included in the prioritization list for 2019

10

Benefits and Outcomes

Business / Social IT Human Empowerment

Guide the business on the right

path to success.

Reduce the waste of resources

and useless activities.

Visibility on variables of good and

bad margins.

Improve relations with customers

and the quotation process.

Increase the efficiency of the

process.

Interaction that acquires the best

of new technologies and

combines them with the most

solid aspects of classical SAP.

Simplify connections from 1 to n

quote tools.

Pave the way for a multi-platform

solution.

Unify the data extraction strategy.

Generate simple architecture for

multiple SAP federation

interactions.

Improve communications

between sales and operations

teams.

Grow the Services Business,

approaching the client.

11

Architecture

12

Deployment

SAP Technologies Used:

Server Processor:

Linux Distribution:

Date of Deployment or POC:

Number of live users:

March 2018 – First Pilot Go-Live (US)

250

unknown

unknown

SAP ECC6 Live – Now ECC6

SAP Concur Live – Live to enter expenses

SAP BI Live – Live in some countries

SAP Screen Personas POC – Objective to improve the view of Costs

SAP Hana POC – Planning to move to Hana

13

Emerging Technologies and Use Cases

The following Emerging Technologies and use-cases are part of the project and describe the

contribution

Technology or Use Case Yes/No Contribution to Project1. Machine Learning / Artificial

Intelligence

No

2. IoT No

3. 3D printing No

4. Blockchain No

5. API Economy / Integrate the

Intelligent Enterprise

No

6. Cloud Native / Event Based

Architectures

No

7. Extending the digital core with SAP

CP / ABAP in SAP CP

No

8. SAP Leonardo Application ( extending

SAP application, using Industry

Innovation Kits or result of Design

Thinking workshop)

No