An overview of the world’s leading ERP system JR Batek, IT Audit Manager – Cooper IndustriesTim Guerinot, Sr. SAP Staffing Consultant – Whitaker IT
Introduction JR Batek, IT Audit Manager – Cooper Industries 11 years of ERP experience 8 years SAP experience 6 years auditing SAP 2 years implementing SAP Tim Guerinot, Sr. SAP Staffing Consultant – Whitaker 6 years ERP experience 3 years staffing SAP, all versions and modules 3 years selling ERP solutions Avoid adult diaper answers!
Overview What 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 Case 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 Sap Systeme, Anwendungen und Produkte in der Datenverarbeitung Systems, Applications and Products in Data Processing The “other names” Stops All Progress Start And Pray Software Acquires Problems Satan’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 package Tool kit Series of Modules Bought and customized to your business
Who Uses SAP? “the World’s best run companies….” 80% of Fortune 500 Coke Conagra Caterpillar Exxon Mobile (over 60 instances) Chevron Marathon Oil Cooper Industries Nike General Electric Baker Hughes Enron….?
SAP – ERP and Data Flow Manufacturing most popular Growth out of MRP R/3 MM SD PP 9 basic modules FI PLM CO Interconnected and QM WM HR independent
SAP – ERP and Data Flow Data types Master data Vendor master Customer master Material master Transactional data Sales orders Payments Meta data
SAP – ERP and Data Flow Financial and Logistics Reporting Cost Controlling QtC Quote Sales Order Inventory Delivery Billing Customer Sourcing Payment Quote to Cash Sales & Material PtP Operations Demand Requirements Planned Order Production Production Planning Planning Order Control Planning Plan to Produce RtC Purchase Vendor Purchase Goods Receipt Invoice Vendor Requisition Selection Order Verification PaymentRequisition to Check Business Information Warehouse
Other SAP Options Other Modules, Components, and Grids CRM BI/BW Treasury Real Estate Energy products SAP Business one AFS – Apparel Footwear Solution Industry specific module Governance, Risk and Compliance
Management Decisions Data 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 information Accounts Receivable Accounts Payable
Management Decisions Profitability What is profitable? Who is profitable? Where are we profitable? Dude, where’s my cash? Inventory – which materials Accounts Receivable – which customers Accounts Payable – which vendors Others – prepaids, accrued payroll, other expenses
Management Decisions - No More No longer decisions! When to pay What to buy When to buy What to make When to make it What to count (inventory stock take) Who to hire (always MBA students)
Management Decision Changes Removal of rote/routine decisions Changes the types of decisions From how much of product X To should we sell product X Flattens the organization Creates new opportunities How many analysts does it take…
Costs of Implementing SAP What does it cost? Hardware Software Bioware Cultural changes Different organization Change management Process changes Where to start?
SAP Implementation Costs Adult diaper time! $50-100 million, typical My experience One company, $50 million for current system Previous company, >$250 million Everything in-house Highly customized Others Hershey failed in October (Trick or Treat!) Enron went in smooth and easy
SAP Hardware Costs Do you have an ERP ready data center? – not in $50 MM Fire detection and prevention Above 500 year flood level? In hurricane, earthquake, or tornado zone? Do you have a hot or cold backup site? $5-10 million depending on size Multi-mirrored Real-time backup Application, database, load balance Do you need new PC’s?
Software Costs $5-15 million up front SAP licenses (various modules) Oracle or other database licenses BW or other analytics Administration tools Backup 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 bioware SAP eliminates $10/hr data entry clerks Now you need $100,000+/yr Basis administrators Consultants can be expensive You want the expensive ones Know business and technical
SAP Consultants Lots of consultants Few have the skills Find, a finder! Lots of billing rates SAP Platinum consultant - $300/hr Quality, independent - $150/hr Someone who read an SAP book – not worth the time Good consultants – know the business! Technical aptitude Communication skills
Cultural Changes Immediate fear Job losses Job changes Management oversight Dashboards Drilldown Centralized/Shared processes and resources
Cultural Changes Unbelievable level of complexity Learn to speak SAPaneese Arguments change What is the correct authorization object? Which movement types are considered consumption? Allocation of costs Data is a valuable asset
Process Changes What changes? Nothing Everything Optimize your process first! Streamline Leverage technology Only one big change Document, document, document Communicate, communicate, communicate
Is it Worth It?YES!!! If done correctly… Eliminate non-value added steps Improve management information Significant soft cost saving Focus resources
SAP Careers SAP Business Analyst Liaison between the business and the techies Good communication skills Understanding of local business and industry practices Technical track Functional track Project management Best – Technofunctional that can manage projects IT Director Consultant
SAP Careers Salaries Business Analyst - 70K/year Basis – 110K Functional – 90K Project manager – 80K Independent consultant Bill at $150/hr Take home $110/hr Less travel costs Approximates to $175K
SAP Careers The downside! Lots of travel (good or bad) Long hours Work-life balance challenges Project work Projects end Jobs end Specialized knowledge – not always transferable Great opportunities with great companies
Wrap-Up What 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 solution Chose SAP Using outsourced data center Which division(s) go first?