An overview of the world’s leading ERP system
JR Batek, IT Audit Manager – Cooper IndustriesTim Guerinot, Sr. SAP Staffing Consultant –
Whitaker IT
IntroductionJR Batek, IT Audit Manager – Cooper Industries
11 years of ERP experience8 years SAP experience6 years auditing SAP2 years implementing SAP
Tim Guerinot, Sr. SAP Staffing Consultant – Whitaker 6 years ERP experience3 years staffing SAP, all versions and modules3 years selling ERP solutions
Avoid adult diaper answers!
OverviewWhat 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 Q&ACase discussion
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)
What is SAP? (the name)The “good names”
Pronounced “S” “A” “P” – NOT SapSysteme, Anwendungen und Produkte in der
DatenverarbeitungSystems, Applications and Products in Data Processing
The “other names”Stops All ProgressStart And PraySoftware Acquires ProblemsSatan’s Accounting Program
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
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…
Customer Profitability
Product Line Profitability
Inventory Balances
Costs of Implementing SAPWhat does it cost?
HardwareSoftwareBioware
Cultural changesDifferent organizationChange management
Process changesWhere to start?
SAP Implementation CostsAdult diaper time!$50-100 million, typicalMy experience
One company, $50 million for current systemPrevious company, >$250 million
Everything in-house Highly customized
OthersHershey failed in October (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
Centralized/Shared processes and resources
Cultural ChangesUnbelievable level of complexity
Learn to speak SAPaneeseArguments change
What is the correct authorization object? Which movement types are considered
consumption?
Allocation of costsData is a valuable asset
Process ChangesWhat changes?
NothingEverything
Optimize your process first!StreamlineLeverage technologyOnly one big change
Document, document, documentCommunicate, communicate, communicate
Is it Worth It?
YES!!!If done correctly…
Eliminate non-value added stepsImprove management informationSignificant soft cost savingFocus resources
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
SAP CareersSalaries
Business Analyst - 70K/yearBasis – 110KFunctional – 90KProject manager – 80K
Independent consultantBill at $150/hrTake home $110/hrLess travel costsApproximates to $175K
SAP CareersThe downside!
Lots of travel (good or bad)Long hoursWork-life balance challengesProject work
Projects end Jobs end
Specialized knowledge – not always transferable
Great opportunities with great companies
Wrap-UpWhat 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 Q&A
Instant Case Time!You are Ken Camarco, VP of Business
Systems (CIO)
Company decided to implement an ERP solutionChose SAPUsing outsourced data center
Which division(s) go first?