Microforum spend analytics

Global Trends

Increasing Costs & Reaction to Risk Limited Spend Visibility

 75% of CFOs under pressure to increase savings and  34% of enterprises still do not have an automated means to
decrease risk (Aberdeen Group, 2010) collect and aggregate spend data from various sources
(G/L, AP, ERP, etc.) to achieve timely, accurate and complete
 Less than 40% of finance professionals are currently information (Aberdeen Group, 2010)
enriching their spend data with risk information, making
savings erosion an even more critical problem (Aberdeen  Inadequate or „too late‟ spend insights
Group, 2010)

Shifting CPO Focus Growing Need for Reliable Data

 70% of CPOs expressed a need to focus on Competitive  56% of ISM members rate data reliability as the number one
Insight, Risk, Compliance, and Supplier Management vs. challenge in strategic sourcing (Institute of Supply
Transaction Management (CPO Research) Management, 2009)

 86% of purchasing and finance professionals rate Spend  62% of all enterprises are still using manual means to
Analysis as a high value function (Aberdeen Group, 2010) classify and cleanse spend data (Aberdeen Group, 2010)

 Procurement is taking on a strategic role to deliver value  US Department of Defense reports that 40% of excess costs
and bottom line savings were the result of unreliable data
 Customers want an integrated, repeatable process to
ensure reliable analyses
© 2011 SAP AG. All rights reserved. 2

Collaborate Effectively With Stakeholders On Cost Savings &
Supply Continuity Initiatives
Visibility to enterprise wide spending and supply base enables sourcing strategies that deliver measurable results to key stakeholders
such as Finance and Supply Chain organizations.

Procurement Finance Supply Chain CIO
Accelerate Cost
Supply
Savings, Reduce Supplier Cost Savings IT Cost Savings
Continuity
Risk
Analyze
Supply Identify 1 Budgets
Supply Data Standardization
Base Savings Plan and Enrichment

Identify
Sourcing Negotiate Savings Budget vs Track Supplier
Initiatives Supplier Trigger Sourcing Actions
Savings Targets Actual Performance
Risks
Monitor 2
Establish Contract
Contracts
Actionable Alerts
Utilization
Supplier Identify Cost To Measure
Risk One Solution , Multiple
Alternate Mitigate Risk Actual Savings
Analysis Suppliers Deployment Options

1. Identify and Act on Savings
2. Identify and Act on Supplier Risk

Analytics for Everyone, Everywhere, Anytime
OPERATIONS l HR l FINANCE I IT I SALES l MARKETING

MANUFACTURING l RETAIL l HEALTHCARE l BANKING l UTILITIES l TELCO I PUBLIC SECTOR

What What is What will
happened? happening now? happen?

How and why What is the risk if it How do you prevent / ensure
did it happen? does/doesn‟t happen? it happens again?
Tom Davenport International Institute for Analytics


Analytics for Procurement

Analytic Applications Analytics for Procurement

Decision Support for Supplier
Data Supplier Spend
the Procurement Perfor-
Reliability Risk Analytics
Function mance


SAP Procurement Portfolio
Integrated Solutions that Support the Process

Spend Sourcing Contract Operational Invoice
Analytics Management Procurement Management

Supplier Management SAP Supplier
Lifecycle Mgmt

SAP Spend SAP
SAP SRM, SAP ERP SAP Invoice Mgmt
Performance SAP Sourcing Contract Lifecycle
& SAP Cart Approval by OpenText
Management Mgmt
SAP Data Enrichment & Supplier Connectivity via SUS and
SAP Sourcing OnDemand
Classification Crossgate / Hubwoo*
New!

Information is key for procurement performance

To meet strategic business ….and this requires
goals, procurement needs to…
 Drive improvement in sourcing  Enterprise wide visibility to spend and
strategies buying patterns
 Effectively manage savings  Complete, accurate, trustworthy data
opportunities
 Powerful information at the hands
 Develop healthy supplier of the business user
relationships
 Improve compliance

“ If I can take the data from my spend analysis tool and understand where it
comes from and tie it to performance, then I can easily address the
opportunities to drive savings and reduce spend.”
CPO, Large North American Insurance Company


Data Enrichment and Classification OnDemand
Solution Overview
A cloud-based, network application that combines spend data with global content
and services to improve data reliability for strategic sourcing and spend analytics.
Data Collection Enrichment Classification Revision

How can I aggregate all My supplier identities are How do I know what I’m How can I add my own
my spend data in one obscured due to poor really buying? knowledge into the
place and be sure it’s data quality and lack of process?
accurate? content!
 Manage accuracy and  Increase leverage opportunities  Increase visibility to both direct  Incorporate subject matter
completeness of company-wide with normalized suppliers and indirect spend expertise with the Revision tool
spend data from multiple sources  Apply changes to the current
 Improve decision-making with  Improve understanding of spend
 Gather data from SAP and non- enriched content activity with a consistent structure cycle and future cycles for
SAP sources for goods and services continuous improvement


The SAP Global Business Compendium

Additional Location Location (Address,
Linkage (Parent
Information (Mail, Fax etc) ZIP, Country etc)
Company etc)
Contact Info
(CEO, Officers, Phon Financial & Risk
e numbers, email Indicators
addresses etc) (Filings, suits, liens, b
Diversity (women ankruptcy etc)
owned, SDB, minoriti
es etc)
Line-of-Business
(Standard Industrial
Cortera Risk (via
Classification Code incl.
Endorsed Business
function)
Business Info Solution: risk
(employees, sales, TI segment, payment
N, non-US Tax Sanctions (OFAC) score, trend etc)
© 2011 SAP AG. All rights reserved.
number etc) 9

Validation and Enrichment
Improves leverage and decision-making
Supplier Validated Legal Ownership Industry Spend

Grafix GraphCorr LLC (Grafix) RockTenn Company Packaging $75,000
Parc Industrial, St. Marie QC 433 2nd Ave, Sainte-Marie QC G6E 3C6 CA

Smurfit Smurfit-Stone Container Corp RockTenn Company Packaging $150,000
PO Box 93095, Chicago, 60673 150 N Michigan Ave, Chicago, IL 60673 US

Stone Container Smurfit-Stone Container Corp RockTenn Company Packaging $200,000
150 N Michigan, IL 60673 150 N Michigan Ave, Chicago, IL 60673 US

Verizon Verizon Business Verizon Communications Telecom $250,000
295 Maple Ave, Basking Ridge NJ 1 Verizon Way, Basking Ridge NJ 07920 US

Verizon WRLS#12RK Cellco Partnership (Verizon Wireless) Verizon Communications Telecom $50,000
NJ 7920 USA 1 Verizon Way, Basking Ridge NJ 07920 US

Traditional SAP
Grafix $75,000
Verizon Comm.
Verizon WRLS
$300,000
$50,000
Verizon
$250,000 Employees: 194,400
RockTenn
Sales (mil): $106,565
Smurfit $425,000
$150,000 Risk, etc.
Employees: 10,400
Sales (mil): $3,000
Stone Container Risk, etc.
$200,000
Accelerate Savings

The SAP Transaction Knowledge Base
Industry Wide Coverage

$350+ billion in spend 20,000+ lines of businesses

20+ key variables

50+ industries

20+ years of history


Methods of Spend Classification

Item Description „Cataloging’ Industry „Vendor Coding‟
(SIC, NAICS, UNSPSC)

 Not all items have valid descriptions  Not organized for sourcing – resource based
 Assumes repetitive similarity in description  Too generalized for in-depth sourcing
 Forces micro vs. strategic focus  Assumes a supplier sells one thing

Accounting SAP Method

 Limited depth  Focuses on what was purchased by analyzing
 Frequently misapplied due to budgets multiple variables on the transaction
 Indicates why not what was purchased  Improves leverage with a more complete and
accurate understanding of spend
 Supports strategic sourcing

Spend Classification
Improves accuracy and understanding
Supplier Industry Item Account Business Unit Spend

Grafix Packaging Not assigned Promotions Graphics $130,000
RockTenn Packaging Displays Accounts payable trade Advertising $475,000
RockTenn Packaging Displays Freight-inbound Advertising $38,000
Verizon Telecom Not assigned Utilities Facilities $285,000
Verizon Telecom Blackberry Office supplies Sales $72,000

Traditional SAP

Supplier Packaging Telecom
Approach $643,000 $357,000

Freight
$38,000
Item Cell Phones Displays Unknown Multi-
Displays Telecom PTP Graphic Design
Approach $72,000 $513,000 $415,000 variate
$475,000 $285,000 $130,000
Approach
Cell Phones
Advertising $72,000
$130,000
Account Unknown Office Sup. Utilities $285,000
Approach $475,000 $72,000
Freight
$38,000
Accelerate Savings

How does Revision help? Process support vs. Excel spreadsheets

1

 During the revision phase, classifications
can be changed or refined as needed
 The revision tool itself can be used to
review and apply changes on-the-spot
 Out of box reports are also available to 2

facilitate review
 Example
1. During classification review, the data
steward notices that some transactions
having account “freight provision” should
be in the freight category
2. Using the revision tool, the data steward x
filters on “freight provision” and selects
the transactions to reclassify x
3. Updated results are applied for x
continuous improvement
3


Solution Summary: SAP BusinessObjects Spend Performance
Management

Maximize Savings – Minimize Supplier Risk
Gain full spend visibility
 Automated data capture from SAP and non-SAP
 Data accuracy for faster insights
Increase spend under management
 Set up performance targets
 Collaborate effectively to act on insights
Data Enrichment & Classification
Rapidly identify savings opportunities
 Find and act on savings potential ERP
 Pro-actively monitor contract compliance GL
BI

Reduce supplier risk P-Cards T&E
 Pin-point supplier risks and supply concentration
* Note: The Data Enrichment & Classification is a separately priced solution.

 Find and act on qualified alternate suppliers

Integrated Data Management Enables Accurate Spend Visibility
Spend and Supplier Risk Analysis

Over 130 pre-built spend analysis models
Out of the box support for supplier risk analysis
Set and Track Performance Targets with
Spend Advisor
Comprehensive set of Analytics functionality
Briefing Book supports stakeholder collaboration

Government/
Public data Phase 1: Supplier Data Phase 2: Spend Data
Standardization & Enrichment Classification Spend Data Validation,
3rd Party Enrichment and Classification
Credit Rating
Global coverage
3rd Party Risk 1.6T transactions in knowledge base
Rating
200+ external data sources
3rd
Party Supplier Financial/Risk data
Legal Rating Global Business Transactional
Compendium Knowledge Diversity/Government watch lists
Base
Newsfeeds
Data Integration

SAP extractors (ECC, SRM)
Data Integrator ETL license for non-SAP systems
SAP SRM P-Card/ Non-SAP ERP
T&E Spend data Support to bring in 3rd party data feeds

Critical Supplier Information Enables Proactive Insights Into Impact
Of Supplier Risk

 Spend volume with suppliers at risk
 Analyze category and item exposure to risk
 Quantify spend volume and buying locations at risk

Critical Supplier Information Enables Proactive Insights Into Impact
Of Supplier Risk

 Jump directly from SPM to Cortera website for up to date
Supplier report


Cortera Risk Data in DEC

 Appended during DEC processing

 Attributes available within SPM for dashboards and
supplier views include
 Risk Segment
 Payment Score Risk
 Payment Rating Trend
 Reported Payment Relationships
 Percent Past Due
 Days Beyond Terms (DBT)
 Industry DBT Benchmark
 Risk Flags
 Bankruptcy Count
 Operations News Count
 Liens Count

 Pull detailed Cortera Supplier Report on demand


Global Personal Products Company
Challenges

Custom BW Reporting application developed in Areas of Opportunity
2004
Increase utilization
 Based on Accounts Payable information only
 Easy of Use
 Rule based logic for spend classification
 Self Service Capabilities
Implemented SRM/EBP solution for indirect  Better classification of spend
procurement between 2007 and 2010 Provide context information
Classification of Indirect Spend has being a  Commodity prices
challenge  Contract and Purchase Order data
 Users not always classify spend properly (EBP)  T&E
 Rule engine data maintenance is resource consuming (BW)
Better analytical capabilities
IT spending to many resources maintaining and  From Corporate summary to document level information
enhancing existing application  Tool to empower users to find and report on the data they
need
Procurement dependency on a few “Power Users” to
generate information for the organization


Global Personal Products Company
Results

Best Practices Key Learnings
Data is the key component SPM solution well designed to address spend
 Have a good understanding of the complexity of your analytics business needs
Transactional & Master Data
User adoption requires good data quality and
 Data validation is key and it can take a lot of effort and time
modern/intuitive user interface
 Define Spend Hierarchies that facilitate sourcing initiatives
 Spend is classified properly
Involve your basis/technical group early in the  Vendors are classified properly per the role they have
implementation
To keep up with external innovation you need to pick
 Make sure that the Java stack is properly configured/tuned for
the expected workload in production. a solution from a vendor that reinvest in enhancing
 Ensure a process is in place to deploy Adobe Flash. existing tools
Define an appropriate data refresh frequency


Global Consumer Packaged Goods Company
Challenges – competing on Analytics


Global Consumer Packaged Goods Company
Results

Business Case Leverage Opportunities
 A Global Business Intelligence (BI) solution that will provide
end-to-end procurement Spend Analytics that supports our
Global RFx and Category Management strategy.
 Improved visibility to item level detail segmented by commodity
from each region leading to greater procurement savings.
 An enabler to achieve our already committed world-class
savings targets. We concluded that it would be mandatory to
have tools such as Spend Analytics to support this already
committed savings goal. Incrementally, we assumed a
conservative 0.1% savings on total direct spend.
 Further savings from cycle time reduction
– Additional sourcing events can be held each year
– More time available for strategy and supplier bid analysis


SAP BusinessObjects BI Platform - Universe Integration
Advanced Graphical Analyses and iPad Integration

SAP BusinessObjects SAP
Spend Performance BusinessObjects
Management BI Platform

SAP
Flex UI BusinessObjects
SAP SAP Explorer
BusinessObjects BusinessObjects
Analysis Web Intelligence
SAP NetWeaver BW
iPad Client (SAP
BusinessObjects
Explorer )

SDN Article on SPM/BO
Universe Integration

SDN Blog on SPM Mobile
Scenarios

Spend Analysis on iPad, Explorer View


Resources

SAP Analytics Online
 Register for Virtual Event: http://virtualevents.sap.com/business-analytics
 Visit our web page:
http://www.sap.com/solutions/sapbusinessobjects/large/industries/procurement/index.epx to discover the
latest Analytic Applications innovations from SAP
 Visit SAP Analytics Blog: http://blogs.sap.com/analytics to share your views on daily blog posts
 Become a Fan on Facebook: www.facebook.com/SAPanalytics/
 Follow on Twitter: www.twitter.com/businessobjects

SAP Community Network (SDN)
 SAP Analytics page: www.sdn.sap.com/irj/boc
 Best practices: www.sdn.sap.com/irj/boc/bi-best-practices
 Architecture: www.sdn.sap.com/irj/boc/bi-solution-architecture

SAP Operational Performance Management Elite Training
Apr 16 – 20 in Prague, Czech Republic

BE THE FIRST TO HAVE LIVE SPM 3.0, SCPM 2.0 and DEC 1.0 EXPERIENCE

This Elite enablement workshop will cover a large variety of topics including:
 New Features for What-If-Analyses and Advanced Analytics in SAP BusinessObjects Spend Performance
Management 3.0 (SPM)
 First time ever experience and deep dive into SAP BusinessObjects Data Enrichment and Classification OnDemand
(DEC)
 Understand SPM and DEC integration options as well as a vertical integration scenario
 New Features for What-If-Analyses and Risk Management Integration in SAP BusinessObjects Supply Chain
Performance Managemement 2.0
 Deep dive technical sessions and performance tuning for all three solutions (UI and Backend)
 Performance Tuning (BW 7.3, OPM solutions, Java and ABAP extensions)
 OPM and SAP HANA session

REGISTER
https://www.sap.com/campaign/2012_04_EVENT_OPM_TRAINING_Apr16_20/i http://www.sdn.sap.com/irj/scn/weblogs http://twitter.com/#!/search?q=%23OP
ndex.epx?kNtBzmUK9zU ?blog=/pub/wlg/28164 MElite


Thank You!

Contact information:

Henner Schliebs
Analytics Solution Marketing
henner.schliebs@sap.com

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