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SAP ANALYTICS
How Analytics for procurement can help you reduce expense and
proactively manage supplier risk
Executive Summary


Your procurement and supply chain businesses are perhaps hounding you for continuous supplier and
spend intelligence – reports that will help drive supplier selection decisions, track performance of
suppliers and manage spend to be within budget. However, your supplier data requires de-duplication,
normalization and enrichment – enrichment with various sources of information such as credit and risk,
debarred businesses, minority owned, and corporate ownership information to help during critical
supplier discussions and negotiations. IT no longer needs to drown from these requests and spend
weeks or even months responding to this request. With SAP‟s solutions, and partnerships with 3rd
party data providers, you can empower your procurement, finance and supply chain business users.




© 2011 SAP AG. All rights reserved.                                                                 2
Learning Points


Find the answers to these questions:
 What is Procurement Analytics?
 How can Procurement Analytic Applications help the Procurement Analysts Know,
  Decide and Act With Confidence?
 What are the Best-Practices?




© 2011 SAP AG. All rights reserved.                                         3     3
Learn about…


Analytic Applications for Procurement
The problems and solutions
   Data Enrichment and Classification
   Spend Performance Management
Customer Best Practices
What‟s Next




© 2011 SAP AG. All rights reserved.     4
SAP Analytics
         ANALYTIC APPLICATIONS FOR
         PROCUREMENT
© 2011 SAP AG. All rights reserved.   5
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 Management,
       Transaction Management (CPO Research)                            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.                                                                                                        6
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

© 2011 SAP AG. All rights reserved.                                                                                                                                                      7
Know, Decide and Act With Confidence

   Embedded Applications                             Purpose-built Applications
                                      Seamlessly integrates with
        Contextually answers                                        Aggregates Enterprise Data
                                         Business Processes
          process driven                                               To Optimize Strategic
                                        Applications to deliver
             questions                                                  Business Functions
                                          actionable insight




© 2011 SAP AG. All rights reserved.                                                              8
Analytics for Procurement

   Analytic Applications                            Analytics for Procurement

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




© 2011 SAP AG. All rights reserved.                                                         9
SAP Procurement Portfolio
Integrated Solutions that Support the Process

           Spend                        Sourcing            Contract  Operational   Invoice
          Analytics                                        Management Procurement Management




                                                                                                                              In Ramp Up!

                                              Supplier Management                                                              SAP Supplier
                                                                                                                              Lifecycle Mgmt




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

© 2011 SAP AG. All rights reserved.                                                                                                            10
Transforming the Way Procurement Users Gain Insight
                                                                 Self Service
               Change
               Problem
               Manage
               Manageme                   Visually analyze the
                                                                 Reporting
               ment
               nt

                                          spend breakdown for
                                          a specific item
                                                                                         Self Service Data
                                                                                                 Reliability
                                                                 See what portion of
                                                                 item spend comes
                                                                 from freight charges
                                                                 versus material costs




                                      external Data
                                      Integration



© 2011 SAP AG. All rights reserved.                                                                       11
Data Reliability
         DATA ENRICHMENT AND CLASSIFICATION
         ONDEMAND

© 2011 SAP AG. All rights reserved.               12
                                              © SAP
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


© 2011 SAP AG. All rights reserved.                                                                                                                               13
What Do Data Collection Do?

    Definition
  • The purpose of Data Collection is to ensure a complete and accurate aggregation of spend data from multiple sources on
    a periodic basis.
  • During the Data Collection phase, master and transaction files are received from multiple sources and reviewed for
    accuracy, technical validity and content integrity. Sources are then approved for further processing or rejected.


    Challenge                                                      SAP Benefit
  Lack of standard process for collecting data from disperse     Standard ETL tool to support external data collection
   systems                                                        Integration into SAP Spend Performance Management to
  Lack of integration into external data sources                  collect raw information
                                                                  Monitor progress towards meeting timelines

Result: Organizations are unable to collect their data in a     Result: Organizations can increase accuracy, timeliness and
timely and automated fashion.                                   automation decreasing risk of bad data and TCO




© 2011 SAP AG. All rights reserved.                                                                                        14
What Do Supplier Data Standardization and Enrichment Do?

      Definition
  •     Supplier standardization validates suppliers and removes duplicates. It creates linkages between supplier corporate
        parents and their children
  •     Supplier enrichment enhances supplier data with information about a supplier‟s diversity status (e.g. Minority-owned,
        Women-owned, Veteran-owned), or credit/financial risk, etc.


      Challenge                                                       SAP Benefit
  Lack of standard process for entering supplier names into         Standard view of all suppliers for goods and services
   transaction systems                                               Leverage total purchases to drive cost savings and
  Lack of supplier parent/child relationships among suppliers        rationalize suppliers
  Lack of supplier specific business and risk data                  Monitor progress towards meeting Diversity Supplier
                                                                      initiatives
                                                                     Identify suppliers who may be a risk to the supply chain
                                                                      due to financial instability

      Result: Organizations are unable to analyze their spend by   Result: Organizations can increase leverage opportunities by
      supplier, and cannot leverage total spend                    normalizing business entities and improve decision-making
                                                                   with enriched content
© 2011 SAP AG. All rights reserved.                                                                                              15
The SAP Global Business Compendium

   Additional Location                       Location (Address,
                                                                        Linkage (Parent
   Information (Mail, Fax etc)               ZIP, Country etc)
                                                                        Company etc)
 Contact Info (CEO,
 Officers, Phone                                                                   Financial & Risk
 numbers, email                                                                    Indicators (Filings,
 addresses etc)                                                                    suits, liens,
   Diversity (women                                                                bankruptcy etc)
   owned, SDB,
   minorities etc)
            Line-of-Business
            (Standard Industrial
                                                                                          Cortera Risk (via
            Classification Code incl.
                                                                                          Endorsed Business
            function)
                                    Business Info                                         Solution: risk
                                    (employees, sales,                                    segment, payment
                                    TIN, non-US Tax      Sanctions (OFAC)                 score, trend etc)
© 2011 SAP AG. All rights reserved.
                                    number etc)                                                           16
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
© 2011 SAP AG. All rights reserved.                                                                                                                                      17
What Is Spend Data Classification?

      Definition
  •    Spend Data Classification is the process of assigning procurement spend purchases to a standard structure such as
       UNSPSC, the SAP taxonomy, or a custom structure




      Challenge                                                       SAP Benefit
  •      Procurement, Supply Chain and Financial transaction      •     Standard Standard view of all goods and services
         systems may not have a standard classification                 purchased across the enterprise
         structure across the enterprise for assigning goods      •     Leverage total spend to drive cost savings, monitor
         and services to a category                                     compliance, and rationalize suppliers
  •      Users may incorrectly classify data at the point of
         entry in the transaction system

  Result: Since purchases are not classified to a                 Result: Organizations can now increase visibility to both
  single, standard enterprise-wide structure, procurement         direct and indirect spend with a consistent category
  organizations cannot analyze their total category spend         scheme.
  across the enterprise
© 2011 SAP AG. All rights reserved.                                                                                           18
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




© 2011 SAP AG. All rights reserved.                                        19
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
© 2011 SAP AG. All rights reserved.                                                               20
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
© 2011 SAP AG. All rights reserved.                                                                                                                                          21
What Is Spend Data Revision?

      Definition
  •    Revision is the process of reviewing the enrichment, validation and classification processes from a data steward
       perspective to add expertise to the process for continuous improvement




      Challenge                                                         SAP Benefit
  •      Automated processes cannot always guarantee the            •    Standard process for the data stewards support
         individual customer data situation is handled correctly         reliability efforts
  •      Due to individual factors there still might be not         •    Easy to use user interfaces to enable the customer to
         classified data sets that need to be matched /                  act as the data steward
         analyzed                                                   •    System gets “smarter” each run by enhanced logic

 Result: Automated rules of all degrees of sophistication          Result: Organizations can now increase the value of the
 cannot handle specifics of individual customer cases and          automation by complementing the rules engine with unique
 might not deliver the desired results. Customers need to be       customer data knowledge.
 able to easily review the data and modify the results of the
 processed rules
© 2011 SAP AG. All rights reserved.                                                                                              22
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




© 2011 SAP AG. All rights reserved.                                  23
What’s in it for You?

                                   Lay the foundation for full
                                   spend visibility in the SAP
                                                                      Improve leverage and
                                    BusinesObjects Spend
                                                                      decision making with a
                                   Performance Management
                                                                     normalized and enriched
                                  application by optimizing the
                                                                           supply base
                                  collection and verification of
                                              data



                                       Drive continuous               Understand purchasing
                                   improvement by adding           activity with transactions that
                                     business expertise to         are classified to a consistent
                                 enrichment and classification        standard for goods and
                                          processes                            services



© 2011 SAP AG. All rights reserved.                                                                  24
Spend Analytics

         SPEND PERFORMANCE MANAGEMENT


© 2011 SAP AG. All rights reserved.         25
                                        © SAP
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
© 2011 SAP AG. All rights reserved.                                                                                              26
Integrated Data Management enables Accurate Spend Visibility

    The Solution                                         Why SAP

                                                       SAP Integration
                                                        Connectors to pull Spend, Financial, Operational
                                                         Procurement and Master data from SAP data sources
                                                       Best-In-Class ETL
                                                        Included best-in-class ETL tool simplifies connectivity
                                                         to non-SAP structured and unstructured data sources
                                                       Leading EIM technologies
                                                        Includes best-in-class methodology and technology for
  Automated data capture from SAP and non-SAP           accurate, reliable data quality, supports data
   enables Continuous Spend Analysis for Incremental     validation, normalization and enrichment having
   Savings Insights                                      processed over 1.5 trillion records
  Data accuracy for faster insights                   External Data Feeds
   – Supplier Normalization & Enrichment*               Includes support for external data feeds providing
   – Spend Classification*                               immediate market insights.
                                                                                        * Provided as optional subscription service
© 2011 SAP AG. All rights reserved.                                                                                            27
Out Of The Box Analytics enables Actionable Insights

    The Solution                                       Why SAP

                                                     Comprehensive Analysis:
                                                       Spend, Supply Base, Contract, Supplier Risk and
                                                        Procurement KPIs, including tracking to key
                                                        KPIs, budgets and financial performance metrics
                                                      Surface Savings and Supplier Risk Insights:
                                                       Quantify impact with detailed drill down analysis to
                                                        effect confident decisions, instead of time consuming
                                                        data mining
 Automated Comprehensive spend and supply base
  data model                                          Integration with SAP Sourcing:
                                                       Launch sourcing RFx, Auction or Project from insights
 Provides insights into savings and supplier risk      directly, via out of the box integration
                                                      Dynamic Briefing Book:
 Powerful ad-hoc analytics for the power user
                                                       Supports snapshots in time, with refresh and offline
 Enables collaboration and decision capture            capabilities to support stakeholder collaboration and
                                                        decision capture
© 2011 SAP AG. All rights reserved.                                                                             28
Actionable Metrics on Critical Success Factors Improves Spend
Performance

    The Solution                                       Why SAP

                                                     Performance Management:
                                                      Evolve from Reporting and Analysis to Performance
                                                       Management, incorporate „Management by Exception‟
                                                       to focus valuable Procurement resources to top
                                                       initiatives

                                                     Configure KPIs:
                                                      Set KPIs to meet your competitive advantage
                                                       goals, and align procurement goals with corporate
 Align procurement strategy to execution              strategy and vision

 Gain full visibility into procurement “actuals”    Know The Contributors to Lagging KPIs:
                                                      Track key KPIs with full knowledge of key contributors to
 Better manage key procurement performance
                                                       variance, and root cause for sub-standard performance for
  indicators                                           immediate decision and action

 Identify root causes of sub-standard performance
© 2011 SAP AG. All rights reserved.                                                                                29
Insights Into Savings Potential Helps Prioritize Sourcing Strategies

    The Solution                                   Why SAP

                                                 Spend Advisor:
                                                  Be alerted to savings potential, instead of time and
                                                   effort mining for savings opportunities

                                                 From Insights to Detailed Analysis:
                                                  Supports Power Users need to perform deep dive and
                                                   ad-hoc analysis on the savings insights, including
                                                   analyzing supplier risk profiles, supply concentration
                                                   and sole sourced supplier risks
 Identify savings potential
                                                 From Insight to Action:
 Analyze Quantity, Price And Supplier details
                                                  Take immediate action on insights by transferring line
 Determine strategic sourcing opportunity         item data into SAP Sourcing for continued next steps in
                                                   the strategic sourcing process
 Launch sourcing action from insights
© 2011 SAP AG. All rights reserved.                                                                       30
Result: Predictable Spend Performance And Confident Sourcing
Decisions
    Today:                                                                                    Sustainable Solution:
    Distributed Information Sources                                                           Integrated, Insight Driven, Actionable




                           Supplier                 Supplier
                         Performance                Ratings                     Information
                                                                                Aggregation



                   Spend                                Supplier Evaluation /
                  Analysis                                     Audits

                                      Supplier Portal


           Multiple systems capturing silo‟ed                                                         One solution
            supplier information                                                                       Monitor entire supply base
           No data integration, random supply                                                         Act quickly on impact driven priorities
            base reviews
© 2011 SAP AG. All rights reserved.                                                                                                               31
Spend And Supplier Risk Analytics enables a stable Supply Base

    The Solution                                                       Why SAP

                                                                     Internal Supplier Data:
                                                                      Incorporate internal supplier performance indicators to
              1. Identify                         2. Appraise
           Root Cause Analysis                                         analyze risk trends for early risk detection
                                                   Impact Analysis

                                                                     External And Market Data:
                                                                      Combine external and market data on suppliers to
                                                                       ensure supplier viability
                                      3. Act
                              Devise Mitigation Strategy
 Know your at risk suppliers                                        Assess Impact of Supplier Failure:
                                                                      Quantify impact on your business, spend volume and
 Identify supplier concentration and sole sourced risk                locations to help prioritize and establish alternate
  factors                                                              suppliers
 Assess impact to your spend
 Find and act on qualified alternate supplier sources
© 2011 SAP AG. All rights reserved.                                                                                           32
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
© 2011 SAP AG. All rights reserved.                                33
Critical Supplier Information Enables Proactive Insights Into Impact
Of Supplier Risk




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


© 2011 SAP AG. All rights reserved.                                34
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




© 2011 SAP AG. All rights reserved.                    35
Quick Demo


Spend Performance Management
   Look & Feel
   Ad-Hoc Reporting
   Classified & Enriched vs. Raw Data
   Pre-defined Intelligence




© 2011 SAP AG. All rights reserved.      36
Procurement Analytics

         CUSTOMER BEST PRACTICES


© 2011 SAP AG. All rights reserved.       37
                                      © SAP
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


© 2011 SAP AG. All rights reserved.                                                                                       38
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




© 2011 SAP AG. All rights reserved.                                                                                            39
Global Consumer Packaged Goods Company
  Challenges – competing on Analytics




© 2011 SAP AG. All rights reserved.        40
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




© 2011 SAP AG. All rights reserved.                                                          41
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
© 2011 SAP AG. All rights reserved.                                                               42
Spend Analysis on iPad, Explorer View




© 2011 SAP AG. All rights reserved.     43
Recommendation: Visit these sessions !!!


Case study: How Kimberly-Clark implemented     Case study: An inside look at the result of
a global spend analytics platform and gained   Health Net's extensive two-year procurement
control of spend data in less than 20 weeks    transformation




© 2011 SAP AG. All rights reserved.                                                          44
Procurement Analytics

         WHAT’S NEXT


© 2011 SAP AG. All rights reserved.   45
Key Learning - Transforming the Way Business Users Gain
  Insights
 Actionable insights like never before
    Modern, compelling, and seamless user experience
    Context-relevant and actionable
    In-depth and complete

 Best-practice Analytics content
    Preconfigured reports and dashboards
    Out-of-the-box end-to-end best practices

 Deep and unique integration
    Leverage investments in the SAP Business Suite
    Leverage latest technology innovations and established best
     practices
    Enable easy extension and customization
© 2011 SAP AG. All rights reserved.                                46
Return on Investment


 SAP is the leader in Enterprise Software since nearly 40 years
 Your company has probably invested in SAP Systems
 You are running Procurement on SAP solutions or are planning to do so
 You require the newest Analytics solutions to help the Procurement Function
  achieve enterprise goals
 SAP has already done the job: Analytics for Procurement
 Leverage your investments and better run your company




© 2011 SAP AG. All rights reserved.                                             47   47
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
© 2011 SAP AG. All rights reserved.                                                                              48
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

© 2011 SAP AG. All rights reserved.                                                                                                                   49
Thank You!

Contact information:

Henner Schliebs                Nikhil Reddy
Analytics Solution Marketing   Procurement Sales
henner.schliebs@sap.com        nikhil.reddy@sap.com
© 2011 SAP AG. All rights reserved.

                                                                                                                                                                              ®
No part of this publication may be reproduced or transmitted in any form or for any purpose   HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C , World
without the express permission of SAP AG. The information contained herein may be             Wide Web Consortium, Massachusetts Institute of Technology.
changed without prior notice.
                                                                                              SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects
Some software products marketed by SAP AG and its distributors contain proprietary            Explorer, StreamWork, and other SAP products and services mentioned herein as well as
software components of other software vendors.                                                their respective logos are trademarks or registered trademarks of SAP AG in Germany and
Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft     other countries.
Corporation.                                                                                  Business Objects and the Business Objects logo, BusinessObjects, Crystal
IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System            Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects
x, System z, System z10, System                                                               products and services mentioned herein as well as their respective logos are trademarks or
z9, z10, z9, iSeries, pSeries, xSeries, zSeries, eServer, z/VM, z/OS, i5/OS, S/390, OS/390,   registered trademarks of Business Objects Software Ltd. Business Objects is an
OS/400, AS/400, S/390 Parallel Enterprise Server, PowerVM, Power                              SAP company.
Architecture, POWER6+, POWER6, POWER5+, POWER5, POWER, OpenPower, PowerP
                                                                                              Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase
C, BatchPipes, BladeCenter, System Storage, GPFS, HACMP, RETAIN, DB2
                                                                                              products and services mentioned herein as well as their respective logos are trademarks or
Connect, RACF, Redbooks, OS/2, Parallel Sysplex, MVS/ESA, AIX, Intelligent
                                                                                              registered trademarks of Sybase, Inc. Sybase is an SAP company.
Miner, WebSphere, Netfinity, Tivoli and Informix are trademarks or registered trademarks of
IBM Corporation.                                                                              All other product and service names mentioned are the trademarks of their respective
Linux is the registered trademark of Linus Torvalds in the U.S. and other countries.          companies. Data contained in this document serves informational purposes only. National
                                                                                              product specifications may vary.
Adobe, the Adobe logo, Acrobat, PostScript, and Reader are either trademarks or
registered trademarks of Adobe Systems Incorporated in the United States and/or other         The information in this document is proprietary to SAP. No part of this document may be
countries.                                                                                    reproduced, copied, or transmitted in any form or for any purpose without the express prior
                                                                                              written permission of SAP AG.
Oracle and Java are registered trademarks of Oracle and/or its affiliates.
UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group.
Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are
trademarks or registered trademarks of Citrix Systems, Inc.



 © 2011 SAP AG. All rights reserved.                                                                                                                                                  51

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SAP Analytics for Procurement

  • 1. SAP ANALYTICS How Analytics for procurement can help you reduce expense and proactively manage supplier risk
  • 2. Executive Summary Your procurement and supply chain businesses are perhaps hounding you for continuous supplier and spend intelligence – reports that will help drive supplier selection decisions, track performance of suppliers and manage spend to be within budget. However, your supplier data requires de-duplication, normalization and enrichment – enrichment with various sources of information such as credit and risk, debarred businesses, minority owned, and corporate ownership information to help during critical supplier discussions and negotiations. IT no longer needs to drown from these requests and spend weeks or even months responding to this request. With SAP‟s solutions, and partnerships with 3rd party data providers, you can empower your procurement, finance and supply chain business users. © 2011 SAP AG. All rights reserved. 2
  • 3. Learning Points Find the answers to these questions:  What is Procurement Analytics?  How can Procurement Analytic Applications help the Procurement Analysts Know, Decide and Act With Confidence?  What are the Best-Practices? © 2011 SAP AG. All rights reserved. 3 3
  • 4. Learn about… Analytic Applications for Procurement The problems and solutions Data Enrichment and Classification Spend Performance Management Customer Best Practices What‟s Next © 2011 SAP AG. All rights reserved. 4
  • 5. SAP Analytics ANALYTIC APPLICATIONS FOR PROCUREMENT © 2011 SAP AG. All rights reserved. 5
  • 6. 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 Management, Transaction Management (CPO Research) 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. 6
  • 7. 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 © 2011 SAP AG. All rights reserved. 7
  • 8. Know, Decide and Act With Confidence Embedded Applications Purpose-built Applications Seamlessly integrates with Contextually answers Aggregates Enterprise Data Business Processes process driven To Optimize Strategic Applications to deliver questions Business Functions actionable insight © 2011 SAP AG. All rights reserved. 8
  • 9. Analytics for Procurement Analytic Applications Analytics for Procurement Decision Support for Supplier Data Supplier Spend the Procurement Perfor- Reliability Risk Analytics Function mance © 2011 SAP AG. All rights reserved. 9
  • 10. SAP Procurement Portfolio Integrated Solutions that Support the Process Spend Sourcing Contract Operational Invoice Analytics Management Procurement Management In Ramp Up! Supplier Management SAP Supplier Lifecycle Mgmt SAP Spend SAP Sourcing / SAP SAP SAP SRM, SAP ERP SAP Invoice Mgmt Performance Sourcing Contract Lifecycle & SAP Cart Approval by OpenText Management OnDemand Mgmt SAP Data Enrichment & Supplier Connectivity via SUS and Classification Crossgate / Hubwoo* New! © 2011 SAP AG. All rights reserved. 10
  • 11. Transforming the Way Procurement Users Gain Insight Self Service Change Problem Manage Manageme Visually analyze the Reporting ment nt spend breakdown for a specific item Self Service Data Reliability See what portion of item spend comes from freight charges versus material costs external Data Integration © 2011 SAP AG. All rights reserved. 11
  • 12. Data Reliability DATA ENRICHMENT AND CLASSIFICATION ONDEMAND © 2011 SAP AG. All rights reserved. 12 © SAP
  • 13. 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 © 2011 SAP AG. All rights reserved. 13
  • 14. What Do Data Collection Do? Definition • The purpose of Data Collection is to ensure a complete and accurate aggregation of spend data from multiple sources on a periodic basis. • During the Data Collection phase, master and transaction files are received from multiple sources and reviewed for accuracy, technical validity and content integrity. Sources are then approved for further processing or rejected. Challenge SAP Benefit  Lack of standard process for collecting data from disperse  Standard ETL tool to support external data collection systems  Integration into SAP Spend Performance Management to  Lack of integration into external data sources collect raw information  Monitor progress towards meeting timelines Result: Organizations are unable to collect their data in a Result: Organizations can increase accuracy, timeliness and timely and automated fashion. automation decreasing risk of bad data and TCO © 2011 SAP AG. All rights reserved. 14
  • 15. What Do Supplier Data Standardization and Enrichment Do? Definition • Supplier standardization validates suppliers and removes duplicates. It creates linkages between supplier corporate parents and their children • Supplier enrichment enhances supplier data with information about a supplier‟s diversity status (e.g. Minority-owned, Women-owned, Veteran-owned), or credit/financial risk, etc. Challenge SAP Benefit  Lack of standard process for entering supplier names into  Standard view of all suppliers for goods and services transaction systems  Leverage total purchases to drive cost savings and  Lack of supplier parent/child relationships among suppliers rationalize suppliers  Lack of supplier specific business and risk data  Monitor progress towards meeting Diversity Supplier initiatives  Identify suppliers who may be a risk to the supply chain due to financial instability Result: Organizations are unable to analyze their spend by Result: Organizations can increase leverage opportunities by supplier, and cannot leverage total spend normalizing business entities and improve decision-making with enriched content © 2011 SAP AG. All rights reserved. 15
  • 16. The SAP Global Business Compendium Additional Location Location (Address, Linkage (Parent Information (Mail, Fax etc) ZIP, Country etc) Company etc) Contact Info (CEO, Officers, Phone Financial & Risk numbers, email Indicators (Filings, addresses etc) suits, liens, Diversity (women bankruptcy etc) owned, SDB, minorities etc) Line-of-Business (Standard Industrial Cortera Risk (via Classification Code incl. Endorsed Business function) Business Info Solution: risk (employees, sales, segment, payment TIN, non-US Tax Sanctions (OFAC) score, trend etc) © 2011 SAP AG. All rights reserved. number etc) 16
  • 17. 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 © 2011 SAP AG. All rights reserved. 17
  • 18. What Is Spend Data Classification? Definition • Spend Data Classification is the process of assigning procurement spend purchases to a standard structure such as UNSPSC, the SAP taxonomy, or a custom structure Challenge SAP Benefit • Procurement, Supply Chain and Financial transaction • Standard Standard view of all goods and services systems may not have a standard classification purchased across the enterprise structure across the enterprise for assigning goods • Leverage total spend to drive cost savings, monitor and services to a category compliance, and rationalize suppliers • Users may incorrectly classify data at the point of entry in the transaction system Result: Since purchases are not classified to a Result: Organizations can now increase visibility to both single, standard enterprise-wide structure, procurement direct and indirect spend with a consistent category organizations cannot analyze their total category spend scheme. across the enterprise © 2011 SAP AG. All rights reserved. 18
  • 19. 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 © 2011 SAP AG. All rights reserved. 19
  • 20. 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 © 2011 SAP AG. All rights reserved. 20
  • 21. 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 © 2011 SAP AG. All rights reserved. 21
  • 22. What Is Spend Data Revision? Definition • Revision is the process of reviewing the enrichment, validation and classification processes from a data steward perspective to add expertise to the process for continuous improvement Challenge SAP Benefit • Automated processes cannot always guarantee the • Standard process for the data stewards support individual customer data situation is handled correctly reliability efforts • Due to individual factors there still might be not • Easy to use user interfaces to enable the customer to classified data sets that need to be matched / act as the data steward analyzed • System gets “smarter” each run by enhanced logic Result: Automated rules of all degrees of sophistication Result: Organizations can now increase the value of the cannot handle specifics of individual customer cases and automation by complementing the rules engine with unique might not deliver the desired results. Customers need to be customer data knowledge. able to easily review the data and modify the results of the processed rules © 2011 SAP AG. All rights reserved. 22
  • 23. 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 © 2011 SAP AG. All rights reserved. 23
  • 24. What’s in it for You? Lay the foundation for full spend visibility in the SAP Improve leverage and BusinesObjects Spend decision making with a Performance Management normalized and enriched application by optimizing the supply base collection and verification of data Drive continuous Understand purchasing improvement by adding activity with transactions that business expertise to are classified to a consistent enrichment and classification standard for goods and processes services © 2011 SAP AG. All rights reserved. 24
  • 25. Spend Analytics SPEND PERFORMANCE MANAGEMENT © 2011 SAP AG. All rights reserved. 25 © SAP
  • 26. 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 © 2011 SAP AG. All rights reserved. 26
  • 27. Integrated Data Management enables Accurate Spend Visibility The Solution Why SAP SAP Integration  Connectors to pull Spend, Financial, Operational Procurement and Master data from SAP data sources Best-In-Class ETL  Included best-in-class ETL tool simplifies connectivity to non-SAP structured and unstructured data sources Leading EIM technologies  Includes best-in-class methodology and technology for  Automated data capture from SAP and non-SAP accurate, reliable data quality, supports data enables Continuous Spend Analysis for Incremental validation, normalization and enrichment having Savings Insights processed over 1.5 trillion records  Data accuracy for faster insights External Data Feeds – Supplier Normalization & Enrichment*  Includes support for external data feeds providing – Spend Classification* immediate market insights. * Provided as optional subscription service © 2011 SAP AG. All rights reserved. 27
  • 28. Out Of The Box Analytics enables Actionable Insights The Solution Why SAP Comprehensive Analysis:  Spend, Supply Base, Contract, Supplier Risk and Procurement KPIs, including tracking to key KPIs, budgets and financial performance metrics Surface Savings and Supplier Risk Insights:  Quantify impact with detailed drill down analysis to effect confident decisions, instead of time consuming data mining  Automated Comprehensive spend and supply base data model Integration with SAP Sourcing:  Launch sourcing RFx, Auction or Project from insights  Provides insights into savings and supplier risk directly, via out of the box integration Dynamic Briefing Book:  Powerful ad-hoc analytics for the power user  Supports snapshots in time, with refresh and offline  Enables collaboration and decision capture capabilities to support stakeholder collaboration and decision capture © 2011 SAP AG. All rights reserved. 28
  • 29. Actionable Metrics on Critical Success Factors Improves Spend Performance The Solution Why SAP Performance Management:  Evolve from Reporting and Analysis to Performance Management, incorporate „Management by Exception‟ to focus valuable Procurement resources to top initiatives Configure KPIs:  Set KPIs to meet your competitive advantage goals, and align procurement goals with corporate  Align procurement strategy to execution strategy and vision  Gain full visibility into procurement “actuals” Know The Contributors to Lagging KPIs:  Track key KPIs with full knowledge of key contributors to  Better manage key procurement performance variance, and root cause for sub-standard performance for indicators immediate decision and action  Identify root causes of sub-standard performance © 2011 SAP AG. All rights reserved. 29
  • 30. Insights Into Savings Potential Helps Prioritize Sourcing Strategies The Solution Why SAP Spend Advisor:  Be alerted to savings potential, instead of time and effort mining for savings opportunities From Insights to Detailed Analysis:  Supports Power Users need to perform deep dive and ad-hoc analysis on the savings insights, including analyzing supplier risk profiles, supply concentration and sole sourced supplier risks  Identify savings potential From Insight to Action:  Analyze Quantity, Price And Supplier details  Take immediate action on insights by transferring line  Determine strategic sourcing opportunity item data into SAP Sourcing for continued next steps in the strategic sourcing process  Launch sourcing action from insights © 2011 SAP AG. All rights reserved. 30
  • 31. Result: Predictable Spend Performance And Confident Sourcing Decisions Today: Sustainable Solution: Distributed Information Sources Integrated, Insight Driven, Actionable Supplier Supplier Performance Ratings Information Aggregation Spend Supplier Evaluation / Analysis Audits Supplier Portal  Multiple systems capturing silo‟ed  One solution supplier information  Monitor entire supply base  No data integration, random supply  Act quickly on impact driven priorities base reviews © 2011 SAP AG. All rights reserved. 31
  • 32. Spend And Supplier Risk Analytics enables a stable Supply Base The Solution Why SAP Internal Supplier Data:  Incorporate internal supplier performance indicators to 1. Identify 2. Appraise Root Cause Analysis analyze risk trends for early risk detection Impact Analysis External And Market Data:  Combine external and market data on suppliers to ensure supplier viability 3. Act Devise Mitigation Strategy  Know your at risk suppliers Assess Impact of Supplier Failure:  Quantify impact on your business, spend volume and  Identify supplier concentration and sole sourced risk locations to help prioritize and establish alternate factors suppliers  Assess impact to your spend  Find and act on qualified alternate supplier sources © 2011 SAP AG. All rights reserved. 32
  • 33. 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 © 2011 SAP AG. All rights reserved. 33
  • 34. Critical Supplier Information Enables Proactive Insights Into Impact Of Supplier Risk  Jump directly from SPM to Cortera website for up to date Supplier report © 2011 SAP AG. All rights reserved. 34
  • 35. 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 © 2011 SAP AG. All rights reserved. 35
  • 36. Quick Demo Spend Performance Management  Look & Feel  Ad-Hoc Reporting  Classified & Enriched vs. Raw Data  Pre-defined Intelligence © 2011 SAP AG. All rights reserved. 36
  • 37. Procurement Analytics CUSTOMER BEST PRACTICES © 2011 SAP AG. All rights reserved. 37 © SAP
  • 38. 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 © 2011 SAP AG. All rights reserved. 38
  • 39. 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 © 2011 SAP AG. All rights reserved. 39
  • 40. Global Consumer Packaged Goods Company Challenges – competing on Analytics © 2011 SAP AG. All rights reserved. 40
  • 41. 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 © 2011 SAP AG. All rights reserved. 41
  • 42. 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 © 2011 SAP AG. All rights reserved. 42
  • 43. Spend Analysis on iPad, Explorer View © 2011 SAP AG. All rights reserved. 43
  • 44. Recommendation: Visit these sessions !!! Case study: How Kimberly-Clark implemented Case study: An inside look at the result of a global spend analytics platform and gained Health Net's extensive two-year procurement control of spend data in less than 20 weeks transformation © 2011 SAP AG. All rights reserved. 44
  • 45. Procurement Analytics WHAT’S NEXT © 2011 SAP AG. All rights reserved. 45
  • 46. Key Learning - Transforming the Way Business Users Gain Insights Actionable insights like never before  Modern, compelling, and seamless user experience  Context-relevant and actionable  In-depth and complete Best-practice Analytics content  Preconfigured reports and dashboards  Out-of-the-box end-to-end best practices Deep and unique integration  Leverage investments in the SAP Business Suite  Leverage latest technology innovations and established best practices  Enable easy extension and customization © 2011 SAP AG. All rights reserved. 46
  • 47. Return on Investment  SAP is the leader in Enterprise Software since nearly 40 years  Your company has probably invested in SAP Systems  You are running Procurement on SAP solutions or are planning to do so  You require the newest Analytics solutions to help the Procurement Function achieve enterprise goals  SAP has already done the job: Analytics for Procurement  Leverage your investments and better run your company © 2011 SAP AG. All rights reserved. 47 47
  • 48. 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 © 2011 SAP AG. All rights reserved. 48
  • 49. 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 © 2011 SAP AG. All rights reserved. 49
  • 50. Thank You! Contact information: Henner Schliebs Nikhil Reddy Analytics Solution Marketing Procurement Sales henner.schliebs@sap.com nikhil.reddy@sap.com
  • 51. © 2011 SAP AG. All rights reserved. ® No part of this publication may be reproduced or transmitted in any form or for any purpose HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C , World without the express permission of SAP AG. The information contained herein may be Wide Web Consortium, Massachusetts Institute of Technology. changed without prior notice. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Some software products marketed by SAP AG and its distributors contain proprietary Explorer, StreamWork, and other SAP products and services mentioned herein as well as software components of other software vendors. their respective logos are trademarks or registered trademarks of SAP AG in Germany and Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft other countries. Corporation. Business Objects and the Business Objects logo, BusinessObjects, Crystal IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects x, System z, System z10, System products and services mentioned herein as well as their respective logos are trademarks or z9, z10, z9, iSeries, pSeries, xSeries, zSeries, eServer, z/VM, z/OS, i5/OS, S/390, OS/390, registered trademarks of Business Objects Software Ltd. Business Objects is an OS/400, AS/400, S/390 Parallel Enterprise Server, PowerVM, Power SAP company. Architecture, POWER6+, POWER6, POWER5+, POWER5, POWER, OpenPower, PowerP Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase C, BatchPipes, BladeCenter, System Storage, GPFS, HACMP, RETAIN, DB2 products and services mentioned herein as well as their respective logos are trademarks or Connect, RACF, Redbooks, OS/2, Parallel Sysplex, MVS/ESA, AIX, Intelligent registered trademarks of Sybase, Inc. Sybase is an SAP company. Miner, WebSphere, Netfinity, Tivoli and Informix are trademarks or registered trademarks of IBM Corporation. All other product and service names mentioned are the trademarks of their respective Linux is the registered trademark of Linus Torvalds in the U.S. and other countries. companies. Data contained in this document serves informational purposes only. National product specifications may vary. Adobe, the Adobe logo, Acrobat, PostScript, and Reader are either trademarks or registered trademarks of Adobe Systems Incorporated in the United States and/or other The information in this document is proprietary to SAP. No part of this document may be countries. reproduced, copied, or transmitted in any form or for any purpose without the express prior written permission of SAP AG. Oracle and Java are registered trademarks of Oracle and/or its affiliates. UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc. © 2011 SAP AG. All rights reserved. 51

Notas del editor

  1. Embedded analytics include content that are built in to the Suite Enhancement Packs. The content is purpose built to address the needs of day to day insights required by various roles. You can think of it as enabling ‘ a day in the life of’ for these roles which range from Sales to Marketing, Finance to HR. In the coming slides you will see some examples across lines of business.
  2. Validation & Enrichment leads to savings. In this example, two separate instances of the same supplier <Smurfit-Stone Container> were normalized. Without validation, the spend for this supplier would have been fractured and leverage would have been lost. Often times, when a supplier is known by different trade and legal names, duplicate entries are created in the supplier master file. Duplicates also arise when different addresses are used such as remit-to vs. the physical address. Validation resolves these issues by matching against alternative names such as legal, trade style and DBA (Doing Business As) and alternative mailing addresses.Enrichment maximizes leverage by identifying parent companies.In this example, we started with five suppliers. With validation we reduced the supply base to four, enrichment further normalized the supply base to only two suppliers <RockTenn Company> and <Verizon Communications>. The data can also be enriched to include financial risk, diversity, government certifications, and more, to improve decision making. 
  3. Item classification is often incomplete and misses leverageAccount classification focuses on why something was purchased, not what was purchasedIndustry or Supplier classification is over-simplified, assuming a supplier sells only one thing, alternative leverage goes unnoticed
  4. Multivariate classification leads to savings.Supplier classification is simple, but overlooks alternative leverage. Suppliers often sell more than one thing. This oversimplification causes alternative leverage, such as freight & shipping, to remain unseen and unleveraged. In this example, packaging is overstated – we are missing freight and the associated graphics design services to create the displays. Furthermore, classifying by supplier industry can miss the finer details such as packaging vs. displays.Item classification is often incomplete. Item descriptions tend to cover direct spend and may not be populated for indirect services or expenses. In this example, the indirect services such as telecom and graphics design are not assigned and result in missed opportunities.Another approach is to classify by account. But General Ledger account structures tend to be shallow. They usually track "why" something was purchased instead of "what" was purchased. In this example, <Accounts Payable trade> is too vague a description to classify what was purchased, <Promotions> tells us "why“ we purchased graphic design services but not the fact that we actually bought graphic design services. Lastly, cell phones are obscured because they are considered to be a general office supply – once again stating why not what.SAP’s multivariate approach to classification yields greater accuracy and granularity. Here, we have full visibility to spend because multiple variables are taken into consideration. If we simply rely on item, we would miss leverage because not all transactions have item descriptions. If we rely on account we risk classifying WHY something was purchased – not what was purchased. And if we based our classification on the supplier we would oversimplify the spend, missing alternative leverage. This example shows the interaction of just a few variables... imagine the impact of adding other variables including: Buying Location, Organization, Cost Center, Source System, Line of Business, WBS Element, Department, and so on.
  5. Colgate Palmolive Co. 15.6B global consumer products company Founded in 1806 35,000 Colgate people worldwide Products sold in 200+ countries and territories The Company focuses on strong global brands in its corebusinesses Oral Care Personal Care Pet Nutrition Home Care
  6. Colgate Palmolive project scopeDataSpend (Account Payables)Purchase OrdersTravel & EntertainmentExternal Factors (CommodityPrices)Three years of dataGeographyGlobal ImplementationSeven SAP ERP’s / One SAP SRMProcurement OrganizationDirectIndirectLogistics
  7. Johnson & Johnson Company BackgroundHeadquartered in New Brunswick, NJGlobal Leader inHealth CareSpecializing in Pharmaceuticals, Medical Devices & Diagnostics and Consumer ProductsMore than 250Operating CompaniesIn 60 CountriesSelling Products in More Than 175 Countries114,000 Employees Worldwide
  8. J&J Consumer - Implementation ScopeLocationsLatin AmericaEurope, Middle East, AfricaAsia PacificNorth AmericaSource DataTransaction DataContracts, Purchase Orders, InvoicesVolumes consistent with a large Consumer Products company.Key Master Data Material, Buyers, Buying Orgs, Categories, Suppliers, Plants, Geography, Management Organization (plus many more attributes)Source system data is not standardizedMaster data values not standardizedTransaction data configurations varySpend Scope:Direct Material Spend (Raw Materials & Finished Goods)TechnicalInstallation of SPM V2 on our existing J&J SAP BW 7 SP 18 system.Integration with 12 source systems File transfers to/from external cleansing 3rd party.Source System TechnologyBPCS SAP 46C with SPM V2 extractorsSAP 46C SPM V1 extractorsSAP 47CSAP ECC5SAP ECC6Global & Regional End Users: 100+
  9. SAP BusinessObjects BI Platform Universe support allows Spend data to be accessed with BI solutions for advanced graphical analyses.View Spend data on mobile devices using SAP BusinessObjects Explorer iPad client for advanced analytics anywhere at any timeExtra SAP BusinessObjects BI Platform and Explorer licensing required