1. Building The Business Case Assemble IT And Business Personnel Define Initial Scope and Cost Parameters Review Functionality Contained in the Scope Measure The Benefits 3 2 1 4
2. What is a Business Case? A business case outlines the overall business benefits that justify the initial and on-going commitment of time, resources, and funding for technology projects. ROI Operational Process improvements (Tangible and Intangible) Technical Benefits to IT infrastructure and support for technology strategy Financial Costs, benefits and impact on business performance measures Strategic New capabilities and improved competitive position
3. The Business Case Should Cover the Entire Life Cycle of the Solution OPERATIONS & CONTINUOUS BUSINESS IMPROVEMENT Assess baseline value for ongoing business performance Measure business performance against industry best practices Justify continuous business change and performance tuning Realize continuous improvement IMPLEMENTATION Incorporate business case as part of implementation methodology Ensure KPI’s are measured throughout implementation Use business case for scope/change control Use integrated content to monitor project risk performance EVALUATION Develop business strategy Identify business solution Align industry solution with key process indicators (KPI’s) Estimate total cost of ownership Use integrated content to develop business case DISCOVERY Qualification of Improvement Opportunity
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7. NPV = Net Present Value = The value today of a series of cash flows received in the future based on a given interest rate (e.g., 5%). Payback = The time period needed before net savings equal initial and ongoing costs (breakeven). Measures for Business Case Proposals IRR = Internal Rate of Return = The interest (discount) rate that causes the net present value of a project to just equal zero (0). If the project’s IRR is greater than the cost of capital, the project is acceptable; otherwise, it should be rejected. The calculation of IRR assumes that the cash inflows will be reinvested at the same rate as the internal rate of return. $100 Year 3 $152.09 @ 5% Interest Rate Savings Costs Payback Period Time
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10. Business Benefits - Some Examples Human Resources/Payroll: Personnel Administration Efficiencies 10%-40% Payroll Check Processing Efficiencies 15%-40% Reduced Time and Exp. Reporting 10%-20% Recruitment/New Hire Efficiencies 15%-25% Employee Self-Service Transaction Reduction 25%-50% Financials: Improve Time to Process A/P Invoice 15%-40% Improve Time to Close Books 35%-80% Reduce Term Discounts Lost 25%-75% Process Improvements Due to Elimination of Reconciliations, Duplicate Data Entry, etc. 15%-45% Purchasing: Reduction in New Item Inventory 10%-30% Reduce Cost of Materials/Services 2%-6% Procurement Process Efficiencies 35%-80% Purchase Cycle Time Improvements 30%-80% Increase Compliance of Purchases from Government-wide Contracts 25%-50%
11. Business Benefits - Some Examples Inventory: Reduction in Inventory 10%-50% Reduction of Inventory Write-Offs 15%-40% Improvement in Inventory Turns 10%-50% Reduction in Warehouses Maintained 15%-85% Facility/Plant Maintenance: Reduction in Repair Parts Inventory 10%-40% Improved Field Service Response 10%-20% Reduction in Work Order Prep Time 25%-75% Reduction in Overtime Cost 10%-20% Reduction in Cost to Re-Enter Work Order Data into Payroll 100% Project Management/Systems: Reduce Project Reporting Costs 5%-20% Reduce Project Set-Up Costs 30%-50% Reduce Invoicing Costs 40%-80% Reduce Reconciliation/Budget Time 15%-30% Reduce Cost for Revenue Calculation/Analysis 40%-75%
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Editor's Notes
The key then to continuous value generation must be a cyclical review and adaptation of company strategy ,business processes and supporting information technology that reflects a changing environment. This is the ultimate goal of SAP’s life cycle approach SAP has always placed the highest priority on system implementation . The care that is exercised during the implementation phase has provided benefits to customers time and again. Four years ago, SAP took a big step in providing AcceleratedSAP, a consistent repeatable method of implementing SAP Solutions Under ValueSAP, the same rigorous focus is applied to both the pre-implementation or “evaluation phase” as well as the post implementation or “continuous business improvement phase” as identified in the ASAP methodology. The life cycle as depicted by the graphic you see here introduces the key attributes of ValueSAP. Namely the benefit of taking a long term, strategic view of IT deployment. The concept of continuous assessment of the value brought to a business by a well planned, implemented and managed IT infrastructure and the use of specific measurement to indicate performance in key business processes as a basis for value calculation as well as continuous improvement. And we’ll go through each phase in more detail during the rest of the presentation
