How To Develop A Business Case For FSCM

Developing a Business Case

SAP FSCM Seminar

Jessica Butler
Principal
Attain Consulting Group February 2011
jbutler@attainconsultinggroup.com

Agenda

• Introduction
• Identify the Opportunities/Improvements
• Quantify the Opportunities/Improvements
• Develop the Return on Investment (ROI)
• Sample Business Case

Attain Consulting Group 2011 – Developing a Business Case

Introduction

What is a Business Case?


Introduction
Definition

A business case captures the reasoning for initiating a project
or task. It is often presented in a well-structured written
document, but may also sometimes come in the form of a
short verbal argument or presentation

Contains 3 Key Components
• Identify the Opportunities/Improvements (What am I going to get?)

• Quantify the Opportunities/Improvements (What is it going to cost?)

• Develop the Return on Investment (What is my Payback?)


Identify the Opportunities/Improvements


How do you know what opportunities or improvements are
available?

• Internally driven: Identified need or pain point – search
for solution

• Externally initiated: Hear about a solution – creates a
previously unknown opportunity


Deduction management automation

TOPIC

Deduction Processing

Cash Application / Remittance Processing

Sales Agreements



TOPIC AREA OF POTENTIAL IMPROVEMENT

 Managing Pre-Deduction Notification Information

 Gathering Supporting Documentation

 Preparing Customer Correspondence
 Credit / Debit Memo Matching

 Credit Memo Approval

 Cross Functional Workflow & Collaboration




 Use of Bank Lockbox Services

Cash Application /
 Manipulation of Remittance Info. Prior to Posting
Remittance Processing
 Reason Code Mapping




 Importance of Program / Claim Validation

Sales Agreements  Validation Drivers

 Validation Process



 Managing Pre-Deduction Notification Information
 Gathering Supporting Documentation
 Preparing Customer Correspondence
 Credit / Debit Memo Matching
 Credit Memo Approval
 Cross Functional Workflow & Collaboration
 Use of Bank Lockbox Services
Cash Application /
 Manipulation of Remittance Info. Prior to Posting
Remittance Processing
 Reason Code Mapping
 Importance of Program / Claim Validation
Sales Agreements  Validation Drivers
 Validation Process

Remittance processing

Improvement Area:
Manipulation of remittance information prior to posting

Common Situation:
• Customer’s remittance information needs manual processing prior to
posting deductions in ERP. For example:
– Deleting / adding columns
– Changing column signs
– Removing prefixes/suffixes from invoice numbers associated with
deductions
• Hours are spent manipulating unique formats and logic associated with
remittance information


Remittance processing

Automation Opportunity:
• Rules based engines
• Allows customer specific automated pre-processing
• Increases on-invoice hit rate / decreases manual remittance processing
• Offered as SaaS (software as a service)
– Minimal IT involvement
– Avoid in-house EDI mapping


Sales agreement validation

Improvement Area:
Validation of Trade Promotion Claims

Common Situation:
• Customers take deductions with minimal program reference
• Matching & retrieving program documentation is labor intensive
– May be maintained in internal system
– May be available on customer vendor portals
• Programs may require Sell Through or Sell In information for validation
• Validation may required “clicking through” numerous screens and
supporting documentation may need to be manually analyzed for
validation


Sales agreement validation

• POS information can be routinely extracted from key customers and
customer reports generated using SaaS solution
• Claim documents and deal sheets maintained on customer vendor
portals can be automatically retrieved and pasted within ERP using
Web Aggregation technology
• Internal source documents can be:
– Retrieved and attached within dispute case
– Calculations can be performed automatically to streamline validation
processing


Deduction processing

Improvement Area:

Common Situation:
• External supporting documents require significant manual effort to
retrieve (e.g., PODs, claim copies)
• Internal supporting documents are stored throughout multiple systems
• Preparing customer correspondence (e.g., denial letters and dispute forms)
is labor intensive
• Credit memo approval process is multi-step process
• Limited cross-functional workflow & collaboration


Deduction processing

• Retrieval of supporting documentation, such as PODs and customer
claims can be can be automated using Web Aggregation technology
• Paper documents, such as customer claims, BOL can scanned and
indexed (using OCR technology)
• Internal source documents can be automatically attached to dispute
case eliminating need to manually retrieve
• Customer dispute forms can be auto-populated
• Workflow engine can be used to streamline & automate manual
processes:
– Credit memo approval process
– Deduction research by reason code


Quantify the Opportunities/Improvements

Current Costs

1. Calculate Current Operational Cost

% of
Depart. / Benefits Number of Resources Full Time FTE
Role Division FTE Salary Markup Resources on Process Equivalent Total Amount


Estimate savings

2. Estimate Min/Max Savings
% of # FTE FTE Min Max Min FTE Max FTE Avg FTE
Task/Sub-Process Time Resources Equiv Amt Automation Automation Savings Savings Savings


Calculate the ROI

Estimated Savings
Minimum Maximum Average
OPERATIONAL EXPENSES

TOTAL VALUE CAPTURE

Implementation Costs

IMPLEMENTATION COSTS Provider Internal Total
First Year
Second Years onwards (Annual Recurring)

Return on Investment
NET YEARLY SAVINGS
First Year savings
Second Year and Ongoing Savings


Sample Business Case

Identify Key Processes

Break into Sub-Processes

Identify Improvement Opportunities

Model Potential Benefits

Summarize Results


Identify Sub-Processes

Process # Deduction Sub-Processes
1 Gather Supporting Documentation
2 Prepare Customer Correspondence
3 Credit Memo Approval
4 Cross Functional Workflow & Collaboration

Identify Improvement Opportunities

Deduction Sub-
# Improvement Opportunities
Process
A % of backup can be automated via Web Aggregation, scanning/indexing etc and automatically
attached to Dispute Case so Analyst does not have to retrieve manually. Relevant SAP
transactions such as Sales Order, Delivery Invoice, Return Credits can be linked to Dispute Case
Gather Supporting - Automatically retrieve and attach BOL or POD from carrier websites
1 - Automatically retrieve and attach debit memos from customer websites
Documentation
- Automatically retrieve check and remittance backup from bank lockbox
- Scan / index mailed documentation & attach to dispute via matching rules
- SAP A/R documents are automatically linked
- SAP SD transactions can be linked using the standard SD document flow logic
Standardized Repay package can be created in SAP via SmartForms including Cover letter and
Preparing Customer Denial Form that can be automatically populated and generated. Backup documentation such as
2
Correspondence Invoice Copy, Claim Copy and POD Copy can be automatically included in package based on
reason codes etc.
Convert complete credit memo approval process to electronic within SAP
Credit Memo - Analyst/Manager approval/reject process can be orchestrated within SAP workflow
3
Approval - Eliminates need for offline email, printing & approval process
- Automatically release credit memo and clear deduction upon approval
All communication via email/fax/mail between various departments & analysts regarding Dispute
Cases will be orchestrated via SAP Workflow so a user can "Forward" the Dispute Case within SAP.
Cross Functional
4 - Most offline email communication can be eliminated brought into SAP within Dispute Case
Collaboration
- Eliminate need for scanning or manually attaching back up documentation
- Eliminate need tor searching through email communication to review history

Current operational costs

Input - Resources

Benefits # of % on Related FT FTE
Role Division FTE Salary markup Resources Activities Equiv. Total Amount
Deduction Analyst Division 1 $ 55,000.00 $ 68,750.00 12 100% 12 $825,000.00
Deduction Specialist Division 1 $ 35,000.00 $ 43,750.00 4 100% 4 $175,000.00
Customer Service Rep Division 4 $ 60,000.00 $ 75,000.00 1 100% 1 $75,000.00
Customer Service Rep Division 4 $ 60,000.00 $ 75,000.00 1 100% 1 $75,000.00
Total 40 40 $2,368,750.00


Quantify savings

Division 1
% of # of FTE Min Max Min FTE Max FTE Avg FTE
Sub - Process Time Resources Equiv. FTE Amount Automation Automation Savings Savings Savings
Supporting
Documentation Gathering 20.0% 12 2.40 $165,000.00 50% 70% $82,500.00 $115,500.00 $99,000.00
Customer
Correspondence 20.0% 12 2.40 $165,000.00 35% 50% $57,750.00 $82,500.00 $70,125.00
Credit Memo Approval
2.0% 12 0.24 $16,500.00 20% 30% $3,300.00 $4,950.00 $4,125.00
Credit Debit Matching
1.5% 12 0.18 $12,375.00 50% 80% $6,187.50 $9,900.00 $8,043.75
Inter-Departmental
Workflow & Collaboration 5.0% 12 0.60 $41,250.00 20% 30% $8,250.00 $12,375.00 $10,312.50
Supporting
Documentation Gathering 90.0% 4 3.60 $157,500.00 20% 50% $31,500.00 $78,750.00 $55,125.00
Customer
Correspondence 0.0% 4 - $0.00 10% 30% $0.00 $0.00 $0.00
0.0% 4 - $0.00 10% 30% $0.00 $0.00 $0.00
Credit Debit Matching
0.0% 4 - $0.00 50% 80% $0.00 $0.00 $0.00
Inter-Departmental
Workflow & Collaboration 5.0% 4 0.20 $8,750.00 20% 30% $1,750.00 $2,625.00 $2,187.50
9.62 $566,375.00 $157,987.50 $225,225.00 $191,606.25

Quantify savings

Role Sub - Process Automation Rational
Division 1 operations comprised of 85% deductions & 15%
Deduction Supporting Documentation invoice collections. On the higher-end we are assuming 70%
Analyst Gathering Automation of Debit Memos and 80% automation of PODs. Max
Automation = (0.7 x .85 + 0.8 x 0.15) = 70%
Deductions: Auto-generate coversheet, customer sepcific claim
Deduction Customer Correspondence denial form, invoices, debit memo & POD copies etc.
Analyst Collection: Auto-generate collection letters, invoice copies and
POD copies. 70% of automation above

Deduction Productivity increase by converting the complete credit memo
Analyst approval process to electronic within SAP. Currently paper copies
are printed for approval or reports are reviewed manually
Productivity increase due to orchestrating the deduction
Deduction Inter-Departmental Workflow
resolution process within SAP workflow eliminating offline
Analyst & Collaboration
collaboration via email, scanning documents etc


Calculate ROI

Estimated Savings
OPERATIONAL EXPENSES
Division 1 $ 157,987.50 $ 225,225.00 $ 191,606.25
Division 2 $ 164,500.00 $ 234,937.50 $ 199,718.75
Division 3 $ 223,234.38 $ 326,125.00 $ 274,679.69
TOTAL VALUE CAPTURE $ 545,721.88 $786,287.50 $666,004.69

Implementation Costs

IMPLEMENTATION COSTS HighRadius Internal Total
First Year $ 580,614.80 $ 76,428.00 $657,042.80
Second Years onwards (Annual Recurring) $ 74,400.00 $ - $ 74,400.00

Return on Investment
NET YEARLY SAVINGS
First Year savings $(111,320.93) $129,244.70 $ 8,961.89
Second Year and Ongoing Savings $ 471,321.88 $711,887.50 $591,604.69


Conclusion

“The sole role of a business case is that of a
communication tool, composed in a language that the
target audience understands and with enough detail to
facilitate decision making on his or her part.”

“The vast majority of unsuccessful projects fail not because
of poor project management, but because of poor decisions
with respect to the choice of projects. A good business case
helps to make right decisions and avoid horrible waste.”

Ilya Bogorad
Principal of Bizvortex Consulting Group


Questions?

Jessica Butler
(201) 280-4773
jbutler@attainconsultinggroup.com

How To Develop A Business Case For FSCM

Recomendados

Recomendados

Más contenido relacionado

Similar a How To Develop A Business Case For FSCM

Similar a How To Develop A Business Case For FSCM (20)

How To Develop A Business Case For FSCM