Increasing the ROI of SAP post-implementation

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Increase the ROI of SAP post-implementation …

Increase the ROI of SAP post-implementation
Reducing the cost of application support through a Managed Service Delivery model
Increasing the value IT can provide to the business

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  • By rule of thumb – Customized SAP implementations are always more expensive than out-of-box. Unfortunately business needs and other circumstances end up pushing for customizationWe have seen clients with 2 or 3 yrs running on SAP and haven’t seen their ROI yetButwhy??
  • Why is that happening? (previous slide)Creating business case, we set expectations to the business and all eyes are on the projectThe business knows it is costing money after implementation
  • Whyshouldweimproveit?Thisisthephasewheremost of the expenses take place. Business operation (Runthebusiness) issupported in thisphase of the SAP lifecycle.
  • Onlywhenthebusinessstartsbeingcharged back every time thebusinesscallsthesupportteam,theystartsolvingtheirownissues, whythereis a FAQ package, whythereis a knowledge base… SELF-SERVICE whereapplicable.Avoid incremental costsrelatedtosupporting/maintainingcustomizedcode, thatresultsfromthespecializedimplementatorsawayfromtheplatform/environmenttheyimplemented.
  • “Walk the Process” - BackwardsDocument each process stepCollect process data“Inventory”Lead timeValue added timeManual/AutoNon-Value added timeQueue timeUnnecessary manual activitiesAny othercause of process flow disruption
  • What is the vision of the business, where are they now, where they want to be, how to get there, How to measure if they got there and keeping the momentum .these are the key q. we would like to answer in order to desing a service for AMS. SLA alinged App Support with business goals and objectives without a Clear SLA you don’t know what the business expects from you. Standarize process to deliver value to the business.Which processes are in place in regards to Incident Management, Problem Management, Configuration Management, Change Management. Then which tools are being used (from Excel to automated/integrated product suits). Email? Person to person.Define KPI’s and SLA’s aligned to business needs (i.e. availability by business process/unit

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  • 1. Using Six Sigma to reduce Costs and Boost Performance in SAP Managed Services ] Raul Morales, Application Management Services, Softtek [ CHAVONE JACOBS ASUG INSTALLATION MEMBER MEMBER SINCE: 2003 [ COREY PEARSON[ ALLAN FISHER ASUG INSTALLATION MEMBER ASUG INSTALLATION MEMBER MEMBER SINCE: 2008 MEMBER SINCE: 2008
  • 2. Corporate Overview Business Provider of services that maximize the value of application portfolios A leader in Latin Creator and leader of Local, regional and Strong alternative to India- America. nearshore. global solutions. centric outsourcing. Presence Serving North America, Latin America, Europe & Asia Direct presence Serving customers 9 Global Delivery Centers Mexico(4), Brazil, +30 Sales / in 13 countries in 20+ countries Argentina, Spain & China (2) operation offices Customer Top tier corporations in the markets in which we operate Profile 150+ Active 17 global Fortune 80% revenue from clients 50 organizations recurring clients People ~ 7,000 Professionals Strong ability to attract, Innovative universities Great Place to Work in develop & retain talent linkage program Argentina, Brazil & Mexico Improving application portfolio performance through increased business alignment.All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 2
  • 3. Learning Points › Increase the ROI of SAP post-implementation › Reducing the cost of application support through a Managed Service Delivery model › Increasing the value IT can provide to the businessAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 3
  • 4. Organizations that use SAP to optimize their business are looking at how their ROI is diminishing after implementation, based on unforeseen costs in consulting and other areas.All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 4
  • 5. AMS represents 66% of the IT Budget 50%- 67% of IT projects Largest portion of IT Budget: are failing Software and Services ~ 66% *2 Creation Implementation Administration IT Represents Value Added Business Visibility Invisibility Line IT Represents just COST SAP Life Cycle*1 Standish Group Chaos Report 2010 & Ambysoft IT Project Success Survey 2010*2 Forrester – Forrsights Budgets & Priorities Tracker Survey, Q2 2010All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 5
  • 6. The challenge… Before After Innovation 34% Innovation 66% Operations 66% Operations 34%All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 6
  • 7. Areas of opportunity Costs exceed Most critical NO original budgets isn’t the priority Visibility Business process Single points of NO inefficiencies failure Control Lack of NO Ad Hoc versus specialization Best Practices Optimization increases costsAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 7
  • 8. The ideal state Avoid single Increase Service Cost per Incident points of failure Capacity through Avoid overhead Cost per Call (due to productivity that related to Cost of SAP over-reliance results in higher Support Code Support on Critical end-user Resources) satisfaction Improve the Quality of the ServiceAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 8
  • 9. Softtek’s “Right Approach” to Application Management Services Management Right-governance › Map operational metrics to business relevant metrics › Align service delivery to business priorities › Gauge each application’s expected business value Right-sizing Right-placing Right-balancing › Rationalizing › Onsite › Measure operational the portfolio: › Onshore health ›Applications › Offshore › Root-cause analysis ›Projects › Nearshore to reduce defect rate ›Activities ›Team size Improving SAP application portfolio performance through process rigor and visibility of business-relevant metricsAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 9
  • 10. Right Approach year-over-year savings Provides one-time savings through consulting and Cost Right-sizing platform optimization. Erodes as time passes Leverages salary differences, and/or Right-placing colocation costs, as long as they persist Enables YOY savings, Right-balancing through a process-oriented and metrics-driven approach Y0 Y1 Y2 Y3 Y4 Y5All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 10
  • 11. Shift focus through Right-balancing Management Support Support Cost activities activities reduction Root-cause analysis › User support Continuous defect › Break fix reduction Value-added › Corrective activities maintenance Increased › Regulatory business Application value changes alignment review › Minor & Value-added incremental Measure business, activities enhancements operational and technical aspects Before AfterAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 11
  • 12. The use of Six Sigma and Lean tools to Right-balancing ›Value Stream Mapping ›DMAICAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 13. What is Value Stream Mapping? Suppliers Your Process Customer Total value stream All the actions and information, both Value Added and Non-Value Added, required to bring a product or service to a consumerAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 14. Value Added and Non-Value Added › Observe that there are 2 things ALWAYS happening. . . › Things that should be done WORK › Things that should NOT be done WASTE Before After Time Time Value Added Work Non-Value Added Work “It”…Either Adds Value or Does NotAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 14
  • 15. Defining Value › Value Added Activity › Any activity that changes the form, fit, or function of a product/service or information to meet customer requirements — OR — › Something customers are willing to pay for › Non-Value-Added Activity › All other actions and unwanted features are by definition - WASTE, › adding no value to the customer - simply raising costs in our business Before After Time Time Value Added Work Non-Value Added Work Eliminate Non-Value-Added ActivityAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 15
  • 16. Understand and Eliminate Waste › ASK YOURSELF - Does this operation change the form, fit, or function of the product or service to meet a customer need? › BETTER YET - Is this operation something that the customer is willing to pay for? NON-VALUE - ADDED OPERATIONS ›Inspection … examples ›Unnecessary approvals Waste Exists in Every Process…Eliminate it.All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 16
  • 17. Mapping the process 1 Product/Process › Identify the Value Stream for the product or process. › Map the current state. Identify all Current State the actions that do not create value. 2 Drawing › Develop and map concepts for the Future State future state with stakeholders and 3 Drawing process participants. Implementation › Define actions and drive toward 4 Plan the future state.All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 18. Example – Current State Currently cannot Workflow delegate authority Management No method to Expense projects record/follow-up Kintana vs PAR on action items TBP Measurement tool Template APL calls Reps work (Kintana) behind TBPs not stored / each rep with SD actual process searchable IT Inventory contacts to Data validate / engineer Intent of workflow not universally HP Service Desk Notification understood Notification Notification Manually Notification Review to No notification Completed Info not avail if no see Project step is ready TBP Application tickets or requests APL contacts DA Complete TBP 1-4 Status Information A60 A90 Some TBP updated as technologies not ITO Data Warehouse Workflow can many as 5 times addressed SD Engineer/Updates Existing TBP Initiate SD Reviews TBP 7 fail at this (mainframe, etc..) Some TBP 7 Workflow step; redo Have to upload Section specific technologies not even if no and technical addressed (mainframe, etc..) APL can bypass A20 A30 A40 A50 A70 A100 A120 revisions A130 expertise A140 A150 A160 workflow and TBP Preliminary reviews APL reviews TBP with APL reviews TBP with Upload TBP (all DA Engineer/Updates APL updates/uploads AA reviews completed Review TBP Full Review APL updates IT Project in TG10 Update existing TBP DA Reviews TBP 5eNPI/RTS Project AA DA and SD sections) TBP 5 TBP TBP (Section (All AA,DA,SD,APL) Inventory data without workflow AA,DA,SD,APL) completion TBP TBP TBP TBP No notification A80 A110 16 Pcs 4 Pcs 1 Pcs 16 Pcs when task is text text ready text AA Engineer/Updates Training text AA reviews TBP 4,6 Some groups TBP 4,6 cannot re-assign Only one person resources per role can be Not enough Wrong resources Rework Process identified in requirements to attached; wait No one has final APL creates TBP with Kintana complete step text text time to correct authority for AA No projects ever approval/reject rejected...just left open with actions Meeting only once per week 10 Days 10 Days 10 Days 5 Days 1 Days 5 Days 5 Days 5 Days 12 Hrs 8 Hrs 30 Mins 5 Days 30 Mins 30 Mins 30 Mins 3 Hrs 10 Mins All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 19. Example – Future State Workflow Management Kintana Notification Notification A80 APL revises TBP based on actions Address Legal items Update and Security Initiate Workflow requirements Workflow before TG2 Define clear roles/ How to handle resp and train in comments / advance actions Email? ? A20 A40 A50 A60 A70 A130 Kintana? APL schedules1 hour APL updates existing Send TBP to Section APL, SD, AA, DA APL updates IT Upload TBP timeslot in section eNPI/RTS Project TBP AA, DA, SD complete TBP inventory standing meeting A10 text TBP text Clarify TBP to text 5 Pcs text ensure it gets to text the right text text A30 questions B90 B100 text B110 B120 APL updates TBP Assign TSG team to GMT reviews TBP/ APL updates IT template(Sec 1-4 Engineer Architecture engineer Architecture inventory required) 3 Days 10 Mins 5 Days 1 Days 8 Hrs 15 Mins 10 Mins 2 Hrs 10 Mins 20 Days 5 Days 1 Days 2 Hrs 10 Days 3 Hrs 10 MinsAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 20. Six Sigma DMAIC › Develop Charter and Business Case › Map Existing Process › Collect Voice of the Customer › Specify CTQs / Requirements › Measure CTQs / Requirements › Institutionalize Improvement › Determine Process Stability › Control Deployment Define › Determine Process Capability › Quantify Financial Results › Calculate Baseline Sigma › Present Final Project Results › Refine Problem Statement and Lessons Learned Control Measure › Close Project › Identify Root Causes › Select Solution (Including Trade Improve Analyze › Quantify Root Causes Studies, Cost/Benefit Analysis) › Design Solution › Verify Root Causes › Pilot Solution › Implement Solution DMAIC = Define, Measure, Analyze, Improve and ControlAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 21. Six Sigma tools Six Sigma Six Sigma Service Management Six Sigma Tools Phases Process Steps Touchpoints › Identify problem › QFD › Inputs from incident management › Define scope › Brainstorming › Analysis Define › Select team › Interviews › Problem identification and recording › Identify measurement system › Gage R&R › Problem classification Measure › Measure current process performance › Cost of poor quality and allocation › Identify root causes of problems › Process analysis › Problem investigation and Analyze › Fishbone diagram diagnosis › Pareto chart ›Recommend/implement solutions › FMEA › Request for change Improve › Benchmarking › Piloting › Implement process control › Control charts › Problem evaluation review Control › Determine process capability › FMEA › Closure › Sustain improvem › Cost of port qualityAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 22. Leverage tools and dashboards to gather and analyze metrics 3rd Level User Key User STK SAP Support Team STK Variable Team Start Clarify Needs Estimate Tickek Request or Y Information? Effort Acknowledge Information Softtek ITG Softtek ITG Enhancement Effort < Project A Y 24 h 4ht & 5thLevel N Schedule Start Request Start & Finish Working Prioritization Date Softtek ITG Softtek ITG UAT UAT Resolved Softtek ITG Softtek ITG Its N Reworking A Ok? Softtek ITG Y Schedule Receive Production Close End Solution Relase Softtek ITG Softtek ITGAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 22
  • 23. Leverage tools and dashboards to gather and analyze metricsAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 23
  • 24. How to move toward Managed Services for SAP Service Design Evaluate Define Create Internal Evaluate Service Phased Process Support Current Tools Levels and Implementation Maturity Framework Maturity A successful transition toward Managed Services typically represents 20% to 30% savings and/or improvements compared to Staffing Model* *Forrester: From FTEs To Results: Going Beyond Labor Arbitrage To Managed Outcome RelationshipsAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 24
  • 25. Success StoriesAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 25
  • 26. Case 1: From staff augmentation to business-oriented AMS › Top 5 PCG and leading global brewer › Performance review linked to business with operations in 23 countries processes (accuracy, availability, › From Traditional IT to IBS plus performance, responsiveness) outsourcing (IBS: Information and › From effort-driven to IT SLA, to Business Business Services) SLAs. Results: Critical apps: 100%, › From IT-centric organization to business Non-critical 99.7% process focused organization IT spending evolution › Continuous Improvement 100% › Payment linked to › Rationalization business process › Base year for › Infrastructure Integration performance calculations › Efficiency on Break/Fix › 10% additional savings › Internally managed › Variable cost managed year over year 53% › Support new initiatives › Dozens of different › Contractors › Start managed outsourcing › Service models: › Vendor consolidation › Staff aug, T&M › Control Demands 21% › Adjust Service Levels 19% › ERP Stabilization 2008 2009 2010 2011All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 26
  • 27. Case 1: End User’s own assessment › Contractor Evolution FTEs 100% $100% $79% 48% (77%) $53% 23% $21% Jun Mar Dec 2008 2009 2010 2008 2009 2009 Suppliers ›2009 › Reduction un FTEs through out the yerar 77% ›2010 › IT service model › Focus on TOC 2008 2009 2010All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 28. Case 2: From staff augmentation to business-oriented AMS › A global provider of business › Business End-User and IT communications and collaboration personnel frustration due to growing software and services project backlog (new initiatives and › 80 offices in 90+ countries, 1,600+ enhancements) value-added resellers and partners › Aging of IT Infrastructure and › Offices include United States, Application Architecture Canada, LATAM, EMEA › IT Resources spread thin covering › Approximately 2,200 employees multiple technologies including legacy systems. › Major Business Transformation (due › Applications support not centralized in one team, causing project to a merger of acquisition) w/ limited schedule affected by support IT capacity and budget (2.1% of activities. sales constrained) › Difficult to scale the team quickly › Supporting two (2) IT environments in when needed. parallel with half the staffAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012. 28
  • 29. Case 2: Our Solution Partnering with Softtek to enable the client’s IT organization to: › Deliver value from IT to the Business by › Setting the stage to a more efficient and lean IT shop aligned to the business › Providing the Business with visibility of the actual IT spend › Implementing a solid IT Governance framework based on SLA’s › Increase IT capacity while at the same time reducing the IT Total Cost of Ownership by › Transitioning over all IT Applications and Infrastructure Support operations into a Managed Services delivery model that leverages Softtek’s global capabilities in Canada, US, UK and Mexico aimed to saving up to 33% of the client’s IT Support operating costs in 5 years › Increasing New Project in-take capacity at a 22% lower costAll Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2012.
  • 30. Raul Morales Application Management Services raul.morales@softtek.com www.softtek.com 30All Rights Reserved © Valores Corporativos Softtek S.A. de C.V. 2011. Internal.
  • 31. [  Thank you for participating. Please remember to complete and return your evaluation form following this session. For ongoing education on this area of focus, visit the Year- Round Community page at www.asug.com/yrc ] [ SESSION CODE: INSERT SESSION CODE Real Experience. Real Advantage. 31