An overview of the world’s leading ERP system

JR Batek, IT Audit Manager – Cooper IndustriesTim Guerinot, Sr. SAP Staffing Consultant –

Whitaker IT

IntroductionJR Batek, IT Audit Manager – Cooper Industries

11 years of ERP experience8 years SAP experience6 years auditing SAP2 years implementing SAP

Tim Guerinot, Sr. SAP Staffing Consultant – Whitaker 6 years ERP experience3 years staffing SAP, all versions and modules3 years selling ERP solutions

Avoid adult diaper answers!

OverviewWhat is SAP and who uses SAP (JR and Tim)SAP modules and ERP information flow (JR and Tim)How managers use SAP and ERPs to make decisions

(JR)Costs of implementing SAP:

Money (JR and Tim)Cultural changes (JR)Process changes (JR)

SAP Careers (Tim)Wrap-up and Q&ACase discussion

What is SAP? (the company)Started in 1972 – five former IBM employees

Top 5 software company (MS, Oracle, IBM, Google)

Trades on NYSE: SAP

Headquartered in Walldorf, Germany (near Heidelberg)

What is SAP? (the name)The “good names”

Pronounced “S” “A” “P” – NOT SapSysteme, Anwendungen und Produkte in der

DatenverarbeitungSystems, Applications and Products in Data Processing

The “other names”Stops All ProgressStart And PraySoftware Acquires ProblemsSatan’s Accounting Program

What is SAP? (the software)Enterprise Resource Planning software

Quote-to-Cash (Revenue cycle)Req-to-Check (Expenditure cycle)Plan-to-Produce (MRP)Finance and Controlling

Massive accounting packageTool kitSeries of ModulesBought and customized to your business

Who Uses SAP?“the World’s best run companies….”80% of Fortune 500

CokeConagraCaterpillarExxon Mobile (over 60 instances)ChevronMarathon OilCooper IndustriesNikeGeneral ElectricBaker HughesEnron….?

SAP – ERP and Data FlowManufacturing most popular

Growth out of MRP

9 basic modules

Interconnected and independent

R/3

MMMM

FIFI COCO

SDSD PPPP

PLMPLM

QMQM WMWM HRHR

SAP – ERP and Data FlowData typesMaster data

Vendor masterCustomer masterMaterial master

Transactional dataSales ordersPayments

Meta data

SAP – ERP and Data Flow

Quote toCash

Plan toProduce

Requisition to Check

Sales Order

Sales & OperationsPlanning

DemandPlanning

InventorySourcing

MaterialRequirements

Planning

Delivery

Planned OrderProduction

OrderProduction

Control

PurchaseRequisition

VendorSelection

PurchaseOrder

Goods ReceiptInvoice

VerificationVendor

Payment

Cost Controlling

Financial and Logistics Reporting

Business Information Warehouse

BillingQuote CustomerPayment

QtC

PtP

RtC

Other SAP OptionsOther Modules, Components, and Grids

CRMBI/BWTreasuryReal EstateEnergy productsSAP Business oneAFS – Apparel Footwear SolutionIndustry specific moduleGovernance, Risk and Compliance

Management DecisionsData driven analysis

What are important pieces of information for a material?

SAP material master 20 different views Average 20 fields per view Several views change by plant

Real time accounting informationAccounts ReceivableAccounts Payable

Management DecisionsProfitability

What is profitable?Who is profitable?Where are we profitable?

Dude, where’s my cash?Inventory – which materialsAccounts Receivable – which customersAccounts Payable – which vendorsOthers – prepaids, accrued payroll, other

expenses

Management Decisions - No MoreNo longer decisions!

When to payWhat to buyWhen to buyWhat to makeWhen to make itWhat to count (inventory stock take)Who to hire (always MBA students)

Management Decision ChangesRemoval of rote/routine decisionsChanges the types of decisions

From how much of product XTo should we sell product X

Flattens the organizationCreates new opportunities

How many analysts does it take…

Customer Profitability

Product Line Profitability

Inventory Balances

Costs of Implementing SAPWhat does it cost?

HardwareSoftwareBioware

Cultural changesDifferent organizationChange management

Process changesWhere to start?

SAP Implementation CostsAdult diaper time!$50-100 million, typicalMy experience

One company, $50 million for current systemPrevious company, >$250 million

Everything in-house Highly customized

OthersHershey failed in October (Trick or Treat!)Enron went in smooth and easy

SAP Hardware CostsDo you have an ERP ready data center? – not in $50

MMFire detection and preventionAbove 500 year flood level?In hurricane, earthquake, or tornado zone?Do you have a hot or cold backup site?

$5-10 million depending on sizeMulti-mirroredReal-time backupApplication, database, load balance

Do you need new PC’s?

Software Costs$5-15 million up front

SAP licenses (various modules)Oracle or other database licensesBW or other analyticsAdministration toolsBackup and recovery software (real time?)

Annual licensing/maintenance fees 20%Hint – select the right state and download

Costs of SAP Expertise$10-25 million on hardware and software

$40-75 million on biowareSAP eliminates $10/hr data entry clerksNow you need $100,000+/yr Basis

administrators

Consultants can be expensiveYou want the expensive onesKnow business and technical

SAP ConsultantsLots of consultants

Few have the skillsFind, a finder!

Lots of billing ratesSAP Platinum consultant - $300/hrQuality, independent - $150/hrSomeone who read an SAP book – not worth the

timeGood consultants – know the business!

Technical aptitudeCommunication skills

Cultural ChangesImmediate fear

Job lossesJob changes

Management oversightDashboardsDrilldown

Centralized/Shared processes and resources

Cultural ChangesUnbelievable level of complexity

Learn to speak SAPaneeseArguments change

What is the correct authorization object? Which movement types are considered

consumption?

Allocation of costsData is a valuable asset

Process ChangesWhat changes?

NothingEverything

Optimize your process first!StreamlineLeverage technologyOnly one big change

Document, document, documentCommunicate, communicate, communicate

Is it Worth It?

YES!!!If done correctly…

Eliminate non-value added stepsImprove management informationSignificant soft cost savingFocus resources

SAP CareersSAP Business Analyst

Liaison between the business and the techiesGood communication skillsUnderstanding of local business and industry

practicesTechnical trackFunctional trackProject managementBest – Technofunctional that can manage

projectsIT DirectorConsultant

SAP CareersSalaries

Business Analyst - 70K/yearBasis – 110KFunctional – 90KProject manager – 80K

Independent consultantBill at $150/hrTake home $110/hrLess travel costsApproximates to $175K

SAP CareersThe downside!

Lots of travel (good or bad)Long hoursWork-life balance challengesProject work

Projects end Jobs end

Specialized knowledge – not always transferable

Great opportunities with great companies

Wrap-UpWhat is SAP and who uses SAP (JR and Tim)SAP modules and ERP information flow (JR and Tim)How managers use SAP and ERPs to make decisions

(JR)Costs of implementing SAP:

Money (JR and Tim)Cultural changes (JR)Process changes (JR)

SAP Careers (Tim)Wrap-up and Q&A

Instant Case Time!You are Ken Camarco, VP of Business

Systems (CIO)

Company decided to implement an ERP solutionChose SAPUsing outsourced data center

Which division(s) go first?