sap hana value roadmap hana value roadmap aurelian popa arcelormittal europe cio – long products a...
TRANSCRIPT
SAP HANA Value Roadmap
Aurelian Popa
ArcelorMittal Europe
CIO – Long Products
A trip from ‘discovery workshops’ towards a ‘Global S4HANA contract – bringing
full maintenance base to HANA including the S4HANA foundation ’ for ArcelorMittal
Executive summary
RECOMMENDATION
PROBLEM
STATEMENT
Consolidation onto a new
generation platform ensures no
“instant legacy” investment while
accelerating deployment and
encouraging earlier and wider
adoption through improved user
interface
Our analysis identified
significant productivity
opportunities in BI and “Shadow
BI” FTE efforts across all
geographies, including
Transversal, BD North, Long
Europe
An analysis of all business processes has been conducted by SAP to identify areas of HANA
coverage, optimizations and business impact
Workshops highlighted the
potential to simplify and optimize
current processes including
financial close, cash
management, customer
engagement, supply chain and
malfunction analysis
• Margin protection and productivity improvement: There is a renewed focus on improving productivity by
removing inefficiencies across the organization that would yield major benefits to margins.
• Price and currency volatility: Price and currency volatility will continue to challenge ArcelorMittal for the next
few years. New solutions are required to consider potential price and currency outcomes well beyond current
forward curves to strengthen pricing and volumes.
• Capital allocation: ArcelorMittal has entered a new era of focusing on margin quality over price driven volume
growth. Its decision makers have to balance divergent stakeholder demands with the ultimate goal of
maximizing returns.
Estimated Annual
Benefits (steady-state):
Reporting/BI: €…m
SRM: €…m
---------------------------
Outside-in business (full
roadmap): €……m
REPORTING
Productivity BUSINESS
Improvement
CONSOLIDATION
Facilitation
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 2
How SAP HANA addresses ArcelorMittal strategic challenges
Simpler Landscapes
Analytics and
Transactions together
on one platform
Lower Total Cost of
Ownership
Lower data footprint,
ETL, setup, and admin
costs
Better Business
Decisions
Instant insight to action
from any device
Accelerated
Business Processes Real-time MRP runs,
financial close and stock
reassignment
New Business Models Enter new markets, address
new customers and build
new products
New Business
Processes , Customer Engagement
Intelligence, Fraud Management
Data Centre Readiness
Virtualization and
Tailored Data Centre
Integration
Flexible Deployment
Models
On-Premise, Cloud or
Hybrid deployment
SRM
CRM ERP SCM
PLM
SAP HANA
IT Value Business Value
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 3
ArcelorMittal internal HANA success stories ArcelorMittal Mines
Challenges
Reduce manual effort and time to consolidate and report on information
Provide one version of truth for the highest quality information
Improve the quality and integrity of reporting
Results
Deployed the SAP Business Planning and Consolidation application on the SAP HANA
platform and in the cloud. Common and automated processes across all mines
10X to 100X
faster
processing
75% faster reporting on consolidated KPIs
“Our strategy is to move all SAP applications to the
cloud using SAP HANA. The first step was this
successful 6 month project that gave us automated
processes and faster access to data. This is helping us
to innovate and make much faster business decisions.”
Yacouba M’Baye, Head of Mining SAP CoE –
ArcelorMittal Mines
Calvert
Challenges
Business spends more time developing spreadsheets than analyzing and making important
financial decisions resulting in wasted time, lack of confidence in data, impossible to respond to
changes in data
Results
Deployed SAP HANA Datamart
Extracting and reporting on global controlling data from 2 days to 30 seconds
Margin analysis reports in 10 seconds
All sales documents for full year refreshed in 2 seconds
20% IT cost savings annually
“The four letter word that summarizes the entire
projects is EASY. The CEO and CFO are thrilled.”
Richard Davis, Head of SAP Systems , AM/NS
Calvert
ArcelorMittal Flat Carbon Europe
Challenges
Remain competitive by exploring and using new state of the art technology and lowering overall
TCO
Increase throughput times of business critical ERP transactions
Results
Deployed the Suite accelerator – sidecar to SAP ECC
3-73x Faster transaction
processing
ArcelorMittal Long Carbon Europe (completed Proof of Concept)
Challenges
Leverage most cutting-edge IT
Increase operational speed and efficiency
Results
Deployed BW on SAP HANA for Billing and Sales processes
20X to 100X query
performance
5X to 11X data load time
Use case 1: Agile Financial reporting
Value:
• Increased efficiency / productivity of Finance FTEs (30%-40%)
• Increased efficiency / productivity of IT & Business Architects (40-50%)
• Reduced cost of finance
• Lower audit cost as % of revenue (typically 30-50%)
Problem Statement ArcelorMittal:
• Analyzing the impact of org changes is manual, time-consuming. No simulation is
possible.
• Management reporting based on aggregates with no possibilities to further drill
down
• Reporting driven primarily through BW, resulting in data latency
Solution (As Is > To Be ArcelorMittal):
• Impact of hierarchy changes on performance data can be calculated or simulated
immediately (‘what-if scenarios”)
• No aggregates means easier ad-hoc analytics and more agile report
development and change management
• Pre-built content and logical data model accelerate development of new reports
and more business self-serve
Discussion:
• Continued focus on operational efficiency, especially in light of increased FTE
costs (now higher in Brazil that in US)
• Increased demand for operational reporting with drill-down to individual
transactions to conduct root cause analysis previously not possible with
aggregates
• Self-service reporting and analytics interesting for all parts of AM Finance
1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE
L0 H4 L0 H4 4 4
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 5
Use case 2: Accelerated financial close
Value:
• Reduced time to close the books (typ 30-60%)
• Increased efficiency / productivity (30% Fin, 50% IT)
• Increased quality (50% lower GL posting corrections)
• Reduction in overtime costs related to close (40-60%)
• Improved timing of purchases and revenue booking towards end of month
Problem Statement ArcelorMittal:
• Accounting and Financial Close delivers the financial results of a group required
for the presentation to external and internal stakeholders
• Lack of transparency – no centrally managed financial close or status
• Lack of speed – long running processes delay the close, limited options for re-
runs to correct errors or deeper analysis
• Lack of speed – separate and disparate databases require intensive data copy
and reconciliation processes
Solution (As Is > To Be ArcelorMittal):
• Accelerated processes providing more time for analysis, reducing overtime, or
earlier publishing of financial results
• Deeper & faster insight down to the lowest level of detail
• Common view across financials (invoice receipts) and logistics (good receipts) –
faster reconciliation and drill-through
Discussion:
• Cost center analysis (16h), 60000 materials leads to long material ledger
transactions
• 25-30 people involved from controlling enterprise wide.
Overtime during close period
• 20 days duration (monthly close, quarterly close, yearly
• Talked about Financial Closing Cockpit, and potential to improve end-to-end
process visibility
• Forex fluctuation during the day is reflected in nightly batch run, which at period
end close is not often enough
• Want opportunity to run simulations, multiple scenarios and faster integration of
Mergers and Acquisitions
1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE
L0 H4 L0 H4 4 4
6
Use case 3: Accounts receivables management
Value:
• Reduced Days Sales Outstanding (typ 5-10%)
• Reduced Unrecoverable Accounts Receivable (0.5-1%)
• Increased efficiency / productivity (30%-40%)
Problem Statement ArcelorMittal:
• Economic disruptions increases write-off risk, which requires more sophisticated
alerting mechanics
• Manual effort in assigning incoming payments to open invoices locks up
headcount in the receivables management process
• Cash tied up in days sales outstanding or bad debt – low working capital leads to
high external financing costs
• Inability to provide key information to sales and service teams to support
collections, credit and dispute management
Solution (As Is > To Be ArcelorMittal):
• Real-time data availability and increased performance allows for continuous
monitoring of the receivable situation anywhere and anytime.
• Drill down from high level KPI view down to individual item
• Collections and sales interact on individual record, integrated in ERP
Discussion:
• Considered to be of strategic importance to CFO
• Not considered a major problem today, but any reduction of DSO would be highly
welcome in order to reduce working capital requirements
1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE
L0 H4 L0 H4 3 4
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 7
Use case 4: Cash management
Value:
• Reduce loan overhead due to more accurate cash requirements forecast [Loan
interests paid * Share of applicable operational loans – 5% * 1-2%]
• Improve margins by reducing sales & operations costs
• Faster identification and response to exceptions
Problem Statement ArcelorMittal:
• Treasury have a limited view of intra day position from the local markets
• Simple reporting of inbound and outbound cash flows possesses time lags,
inaccessibility to key data due to multiple company codes and currencies.
• Short term and rolling 12 month forecasts are increasingly difficult to produce
with higher market volatility
• Increased interest in using historical data to predict into the future
Solution (As Is > To Be ArcelorMittal):
• Combines analysis of data from multiple company codes, currencies and sources
• Built-in automated variance analysis
• Ability to load/match historical cash flow data from GSAP and BCS and simulate
cash forecasting
• Smart Business Cockpit for end-to-end process visibility
Discussion:
• Three main areas of interest in Finance:
• Cash Management and Liquidity Forecasting
• Centralized and more real-time visibility of Bank Account balances
• Improved visibility of net foreign exchange positions in order to report accurately
and hedge more effectively
1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE
L0 H4 L0 H4 4 4
Examples:
• HANA trading POC : Finance Working Capital & HANA 60 day FE and P&L
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 8
Use case 5: Profitability analysis
Value:
• Reduce COGS [COGS * 0.5-1%] by optimizing supplier negotiations (eg
transport, labor, …)
• Identification of margin destroying customers and/or products [Operational
Margin * Share or negative margin sales 1-2% * Improvement 20-30%]
• Establish better pricing strategies [Operational Profit * Share of sales with better
pricing potential – 20% * Improvement 0.5-1%]
Problem Statement ArcelorMittal:
• Ability to carry out profitability analysis against a very small set of variables.
• The aggregate information about cost of goods sold does not give transparency
into the trends of cost elements in sales.
• Plan vs. budget in COGS difficult to determine.
Solution (As Is > To Be ArcelorMittal):
• Net-Margin Analysis on HANA brakes COGS down into 30 different cost
elements and allows sales management and finance to discover sales costs
increases that do not adhere to the corporate strategy.
Discussion:
• Currently takes over 1 week to calculate profitability for 1 product, and therefore
only done once a month
• Interested in having a unified view of profitability across Financial and
Commercial teams; currently use different systems and different profitability
models
• Interested in higher granularity (currently only done at Product Group level, not
individual product), ability to run analysis with higher frequency and using
predictive capabilities
1. Exp. Value : 3. Feasibility: SAP Readiness: AVAILABLE
L0 H4 L0 H4 4
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 9
3
HANA - challenges
Requires specific skills
(Gartner) Currently, there are very few standards for in-memory technologies against which SAP Hana can be measured.
However, it is really the skills scarcity for new SAP Hana products and services that often constrains their adoption to more
leading-edge-type enterprises.
Adoption is slow
There is a technical excitement related to the HANA PoC followed by a long project time before we see first results. However,
in many cases the expectations are confirmed.
Specific hardware is needed
HANA currently runs on specific hardware to support the respective performances.
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 10
Architecture deployment options
Scenario I
Introduce HANA as sidecar for two purposes:
- Acceleration of specific business transactions
- Operational reporting via HANA Live
This will allow for addressing niche opportunities and capturing
linked business value, building up skill base with least impact on
the business
Current Implementations: BD North, Calvert
Roadmap: Latin America, Long Carbon Europe, Dofasco,
South-Africa
Scenario III
Suite on HANA Migration or new greenfield implementation is the
most comprehensive and immediate opportunity for business
process transformation and innovation
Current Implementations: Mining (greenfield)
Roadmap: Tubular (greenfield), BD North, USA
Scenario II
Migrate BW to BW on HANA. This will allow to capture the value of
increased BI productivity and efficiency, faster data loads and
reporting, simpler administration due to simpler architecture.
Current Implementations: Mining, Long Carbon Europe (PoC)
Roadmap: BD North, Long Carbon Europe, Dofasco, Ukraine, Latin
America
IIa IIb
IIIa
DBX
ERP
DBX
BW
HANA
Live
HANA
Acc
DBX
ERP
DBX
BW
I
DBX
ERP
HANA
BW
HANA
Live
HANA
Acc
DBX
ERP
HANA
BW
HANA
ERP
IIIb
HANA
ERP
HANA
BW
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 11
Walldorf Innovation Workshop
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 12
PaloAlto Innovation Workshop
An Enthusiastic, «beyond expectations» workshop!!!
2014 SAP SE or an SAP affiliate company. All rights reserved. ArcelorMittal confidential 13