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    Bpc benchmarking example Bpc benchmarking example Presentation Transcript

    • Financial Performance & Risk ManagementBenchmarking ResultsABCSAP Value EngineeringJune 16, 2011All benchmarks contained in this report are for illustrative purposes only. Thecontents of the actual report may vary depending on availability and maturityof benchmarks for the peer group in consideration
    • Statement of Confidentiality and Exceptions The information and analysis contained herein are the confidential and proprietary materials of SAP AG. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express written permission of SAP AG. The information contained herein may be changed without prior notice. The furnishing of this document shall not be construed as an offer or as constituting a binding agreement on the part of SAP AG and/ or its affiliated companies (“SAP”) to enter into any relationship. SAP provides this document as guidance only to illustrate estimated comparisons between the subject Company and other companies with respect to certain key performance indicators and drivers. These materials may be based upon information provided by the subject Company, information provided by other companies and assumptions that are subject to change. These materials present illustrations of potential performance and cost savings, and do not guaranty future results, performance or cost savings. The materials are provided solely for internal review and use by the subject Company. SAP makes no representation or warranties of any kind with respect to these materials, and SAP shall not be liable for errors or omissions with respect to these materials. SAP CONFIDENTIAL - Page 2 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Agenda1. Executive Summary2. Detailed Benchmarking Results SAP CONFIDENTIAL - Page 3 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • SAP Performance Benchmarking: Designed toGet Actionable Results  Strategic service by ASUG and SAP, launched end of 2004 as a forum to exchange metrics and best practices  Program covers 20+ processes, with 7000+ participants who leverage the program to:  Build a business case for change  Compare performance to leading companies, industry peers, and between regions/ divisions  Assess value realization, year-over year  Prove success  Financial Performance & Risk Management survey launched end of 2009 SAP CONFIDENTIAL - Page 4 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Closing the Performance Gap Could Result in Substantial BenefitsPerformance Results – Key Metrics Potential Benefits: Value of Closing the Gap to Peer Group P1 N Gap to Q1 Gap to Average N Peer Group P1 Type Metric Company (n=715) Efficiency: Reduce Cost as a % of Revenue (in Avg. Q1 millions) Effectiveness Forecast Accuracy* 90.1% 82.9 95.1 Cost Of Capital (in %)* 8.2% 9.7 4.3 13.3 Profitable Customers (in %)* 82.0 85.9 47.8 3.0 Finance Cost as a % of Revenue 0.92 0.80 0.39 Audit Cost as a % of Revenue 0.06 0.05 0.02 Efficiency Days to Close Annual Books (in days) 15.0 14.7 7.0 Efficiency: Reduce Days Sale Outstanding (in millions) Cycle Time for Forecasts (in days) 40.0 40.3 10.0 Time to Create New Reports (in days) 4.0 5.8 2.0 3.4Ranking: Below Average Between Average and First Quartile First Quartile Outlier * Indicates KPIs for which benchmarks are calculated from a peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 5 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Best Practices Enabling BusinessPerformance Company Best Practice Company Internally Perceived Area Coverage Compared to P1* Gap Finance Strategy and Leadership Compliance and Risk Management Budgeting and Forecasting Business Operations Analysis and Reporting G/L and Financial Closing Cost Accounting and Analysis Company Best Practice Below Average Between Average And First Quartile First Quartile Coverage compared to P1: Internally Perceived Gap (Company Importance – Coverage) Significant Gap Moderate Gap Small/ No GapBest Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 6 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Agenda1. Executive Summary2. Detailed Benchmarking Results SAP CONFIDENTIAL - Page 7 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Performance Indicator Summary Peer Group P1 Type Metric Company Avg. Q1 Cost Of Capital (in %)* 8.2 9.7 4.3Effectiveness Forecast Accuracy (in %)* 90.1 82.9 95.1 % Of Profitable Customers* 82.0 85.9 47.8 Finance FTE’s per Billion Revenue (overall) 75.0 68.0 26.8 Finance Cost as a % of Revenue 0.92 0.80 0.39 Compliance and Risk Mgt.: Audit Cost as a % of Revenue 0.06 0.05 0.02 Compliance and Risk Mgt.: Number of controls per $ billion revenue* 2,000 1934 17 Compliance and Risk Mgt.: Manual Tested Controls As A % Of Total 74.0 69.4 21.5Efficiency Controls* Budgeting and Forecasting: Cycle Time to Create Forecasts (in days) 40.0 40.3 10.0 Business Analysis and Reporting: Time to Create New Reports (in days) 4.0 5.8 2.0 G/L and Closing: Days to Close Monthly Books (in days) 5.0 6.5 4.0 G/L and Closing: Days to Close Quarterly Books (in days) 5.0 8.5 5.0 G/L and Closing: Days to Close Annual Books (in days) 15.0 14.7 7.0 Ranking: Below Average Between Average and First Quartile First Quartile Outlier* Indicates KPIs for which benchmarks are calculated from a peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 8 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Company Baseline: Staffing and Cost Profile Total Total External Avg. Cost/ FTE Headcount Finance Sub Processes Finance FTEs Spend (in ’000s) Cost Cost (in ’000s)Area (in ’000s) (in ’000s) Finance Strategy and Leadership 7 325 2,275.00 - 2,275Strategy Related Compliance and Risk Management 10 120 1,200.00 150 1,350 Budgeting and Forecasting 8 180 1,440.00 - 1,440 Business Operations Analysis and Reporting 18 120 2,160.00 2,000 4,160Expertise Based G/L and Financial Closing 30 110 3,300.00 1,500 4,800 Cost Accounting and Analysis 20 90 1,800.00 - 1,800TOTAL 93 130.9 12,175 3,650 15,825 SAP CONFIDENTIAL - Page 9 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Performance Indicator Summary – FTEper Billion in Revenue FTEs per Billion in Peer Group P1 Function Revenue Avg. Q1 Finance Strategy and Leadership 2.8 3.6 1.5 Compliance and Risk Management 4.0 3.3 1.6 Budgeting and Forecasting 3.2 5.0 2.0 Business Operations Analysis and Reporting 7.2 6.8 2.6 G/L and Financial Closing 12.0 10.3 4.1 Cost Accounting and Analysis 8.0 4.2 1.8 Ranking: Below Average Between Average and First Quartile First Quartile Outlier SAP CONFIDENTIAL - Page 10 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Performance Indicator Summary – Costas a % of Revenue Cost as a % of Peer Group P1 Function Revenue Avg. Q1 Finance Strategy and Leadership 0.09 0.04 0.01 Compliance and Risk Management 0.05 0.07 0.01 Budgeting and Forecasting 0.06 0.05 0.02 Business Operations Analysis and Reporting 0.17 0.05 0.02 G/L and Financial Closing 0.19 0.09 0.03 Cost Accounting and Analysis 0.07 0.03 0.04 Ranking: Below Average Between Average and First Quartile First Quartile Outlier SAP CONFIDENTIAL - Page 11 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • FPRM: Improved Best Practices AdoptionDrives Value Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses (Peer Group P1) Average Coverage Q1 Coverage Company Coverage Company Importance 1 = No Coverage 5 = Full Coverage6543210 Finance Strategy & Leadership Compliance & Risk Budgeting and Forecasting Business and Operations G/L and Financial Closing Cost Accounting and Analysis Management Analysis and Reporting Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 12 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Finance Strategy and Leadership Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 Executive leadership clearly supports the adoption and alignment of strategy. The "office of strategic planning" has 41 1 executive support to enable the creation of scorecards, 3 objectives and KPIs There is an effective close-loop management process that 2 identifies key objectives and assigns measures and targets to 1 those objectives. Relevant key risks are identified and factored2 into the performance targets. At the same time there is a 1 0 process to communicate those goals downwards through the 1 2 3 4 5 6 7 organization and measure the results which are reported back to management Peer Average Peer Q1 Company Importance Company Coverage Finance leadership has access to a financial cockpit and/ or dashboard that provides a timely view into pre-defined sets of3 2 key metrics (e.g. sales and production information on a daily Coverage Ranking: Below Average First Quartile basis) Between Average and First Quartile Strategic planning is not limited to the office of the CFO but includes input from other departments. In particular IT plans4 2 and HR plans are closely aligned to ensure systems and budgets are in place to support the overall strategy Strategic plans are linked to lower level operational and financial plans to ensure alignment of KPI and budget5 2 information, from more detailed plans, to higher level strategic plans Finance system leverages automated reporting and analysis capabilities to provide information required to identify which6 processes within the finance department can potentially be 2 improved to drive further operational efficiencies, data accuracy and timeliness, and lower costs Ownership and accountability has been assigned for all key metrics on the operational level, to ensure that mitigating Best Practices coverages have been compared to coverages of7 1 actions are executed promptly once a metric falls out of the peer-set of 36 companies in the FPRM database acceptable range SAP CONFIDENTIAL - Page 13 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Compliance and Risk Management Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 The company has established an enterprise wide risk1 management culture, with clearly defined risk management 1 4 framework, and responsibilities assigned to the LOBs 3 The development process for organizational strategies, goals, 22 and objectives take risk into account, and provides for impact 1 assessment 1 Organizational risk tolerances are established and risks 03 exceeding the tolerances identified for appropriate risk 3 response. Automated alerts are generated 1 2 3 4 5 6 7 Peer Average Peer Q1 Risks are linked to the internal controls for on-going monitoring4 2 Company Importance Company Coverage and remediation Alternative risk responses and scenarios are assessed to5 2 determine the optimal action Coverage Ranking: Below Average First Quartile The CFO has the automated ability to monitor and analyze Between Average and First Quartile strategic, operational, compliance, and reporting risks across6 2 enterprise systems (e.g. customer relationship management, human resource management, purchasing) All processes are well-documented and meet financial compliance requirements - example, Sarbanes Oxley (SOX)7 2 Section 404 requirements, BilMoG, 8th EU Directive, JSOX, Clause 49 for India Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 14 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Compliance and Risk Management Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 The use of automated controls, rather than manual controls, is8 3 4 maximized to improve assurance and minimize cost Access control risks are minimized through: careful role 3 definition (processes in place to prevent segregation of duties issues while granting access rights); limits to and monitoring of 29 2 superuser access; limits to and monitoring of emergency 1 access to correct data or program errors; regular monitoring to ensure only business-required access has been granted 0 Effective automated processes are in place to ensure 8 9 10 11 12 1310 compliance with global trade laws and regulations (e.g., 2 Peer Average Peer Q1 compliance with Foreign Corrupt Practices Act) Company Importance Company Coverage The internal audit plan is driven by the enterprise risk11 management program, ensuring that internal audit is focused 1 on current risks to the organization Coverage Ranking: Below Average First Quartile Internal audit uses enterprise automation tools (including Between Average and First Quartile12 business intelligence and automated controls testing solutions) 2 for fraud and error detection and investigations Issues identified by internal audit (and other assurance13 providers) are updated into the enterprise risk management 2 system and their impact on risks assessed Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 15 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Budgeting and Forecasting Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 The company is using rolling forecasts as the basis for their1 1 4 budget Budgeting and forecasting is a continuous loop process of 3 planning, measuring and modeling that relies on up-to-date2 1 2 "actual" results and scenario-based collaboration across business functions and regions 1 Standardized planning models are used throughout the 03 organization ensuring consistency and comparability of 2 submitted results 1 2 3 4 5 6 7 Peer Average Peer Q1 The planning and forecasting process is collaborative in that it allows supervisors to review and approve the status at any Company Importance Company Coverage4 2 point in time while individuals work together on the creation of the plans/ forecasts in a virtual team environment Coverage Ranking: Below Average First Quartile The forecasting system allows users to directly access5 standardized input forms or electronically distributes 2 Between Average and First Quartile standardized templates at the beginning of the planning cycle Budget and forecast simulations can be automatically6 produced or results simulated using several key drivers (e.g. 2 revenue growth estimates) The planning system supports top down strategic objectives7 2 and planning from the bottom up Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 16 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Business Operations and Analysis Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 Financial systems are used in the business analysis process1 by providing historical and forward looking views into financial 2 4 and operational performance 3 Scorecards are implemented and used to connect strategic to 22 operational goals. Scorecards exist at staff level, as well as 2 management and executive levels 1 Analytical systems allow for online ad-hoc analysis and 03 reporting along key dimensions (customers, regions, divisions 2 etc.) as well as drill-down to the desired level of detail 1 2 3 4 5 6 Peer Average Peer Q1 Operational reviews and board package content can be4 automatically generated directly from financial systems in the 2 Company Importance Company Coverage formats users prefer. (PDF, Excel, PowerPoint, Word, etc.) Reporting systems automatically surface or send alerts when Coverage Ranking: Below Average First Quartile5 abnormal or large variances occur based on predefined rules 2 and thresholds Between Average and First Quartile Business and operational analysis is based on a single source (integrated data model) of financial and non-financial6 2 information providing consistent data across all views of information Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 17 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • G/L and Financial Closing Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 Consolidation and reporting systems support both internal and external accounting requirements (e.g. statutory, segment, 41 2 regulatory, and management views) as well as ad hoc 3 reporting 2 The current general ledger (G/L) accounting system can2 2 handle multiple accounting standards (e.g. US GAAP, IFRS) 1 The current consolidation system can handle multiple 03 2 accounting standards (e.g. US GAAP, IFRS) 1 2 3 4 5 6 7 8 9 System allows prior year comparisons between local GAAP Peer Average Peer Q14 3 and IFRS during a transition and allows for easy reconciliation Company Importance Company Coverage Intercompany reconciliations are conducted in a decentralized,5 2 "peer-to-peer" manner Coverage Ranking: Below Average First Quartile System allows publishing of financial statements in "interactive6 format" (XBRL) per SEC requirements, in-house (as opposed 3 Between Average and First Quartile to out-sourcing) Changes in group structure (e.g. changes in equity interests,7 consolidation frequency and methods) can be processed 2 easily The G/L and downstream financial systems are integrated in8 such a way that account data is up-to-date and synchronized 2 at all times A global chart of accounts is used across the entire company9 and local accounts are required to be mapped to the global 2 charts of accounts Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 18 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.
    • Cost Accounting and Analysis Company Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage Best Practice Listing Internal Coverage Ranking: Gap 5 Cost and profitability reporting uses true cause and effect1 business rules to assign costs, rather than high-level 2 4 apportionments 3 All operational entities within the company follow standardized 22 2 costing methods and procedures 1 Cost and profitability reports are generated to the level of3 2 product, channel and customer 0 Real time What-if? analysis is possible, to model and test the 1 2 3 4 5 6 7 84 2 impact of changes to profitability before committing to plans Peer Average Peer Q1 Company Importance Company Coverage Cost accounting accesses information from all of the5 integrated components such as G/L, A/P, billing, purchasing 2 etc. Coverage Ranking: Below Average First Quartile The cost accounting system supports cost analysis along6 multiple dimensions including product, location and pre- 2 Between Average and First Quartile defined activities Product, channel and customer profitability is reviewed on a7 2 regular basis to develop strategies for improvement Internal shared services costs are allocated in a manner that8 2 reflects actual usage Best Practices coverages have been compared to coverages of peer-set of 36 companies in the FPRM database SAP CONFIDENTIAL - Page 19 - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings.