You Already Have It. Looking for cash? Realizing Business Benefits from SAP

Transcription

1 Looking for cash? You Already Have It. 2008: By changing the way they use SAP, 10 Large enterprises realized $2.5 Bncashable benefits. Realizing Business Benefits from SAP

2 2 of 10 Applies to: Any size SAP project or programme Executive Summary: HCL AXON has a robust, industry-leading, Benefits Realization methodology which has been successfully used on a vast array of client engagements to enable and realise significant financial Benefits. Benefits efforts start before an engagement to produce a robust business case which can be used to gain internal investment approval. To increase the likelihood of success, HCL AXON works jointly with the client team to determine what Benefits will be achieved and the target value of the Benefits. This is done by validating the Benefits bottom-up by reviewing existing processes and performance; gaining sign off and ownership of the Benefits from the beginning of the process and making Benefits Delivery an integral part of program delivery. A governance process, including a cross business body for assuring the validation and delivery of the Benefits supported by reporting and tracking of the Benefits, is integrated into the broader HCL AXON program management governance. HCL AXON also provides subject matter experts to work jointly with client teams to deliver the Benefits and transfer the skills required to continue to deliver the Benefits and drive Continuous Improvement efforts well past SAP go live. This white paper provides an overview to HCL AXON s approach to Benefits Realization and the results it can deliver to your business. Author: Robert MacDougall, Global Head of Benefits Delivery HCL AXON

3 3 of 10 Table of Contents Why a Benefits Realization Approach is Important 4 The HCL AXON Approach 4 The Benefits Identification Stage 5 Identifying Benefits 5 Validating Benefits 7 Enabling Benefits 7 Realizing Benefits 8 Key Success Factors 9 About the Author 9 About HCL Axon 10 About HCL Technologies 10

4 4 of 10 Why a Benefits Realization approach is Important There are always other business priorities drawing on the same resources as a SAP program and in a time of limited access to capital, any investment in SAP needs to be seen as providing an acceptable return on investment. Research has found that: 40% of ERP projects failed to achieve their business case within 18 months of going live Companies that did achieve benefits declared it took at least 6 months longer than expected to receive the benefits 46% of respondents felt that their organization did not use the ERP application to improve the way they conduct business A comprehensive Benefits Realization approach will directly link the delivery of business outcomes with the program; shape the scope of the program through Benefits led design; align the cost and scope of programs around the Benefits, maximising the clients return on investment; and facilitate gaining internal approval for the required investment. From the outset a non-emotional, objective story needs to be developed working from both top down and bottom up. Top down by aligning senior management through agreeing the key business drivers for benefits and gaining sign off to guarantee accountability. Bottom up by ensuring accountability through middle management understanding the detailed benefits areas; signing off benefits cards; agreeing benefits realization plans and agreeing the review and tracking mechanisms; ensuring functional design optimizes the delivery of the identified benefits and using subject matter experts to prove the benefits with key process owners and other stakeholders in the business. The HCL AXON Approach There are four key stages to HCL AXON's Benefits Realization approach

5 5 of 10 Benefits Identification starting pre-program this stage Identifies which benefits will be pursued, Validates the target value of the benefits taking into consideration the assumptions and dependencies on the business; Enables the benefits through process design and assuring the appropriate change management processes are in place and Realizes the Benefits through gaining final sign off of the Benefits and assigning the necessary resources to deliver them Benefits Management - is the process by which the Benefits are actually delivered. This may be a HCL AXON and client joint team focused on delivering Procurement savings through demand management, increased compliance to existing contracts and renegotiation through to managing headcount reduction and retraining staff in new processes and ways of working Benefits Tracking and Reporting follows the progress of dependencies and assumptions being met which will impact on the delivery of the Benefits as well as the progress of the Benefits value which has been delivered Benefits Recognition - the process defining how and when Benefits are realized. As each SAP program has a unique lifecycle and pay back period when Benefits will be recognized (lump sum, month by month, over how many months, etc) this varies by program The Benefits Identification Stage This stage is standard across most programs so this paper will focus on the activities undertaken in this stage. Identifying Benefits Steps in process Data Analysis and key stakeholder engagement 1st Cut Benefits profile Steering Committee presentation of approach and identified benefits case Inputs Corporate Objectives Executive Objectives Key Business Contacts Peer Group Benchmarks Business Knowledge Industry Benchmarks (including SAP Value Engineering) Executive input Activities Top down analysis of corporate / executive objectives and alignment with potential benefits Data download specification setting Identification and facilitation of engagement with appropriate client stakeholders Obtain data and business understanding Bottom up analysis of potential benefits in each of the segments Participate in business decision meetings; Provide assumptions for 1st cut benefits High level analysis of current performance vs benchmarks Validate framework with key personnel and update as appropriate Planning for the next phases, including Validate, Enable & Realize Identification and guidance for the selection of benefits managers Deliverables Engagement with key personnel Strawman benefits case to be tested by review process Agreed framework and measurements of success

6 6 of 10 Benefits Cards are developed in this stage and used throughout the process. Individual benefits cards identify specific benefit opportunities, at a departmental or cost centre level, which are tied to specific benefits drivers delivered by the programme. Identifying information about the benefit (where, what type, etc.) Unique Code identifies benefits card Benefit description Benefit values: base & stretch Calculations Dependencies Assumptions on targets Sign-off Multiplier assumptions An example Benefit B enefit desc ription Rationale Metric type Reduction in Reduction in num ber of Number FTE invoice queries. queries through centralized of s aving Simplified customer master data will invoices searching for reduce number of manual requiring invoice queries interventions. Automated stop through and centralized function codes availability of with better reporting better search facilities reduces time spent facilities dealing with queries. B enefit range Target range Target range Low High Bas eline Low High Low High $50,769 $188,899 # of Reduce Reduce Reduce # of Reduce # of invoices number of number of minutes per minutes per cur rently invoices invoices query query requiring requiring requiring attention attention attention 26,584 35% 50% The cards shows real data about existing performance and calculations showing what drives the numbers. Each benefit is calculated bottom-up using your own performance data (ie data that you recognise). This makes our approach fact-based, and gives confidence around the ability to deliver the benefit. Too often other approaches take a top-down approach, setting aspirational benefit targets which can not be proven to be achievable and hence are unbelievable. This leads to lack of buy-in and accountability. Our bottom up approach shows evidence of where improvement can come from, and how much. This is much easier to engage around, and to show which part of the business needs to take ownership. In our process all benefits cards must have an individual owner who is held accountable for the delivery of the benefit.

7 7 of 10 Validating Benefits Steps in process Develop Realization plans Sign off with budget holders Gain executive endorsement Inputs Project scope Business unit information Baseline data Realization plans Benefits cards Realization schedule Executive input Activities Agree benefits types Validation meetings with key stakeholders Agree scope of improvement Agree benefit multipliers Agree base methodology Validate framework with key personnel and update as appropriate Interview of key personnel Ensure that benefits can be measured through KPI reports where appropriate Signed off benefits cards Sign off cards and benefits case Understand and include benefits as a key driver for business transformation Deliverables Realization plans with associated benefits cards for each benefit Cash flow of benefits delivery Validate areas of potential benefits using benefits cards Required reporting structure for benefits Finalized benefits case including integration into clients return on investment measures HCL AXON s Benefits Methodology demands an inclusive approach that intrinsically involves key stakeholders from the inception of the programme. This means that there is not a need to sell the benefit to the benefit owner as they are fundamentally involved in the identification and validation process. In HCL AXON s experience this close business partnering and deep understanding of our client s business as well as ensuring ownership by budget owners is critical to the successful enablement and ultimate Realization of any benefit. Enabling Benefits Steps in process Build design around Benefits Agree challenges to Realization with Benefits managers Sign off Benefits and dependencies with senior management Inputs Realization plans Project scope Challenges to Realization Executive input Activities Re-assess benefits managers and benefits owners to determine understanding against original objectives Implementation of Quick Wins that are not dependent on other specific deadlines Creation of reporting requirements to allow measurement of ongoing benefits areas Obtain business understanding of challenges Validate challenges of potential benefits; identify solutions to challenges Creation of business cases to support new work opportunities Create a validated benefits case for newly identified benefits Presentation / agreement on actions to overcome the top challenges to achieve the identified benefits Ensuring that identified dependencies are being addressed by the business Deliverables Implementation work plan for quick wins Agreement on owners and responsibilities to overcome the challenges identified Agreed action plan Migration strategy One way to focus both the client and partner program teams on delivery of Benefits is to make the teams responsible for the delivery of the Benefits by tying in their performance or incentive pay into the successful delivery of the Benefits.

8 8 of 10 Realizing Benefits Steps in process Review of challenges and benefits realization plan Agree actions to ensure delivery of benefits Embed continuous improvement Inputs Realization plans Challenges to Realization Challenges to Realization Benefits cards Realization Plans Strategic Roadmap Activities Identification of issues that still hinder benefits delivery Review assumptions Agree KPIs Identification of issues that still hinder benefits delivery Monthly review of benefit linked KPI s Assess and sign off benefits that have been delivered Continuously monitor ongoing benefits through enterprise performance management Extend organisational ownership of ongoing activities and capability for continuous improvement Assess new opportunities for improvement Provide benefits cases for the next phase Move to business as usual Deliverables Agreed action plan to ensure the benefits delivery Performance management system to track progress Progress and performance tracking Communication plans for stake holders Continuous improvement approach and tools Identification of new strategic priorities HCL AXON s unique Benefits Toolkit contains a detailed benefits tracking mechanism that is used to monitor and track validated benefits and enable transformational change to take place. This tool indicates when benefits are likely to be delivered and whether the program is on plan. It also allows the business to measure Return on Investment, a key factor in justifying the business case. Once benefits cards are signed off a benefits reporting pack (in the form of a dashboard) is put in place to illustrate the delivery of benefits to plan and to identify key issues/risk facing delivery of benefits. This is derived from benefits tracking and presented a summary view. It demonstrates how the project is progressing, with respect to delivery of benefits, along all workstreams, instigating escalations and corrective actions amongst stakeholders where there is a discrepancy between plans and actual, and was used as a communication tool to show progress. This detailed reporting and ongoing monitoring is fundamental to HCL AXON s Benefits Realization Methodology and represents one of the reasons HCL AXON is so successful in enabling and realising benefits with our clients.

9 9 of 10 Key Success Factors Through our experience across a number of clients, HCL AXON has found some common themes which really drive successful realization of Benefits. Develop your approach to Business Benefits Realization before you start Each enterprise differs in it s management approach so define how you want to drive the Benefits agenda. If you have a consultative organization plan to engage early and often with the business; if it is a top down driven organization the focus will be on getting the right measurements and expectations in place Decide how you can share success across the business Departments/business units/countries/others may need to share in the success of business transformation. It facilitates the progress of business transformation efforts in service areas and gives the service areas ownership in successfully delivering transformation Integrate the SAP related efforts with existing frameworks in the business Make the SAP programme about the business not about an IT system. Show how it will improve performance by demonstrating the integration points between the SAP functionalty and existing business performance. Example: reduced call handling time through SAP CRM enabled by higher quality single set of customer data which increases first time resolution rates Define what your level of ambition is so you can focus on the right activities If you are implementing SAP for primarily non financial reasons (replacing a legacy system, compliance and regulatory requirements) your Benefits focus will be reducing risk to the business versus cost reduction through process effiencies. Your program focus and efforts should reflect this Establish a Benefits governance body Ensure the new processes and systems are being adopted and that there are non Finance and IT senior management members and a commitment to continuously improving and optimising. About the Author Robert MacDougall is the Global Head of Benefits Delivery for HCL AXON focused on working with clients to realize the Business Benefits in Front Office, Back Office and Technology from their SAP investment. He has been consulting with private and public sector clients including HP, Cisco Systems, Philips, Unilever, Ingram Micro, Thames Water and Birmingham City Council in the US, Asia Pacific and EMEA for the last fifteen years. He is the recipient of the 2008 Management Consultancies Association, Performance Improvement Consultant of the Year award.

10 10 of 10 About HCL AXON HCL AXON is a business transformation consultancy that designs, implements and supports solutions that address complex business issues faced by large organizations who have selected SAP as their strategic enterprise platform. We are the world s largest dedicated SAP services partner. The organization is a wholly owned subsidiary of HCL EAS Ltd., founded on 15th December 2008 after the reverse merger of AXON Group plc and the HCL SAP practice. HCL AXON has helped over 60 Global 500 companies optimize their business processes, and deliver better business results through process improvement, shared services, outsourcing and off shoring solutions leveraging SAP as a strategic platform. For more information visit About HCL Technologies HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on transformational outsourcing, underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 19 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences & Healthcare, Media & Entertainment, Travel, Transportation & Logistics, Automotive, Government and Energies & Utilities.