sap netweaver® as a strategic business intelligence platform

SAP NetWeaver®As a Strategic Business Intelligence Platform

01_Banner

02 HEADLINES

2

SonyEricssonAirbus

Valeo

Saudi Aramco ?

3

CONTENTS

SAP NetWeaver® as a Strategic Business Intelligence Platform

Agfa 6

Coop Schweiz 14

Philips 22

Yell Group 30

K+S 40

McKesson 50

Volkswagen Financial Services AG 62

Henkel 72

Sony Ericsson 82

Introduction

SAP NetWeaver® AS A STRATEGIC BUSINESS INTELLIGENCE PLATFORMEffective management of business information

has become mission-critical in most enterprises.

What organizations increasingly are realizing is the

need for a flexible, scalable, and comprehensive

infrastructure as the platform for their business

intelligence strategies. Enterprises need a “single

version of the truth” on which to base strategic,

tactical, and operational decisions to make sure

that strategy is aligned with execution. And

they need to provide intelligence and insights in

the context and terms of their business processes.

Unfortunately, many organizations still find them-

selves with a myriad of disparate and incompatible

business intelligence systems, lacking any common

standards, and most of all, missing the big picture.

In the past the deployment of different business

intelligence tools and local data marts may have

helped to achieve tactical goals. But today,

enterprises need to link operational realities with

strategic goals using an open integration platform.

This booklet provides you with insights into a number

of companies that have developed a business

intelligence road map with the SAP NetWeaver®

platform. SAP NetWeaver serves as the reliable and

future-proof infrastructure for business information

management.

4

The projects presented vary in geographical and

industry focus. But they all share several common-

alities, such as heterogeneous IT environments

and high-volume data warehouse deployments

with a considerable number of users. System

architectures evolved from scattered business

intelligence system landscapes to a solid and

flexible foundation delivering a single version of the

truth to all business users within and beyond the

enterprise.

In a first step these case studies describe the way

the projects were technically realized. You will

learn how scattered business intelligence system

landscapes have been consolidated into an

enterprise data warehouse platform open to all

kinds of data sources.

Second, the case studies describe how this

platform provides the foundation for enterprise-

wide reporting, query, and analysis, reaching a

large number of users. On this basis people

at all levels in an enterprise get access to actionable

information leading to a better and more informed

decision-making process.

5

Further, you’ll see in more detail the deployment of

enterprise planning and analytical services, and

how organizations are leveraging the array of

embedded analysis tools, dashboards, and planning

functions provided by SAP NetWeaver. The SAP®

Analytics application, built on the SAP NetWeaver

infrastructure, delivers business-user composite

applications spanning the complete value network.

SAP Analytics leverages the SAP NetWeaver

building blocks to align strategy and execution,

doing so in the context of business processes and

in concert with organizational strategy.

We’d like to share with you these successful

experiences, and hope you will see them as

a compelling reason to define your analytics and

business intelligence road map based on

SAP solutions.

Klaus KreplinGeneral Manager SAP NetWeaver and Corporate Officer of SAP Group

6

Company ProfileAgfa is one of the world’s leadingimaging companies. The companydevelops, manufactures, andmarkets analog and digital systems –intended mainly for the graphic andhealthcare markets. Agfa’s head-quarters are in Mortsel, Belgium,and the company is active in 40countries and has agents in another100 countries throughout the world.In 2003 the company achieved aturnover of €4.2 billion.

ChallengesSuccess in Agfa’s new marketsdemands constant productinnovation and careful control ofsales and operations expenses.Furthermore, Agfa is also quoted on the stock exchange and thecompany therefore requires accurateand timely consolidated financialinformation.

GoalAgfa’s goal is to become a worldleader in digital imaging and ITsystems for the healthcare andprinting industries.

SolutionIn 2000 Agfa began an ambitioustechnology and business processreengineering strategy that startedto systematically replace its dozensof worldwide transactional systemswith a central SAP® R/3® softwareinstallation (this functionality isavailable today in the mySAP™ ERPsolution). Further consolidating its IT efforts, Agfa also installed SAPNetWeaver® Business Intelligence(SAP NetWeaver BI) – a componentof the SAP NetWeaver platform –for centralized data warehousing andbusiness reporting.

TargetsThe centralization of data collection,analytical, and reporting systems inthe future will provide the followingbenefits:• A single version of the truth• Confidence that accurate and

timely data underpins decisions• A global view of company

performance• A broader view of key perfor-

mance measurements

7

AGFASAP NetWeaver® as a Strategic Business Intelligence Platformat Agfa

As one of the world’s leading imaging companies in the graphic and

healthcare markets, Agfa-Gevaert (Agfa) decided to refocus itself as a business-

to-business (B2B) company and to divest its photographic activities. To do

so required large-scale reengineering of its information systems and internal

business processes.

Executive Summary 8

Keys to Growth 9

From Decentralization to Centralization 9

Why Business Intelligence with SAP NetWeaver? 9

Agfa’s “Corporate Memory” 10

Focus on Analytics 10

Reliable Data 12

Business Benefits 12

Next Steps 13

Lessons Learned 13

Technical Information 13

Executive SummaryAgfa, a company that traces its roots to 1867, made a bolddecision – it would leave behind the professional andamateur photography supply business that had made itfamous throughout the world. A new focus on printing andhealthcare was apparent in late 2004 when Agfa announced ithad spun off its photographic business to an independentcompany and would no longer pursue that market. Fromthen on, Agfa would refashion itself as a software companythat creates and sells complete systems for hospitals andgraphics businesses.

The migration from a photographic chemicals company to ahigh-tech electronics enterprise requires more than just anew business strategy. Agfa realized it also needed to adapt its IT systems to this new push; after all, the company would now need to gather and analyze different kinds ofperformance data.

Speed is the hallmark of Agfa’s new business. A steady streamof product innovations is necessary to maintain marketshare, and being first to market with a new product canmake the difference between success and failure. Becausedigital healthcare and printing systems are complex andexpensive technologies, customers commit to their purchasesfor long periods. Thus, a lost sale may mean losing thatparticular customer for years. Successful product develop-ment and sales decisions hinge on having the best infor-mation available about customers, markets, competitors,product development schedules, costs, and other key factors– information which must be readily available to seniormanagers.

“We needed a global back-office application to supportworldwide business processes and worldwide data to supportmanagement to make decisions quickly,” says Paul Boons,manager of the European global information andcommunication services (GICS) organizations at Agfa.

8

Non-SAP Country-Specific

Operational System

on AS/400


Operational System

on AS/400


Operational System

on AS/400


Operational System

on AS/400


Operational System

on AS/400

Non-SAP BI Tool

3

Non-SAP BI Tool

Figure 1: Phase One – Heterogeneous System Landscape Before 2002

MainframeFinancial

Consolidation

Non-SAP BI Tool

2

Non-SAP BI Tool

1

Non-SAP BI Tool

4

Non-SAP BI Tool

5

Agfa

9

Keys to GrowthAgfa’s success strategy focuses on the following main factors:

• Centralized data collection and analysisThis requires smooth internal business processes andenables Agfa to give senior managers the best informationfor strategic decision making.

• Detailed reportsThese are required so that business, sales, and logistics staffcan work as efficiently as possible and also so thatcustomers can receive timely information about products,delivery, and payments.

To achieve these goals, Agfa needed to reengineer its IT andbusiness processes to provide a foundation for the fast-paceddecision making required for success. So the company beganan ambitious project to replace the dozens of local back-officeapplications that had sprung up throughout its network ofoffices and divisions. The company decided to consolidatethese systems into a central transactional environment builton SAP® R/3® software. In addition, the company leveraged thebusiness intelligence component of the SAP NetWeaver® plat-form to create a central reporting environment that enforcedthe use of standard, corporate-wide reports. To assure acentral, single source for accurate company-wide data, Agfachose the data warehousing functions of the SAP NetWeaverBusiness Intelligence (SAP NetWeaver BI) component.

From Decentralization to CentralizationFor much of its history, Agfa ran a decentralized operation withworldwide sales organizations and activities in more than 40countries. As a result, the IT landscape exhibited a high degreeof local control. Local reporting solutions varied from self-written reporting solutions to business intelligence solutionssupplied by different, specialized vendors. The company’s head-quarters in Mortsel ran an IBM mainframe to collect aggregat-ed data from each of Agfa’s sales organizations to determineoperational results such as profit and loss rates and inventorylevels. On top of the mainframe, Agfa ran a non-SAP businessintelligence tool to produce consolidated financial reports.“Each month, data is sent from all the sales organizations toheadquarters where we try to run consolidated reports, butwhen you have different platforms and different local appli-cations, it’s hard to produce worldwide reports,” says Boons.

Because of different local business processes and technologyplatforms, the consolidated information was often inaccu-rate and reports were late. As a result, senior managerswould not see consolidated sales results for the companyuntil some days, or even weeks, after the close of a month.With its new business strategy, however, Agfa wants theability to produce daily worldwide sales reports showing howthe company performed the day before (see Figure 1).

Why Business Intelligence with SAP NetWeaver?In 2001 Agfa acted to improve its business intelligencefunctions. The company developed a strategic consolidationplan that would replace all the local back-office systems with a central enterprise resource planning (ERP) system. In addition, the company also decided to install a businessintelligence solution to create a central reporting environ-ment that enforced the use of standard, corporate-widereports – based on a common set of master data.

After evaluating a number of ERP solutions, Agfa chose SAP software because it offered the most comprehensive suiteof solutions on the market. Choosing SAP NetWeaver BI was also a natural outgrowth of the broad decision in favor of SAP solutions; SAP NetWeaver BI could be easily andeffectively integrated with the SAP ERP portfolio. Agfa wantsSAP NetWeaver BI to become the single source for accurate,company-wide data.

The first phase of the business intelligence project consistedof two tracks: European reporting and management infor-mation systems (MIS). The European reporting track rolledout standard financial and logistic reports for each Europeancountry (using the “template approach”) and the projecttimeline ran parallel with the implementation of SAP R/3software. This European project ended in September 2004,supporting Agfa locations in approximately 20 countries. Assoon as they are enrolled in the worldwide SAP R/3 softwareenvironment, locations in the other regions will also beincluded – in the same way and with the same solution.Meanwhile, the Agfa locations in Asian countries are alreadyusing the same set of standard reports.

The worldwide MIS project track, which was also based onSAP NetWeaver BI, ended in 2003. This track providesconsolidated information to the complete Agfa organization,including consolidated turnover and profit and lossinformation, and balance sheet and headcount reporting. As a result of this project, the system landscape has evolvedand improved dramatically (see Figure 2).

In those countries where its locations have not yet migratedto SAP R/3 software and SAP NetWeaver BI, Agfa is still usingdifferent non-SAP operational systems and local reportingsystems. The mainframe continues to collect consolidatedinformation from different areas, but Agfa now brings thisdata into the SAP NetWeaver BI data warehouse, where itbecomes available to any authorized staff member, anywherein the world. Now, anyone who needs to know the results ofyesterday’s sales activities in the European or Asia-Pacificmarkets can view that information easily.

Agfa’s “Corporate Memory”The SAP NetWeaver BI architecture conforms to a classiccorporate information factory framework for enterprise datawarehousing. Source data feeds into a staging area, which inturn links to three other areas. The first area, the data ware-house, is the master repository for corporate data – whatAgfa calls its “corporate memory.” The second area is theoperational data store, which is home to detailed operationaldata – information that is held for three to six months beforebeing refreshed. Finally, the architecture provides an area forarchitected data marts, available to business managers. Thesedata marts are designed to contain all the data needed toanswer specific business questions (see Figure 3).

Focus on AnalyticsThe standard business content that comes with SAP NetWeaverBI includes predefined data models, making the job of settingup a data warehouse easier. “If you ask business people whatreports they want, they have problems in providing exactanswers,” says Ivan Schouppe, Agfa’s manager of businessintelligence. “With the predefined models in the SAP datawarehouse, we were able to give business people a frameworkfor what to add or subtract.”

10


Operational System

on AS/400


Operational System

on AS/400

Figure 2: Phase Two – Harmonization of IT System Landscape (Current Solution)

Figure 3: Corporate Information Factory Landscape

Non-SAP BI Tool

Non-SAP BI Tool

SAP NetWeaver® BusinessIntelligence

(Reporting, Analysis, Planning)

SAP® R/3® Sales Organizations

Europe, Asia Pacific

SAP R/3 Manufac-turing OrganizationsEurope, Asia Pacific

SAP R/3UnitedStates

SAP R/3Latin

America

MM

PM

TM

COPP

FI

SD HRAPO

OM

European Reporting &Analytics (SCM,SRM, FIN, CRM)

Worldwide Financial(FIN) Analytics Consolidation

MainframeFinancial

Consolidation

Any Target

Any Source

Architected Data Marts

Persistent Staging Area

Data Warehouse Operational Data Store

Corporate Memory

Agfa

11

Agfa provides a complete set of analytics to its SAP NetWeaverBI users. The main area is financial analytics where thesolution provides insights into accounts payable, accountsreceivable, general ledger, cost center accounting, profitcenter accounting, and profitability analysis. Agfa also usesbusiness planning and simulation intensively – planningfigures are delivered to the entire Agfa organization via theMIS track. The consolidated financial information comingfrom the mainframe is also integrated into MIS. In futuresteps, Agfa will integrate even more financial information,including competitive key performance indicators (KPIs).

The supply chain management analytics Agfa uses focusmainly on advanced planning and optimization reportingand advanced stock analysis, as well as on the evolution ofpurchasing values. Agfa is using a legacy application for itscustomer relationship management processes. Critical infor-mation with respect to customer behavior and interactions –as well as the customer contribution analysis – is integratedinto SAP NetWeaver BI. This information is then linked withthe profitability information to provide a customer-centricoverview. Agfa will develop further analytics in the areas ofsupplier relationship management and product life-cyclemanagement in the near future.

These new developments go hand in hand with the evolutionAgfa is experiencing. In the healthcare projects Agfa nowhandles, the company provides complete solutions includinghardware, software, and services. These projects needdetailed monitoring and KPIs, which the company will sooninclude in its SAP NetWeaver BI solution.

Agfa also found itself undergoing significant business processreengineering to make its central IT strategy a success. Thekey was in creating a central storehouse of master data so thatinformation about customers, products, performance, andother areas came from one worldwide source. To accomplishthis, Agfa adopted a central master data maintenanceapproach in the SAP NetWeaver BI environment. “That’s abig change in the business process but something that’sessential,” says Schouppe.

Next, Agfa defined its standard reports and mandated thateveryone had to use the new worldwide templates. Thisinitiative eliminated most of the unique reports that hadgrown up at local offices and also made it easier for seniormanagers to compare performance among regions, countries,and individual divisions. However, because the reports offer avery broad range of navigation possibilities, the local officesstill have the flexibility they need.

In addition, rather than relying on local IT staff to createreports, Agfa now provides local offices with a headquarters-based service to create standard reports – at the same timetaking into account the local offices’ special needs. “If you’redealing with turnover, there’s an official turnover report,”Boons says. He adds that only data coming from SAPNetWeaver BI can be used for reports – to ensure a singleversion of truth.

This reengineering process was difficult, he admits. “But thetechnology aspects are not the most difficult to achieve,” hesays. “To be successful, you have to spend more time on yourchange process than on IT. And also the organization of anefficient, worldwide process for incidents and enhancementsis a critical success factor.”

Agfa points to three key elements for making its reengineer-ing process successful. The first key element was the closeinvolvement by business staff in determining which reportswould be run and which formats they would use. Thiscollaboration avoided conflicts that would have arisen later if business people felt IT was unilaterally pushing decisionsonto them. The second key success factor was the fact thatAgfa’s board backed the process. The third and final successfactor was that, for the implementation stage, Agfa appointedteams of key users who could immediately identify technicalor people-related problems and take appropriate actionquickly.

Agfa originally selected SAP software in 2001. The Europeanreporting project ran from 2002 to 2004 and Agfa rolled outthe systems in its European locations and expanded them to most Asia-Pacific locations. Agfa further plans to have

regional data available from anywhere in the world in thenext three years. The worldwide MIS project started inMarch 2002 and went live in 2003.

Reliable DataAgfa is going for a single version of the truth, and there’s noquestion about where the data comes from or if it’s accurateand up-to-date. Also, the company uses SAP NetWeaver BI to create a global view of performance data that is muchbroader than ever before. And thanks to the analyticsfunctionality of SAP NetWeaver BI, Agfa can effectivelyconvert this global data into business insights.

In the European and the Asian company locations whereSAP R/3 software and SAP NetWeaver BI are live, Agfaemployees can now drill down from aggregated into detaileddata. They can now understand the reasons for businesstrends and make real-time business decisions based on facts,not guesswork. The KPI project enables Agfa to definecommon KPIs that are perfect indicators to monitor andcontinuously improve the company’s business processes.These KPIs are based on data from the company’s strategicbusiness intelligence platform and this information isconsistent across all organizations. KPI definitions areconsistent and the definitions, for example, of turnover,discounts and stock evaluation are identical. Armed with thisinformation, Agfa managers can quickly decide whether ornot critical business processes need to be adapted.

“There’s no discussion anymore about where these figurescome from and whether they are correct. Everyone nowfocuses on what the figures indicate and what we should dobecause of what they show,” says Boons.

Business BenefitsManagers are not the only ones to benefit from quicker andbetter decision making. SAP NetWeaver BI is an importantpart of Agfa’s efforts to eliminate old lines of business and todevelop new ones. “It is delivering a complete reportingsystem about our service-desk calls. With these reports wecan see weak points in our process and determine what weneed to do to improve,” Schouppe adds. “Without thisinformation, we would not be able to improve.”

SAP NetWeaver® Portal

SAP NetWeaver Business Intelligence(Reporting, Analysis, Planning)

mySAP™ERP

mySAPSCM

mySAP SRM

mySAP PLM

Non-SAP (Production)

Non-SAP (Others like

CRM)

SCM AnalyticsPlanning

FIN AnalyticsPlanning/

ConsolidationSRM Analytics CRM Analytics PLM Analytics

Figure 4: Road Map – SAP NetWeaver® BI as a Strategic Platform for Business Intelligence and Analytics

12

Agfa

13

The biggest business benefit is the availability of consistent,consolidated, and uniform data – presented via the sameuser interface to everyone who needs the information forday-to-day tasks. The reach of SAP NetWeaver BI is extendingwithin Agfa and the amount of business-critical informationis growing. At the end of 2004 the data warehouse was half aterabyte in size and was growing by about 10% per month.

Agfa’s ambitious reengineering strategy is successful becausethe company has forged more than a traditional supplier-to-customer relationship with SAP. In fact, Agfa views SAP as apartner.

Next StepsOver the next year Agfa will continue to bring the remaininginternational locations into its centralized data system byrolling out the European reporting model in the other regions.This will definitely increase the ROI by extending the reachof SAP NetWeaver BI. In coming years, Agfa will continue toextend the scope of the worldwide MIS track with new datamarts. The data marts will contain KPIs on the implemen-tation time of new products, on technical support, and oncustomer benefit and competitive analysis. The company will also extend the analytical domain of supplier relation-ship management and will introduce product life-cyclemanagement.

The company will also add SAP NetWeaver–based decision-support tools – such as balanced scorecards – to its existingSAP NetWeaver BI landscape. Furthermore, Agfa intends toevaluate the usability and effectiveness of the SAP businessconsolidation solution. All these future projects will helpAgfa to realize its “define, measure, investigate, analyze, andcontrol” approach. The company applies this approach toeach project implementation in order to evaluate whetherthe new technologies or applications contribute to Agfa’sgoals and whether business process reengineering is neededto guarantee the process improvements. One of Agfa’s goalsremains the simplification of the system landscape – toprovide the company with a flexible, open, and integratedbusiness intelligence platform (see Figure 4).

Lessons LearnedFrom its experience with SAP NetWeaver BI, Agfa has learnedthe following:

• Use SAP predefined data models (business content) for fastprototyping of reports

• Build a worldwide network of responsible people to alignthe specifications of standard reports with local needs andto facilitate local implementation

• Implement an efficient worldwide incident and enhance-ment process

• Establish a project team of SAP NetWeaver BI experts andbusiness users to promote company-wide buy-in for newsystems

• Make sure the board of directors is committed to changeand stands ready to resolve conflicts

• Realize that in reengineering projects, managing people ismore challenging than managing technology

Technical Information

• Size:

– Current: ½ terabyte

– Increase: 10% per month

• Users: 1,950

• Hardware: Sun

• Operating System: UNIX

• Database: Oracle

• CPU: Multiple servers, most of them 10 x CPU

• Memory: Multiple servers, most of them 20 GB RAM and 32 GB swap

14

Company ProfileCoop Schweiz, based in Basel, is thesecond largest retailer in Switzerlandwith over 1,500 branches, 50,000employees, and sales totaling €9.45billion. It is a cooperative enterprisemanaging a range of different shopformats in the foodstuffs, nonfood,and services categories.

ChallengesCoop Schweiz faces a variety ofchallenges from both the market andits own organizational requirements,including:• Increasing pressure of competi-

tion from discounters• Nonstandardized reporting and

controlling processes• Decentralized business intelli-

gence tools and heterogeneoussource systems

• High administrative outlay• High manual integration and

consolidation outlay• High data volume (about 1.5

terabytes)

GoalsTo help realize its business strategy,Coop Schweiz has set its sights onthe following targets:• Speed up company response

times• Realize synergies in the fields of

logistics and product assortment• Simplify and speed up processes• Control product ranges and logis-

tics to ensure market proximity• Provide standardized, transparent

key performance indicators (KPIs)throughout the company

• Lower costs

Solution To meet its goals, Coop Schweizhas planned a strategy that includesthe following elements:• Establish a central business

intelligence platform for reportingand planning, and consolidatestand-alone solutions with SAP NetWeaver®

• Decrease complexity by usingstandard processes and reducingintegration points

• Create a highly scalable controlsystem

• Ensure departments have accessto mission-critical information

• Integrate business intelligence inoperational processes

ResultsThe company’s business intelligenceexpectations are high. With itsstrategy, Coop Schweiz intends toachieve results that include:• Homogeneous data warehouse

and standardized reportingprocesses ensure transparent,reliable KPIs

• More precise planning and more efficient monitoring enableimplementation of corporatestrategy

• Attractiveness of product rangeincreased through improvedproduct assortment planning,implementation, and monitoring

• Minimized administrative outlay

15

COOP SCHWEIZSAP NetWeaver® – Strategic Business Intelligence Platform at Coop Schweiz

Coop Schweiz used a wide variety of nonintegrated business intelligence

tools that were not able to provide adequate support for business processes.

This meant the group lacked an overview of the business, which affected both

the planning and the implementation of business strategies. Now that

Coop Schweiz has deployed the SAP NetWeaver® platform as the central

business intelligence infrastructure and data warehouse throughout the

company, it is well on its way to successfully executing its business strategies.

Executive Summary 16

Increased Competition from Discounters 17

Integrated Reporting Hones Market Proximity 17

Data Volume Challenge 18

Reducing Outlay and Operating Costs 19

Gearing Product Assortments to Market Needs 19

Pioneer in Promotion Planning 19

SAP NetWeaver Demonstrates Its Success 20

On the Way to “Information Democracy” 21

Lessons Learned 21

Executive SummaryThe decentralized structure of Coop Schweiz resulted inhigh response times. In addition, the company’s IT landscapewas characterized by stand-alone solutions – most of them developed in-house – and heterogeneous businessintelligence systems that required large amounts of manualinput but still provided inadequate support for the corporatestrategy.

So Coop Schweiz decided to centralize its organization andto realize logistical and product assortment synergies withthe help of a strategic business intelligence platform. Thecompany chose the SAP NetWeaver® platform for its ability toefficiently process large volumes of data from heterogeneousdata sources. This functionality allows Coop Schweiz toperform flexible analyses at short notice down to article/branch/day level. To test this SAP NetWeaver functionality,Coop Schweiz performed extensive volume and load tests –with an impressive 5 terabytes of data – during theevaluation phase. The openness of SAP NetWeaver alsofacilitates the integration of data from non-SAP systems –another plus for Coop Schweiz.

16

WGO –Legacy WWS

ALKE – Articles,

Prices, etc.

Planning DBs – EXCEL,

Legacy

IHA, ACN –Household Panel,

Retail Panel

HA Analyser-External

data

PAN-SCAN

External data

Non-SAPPlanning

AppsMIS POSGSAneuCIP

Figure 1: Scattered System Landscape (Past Solution)

SAP® R/2® –RF, RK,

Master Data:Locations, etc.

TS-KAP –POS System

Coop Schweiz

17

Today, Coop Schweiz plans and controls its business withSAP NetWeaver as its central data hub. For the first time, thecompany can carry out market segment monitoringoperations. Up-to-date KPIs – for example, gross profitmargin and profit per customer – are provided on a weeklybasis. The improved analysis options and transparency haveenabled the company to cut its response times dramaticallyand to significantly increase its proximity to market – and allthis with lower operating costs. Furthermore, importantinformation is now available to a larger number of users(currently around 900).

Increased Competition from DiscountersThere are changes afoot in the Swiss foodstuff sector.Competitors such as German discounters are forcing theirway into the market – a market formerly dominated byMigros, Coop, and Denner, with Coop and Migros account-ing for a good 70% of sales. Retail prices in Switzerland aregenerally about a third higher than in Germany; for food-stuffs, however, the Swiss are obliged to pay on average 50%more than their EU neighbors.

“The market is becoming more competitive and consumers’price sensitivity is increasing,” says Stéphane Bianchi, head ofinformation systems at Coop Schweiz. This is reason enoughfor the company to arm itself against the intensifyingcompetition. The company has ambitious goals – namely toincrease its market share and distribution. And Coop Schweizis not interested in straightforward price or discount wars;instead, it plans to offer the best brand mix at an attractiveprice-performance ratio. A lavish selection of high-qualitybranded and organic products will play a key role in this. But for this strategy to work, the ability to efficientlymonitor product assortments is indispensable.

To implement its strategy, Coop Schweiz is relying on the keyweapon in its arsenal – SAP NetWeaver. “The business intelli-gence functions of SAP NetWeaver give us the KPIs we needto assemble product ranges with high market proximity,react quickly to customer demands, and take advantage ofpotential savings,” Bianchi explains. With the help of SAPNetWeaver, the Swiss retailer is now able to plan and monitorall activities and flows of goods throughout the whole value-added chain, from procurement and planning to sales.

Integrated Reporting Hones Market ProximityThe decision to introduce SAP NetWeaver Business Intelli-gence (SAP NetWeaver BI), a component of SAP NetWeaver,was taken in 2001 as part of “Coop Forte,” the extensiverestructuring program initiated in 1999 by Coop Schweiz togive the company greater punch. With this aim, the former14 regional cooperatives were merged with headquarters toform a countrywide enterprise that today is divided into fivesales regions.

The goal is to shorten decision-making channels and focusall the company’s strengths by implementing a centralmanagement structure – in particular, by basing thecompany’s logistics and category management on standardprocesses. “The former IT landscape was characterized byheterogeneous platforms and many in-house developments.One of the main elements lacking was the flexibility andopenness to implement new market requirements quickly,”recalls Bianchi. Large numbers of stand-alone solutions alsoprevented the definition and support of standardizedreporting and controlling processes.

Among other solutions, Coop Schweiz used a legacymerchandise management system called WGO, SAP® R/2®software for costing, various systems for market research data (from firms like IHA and AC Nielsen) and sales data(MIS-POS), as well as an in-house management informationsystem – Coop Info Pool (CIP) – based on Microsoft Accessand Microsoft SQL Server. The lack of integration resulted in reduced transparency and prevented flexible reporting.

To harmonize its disparate IT systems and establish morestreamlined, simpler processes enterprise-wide, Coop Schweizimplemented the SAP for Retail set of solutions and themySAP™ Customer Relationship Management (mySAP CRM)solution. Coop Schweiz replaced the WGO merchandisemanagement system with the Coop Retail System (CRS),consisting of the WAMAS warehouse control system and SAP for Retail. For costing, the company replaced SAP R/2software with SAP R/3 software and introduced mySAP CRMin the “Remote Ordering” project. The data from these andother third-party systems was collated using SAP NetWeaver BI.

However, reporting quality in the past was impaired not justby use of heterogeneous data sources, but also by employingdifferent business intelligence tools, resulting in longresponse times. Coop Schweiz used a whole range of localapplications – for example, the IHA analyzer product formanaging market data, SPSS Clementine for monitoring thenumber of sales per shelf-meter for each branch, MicrosoftExcel and Microsoft Word for Coop Category Management(CCM), and MIK-INFO for multiyear planning. As well asrequiring high manual outlay, the large number of toolsproduced vast amounts of data and but was still unable toprovide standardized KPIs. “With SAP NetWeaver, we havestandardized the reporting process. The numerical materialis now comparable throughout the company and dataquality is reliable,” says Bianchi. The strategic businessintelligence functionality of SAP NetWeaver BI is the verycore of the new business intelligence landscape at CoopSchweiz (see Figure 2).

Data Volume Challenge“SAP NetWeaver can rapidly process large volumes of datafrom SAP software and third-party sources. This gives us acomplete overview of our business,” says Bianchi. Other key factors in choosing SAP NetWeaver included the “star”layout that allows the multidimensional data modeling, thescalability, and the transparent ETL (extraction, transfor-mation, load) processes that are components of the datawarehouse.

18

SAP NetWeaver® Business Intelligence(Reporting, Analysis, Planning)

mySAP™CRM

SAP R/3FI/CO

TS-KAP –POS System

WAMAS Ware-house Manage-ment System

IHA, ACN –Household Panel

Retail Panel

CRM AnalyticsPromotion Planning

Infrastructure/database productive system:• SUN/Solaris E25000 with Oracle; 28 CPU (1,200 MHz);

228 GB memory• ~1.5 TB disk in use• ~900 users

Data:• 1,500 retail stores• ~500,000 products• 2.4 million records/day (only for POS data)• 1.4 billion records in day-cube (2 years history)• 400 aggregates

Performance:• 6 hrs./night load time (without compression)• Target query-performance: <30 sec. (average <20 sec.)

Figure 3: Technical Details

Figure 2: Harmonization of IT Systems (2004)

SAP®R/3®Retail

19

SAP NetWeaver also performs impressively when processinghigh data volumes. “With the old solution, it was notpossible to manage and analyze large volumes of dataquickly, let alone process the increasing volumes of salesfigures easily and effectively,” says Bianchi. The monthly salesdata alone adds up to an average of 84 million data records.

Before introducing SAP NetWeaver, Coop Schweiz tested theSAP NetWeaver BI component with a data volume of around5 terabytes. In practical applications to date, the system has shown that it can be flexibly scaled to accommodateincreasing data volumes and numbers of users. The loadingperformance – particularly that of the external scanner data,the index setup and presentation of aggregated data, and theresponse time for reports – is very good. The current datavolume is around 1.5 terabytes. However, Coop Schweizreckons that figure will double to 3 terabytes by the end of2005 (see Figure 3).

Reducing Outlay and Operating CostsBy using SAP NetWeaver BI as an end-to-end businessintelligence solution, Coop Schweiz was able to significantlyreduce the technical complexity of its business intelligencelandscape. The new landscape contains fewer integrationpoints; therefore, fewer interfaces need to be set up andadministered. Manual consolidation work was also minimizedby integrating master and transaction data on a standardizedplatform. “At the end of the CRS SAP R/3 software migrationproject, master data is to be loaded almost exclusively fromthe SAP R/3 software. This will reduce outlay and costs,”explains Markus Lienhardt, senior project manager, CoopRetail System.

Gearing Product Assortments to Market NeedsThe integration of business intelligence into operationalsystems enables Coop Schweiz to monitor its business andensure that its product offerings are close to market needs.Detailed analyses of day-to-day business – for example, salesvolume, sales revenue, and gross profit margins down tobranch and article level – form the basis for goods and

product assortment planning. Instead of using MicrosoftExcel and Microsoft Word, the company now uses theplanning and simulation functions of SAP NetWeaver BI togenerate planning data for a three-year period.

Goods and product assortment planning is adapted annuallyto the current market situation with corresponding strategies,tactics, and measures as part of a rolling plan. The results ofthe analyses and operational and tactical planning are fedback to the operational business. Transparent daily sales dataat the article and branch level enables category managers toanalyze customers’ buying behavior, optimize product ranges,and monitor the success of the measures taken. “New KPIsare provided every day, enabling responses to be triggeredfaster,” says Lienhardt. “The SAP NetWeaver BI applicationallows us – for the first time – to analyze the profitability ofour product range for the whole length of our customerdecision tree, spanning all sales channels, right down to theindividual articles,” adds Bianchi.

Coop Schweiz also benefits on the procurement side. Thesolution will create the transparency required to bundlepurchases nationally and realize logistics synergies;monitoring central purchasing and planning forms the basisfor this. The company’s “Logistics Strategy 2005” initiative,which among other things includes a plan to reduce thenumber of distribution centers, is intended to help save thecompany around €32.3 million a year in synergy effects.

Pioneer in Promotion PlanningCoop Schweiz is the first retailer in the world to use SAPsolutions for promotion planning. Until now, the company’splanning was based solely on experience, because there wasno reliable “target versus actual” data. Coop Schweiz ran itspromotion management on a third-party system and based it purely on external market research data. The process wasnot integrated with either the planning or the live systems.Today, however, Coop Schweiz runs some 4,000 campaigns ayear using SAP solutions – from the planning right throughto the logistics stage.

Coop Schweiz

In a fully integrated process, Coop Schweiz first defines andplans campaigns in mySAP CRM. Depending on the plannedquantities per promotion, orders are created in the SAP forRetail system and then allocated to the individual sales pointsaccording to proposed quantities, based on earlier sales figures.The third-party warehouse management system, WAMAS,handles the logistics of the promotion. At night, SAP NetWeaverBI analyzes the sales figures to monitor and manage thesuccess of the promotions. “Because of the improved analysisoptions and the closed information cycle – which facilitatethe analysis of sales figures and allocated promotionquantities and improve the quality of the planning thisdelivers – we will be able to gear our campaigns even moreprecisely to market requirements and optimize the logisticsprocess,” says Bianchi (see Figure 4).

In the future Coop Schweiz plans to provide business part-ners and suppliers with access to promotion data via SAPNetWeaver Portal, another component of SAP NetWeaver.

SAP NetWeaver Demonstrates Its SuccessCoop Schweiz is growing faster than its rivals. Its generalmarket share rose from 15.8% in 2002 to 16.7% in 2003, and for foodstuffs specifically from 21.9% to 23%. For organicproducts (“Naturaplan”) in particular, Coop Schweiz hasseen an above-average increase of 15%. With sales of organicproducts at €841 million, corresponding to around 10% oftotal sales, it is the market leader in this segment. “Thisgrowth is also thanks to our efficient product assortmentmanagement,” says Bianchi, who already has further projectsin mind. Coop Schweiz plans to use sales-based ordering to automate the ordering and delivery cycle as much aspossible. The company plans to use forecast and replenish-ment data from SAP Forecasting and Replenishment – anapplication in the SAP for Retail solutions – for this purpose.

Coop Schweiz is also looking to improve the management of its premises. By integrating SAP real estate managementdata into the SAP NetWeaver BI data warehouse, the companyis able to manage its property more cost-effectively, making it

20



SAP forRetail

mySAP™CRM

SAP F&R

Non-SAP(IHA/CAN)

Non-SAPWAMAS

Non-SAP(TS/KAP)

Collabora-tion Sup-

plier Portal

CIP Management

Cockpit

Category Management Workplace

CRM Analytics Promotion Planning

Figure 4: SAP NetWeaver® BI as a Strategic Business Intelligence Platform (2005)

Coop Schweiz

21

easier to identify and sell off properties that are not required.The funds released in this way are then invested in convertingand building new sales points. Coop Schweiz is continuing toexpand. On the IT side, the company is well equipped forfurther integration and reorganization projects. In 2003 thecompany’s business intelligence strategy, courtesy of SAPNetWeaver BI, passed its first major test when Coop Schweiztook over the department store chains EPA and Waro.According to Bianchi, the takeover doubled the amount of product master data Coop Schweiz had to handle. “But,”he adds, “it hasn’t affected the system’s performance.”

On the Way to “Information Democracy”By setting up a strategic business intelligence platform withthe help of SAP NetWeaver BI, Coop Schweiz has laid thefoundation for “information democracy.” All hierarchy levelsand user groups benefit from the precise planning, efficientmanagement, and better access to information that thesystem provides. The current 900 users in the logistics,finance, category management, and sales departments areparticularly impressed with the system’s user-friendliness,dynamic access to KPIs, and features such as Web reporting.

Coop Schweiz is currently working on the idea of providingits employees with information using the portal technologyin SAP NetWeaver. “We are expecting additional increases inefficiency from the role-based access, because we will be ableto provide more employees with the exact information theyneed on a context-specific basis,” explains Bianchi. This role-based approach will include access for sales managers,who from January 2005 will be able to get managementinformation through a portal. To this end, Coop Schweizplans to change their SQL-based CIP system to a portal-basedmanagement cockpit, with 27 different roles defined. Bianchisees information broadcasting as the next stage and this will provide the approximately 1,500 branch managers, for example, with targeted information by e-mail. Bianchireckons that in 2006 around 1,750 people will be using SAP NetWeaver BI, 200 of them managers.

Lessons LearnedCoop Schweiz’s business intelligence initiative has providedinvaluable experience for the company. The lessons learnedinclude:

• The quality of the data model has a crucial impact on theflexibility and performance of the overall system.

• The quality of the master data has to be verified before areporting range is implemented (do not introduce the datawarehouse at the same time as SAP R/3 software).

• Standardized reporting/controlling processes have to bedefined first.

• A clearly-structured and process-oriented request processis a key success factor.

• Role-based, business case–oriented, and even personalizedreports are more preferable to comprehensive, highlyflexible “global” queries – here too, less is sometimes more.

• A successful SAP NetWeaver BI project has to combine allkey IT skills in one team (process specialists, applicationdevelopers, SAP database administrators).

22

Company ProfilePhilips Lighting, the number-oneleader in the global lighting market,oversees manufacturing operationsin Europe, the Americas, and Asia inmore than 25 countries. Its 43,800employees achieved sales of €4.5billion in 2003. Europe remains itslargest market, followed by theAmericas and Asia.

Challenges• Intense competition• Price erosion• Low market growth rate• Lack of transparency• Decentralized, heterogeneous

enterprise resource planning(ERP) systems and data ware-houses, making it difficult toprovide a global view

Goals • Increase transparency and

improve reporting• Centralize business intelligence

solution on a single platform tosupport decision making

• Obtain global view of data andbusiness

Approach • Implement the SAP NetWeaver®

platform to create a single,enterprise-wide businessintelligence platform

• Incrementally replace existing data warehouses and businessintelligence tools

Results • Central business intelligence

platform and global data ware-house implemented

• Data from SAP® and non-SAPregional systems integrated

• Global insight into product andcustomer profitability

• Managers gain direct access toinformation via the Web

• Faster, more flexible businessoperations

• Lower total cost of ownership

23

PHILIPS LIGHTINGSAP NetWeaver® as a Strategic Business Intelligence Platformat Philips Lighting

Business intelligence at Philips Lighting is scattered through disparate site-

specific and regional systems, which could not readily provide a transparent

global view of the state of business. The company settled on the SAP NetWeaver®

platform to provide a strategic business intelligence tool. Still in its early

stages of implementation, the business intelligence component has already

achieved many of the company’s goals.


Improving People’s Lives 25

Strong Need for High-Level Transparency 25

Change of Strategy 25


First, the Headquarters Reporting Process 26

Tackling Pressing Business Issues 27

Management Goes Online 27

Faster Operations 28

Future Plans 29

Lessons Learned 29


Executive SummaryIn the highly competitive, slow-growth market of commercialand residential lighting, Philips Lighting was hampered bydiffuse business intelligence, a mix of systems from a varietyof vendors, and isolated data warehouses organized on a site-specific and regional basis.

The company decided on a new strategic direction: toestablish a business intelligence platform as the first steptoward creating a centralized data warehouse to incorporateall global data. The broader goal was to provide transparencyinto the firm’s global operations, which would support bothdaily operations and long-term decision making.

Philips Lighting chose the SAP NetWeaver® platform to leverageits SAP NetWeaver Business Intelligence (SAP NetWeaver BI)component. The decision was based on the company’s currentuse of SAP data warehouses and SAP® R/3® on a regional basis,and on the openness of SAP NetWeaver, which would simplifyintegration of data from the firm’s non-SAP solutions. (SAPR/3 functionality is now available in mySAP™ ERP.)

SAP NetWeaver BI went live at Philips Lighting in September2004. There were already approximately 1,300 users at PhilipsLighting for the three regional/local SAP data warehouses; 80 more users were added during the first phase of the globaldata warehouse project. The positive user response has beenespecially favorable relative to the ease of use and minimaltraining requirements of SAP NetWeaver BI. Introduction ofthe central data warehouse is proceeding incrementally toassure a smooth transition. Eventually, the company plans toanalyze whether the regional data warehouses can be eliminat-ed and data loaded directly from SAP R/3 to the central data warehouse. The number of users of the enterprise datawarehouse is projected to increase to 300 by the end of 2005.

In the short time since implementation, SAP NetWeaver hasincreased transparency dramatically through reporting andmeasurement of key company performance indicators, such as the margin across the whole supply chain (“integralmargin” – net sales minus product cost). These keyperformance indicators also provide insight into regional

24

Figure 1: System Landscape in 2003 (Past Solution)

SAP R/3Global SAP R/3

EU 2SAP R/3

APR

BW 1 DW 5

SAP®R/3®US 1

SAP R/3EU 1

SAP R/3US 2

DW 6

LATAM

BW 2 DW 3 BW 4

Philips Lighting

25

and customer-specific profitability, and managers can obtainimmediate reporting online. The firm notes that businessoperations move faster and more flexibly, and that total costof ownership is lower through greater efficiency in datagathering and reporting.

Philips Lighting plans to increase its use of SAP NetWeavercomponents via a phased introduction. Pilot projects arenow in place for SAP NetWeaver Exchange Infrastructure and SAP NetWeaver Master Data Management.

Improving People’s LivesPhilips Lighting strives to improve people’s lives with effectiveand appealing lighting solutions based on a thorough under-standing of customers’ needs and desires. Products include afull range of incandescent and halogen lamps, compact andstandard fluorescent lamps, high-intensity gas-discharge andspecialty lamps, fixtures, lighting electronics, ballasts, LED-based lighting, and automotive lamps.

Philips Lighting products are found in people’s homes and in a multitude of commercial applications. In fact, 30% ofoffices, 65% of the world’s top airports, 30% of hospitals, 35% of cars, and 55% of major football stadiums use PhilipsLighting products.

Philips Lighting is comprised of four business groups: Lamps,Luminaires, Automotive & Special Lighting, and LightingElectronics. Focusing on innovation, marketing excellence,and reliable delivery, Philips Lighting maintains 25 manufac-turing operations in Europe, the Americas, and Asia. Its43,800 employees achieved sales of €4.5 billion in 2003, withEurope remaining the largest market, followed by theAmericas and Asia.

Strong Need for High-Level TransparencyPhilips Lighting may be the market leader, but competition is still intense. Growth rates in most markets are low, and in many cases, the price of a product is a decisive factor inmarket success. Therefore, Philips Lighting is working oncontinuous improvement, which requires strong IT support.

The company’s size and global reach require a high level oftransparency across business groups and regions. However, itsexisting business intelligence landscape did not provide thedesired transparency. “We have many different production orsite-specific, regional, and business-group-specificinformation systems,” says Jeroen Vermunt, manager ofservice line management information systems at PhilipsLighting. “As a result, business intelligence processes wereinefficient, and we lacked access to information even as ourbusiness became more global.”

Change of Strategy Although the firm had used SAP enterprise resourceplanning (ERP) software in all the different locations, a mixof business intelligence applications was in use (see Figure 1).

“Because of our decentralized structure the businessintelligence initiatives were not coordinated,” says MarcoKoopmans, data warehouse architect at Philips Lighting. The result was a proliferation of interfaces and data flowsbetween data warehouses and ERP systems to meet thegrowing need for the exchange and integration ofinformation. “It was difficult to determine responsibilitiesand guarantee consistency, for example, in terms of ourmaster data,” adds Vermunt.

Despite the availability of several business intelligencesystems, there was no reporting system providing a globalview of information, except for the company’s corporateconsolidation environment. “In this system, only highlyaggregated data is available, which offers little insight into the state of our business,” Koopmans says. “Therefore, theinformation in this corporate environment does not supportsound decision making.”

The company’s IT experts decided to implement a strategicbusiness intelligence platform using a step-by-step approachto establish an enterprise data warehouse. In a metaphor forlighting – and the goal of improving transparency – theproject was called Helios, after the Greek sun god. “Helios isthe first step towards an enterprise data warehouse based onSAP NetWeaver,” Koopmans says.

Why Business Intelligence with SAP NetWeaver?Philips Lighting settled on SAP NetWeaver. “It was the naturalchoice for several reasons,” Vermunt says. “First of all, wehave had three SAP data warehouses in operation, with goodresults. These three systems have at the moment approxi-mately 1,300 concurrent users and a size of 1.1 terabyte.Second, we liked its easy integration with these existing datawarehouses and with the ERP systems from SAP. Third, theopenness for non-SAP applications, as well as the ability tohandle multiple source systems, was very important to us.”

And last but not least: the business-content informationmodeling of SAP NetWeaver was an important advantage; thepreconfigured information models and extractors helpedreduce implementation time and cost. Apart from ERP and business intelligence systems, Philips Lighting uses SAP solutions for its customer relationship managementprocesses within certain regions and business units.

First, the Headquarters Reporting ProcessPhilips Lighting made the decision to establish SAP NetWeaverBI as the strategic business intelligence platform and createan enterprise data warehouse at the end of 2003. The Heliosproject started in early 2004 and went live the followingSeptember. “The global data warehouse was designed aroundbest practices and lessons learned from the experiences withour data warehouses already in use,” says Koopmans. Theglobal data warehouse was also tightly linked to the intro-duction of SAP Advanced Planning & Optimization (SAP APO)in a separate project covering demand planning. SAP APO isa component of the mySAP Business Suite family of businesssolutions.

“According to our strategy, we introduced the global datawarehouse with the intention of building it incrementally,”he adds. In 2004 the focus was on a headquarters reportingprocess for global sales analysis. In 2005 it broadens to includeoperational and tactical information (see Figure 2).

26

Figure 2: Headquarters Reporting Process (Current Solution)

Figure 3: Conceptual Data Warehouse Layers

SAP R/3Global

SAP R/3APR LATAM

SAP®R/3®US 1

SAP R/3EU 1

SAP R/3US 2

SAP R/3EU 2

DW 3BW 1 BW 2 DW 5BW 4

GBW

Layer Purpose

Presentation End User Access

Multidimensional Data Mart Analysis &

Operational Reporting

Data Warehouse Integration &Transformations

Data Acquisition

Persistent Data StorageStaging Area

Source Systems Provides Data

MA

STE

R D

ATA

MET

A D

ATA

Philips Lighting

27

Currently, the global data warehouse extracts data frommultiple instances of SAP and non-SAP systems coveringdifferent regions. Non-SAP data integration is mostly realizedvia the standard delivery tool DB Connect. “The initial feed-back from users is positive,” says Koopmans. “They applaudthe easy-to-use and more flexible system, and the fact thatthey have a complete, central source of information.”

Since Philips Lighting has a mixed regional/business unitstructure, making it difficult to bring all users together, thecompany relies on electronic learning tools for user training– made possible by the self-explanatory nature of the system.

User-friendliness is one of the focal points of the Heliosproject. Reports are created centrally by one team, and onlyWeb reporting is used. The use of a central Web templateassures the same look and feel for all reports.

If user acceptance remains positive, the company wouldconsider eliminating the layer of local, regional, andbusiness-group data warehouses that lies between the globaldata warehouse and the ERP systems. “But we want toprogress carefully, step by step,” explains Koopmans. “Sincewe are currently reviewing the function of the regional and business group data warehouses, the future landscape isstill under investigation.”

In applying enterprise data-warehouse modeling principlesin the Helios project, Philips Lighting intended one set ofstructures to be dedicated to data storage and another dedi-cated and optimized to reporting. The layered approachenables a structured design, and facilitates future architec-tural discussions and responsibilities. Specific guidelines havealso been established per layer, and all developments must be compliant – from naming conventions to authorizations(see Figure 3).

Tackling Pressing Business Issues“With SAP NetWeaver we were able to tackle our pressingbusiness issues by consolidating data from the respectivesource systems,” says Koopmans. In terms of the businessintelligence functions of SAP NetWeaver BI, Vermunt citesthe global view of information as a strategic asset, along witheasy access at the operational level. From a technical point ofview, Philips Lighting now lives in one environment insteadof several. Financially, the company has achieved cost savingson infrastructure, and on maintenance and support.

“SAP NetWeaver BI supports us in our business by helping us to measure key performance indicators,” says Koopmans.SAP NetWeaver BI calculates the margin across the wholesupply chain (“integral margin” – net sales minus productcosts). Based on such reliable margin information, thecompany can better identify its most profitable products and customers.

“We have global insight into product and customer prof-itability and, as such, a clear guideline on where to invest,”notes Vermunt. “And the transparency of customer dataenables us to make sure that all our products are sold at thesame price in all regions and by all business groups. That isonly possible with all information in one central data ware-house.” In the future, SAP NetWeaver BI could also supportPhilips Lighting in make-or-buy decisions and in conductingregional profitability analyses.

Management Goes OnlineIn the first stage, financial staff and product managers havebenefited most from SAP NetWeaver BI. It provides easyaccess to important management information via the Web.“Easy access is crucial for upper managers to get accustomedto finding reports themselves, instead of asking assistants to do it for them,” says Koopmans. Moreover, data can beanalyzed online during management meetings. “We haveachieved our goal of getting global product managers, CFOs,and business group controllers to work with the system,” he adds. “They use it readily because they can convert easilyavailable data into business insights.”

Faster OperationsThe deployment of SAP NetWeaver BI, with its day-to-daystability, has changed the way Philips Lighting does business.“Business operations are faster and more flexible because ofincreased efficiency in providing management information,”says Vermunt. “Eliminating inefficiencies in data gatheringallowed us to reduce the total cost of ownership.”

Having global information at hand helps management betterjudge the state of the business and leverage strengths andopportunities for higher profitability. And expanded infor-mation on suppliers, such as detailed delivery performance,puts Philips Lighting in a stronger negotiating position.

SAP NetWeaver BI has enabled Philips Lighting to raise per-formance and meet strategic objectives, increase marketshare, and gain competitive advantage. “SAP NetWeaver BIassists us in achieving our goals by providing global prof-itability information to our global key account management,”says Koopmans.

In day-to-day operations, SAP NetWeaver BI enables PhilipsLighting to visualize processing errors, which triggerimprovement procedures. By consolidating informationfrom the separate systems, SAP NetWeaver BI provides Philips Lighting with a “better return on information,” thusharvesting the investments made in the respective systems.

28

Philips Lighting

29

Future PlansPhilips Lighting is currently testing further technologycomponents of SAP NetWeaver, with pilot projects on SAPNetWeaver Exchange Infrastructure and SAP NetWeaverMaster Data Management. Through the integration of SAPNetWeaver BI with these other components, Philips Lightingwould profit from the comprehensiveness of the SAPNetWeaver platform. For the short and medium term,however, Philips Lighting will focus on how to make evenbetter use of SAP NetWeaver BI tools such as businessplanning and simulation, and its integration with SAP APO.

A planning project, which went live in January 2005, calcu-lates customer profitability for the European region usingactivity-based costing methods, allowing the company todecide where to focus its resources. SAP APO – implementedin 2004 – will be used to integrate demand planning withfinancial planning.

In the first stage of the Helios project, SAP NetWeaver BIalready provides a detailed view of key figures. Additional key performance indicators will be added progressively. “For example, we’ll soon be able to deliver weekly financialreports before 10:00 a.m. Monday, as requested by the boardof management,” says Koopmans. “We are confident thatusers will ask for more, since they liked what they received inthe first place.”

Lessons LearnedFrom its experience with SAP NetWeaver, Philips Lighting haslearned the following lessons:

• Use the business-content information models

• Employ harmonizing processes to enable successfulimplementation

• Control query creation; too many power users lead to toomany queries and extra maintenance

• Create a question-and-answer environment

• Keep central control of functional decisions for both SAP NetWeaver BI and SAP R/3

• Avoid (manual) flat-file interfaces

• Use data-model design – crucial for performance

• Use function-based role concept (instead of content-based)

• Include SAP NetWeaver BI database knowledge, because itdiffers greatly from that of SAP R/3

Technical information

• Size: – 1.1 TB for the local/regional SAP data warehouses and

60 GB for the global SAP data warehouse (~350 GB by the end of 2005)

• Users:– Number of users of the local/regional non-SAP data

warehouses: 1,100– Number of users of the local/regional SAP data

warehouses: 1,300– Number of users of the global SAP data warehouse:

80 (300 by the end of 2005)

• Hardware: IBM

• Operating System: AIX

• Database: Oracle 9.2.0.4.0

• CPU: 2

• Memory: 12 GB

Company ProfileYell Group plc, the publisher of theYellow Pages and Yellow Bookyellow pages directories, is a marketleader in business-to-consumerdirectories in the United Kingdomand the United States. Yell deliversits services as print, online, andphone-based products for classifiedadvertising. This case studyconcerns the UK business, Yell.

Challenges• Increased competition, especially

from local newspapers andInternet-based companies

• Need for reporting processes tobe compliant with regulatoryrequirements

• Unreliable source data fromtransactional systems operatingseveral decentralized reportingsolutions

• Lack of an integrated andharmonized view of the customer,sales, and financial processes

• Excess costs due to poor datamanagement

Strategic Business Goals• Maintain and grow market-leading

position in classified advertising• Use new technologies to deliver

and optimize products andservices

• Drive efficiency and effectivenessthroughout operations

Strategic IT Goals • Assure a single view of the

customer with regard to all sales,financial, and marketing infor-mation collected by transactionalsystems

• Increase productivity, quality, and effectiveness of knowledgeworkers

• Provide information for internaluse that is more comprehensive,reliable, and timely than everbefore

Approach • Implement SAP NetWeaver®

Business Intelligence (SAPNetWeaver BI), a component of the SAP NetWeaver platform,to set up an integrated enterprisedata warehouse solution

• Implement SAP® enterpriseresource planning (ERP) solutionsfor collecting data from across theorganization

Results• Significantly improved handling

of the 25% increase in newcustomers

• An increase in the rate of changethat the company’s InformationDevelopment Group can sustain

• Lower total cost of ownership• Improved segmentation functions

for marketing and planning• A single version of the truth

30

YELL GROUPSAP NetWeaver® as a Strategic Business Intelligence Platform at Yell

Data management was the main issue for Yell Group, the UK-based

advertising company – and unreliable data resulted in excess costs and missed

sales opportunities. Following the implementation of the business

intelligence component of the SAP NetWeaver® platform, Yell was better

able to handle the 25% increase in new customers, and that was only one of

many benefits realized.


Millions of Advertisements, Print and Online 33

Keys to Growth 33

Road Map to Business Intelligence Supply Chain 34


Strategic Enterprise Data Warehouse 35

Strong Growth in New Customers 37

High User Numbers 38

Complete View of Finances 38

Does the Investment Pay Off? 39

Next Steps 39

Lessons Learned 39

31

Executive SummaryA highly successful company like Yell Group, the UK-basedpublisher of classified directories, stays that way byrecognizing areas for improvement and acting on them. With increasing competition, Yell Group needed to maintainits leadership position by improving its relationships withcustomers – and achieving that objective required better datamanagement.

The company was relying on several decentralized reportingsolutions and data marts from a third-party vendor forspecific sets of data. The result was a disparate view of thecustomer, sales, and financial processes, leading to outdatedreports and excess costs due to poor data management.

After a comprehensive study, Yell chose to implement theSAP® enterprise resource planning (ERP) solution with itsbusiness intelligence component and data warehousingfunctionality. The combination of the ERP solution and thebusiness intelligence component provides the flexibilityrequired for managing operational processes and data flows,and to analyze that data for new customer service and salesprograms. SAP NetWeaver® Business Intelligence (SAPNetWeaver BI) acts as an enterprise data warehouse for asingle version of the truth about current customers, and afoundation for more sophisticated analyses.

Yell is now able to manage a much higher volume of data,and can be confident about the quality of its data since it isconsistent throughout the entire business intelligence supplychain. The end-to-end business intelligence platform haschanged Yell’s management of the entire business valuechain. Yell can now perform complete performance analysesto target key customers, develop custom promotions toappeal to finely tuned customer segments, analyze newopportunities and open leads, and conduct sales debriefingsto identify ways to improve future sales campaigns. Theability to handle data better has facilitated the acquisition ofnew customers and hence Yell has benefited from increasedrevenues.

32

33

Yell Group

Millions of Advertisements, Print and OnlineStarting with a single Yellow Pages directory in Brighton,England, Yell Group plc has grown into one of the mostsuccessful advertising companies in the world. The companyemploys more than 3,500 people in the United Kingdom andanother 4,800 in the United States. Its UK products includeprint editions of the Yellow Pages and Business Pages (B2B),classified directories, the Yell.com online classified directory,and “Yellow Pages 118 24 7,” a phone-based classifiedinformation and directory service. U.S. products and services include Yellow Book printed directories and theYellowbook.com online classified directory. Group revenuefor the year ended March 2004 totaled €1.71 billion, whileadjusted revenues reached €518.4 million.

Yell currently enjoys approximately 15% of the UK classifiedadvertising market. It publishes over 90 separate editions ofthe Yellow Pages, plus 9 Business Pages editions. Together, the2 directories carried more than 1 million advertisements in2004, representing business from almost 500,000 differentcustomers. Over 29 million copies of the directories weredistributed across the United Kingdom, and people use theYellow Pages about 100 million times a month.

Financial success isn’t Yell’s only accomplishment. The LondonSunday Times named Yell one of the 100 best companies towork for in the United Kingdom. Yell is also a two-timerecipient of the European Quality Award for organizationalexcellence from the European Foundation for QualityManagement. And for two years running, the company hasreceived the “Big Tick” award in recognition of the positiveimpact of its community programs and business activities.Yell’s IS department was recently recognized as the“Computing IS Department of the Year,” and specific tobusiness intelligence, the Information Development Groupearned two information management awards in the last threeyears for the overall business intelligence implementation.

Keys to GrowthIn response to increasing competition in classifiedadvertising, Yell has to improve its offering and relationshipto potential customers. Yell’s strategic plan for continuedgrowth targets the following main areas:

• Establish closer customer relationships to cope with thecondensed annual sales cycles inherent in the industry

• Improve customer segmentation to identify and cultivatetop sales leads with the highest profit potential

• Optimize product prices, using analytics to understandprice and sales volume dependencies

• Develop new products, using technology to build on thecurrent portfolio of products to give advertisers morevenue choices for their advertisements

Achieving these objectives requires Yell to consolidatecustomer, sales, and financial data into an enterprise datawarehouse. This is a precondition for providing customizedand ad hoc reports for an integrated view of Yell’s customer-focused activities and results.

This information can then be used by the sales teams forsophisticated performance analyses and as backup informa-tion for direct negotiations with customers. This function isparticularly important because most customers are engagedjust once a year, when they purchase advertising in a printdirectory.

Besides, Yell has to meet regulatory and compliance factorswith regard to reporting processes. A reliable and timelyenterprise-wide view of the financially relevant data is acompulsory requirement of senior managers, who wantaccurate forecasts aggregated from the different sales teamsto predict future performance.

The overall paradigm for Yell’s information processes is to“increase the productivity and effectiveness of all knowledgeworkers inside the company.”

Road Map to a Business Intelligence Supply ChainIn 2000, before installing ERP solutions from SAP, Yell reliedon two internally developed transactional systems, operatingseveral decentralized reporting solutions with data martsfrom a third-party vendor for specific sets of data. Not onlywere the business intelligence functions rudimentary at thattime; the source data from the transactional systems wasoften unreliable. “Data latency within the warehouse wasmuch greater, and the breath of data was also significantlynarrower,” recalls Nick Good, operational intelligencemanager.

The main problem with this approach was the lack of anintegrated and harmonized view of the customer, sales, andfinancial processes. The complexity and decentralization ofthe reporting solutions often led to outdated reports andexcess costs due to inefficient information management.

At that time Yell already had some sales planning andforecasting processes established – but they were notintegrated. This factor led to additional coordination effortsfor the planning process (see Figure 1).

34

Figure 3: Phase 2 – Integrated Business Intelligence Platform Details (Current Solution)

OSDLegacy

Operative Reporting

Operative Reporting

DICALLegacy

PlanningDatabases,Microsoft

Excel, Legacy

Non-SAPTelephony

System – 113

Other Operational

Systems

Non-SAPBI Tool

Yell Portal

SAP NetWeaver® Business Intelligence (Reporting, Analysis, Planning)

SAP® R/3®4.6C

FI

Non-SAPTelephony

System – 113

Other Non-SAPSystems

SD

MM

HR

CO

Non-SAPBI Tool

FIN Analytics – Sales Planning &

Forecasting

FIN Analytics – Financial Supply Chain Analysis

FIN Analytics – Sales Performance

Analysis

Business Intelligence Supply Chain

Transactional Systems Platform

Ente

rpris

e da

ta w

areh

ouse

(S

AP

BW

OD

S)

Port

al

DS Apps Presentation Delivery

SA

P® R

/3®

118

. . .

SAP BWInfo Cubes

Operational Reporting

Operational WebReporting

4CA Mart(Analysis)

Non-SAPDecision Support

Applications

SAPDecision Support

Applications

Research

Analysis & Reporting

SubjectSpecificMarts

Figure 1: Phase 1 – Business Intelligence System LandscapeOverview (Past Solution)

Figure 2: Phase 2 – Integrated Business Intelligence Platform Overview (Current Solution)

Yell Group

35

Why Business Intelligence with SAP NetWeaver?Yell conducted a thorough software evaluation process in2000, and selected the SAP ERP solution. Adding the datawarehouse component of SAP NetWeaver BI was a naturalextension. “The real strength was the integration of the datawarehouse layer with the SAP source system,” Good says.Other benefits included the close alignment of the SAP ERPsolution with the business intelligence data models and out-of-the-box extraction functions of SAP NetWeaver BI, whichhelped Yell jump-start its business intelligence activities.

Good points out that today, the flexibility and serviceorientation of the SAP NetWeaver platform fits very wellwith his team’s understanding of future business intelligenceinformation processes.

Yell’s current information technology infrastructure relieson SAP R/3® 4.6c (now available in mySAP™ ERP) and SAPNetWeaver BI running on an HP UX operating systemtogether with an Oracle database (see Figure 2).

Yell began implementing SAP solutions in 2000. The combi-nation of the ERP solution and the business intelligencecomponent provides the flexibility required for managingoperational processes and data flows, and to analyze thatdata for new customer service and sales programs.

Data quality improved significantly with the original imple-mentation of SAP software. SAP NetWeaver BI acts as anenterprise data warehouse for a single version of the truthabout current customers, and a foundation for more sophis-ticated analyses. “We now have one central source of data,and we can manage a much greater depth of data onindividual customers for segmentation,” Good explains.

The data warehouse stores a wide range of detailed andgranular information, including sales orders, sales activities,pay and performance reports, financial results, and customerinformation gleaned from Yell’s call centers. “We have anabsolutely massive amount of content available now foranalysis and reporting,” Good explains.

Analytical activities have gone through a similar process ofstreamlining and expansion. The old data warehouses used adisorganized collection of business intelligence tools, withseparate third-party products for ad hoc queries, OLAPanalyses, and operational reporting. “There was no consoli-dated business intelligence solution,” Good recalls.

Yell took advantage of the tight integration of the differentSAP applications to build its new business intelligence archi-tecture. The system performs many of its data extractionsusing the standard extractors provided. Specific requirementsrelating to Yell’s SAP R/3 processes required the project teamto built custom sales order and activity extractors. “SAPNetWeaver BI is able to accommodate the very complex logicof these extractors,” Good says.

Strategic Enterprise Data WarehouseThe enterprise data warehouse layer in Yell’s architectureintegrates all the data from operating systems. This layer,built with operational data store objects, creates Yell’s “singleversion” data store.

Most of Yell’s reporting models are built with “info cubes,”which use the consolidated and integrated data of theenterprise data warehouse layer, and are optimized for thespecific information requirements of the business users.

The existing data marts rely as well on the data from thecentral enterprise data warehouse layer. Yell has decided tokeep these third-party tools for more advanced reporting andstatistical analysis, not least because business users are sofamiliar with them. Good mentions that what they likeespecially from the SAP NetWeaver platform is the opennessto integrate other applications easily. He comments that SAP NetWeaver and the Enterprise Services Architectureblueprint are very appealing because “they will make thebusiness intelligence supply chain even more flexible in thefuture.”

With regard to the underlying data model of the businessintelligence solution, Good is quite confident: “The ‘infoobjects’ in SAP NetWeaver BI provide a key advantage for theenterprise data warehouse solution,” Good says. “They canbe used as shared dimensions in all layers to guarantee anintegrated architecture with trace-back and drill-throughreporting, as well as the flexible design of new ‘info providers.’They are comparable to the shared dimension of othervendors but can be maintained centrally and are a consistentpart of all business-content information models. Thisconsiderably enhances the development of the reportingsolutions.”

Yell’s presentation layer consists of Web- and Microsoft Excel-based reports and planning layouts. This distinction in thepresentation formats enhances end-user productivity by pro-viding a role-specific work environment, with easy Web-basedaccess for occasional information consumers and the use ofExcel functionalities for analysts and knowledge workers.

36

Figure 4: Closed-Loop Business Intelligence Supply Chain

Yell’s BI Supply Chain

Right Information Right TimeRight People Right Action

Data Preparation

Data Management

Research Analysis Modelling

Business Intelligence Portal People

External Data

Internal Data

£ cost

£ cost

£ cost £ cost + value

£ cost creation £ cost + value £ value benefit

Action Outcome Benefits

Technology

Process – Management and Leading

People Culture Leadership Structure

Yell Group

37

When Yell installed SAP NetWeaver BI, the company signifi-cantly enhanced the Information Development Group withinits Strategic Development division to support new knowledgemanagement and information delivery processes. TheInformation Development Group consists of several datawarehousing, business intelligence, and research experts, and some portal developers. The combination of technicalexpertise and SAP NetWeaver technology enables Yell toquickly adapt its business intelligence functions to anychanges in the operational processes. The group’s approachto the business intelligence supply chain stresses theparadigm of information, people, and process integration,which are the building blocks of the SAP NetWeaver platform(see Figure 4).

The time-consuming and unreliable process steps from dataintegration to data management are now much easier tohandle. The reliability and flexibility of the enterprise data warehouse layer provide enough freedom for theInformation Development Group to focus on the controland enhancement of the complete business intelligencesupply chain. People are no longer struggling to adapt theirreporting data models to the inevitable changes in the sourceprocesses of the SAP software. The resulting changes andenhancements of the business intelligence solution can beapplied very quickly, thanks to the rich tool set of SAPNetWeaver and the central, nonredundant data in theenterprise data warehouse layer.

The development process is centrally organized in a three-tier landscape (development, test, production). Most of thenewly required information models are initially built withthe SAP NetWeaver BI business-content tools. “This approachis appealing because we can deliver a first version of newreporting solutions very quickly to our users,” says Good.“They always start testing with the business-contentinformation models, and afterwards we collect the detailedrequirements for the new reporting or analysis applications.”This as well as the transport-management infrastructure ofSAP NetWeaver BI saves a lot of time and resources, he adds.

Strong Growth in New CustomersYell’s data warehouse is just under one terabyte in size, and isgrowing at about 100 gigabytes per quarter. Use of multicubeobjects and aggregates leads to very satisfying performanceresults. “Although we had some issues at the beginning of the project, our team learned quickly to use the features ofSAP NetWeaver BI to tune the performance of the system,”says Good.

But the sheer volume of data that Yell can now manage isonly part of the story. The company is now even moreconfident about the quality of its data, knowing theinformation is consistent throughout the entire businessintelligence supply chain – an important difference from thepre-SAP days.

In business terms, this translates into increased sales. Foryears, Yell has experienced steady growth in its customerbase, adding an average of 70,000 new customers annually.Since the system went live, Yell has been better able tomanage both the increase in information and the increaseddependency on that information.

The end-to-end business intelligence platform has changedYell’s management of the entire business value chain. “Thetools we now have in place to manage the selling process area long, long way from where we were before,” says Good. He explains that Yell can perform complete performanceanalyses to target key customers, and identify issues beforethe selling cycle for a particular edition closes. Strategiesinclude developing new, custom promotions to appeal tofinely tuned customer segments. The company is in a betterposition to analyze new opportunities and open leads.Finally, Yell can conduct sales debriefings to identify ways toimprove future sales campaigns.

High User Numbers“The volume of users of the system is one of the best indica-tors of its success,” Good says. “We’re now running up to40,000 reports a month, and have a solid continual base ofnearly 1,200 unique users per month, the vast majority ofwhom are salespeople.”

One of the standout sales tools is sales forecasting, whichhelps management keep tight reins on ongoing campaigns.In Yell’s business, there’s little room for errors or miscalcula-tions. “Because there’s a limited period when we can sell, wehave to make sure we’re maximizing each salesperson’s timefor the best coverage of customers and potential customersbefore a book closes,” Good explains. The planning toolshows how much each individual salesperson is expected to sell, and compares that to actual sales to individualcustomers. This provides an early warning signal that alertsmanagers if, for example, a customer that bought two ads ayear ago plans to purchase only one in the current cycle.Sales managers may then assign additional resources to theaccount to address any unresolved issues that might have ledto the cutback. Any changes between the planned and actualperformance can nevertheless be communicated up thechain of senior managers to mitigate unpleasant financialsurprises at the end of the cycle.

Complete View of FinancesThe system also allows managers to compare sales order datato billing information to identify slow payers, bad-debt situa-tions, and customers with credit problems. The complete viewof the financial supply chain allows managers to inductivelyfind out about parameters that indicate potentially criticalcustomers. These insights can afterwards be used to decreasethe risk of bad-debt losses and days of sales outstanding.

38


SAP NetWeaver Business Intelligence (Reporting, Analysis, Planning)

SAP NetWeaver Master Data Management

mySAP™ ERP mySAP CRM

Non-SAPTelephonySystem

Non-SAP. . .

Non-SAPBI Tool

FIN Analytics – Sales Planning &

Forecasting

FIN Analytics – Financial Supply Chain Analysis,

Sales Performance Analysis

CRM Analytics – Channel Analytics

Figure 5: Road Map – SAP NetWeaver® BI as a Strategic Platform for Business Intelligence and Analytics

Yell Group

39

Finally, managers can track the incidence of errors inadvertisements and identify individual salespeople or teamswith higher-than-average correction rates. “We can thendetermine how to improve the situation – for example, byproviding better coaching on how these individuals collectinformation,” Good says.

The performance of the sales teams is directly linked to thecommission schemes and incentive structures of the YellGroup. Employees and managers now have full transparencyof their individual or team performance. Benchmarking toother groups is used as a basis for steady performanceimprovements.

Yell is currently evaluating a prototype of the mySAP CustomerRelationship Management (mySAP CRM) solution forchannel planning. As part of this solution Yell wants tosupport segmentation procedures in the business intelligencesolution and use the results as leads in the CRM solution.Complex segmentations and transformations, as well as thetransfer to various data targets, are facilitated by the analysisprocess designer, an integral part of SAP NetWeaver BI. Thetight integration with the CRM application allows Yell toclose the loop from analysis to operations – and that’s what counts for Yell. While a reliable and easily manageablebusiness intelligence platform is key, it’s even more importantthat people have the analysis results they need to take theright action at the right time.

Does the Investment Pay Off?With the ability to handle more business and a better all-around view of the customer, there is no question that SAP NetWeaver is producing positive returns – borne out byincreased revenues resulting from the additional 30,000 newcustomers each year. The standardization of the IT landscapeon a predominantly SAP-based architecture has increased the rate of change that the Information Development Groupcan sustain, and has also provided a lower total cost ofownership.

Next StepsWith its ERP and business intelligence platforms in place, Yellis looking for ways to expand its technology infrastructure.The company is currently investigating the data miningfunctions of SAP NetWeaver BI along with its analysis ofmySAP CRM. “We now have the best platform to meetcurrent needs, and one that’s extensible for the future,”Good remarks. In the future, he says, Yell will increasinglyleverage the openness and flexibility of the SAP NetWeaverarchitecture. Yell is also considering SAP NetWeaver Portaland SAP NetWeaver Master Data Management, bothtechnology components of SAP NetWeaver (see Figure 5).

Lessons LearnedDuring the project the Information Development Group atYell learned a great deal about the management of Yell’s “BI supply chain.” Two key findings stand out:

• Stick to the SAP NetWeaver BI business-content modelsand avoid “green field” development, if possible, to get themost out of the already integrated data models within theSAP solution.

• Start with an open and flexible technology platform toembed the analytic insights coming out of the businessintelligence solution directly into operational processes;close the loop from analysis to execution.

40

Company ProfileK+S Group, headquartered inKassel, Germany, is one of theleading providers of specialty andstandard fertilizers, plant care, andsalt products. The company, whichincludes the divisions K+S KALIGmbH, COMPO, and fertiva, isEurope’s second-largest supplier of specialty and standard fertilizers.With a workforce of 11,000, thegroup achieved sales of approxi-mately €2.3 billion in 2003.

Challenges• Integrating new divisions• Heterogeneous IT landscape

created through Europe-wideacquisitions

• Disparate, decentralized reportingand planning systems

• Isolated business intelligencesolutions and heterogeneoussource systems

• Time-intensive analysis throughmanual merging

Goals• Support growth and international-

ization of K+S Group throughcutting-edge IT

• Harmonize and consolidate thesystem landscape by means of acentral IT platform

• Use business intelligence platformto evaluate corporate informationand utilize it for planning processesacross the entire company

Solution• Heterogeneous IT system land-

scape harmonized – increasedefficiency thanks to a reduction inbusiness intelligence and planningsystems

• Master data standardized andoptimization of company-widereporting in multiple languages

• Operational reporting built up,including day-by-day comparisonswith the previous year andevaluations down to item level

Results• Infrastructure for easy integration

of new companies created• Process of rolling and monthly

sales and profit planning andfinancial planning shortened fromsix to four days while maintaininghigh planning reliability

• Improved automatic midtermplanning based on data fromshort-term planning (140 profitand loss items condensed into 90 items)

• Return on investment of 168% ina period of five years up to 200

Implementation Partnerdata process, Kassel, Germany

Existing SAP® SystemLandscape• SAP® R/3® (functions now

available in mySAP ERP)• mySAP™ Supply Chain

Management (using the SAPAdvanced Planning & Optimizationcomponent for sales planning)

• mySAP Supplier RelationshipManagement (for business-to-business procurement)

• mySAP Customer RelationshipManagement (for marketingsupport)

• SAP NetWeaver® with thefollowing components:– SAP NetWeaver Business

Intelligence– SAP NetWeaver Portal– SAP NetWeaver Application

Server

System and Hardware for theBusiness IntelligenceComponent:• IBM pSeries 7026-6M1• 6 CPUs @ 750 MHz• 20 GB main memory• Operating system AIX 5.2

Maintenance level 4• Database Oracle version

9.2.0.5.0• Database size currently approx.

500 GB (plans to extend this to > 1 TB)

• Number of users: 1,000 (plans to extend this to > 1,500 users)

41

K+S GROUPSAP NetWeaver® as a Strategic Business Intelligence Platform at K+S Group

K+S Group needs a powerful reporting system and precise rolling planning

to help it operate in tune with market needs. Against the backdrop of its

expansion throughout Europe, K+S leveraged the business intelligence

component of the SAP NetWeaver® platform to integrate and harmonize its

previously isolated business intelligence and planning solutions, thus

enabling the group to ensure company-wide transparency. Thanks to the new

strategic business intelligence infrastructure, existing and new subsidiaries

can be integrated in planning and reporting processes with minimal effort.


Expansion Prompts Need for New IT Structures 43

Evolution in Three Phases 43

Decision for Central Platform and Implementation 44

Legacy Systems Replaced, Data Integrated 45

Enterprise-Wide Business Intelligence with SAP NetWeaver 45

Analytical Applications 45

Optimized Processes for Reporting 46

Reduced Use of Resources, Lower Total Cost of Ownership 47

Growing Number of Users 47

Staying on Course 47

Lessons Learned 48

The K+S Group’s IT Evolution 49

Lessons Learned 49

Executive SummaryContinued strong growth, paired with the acquisition ofseveral other companies, became the motivation for K+SGroup to consolidate its IT landscape. The larger and morecomplex the organization became, the more difficult andlaborious it was to deliver a high-performance reportingsystem and rolling planning. Isolated, heterogeneous businessintelligence solutions, coupled with semiautomatic or manualdata-capturing processes, made it difficult to gain a clearoverview of up-to-the-minute company data. That promptedK+S Group to harmonize its IT landscape and create company-wide transparency through a central business intelligenceplatform. The SAP NetWeaver® platform covers all thecompany’s requirements with the SAP NetWeaver BusinessIntelligence (SAP NetWeaver BI) component, which providesthe openness and flexibility needed to incorporate othercompanies and broader user groups with minimum effort. A central SAP source serves as a standardized database forK+S Group. Information from third-party systems is incor-porated into analyses and planning via SAP NetWeaver BI.

K+S is now reaping the benefits of the business intelligencecomponent of SAP NetWeaver to meet all its reporting andplanning requirements and further enhance operationalprocesses using analytical applications for financials, supplychain management, customer relationship management, and supplier relationship management. The company-widebusiness intelligence functions have enabled K+S toextensively automate and significantly improve the flow ofdata. The data warehouse can be used as an enterprise datawarehouse, and delivers high performance even with largevolumes of data and numbers of users. Continual reporting

42

Figure 1: Phase 1 – Scattered System Landscape

Figure 2: Phase 2 – Harmonization of IT System Landscape

Figure 3: Phase 3 – SAP NetWeaver® BI as a Strategic Platform for Business Intelligence and Analytics

Non-SAP BI Tool

1

SAP R/3 4.0BBASF – FertivaCompo ES, IT

SAP R/2®Reporting(ABAP™)

SAP® R/3®Reporting(VIS/LIS)

SAP R/2 5.0xSolvay – Esco BE,

FR, ES, PT, DE

SAP R/3Reporting(VIS/LIS)

SAP R/3 4.5BBU Kali – Sales,

Logistik

SAP R/3Reporting(VIS/LIS)

SAP R/3 4.5BBU Salz – Sales,

LogistikSAP R/3 3.1I

Compo – FR, BESAP R/3 3.1ICompo – DE

Non-SAPOperational

Systems

Non-SAP BI Tool

2

AS/400Statistics

SAP NetWeaver® Business Intelligence (Reporting, Analysis, Planning)

SAP R/2 5.0xSolvay – Esco BE,

FR, ES, PT, DE

SAP R/3 4.5BBU Kali – Sales,

Logistik

SAP R/33.1I Compo

– DE

SAP R/3 4.5BBU Salz – Sales,

Logistik

SAP R/33.1I Compo

– FR, BE

MM

PM

TM

COPP

FI

SD HRAPO

OM

SCM AnalyticsMarketing

FIN AnalyticsConsolidation

SAP® R/3®4.0B

BASF – FertivaCompo ES, IT Non-SAP

Operational Systems



mySAP™ERP

mySAPCRM

mySAP SCM

mySAP SRM

Non-SAP (Mobile Sales)

CollaborationWholesaler Data


FIN AnalyticsPlanning/

Consolidation

CRM AnalyticsMarketing Support

SRM Analytics

K+S Group

43

and transparent planning are helping K+S tap into newgrowth potential, and enabling the company to make betterstrategic market decisions.

Over a five-year period up to 2005, the return on investmentof the SAP NetWeaver BI implementation at K+S amounts to 168%.

Expansion Prompts Need for New IT StructuresA powerful reporting system and rolling planning are keymechanisms that help K+S operate in tune with marketneeds. Every month the company checks whether the targetvalues for sales and revenues have been achieved. If thefigures fall short of the targets, an analysis is undertaken and planning is adapted to fit actual market conditions.

Until 2001 the company used a mixture of semiautomatedand manual methods of collecting and evaluating data. Thisapproach made reporting, and in particular the planningprocess, time-consuming and complex for employees in salesand marketing, production, and controlling. In addition, theisolated, PC-supported reporting and planning systems, partsof which had been developed in-house, enabled only alimited number of staff members to be directly involved inthe process, and were incapable of producing a consistentview of all company information.

The drawbacks of this situation became increasingly apparentthe more K+S has grown as a company and tapped into newbusiness areas. “Our need for Europe-wide IT processes andsystems came about practically overnight, and was mainlydue to acquisitions,” explains Dietmar Mänz, K+S Group’shead of IT coordination, profitability analysis, and rollingplanning. Adds Martin Koller, business intelligence officer atK+S, “We needed a system environment that facilitated boththe integration of new companies and cross-sector coopera-tion when it comes to reporting and planning.” The companywas able to solve these issues by combining its enterpriseresource planning (ERP) applications in a central SAP datawarehouse, thereby ensuring a standardized body of data,and using SAP NetWeaver BI as a strategic platform forcompany-wide reporting, financial planning, analytical supplychain management, and further analytical applications.

Evolution in Three PhasesIn overview, the evolution of the company’s IT landscape canbe divided into three distinct phases:

• Phase 1: Prior to the expansion into new areas of businessstarting in 1999, accounting, controlling, and materialsmanagement ran on one SAP® platform while sales andlogistics ran on another. The period from 2001 to 2003 sawthe company add the business units fertiva and COMPO, a move that made K+S Group’s IT landscape increasinglyheterogeneous. The fertiva and COMPO divisions were atdifferent release levels of SAP software in differentcountries, and also used a variety of third-party systems. In accounting and planning, K+S Group used an equallywide range of systems. Statistics applications in SAPsoftware were used alongside Microsoft Excel-basedsolutions and business intelligence systems from a varietyof suppliers. Lacking a standardized platform for programdevelopment, and without comprehensive evaluations forthe entire company, K+S Group faced major disadvantages.

• Phase 2: Against this backdrop, K+S decided to implementthe above-mentioned central ERP system and SAPNetWeaver BI. Operational reporting, strategic reporting,and corporate planning could all be coordinated on thenew business intelligence platform. As part of thetransition to a central ERP platform, third-party data was migrated from the different systems. The isolatedbusiness intelligence solutions were dismantled one by one in order to ensure a standardized view of the company.

• Phase 3: K+S reaped the benefits of SAP NetWeaver BI as a strategic business intelligence platform to cover allreporting and planning requirements. SAP NetWeaver BIfurther enhanced operational processes using analyticalapplications for financials, supply chain management,customer relationship management, and supplierrelationship management. The company is currently inthe middle of a step-by-step deployment of SAP NetWeaverPortal – another component of SAP NetWeaver – with the aim of ensuring central access to both structured andunstructured information in the future.

Decision for Central Platform andImplementation“Given our heterogeneous IT landscape and need to createtransparency across the company, we were looking for acentralized, standard solution. We wanted to extendreporting and rolling planning to a wider range of users andquickly integrate all decision makers,” says Koller. Strategicand product-specific considerations led the company to opt for the data warehouse and planning and simulationfunctions of SAP NetWeaver BI.

For one thing, SAP NetWeaver BI would make it possible tomap all the requirements relating to the rolling planning of revenues and sales costs, sales and profit planning, andfinancial planning. The easy integration with the existingSAP software and SAP Advanced Planning & Optimization(SAP APO) – a component of mySAP™ Supply ChainManagement (mySAP SCM) – was another key factor. The close integration allows work processes to be linkedfrom start to finish. Another important criterion was the fact that SAP NetWeaver BI was ideal for use as a company-wide platform for reporting and planning.

The implementation was carried out by K+S Group togetherwith its IT subsidiary, data process, and SAP, and went liveafter six months at the start of 2002. “Working with SAPproved very rewarding,” says Jürgen Jordan, project managerand IT consultant with data process. “For example, the SAPdevelopment team was able to implement specific require-ments, such as carrying over receivables and liabilities to later planning periods.” In addition, the preconfiguredbusiness content played a key role in the project’s rapid pace.In materials management – that is, everything related toinventory controlling, procurement data, orders, andmovements of materials – approximately 80% of the businesscontent could be used.

44

Figure 4: Different Layers for Data Harmonization, Consolidation, and Reporting Requirements

Organization(OperationalReporting)

BEx Analyzer(Key User)

BusinessUnits

(MonthlyReporting)

K+S Group(KPI Model)

BEx Web/Enterprise Portal(Management/Executives/

Information Consumer)

mySAP™ ERP(Internal)

mySAP CRM(Internal)

mySAP SCM(Internal)

mySAP SRM(Internal)

Non-SAP(MobileSales)

Non-SAP. . .

PSA Layer/

ODS

Compo IT

Compo ES

fertiva

. . .

. . .

. . .

. . .

. . .

. . .

Compo

KALI

ESCO

fertiva

K+S Group

45

Legacy Systems Replaced, Data IntegratedThe strategic business intelligence solution K+S built basedon SAP NetWeaver BI replaced the company’s existingreporting and planning solutions, which consisted of amixture of business intelligence solutions from othersuppliers, applications based on Microsoft Excel, andstatistical systems developed in-house. Following a transitionphase when different SAP and non-SAP systems were directlyconnected to the data warehouse, the SAP data now comesexclusively from the central SAP source. In addition,information from third-party systems flows seamlessly intothe evaluation and planning process, including field staff datarelating to contacts, visits, and travel costs from mobile salesapplications, for example.

Enterprise-Wide Business Intelligence with SAP NetWeaver The company-wide business intelligence platform hasenabled K+S to extensively automate and significantlyimprove the flow of data. Time-intensive evaluation andmanual merging of several Microsoft Excel files at thecompany’s headquarters – for example, for managementreporting and financial planning purposes – is now a thing of the past. The data warehouse can be used as an enterprisedata warehouse, and can also process large volumes of dataand numbers of users. K+S currently stores around a half-terabyte of data. The volume will continue to grow and willexceed the one-terabyte limit by 2006 at the latest.

Different user groups are supplied with information at alllevels of the company. At corporate headquarters, where the key users are located, SAP NetWeaver BI provides supportfor the operational reporting requirements of the real-time,day-to-day business. At the divisional level, reporting is per-formed monthly. Company reports containing condensedinformation for management are prepared via the Web. Plansare afoot to build a Web-based key performance indicatormodel for the entire K+S Group at the corporate level, withthe aim of supporting strategic decisions and keeping thecompany on course.

Analytical ApplicationsK+S uses SAP NetWeaver BI to link reporting and planning,thereby creating the basis for implementing companystrategy on the operational level. Planning can be continuallychecked against developments in the real world, and adjustedaccordingly. “We practice analytical supply chain managementinternationally,” reports Martin Koller. Up-to-the-minutesales planning data from mySAP SCM is evaluated in the data warehouse and reconciled on an ongoing basis. Thisenables the company to determine, for example, whether the materials planned for producing a specific product groupare actually needed. “This is very important for the COMPOdivision, since it works with a large number of products andcorrespondingly large quantities of materials.” COMPO isrepresented in different market segments in many countries,and has to be able to adjust quickly to the changingconditions on the raw materials and sales markets.

Alongside integrated sales and production planning atCOMPO and fertiva, K+S also uses sales and profit planningand financial planning based on SAP NetWeaver BI . Under-lying this are standardized product and contribution marginpatterns that make costs and revenues transparent andcomparable, and provide a basis for generating contributionmargin analyses and revenue estimates. Every month, six-month forecasts are generated for around 200 groups ofaccounts for approximately 100 profit centers. Commentscan be added to values in the plan to make them moreinformative.

“The interplay between mySAP SCM and SAP NetWeaver BIbrings major advantages. For example, we generate quantityand sales forecasts in mySAP SCM, which we then reconcilewith the capacity plans using SAP NetWeaver BI. This allowsus to respond more quickly if bottlenecks occur,” explainsKoller. Continual reporting at the operational level enablesmanagement to better identify potential for growth andmake strategic market decisions.

Optimized Processes for ReportingThe company’s internal workflows also benefit from thecentralized planning solution, which has proved a catalystand platform for closer collaboration between different areas.“The integrated system forces those responsible in sales,production, and controlling to regularly exchange informa-tion and strategies and coordinate closely when laying downplanning objectives,” says Mänz, assessing the new solution’spositive impact. “This provides long-term support for thecompany’s technical and organizational unity.”

The full integration of existing SAP software with mySAP SCMand SAP NetWeaver BI has had a positive effect on reporting,as K+S Group has benefited from easy access to standardizeddata. The high level of detail enables evaluation down to thelevel of individual items. “Whereas in the past only monthlycomparisons were possible, our operational reporting todayincludes daily comparisons with the previous year, forexample,” explains Koller.

46

Figure 5: K+S – ROI Analysis

t0 t1 t2 t3 t4 t5 Total

Costs € 560,836 476,813 675,035 288,537 269,779 214,357 2,485,356

Total tangibles € 327,880 622,509 774,944 825,104 825,104 3,375,541

Net Cash Flow € -148,933 -52,526 468,407 555,325 610,747 1,451,020

Net Present Value(NPV) €

-135,393 -43,410 365,445 379,294 379,226 945,162

Cumulative NPV -560,836 -696,229 -739,639 -374,194 5,100 384,326

Discount rate: 10%, (internal discount rate provided by the customer)

1,000,000

800,000

600,000

400,000

200,000

0

-200,000

-400,000

-600,000

-800,000

-1,000,000

t0 t1 t2 t3 t4 t5

Costs

Tangibles

Net Cash Flow

Cumulative NPV

K+S Group

47

Reduced Use of Resources, Lower Total Cost of OwnershipK+S has achieved measurable savings thanks to the SAPsolution, as the company is now able to produce informativereports and planning data faster with fewer people. Forexample, the monthly planning process has been cut fromsix days to four. Midterm planning now takes place auto-matically based on the same data as the rolling monthlyplanning, and can now be viewed by more users.

Since more time is now available for analysis, and the consid-erable data stocks can be evaluated using many differentcriteria, K+S has already been able to reduce the number ofsuppliers and materials and improve delivery conditions andinventory controlling.

New reporting requirements can be implemented on the flyby trained key users. Building the centralized business intel-ligence platform has also enabled K+S to cut administrationcosts for its system landscape, a feat achieved mainly by replac-ing legacy systems at the ERP and reporting levels. Using SAP NetWeaver BI, K+S has created the infrastructure needed to integrate other newly acquired companies in the planningand reporting processes with minimal effort. Overall, IT todayplays a greater role in the company’s success. “Comparedwith our previous systems, we are seeing a very positive profitcontribution,” says Mänz. The return on investment of SAPNetWeaver BI amounts to 168% over a period of five years upto 2005. Improved reporting accounts for about two-thirds ofthe value, and optimized planning processes for the rest.

Sixteen subprojects have been implemented since the projectstarted in 2001. In the project’s second and third years inparticular significant investments were made, which then ledto positive results in the years that followed. The paybackperiod is 47 months.

The entire project’s total cost of ownership (including theinitial investments before going live) is €2.485 million. Thetotal measurable savings amount to €3.375 million. The fivemonitored periods after going live resulted in an accumulat-ed net cash flow of €1.451 million. After taking into account

an internal imputed interest rate of 10%, this results in a netpresent value of €945,162. Further, qualitative benefits havemade a significant contribution to the success of the project.

Growing Number of UsersWhen SAP NetWeaver BI went live in 2002 only 50 staffmembers in different plants worked with the new planningcomponent, while about 200 worked with the reportingcomponent. At the end of 2004 over 1,000 people are alreadyworking with the centralized business intelligence functions.“The users accept the new system, because it makes theirday-to-day work easier,” says Koller. Instead of having tocollate data by hand, employees can now obtain reportstailored to their exact requirements at the touch of a button,enabling them to concentrate on analyzing data instead ofstudying lists.

“SAP NetWeaver is our tool for strategic and operationalplanning at all levels, and is also our management infor-mation system, enabling early detection of irregularities,”reports Mänz. Other user groups – in senior management, forexample – will be added thanks to access via the SAP NetWeaverportal interface and an integrated report distributionfunctionality. Since these features enable easier and morecomprehensive access to business intelligence contents, K+S anticipates around 1,400 users by the end of 2005.

Staying on CourseSAP NetWeaver Portal and the integrated report distributionfunctionality address two important issues that have a majorbearing on K+S’s future strategy. The company is satisfiedwith the quantitative and qualitative benefits realized thusfar, and will extend its IT platform based on SAP NetWeaver.“Entering the world of SAP NetWeaver was a strategicdecision for us,” reports Koller. “SAP NetWeaver Portal, which went live in 2004, will serve in the future as a gatewayto K+S’s world of data and information.”

As of the first quarter of 2005, therefore, new reports andanalyses, including inventory and procurement controlling,were available to managers and staff. Managers are also ableto access monthly reports and highly aggregated figures via“Web cockpits” in the portal.

The implementation phase will also include a Web-basedgeographical information system (GIS). In the logisticssector, this feature allows the flow of goods between sites tobe tracked. The fertiva division, in particular, is set to benefitfrom this, not least because the cartographic data on harborsand waterways includes important transshipment points andtransport routes.

K+S is looking to centralized data modeling as a way tofurther evolve its IT systems. The key objective is still to use SAP NetWeaver BI as a strategic business intelligenceplatform to ensure a consistent, transparent data andinformation environment in the diversified company groups.After all, the operational processes are also to undergocontinuous improvement in future, and of course it’s alwayspossible that newly acquired companies will soon need to beintegrated quickly.

Lessons Learned

• Central data modeling in the business intelligence teamensures consistency of master data for the whole companycovering all applications.

• A well-conceived naming concept for all objects in SAP NetWeaver BI (particularly cubes and query names) is important for easy-to-use authorization in the SAPNetWeaver BI environment.

• A multistage data model for operative reporting (details in the Microsoft Excel environment) and aggregatedreporting (for example, for monthly reports andmonitoring of key performance indicators) in the Webenvironment are essential.

• A well-balanced key-user concept (query development bythe departments) is required to ensure acceptance of newtechniques for creating reports.

48

K+S Group

49

• It has proved effective to use SAP NetWeaver BI as the datasupplier for both master data and transaction data for SAP APO, in order to achieve data consistency.

• The departments must become involved in the datamodeling right at the start of the project phase. A clearlystructured and process-oriented request process is a keysuccess factor.

• Only with an appropriate business intelligence environ-ment is it possible to perform analyses covering severalapplications.

The K+S Group’s IT EvolutionFigure 1:

Phase 1 (until approximately 2000):

SAP R/3 controlling, materials management, accountingSAP R/3 logistics, salesBusiness intelligence: SAP logistics information system

Figure 2:

Phase 2 (2001 – 2003):

Heterogeneous starting environment due toacquisitions:SAP R/2, Belgium, Germany, France, Portugal, SpainSAP R/3, Belgium, Germany, France SAP R/3, Italy, SpainBusiness intelligence: AS/400 statistics, Cognos, SolvayInformation System, Eurostat Information System, Microsoft Excel

Harmonized IT landscape:SAP R/3 (centralized ERP system)mySAP ERP Human Capital ManagementSAP APOSAP NetWeaver BI as a strategic business intelligenceplatform

Figure 3:

Phase 3 (from 2004):

SAP NetWeaver 2004, including SAP NetWeaver BI, SAPNetWeaver Application Server, SAP NetWeaver Portal

Figure 4:

Different reporting layers

Figure 5:

Higher ROI Thanks to a Harmonized IT Landscape (cf. SAPNetWeaver conference presentation)

Lessons Learned

• The quality of the data model has a crucial impact on theflexibility and performance of the overall system.

• Verify the quality of the master data before implementinga reporting range. (Do not introduce the data warehousingfunctions of SAP NetWeaver BI at the same time as SAPERP solutions.)

• Standardized reporting/controlling processes must bedefined first.

• A clearly structured and process-oriented request process isa key success factor.

• Role-based, business-case-oriented, and even personalizedreports (entry values) are more preferable to comprehen-sive, highly flexible “global” queries. Here too, less issometimes more.

• A successful SAP NetWeaver BI project must combine allkey IT skills in one team (process specialists, applicationdevelopers, SAP database administrators, live-operationexperts).

50

Company ProfileMcKesson Corporation is one of theworld’s leading healthcare servicesand information technology companyand is currently ranked 15th in theFORTUNE 500. McKesson Pharma-ceutical Solutions, a business unit of McKesson, is the leader inpharmaceutical distribution andsupply chain management, withmore than US$71.1 billion in annualrevenues.

ChallengesThree main players in the pharma-ceutical distribution industry claim an equal share of the market,creating very low margins and stiffcompetition. The main differentiatorsamong the competitors are price,quality of service, and convenience.In addition, there are two otherchallenges. First, a significantchange in baby boomer demograph-ics is reshaping healthcare needs.Second, government regulators andinvestors are calling for increasedcorporate transparency.

SolutionMcKesson Pharmaceutical continu-ally invests in process improvementsto raise customer satisfaction, itsnumber-one objective. At the sametime, McKesson seeks to increaseprofit margins by reducing costs,creating value, and leveragingopportunities for increased sales.

ApproachMcKesson Pharmaceutical imple-mented SAP NetWeaver® BusinessIntelligence (SAP NetWeaver BI) as part of its efforts to replace itslegacy systems. The companysuccessfully implemented the datawarehousing functionality of SAPNetWeaver to provide for a datawarehouse with a capacity of 10 terabytes. The data warehousecurrently holds 5 terabytes of dataand grows at about 150 gigabytesper month. Analytics are deliveredvia the Microsoft Excel–basedbusiness explorer tool from SAP. Inaddition, scorecard and dashboardanalytics are being delivered throughthe tool’s Web applications.

Results“Altogether, the improvementspermitted by SAP NetWeaverBusiness Intelligence are helpingMcKesson Pharmaceutical realize its overriding objective of aligningbusiness strategy with execution,”says Brian Hickie, vice president ofbusiness intelligence at McKessonPharmaceutical. “SAP NetWeaverBusiness Intelligence is providingunprecedented insight and trans-parency into our data. With our SAPNetWeaver Business Intelligenceinfrastructure we are now able tomake informed decisions moreeffectively and efficiently, as well as evaluate them more immediately.”

51

McKESSONAligning Strategy and Execution – SAP NetWeaver® as theStrategic Business Intelligence Platform at McKesson

McKesson Corporation, one of the world’s leading pharmaceutical distribution

companies, considers customer satisfaction and efficient internal processes keys

to its future success. To increase its competitive edge, McKesson Pharmaceutical

Solutions, a business unit of McKesson, launched the SAP NetWeaver® Business

Intelligence (SAP NetWeaver BI) component of the SAP NetWeaver platform,

starting in 2002. Today, SAP NetWeaver BI is helping the organization achieve

its objectives by streamlining key business processes and allowing users

to better understand their data, convert their data into information, and use

that information to impart knowledge and make more informed decisions.


Company Background 53

Keys to Growth 53

Information Systems 53

Approach 53

Business Intelligence Strategy 53

Decision Factors for SAP Solution: Complete, Scalable, and Reliable 54

Building on Success: A Step-by-Step Implementation Approach 55

SAP NetWeaver BI: Right Enterprise Data Warehouse Solution 55

Architectural Principles and Guidelines for the Enterprise Data Warehouse 56

Business Intelligence Services and Information Deployment Strategy 57

Organize for Business Intelligence 59

Analytical Applications 59

Inventory Adjustment Analytics 59

Drop-Ship Analytics 59

The Road Ahead 60

Lessons Learned – Aligning Strategy and Execution 61


Executive SummaryMcKesson Pharmaceutical, a business unit of the US$80.5billion McKesson Corp., vies against two main competitors in the hotly contested pharmaceutical distribution market. To manage costs, increase margins, and improve customerservice, McKesson Pharmaceutical decided to install the SAP NetWeaver® Business Intelligence (SAP NetWeaver BI)component of the SAP NetWeaver platform, creating a large10-terabyte-capacity data warehouse, currently growing atabout 5 gigabytes per day.

Analytics are delivered to more than 1,500 named users –including about 300 upper- and midlevel managers andfinancial analysts. Users get their information from the SAP business explorer tool front end and SAP Web-basedscorecards and dashboards, available via their intranet. Byutilizing SAP NetWeaver BI performance tools, such asprecalculation and caching, the business can expedite theanalysis of very large data sets.

The new platform that SAP NetWeaver BI provides allowsMcKesson Pharmaceutical to replace, over time, a myriad ofhighly disconnected, legacy IT systems. McKessonPharmaceutical uses SAP NetWeaver BI to centrally houseand organize critical company data and to provide a flexiblereporting and analytics environment. As a result, thebusiness unit is in the process of simplifying its IT landscapeand achieving total cost of ownership (TCO) savings.

Among the benefits of the new platform for McKessonPharmaceutical is an automated, enterprise-wide view ofinventory adjustments on a next-day basis. Managers canquickly perform root-cause analyses and resolve discrepan-cies as they occur. Similarly, McKesson Pharmaceuticalfrequently drop-ships orders directly from manufacturers to its customers. Prior to using SAP NetWeaver BI, managershad to pull data extracts from a number of systems, thenmanually merge the results and perform ad hoc analyses inorder to see exceptions. Now, managers get automatic next-day instead of monthly updates and can quickly drill into thebusiness process through a specialized data mart.

52

Figure 1: Historical Business Intelligence Landscape

TransactionalSystems

Reporting/Analytics

Downstream Systems

SAP BW

Legacy DW

MF DB Files

PurchasingSystem

Other Downstream

Systems

Sal

es H

isto

ry F

low

Ana

lysi

s

SAP® R/3®

MainframeApplication



WarehouseSystem

Other Systems

McKesson

53

Company BackgroundMcKesson Corporation, ranked 15th in the FORTUNE 500, is a healthcare services and information technology companydedicated to helping its customers deliver high-qualityhealthcare by reducing costs, streamlining processes, andimproving the quality and safety of patient care. Over thecourse of its 170-year history, McKesson Corporation hasgrown to provide pharmaceutical and medical-surgicalsupply management across the spectrum of care – healthcareinformation technology for hospitals, physicians, home careand payors; hospital and retail pharmacy automation; andservices for manufacturers and payors designed to improveoutcomes for patients.

McKesson Pharmaceutical, a business unit of McKessonCorporation, is the market leader in pharmaceuticaldistribution and supply chain management. The company’ssupply, technology, and care management solutionsempower more than 25,000 retail and 5,000 health-systempharmacies nationwide. McKesson Pharmaceutical’scustomers include large, national chains and communitydrug stores, as well as hospital pharmacies, outpatient clinics,and other institutional providers.

Keys to GrowthThe company has identified two primary goals to ensurefuture growth:

• Improve level of customer satisfaction to maintain andgrow market share

• Increase profit margins, create a solid financial foundation,and increase attractiveness to the investment community

To accomplish these goals, McKesson Pharmaceutical isworking to:

• Reduce costs

• Create value

• Identify and capture sales opportunities

Information SystemsMcKesson Pharmaceutical implemented SAP NetWeaver BI as the strategic platform to replace its legacy systems. Thecompany takes advantage of SAP data warehousing functionsand the business explorer tool that delivers scorecard anddashboard data via the Web.

ApproachIn 2002, McKesson Pharmaceutical was using a myriad of IT systems for order processing, inventory management,marketing, finance, and other tasks. “The problem was thatmost of these systems were not connected, and they all haddifferent reporting mechanisms,” says Hickie. “No singlesystem had access to all information. Not even the in-house-developed data warehouse kept enterprise-level data.” (SeeFigure 1).

McKesson Pharmaceutical was also using a variety of businessintelligence tools to perform analytics on different systems.“Data proliferation was a significant challenge. In some cases,users couldn’t trace the definitions of some analytics becausethe infrastructure was so complex and some data definitionsare not commonly understood. We couldn’t get the informa-tion into the hands of the right people to make those deci-sions to help achieve the strategic priorities,” Hickie explains.

Business Intelligence StrategyFaced with these significant information challenges, McKessonPharmaceutical executives committed to a business intelli-gence solution. From a decision-support perspective, the business unit needed to satisfy the high demand foractionable information, where people could measure their performance as well as the effectiveness of processes.Information transparency, mandated by regulations such as the Sarbanes-Oxley Act, had to be guaranteed. Finally,McKesson Pharmaceutical had to find new ways to cope with extreme competition, increase sales, and enhance itsflexibility to implement new types of business processes. To achieve all this, McKesson Pharmaceutical sought tocentrally house and organize critical company data andprovide a flexible reporting and analytics environment. Inshort, the business unit wanted to shift emphasis from dataseeking to information analysis.

McKesson Pharmaceutical began a major initiative to set upan enterprise-wide business intelligence platform to ensurethat information was available – for disclosures as well as forthe purposes of internal management. In addition, it wantedto simplify the system landscape by significantly reducing thenumber of systems and interfaces, and to bring down the TCO.

Decision Factors for SAP® Solution: Complete, Scalable, and ReliableWhen evaluating potential business intelligence vendors,McKesson Pharmaceutical used some key decision criteria:extendibility, performance, scalability, and the feasibility of asingle-instance approach. At the same time, the companywanted to use business intelligence not only within theenterprise but also eventually outside with its customers and vendors.

“An adaptive business intelligence platform was needed thatenables us to structure this complex environment and tointegrate not only SAP solutions but also mainframe andlocal desktop applications,” says Sven Jensen, SAP businessintelligence project lead, McKesson Pharmaceutical. “Welooked at the strong connectivity of the SAP data ware-housing component and how it integrates not only with the SAP environment to leverage its natively deliveredbusiness content, but also with other sources via databaseconnections, flat files, or Java connections,” Jensen adds.

The tremendous scope of the business intelligence infra-structure was one reason why McKesson Pharmaceuticalchose SAP NetWeaver BI over other solutions, according toHickie. “With SAP NetWeaver, SAP delivers a complete, end-to-end business intelligence solution for process-basedanalytics,” he says. “It incorporates enterprise-wide datawarehousing functions and online analytical processing.Also, it’s highly scalable and can handle high volumes ofdata. There’s a lot associated here with vendor confidence,too. SAP has done a great job delivering our solutions.There’s a great deal of dedication on their part.”

54

Figure 2: Making the Business Intelligence Vision Operational

April 2004 to August 2005• Analytics rollout accord-

ing to release schedule• Weekly – defects and

reports• Monthly – high benefit/

simple development• Quarterly – ongoing

major BI analytics releases

September 2003• Analytics rollout for

day-one reporting for SAP R/3 MM & SD go-live

• Data provisioning for: SalesOperations (MM/PO)ProfitabilityFI (enhancements)

March/April 2003• Initial win for

BI team• Deploy limited

KPI’s not depen-dent on SAP® R/3® MM & SD implementation

• Proof of concept architecture complete

Figure 3: Data Provisioning Area for the Enterprise Data Warehouse

April 2003 – Go-Live KPIs

April 2003 – BI Architecture

September 2003 – ERP/BI Go-Live

January 2004 – August 2005 – Analytics Rollout

August 2005 – Hand Over to BI Org.

Analytical SystemsOperational Systems

Data cleansingaggregation & mapping

Meta Data Repository

DownstreamOperational

Systems

Land

ing

Pad

Dat

a Pr

ovis

ioni

ng A

rea

(DPA

)

SAPNetWeaver®

BIComponent

SAP® R/3®

Non SAP

Not all SAP R/3 needed by operational systems

Sales HistoryMaster Data

Sales HistoryMaster Data

Inventory MovementVendor Blocking

PO DetailReceipts

Mainframe

Warehouse System

Purchasing System

McKesson

55

Also important was the fact that the SAP NetWeaver BI com-ponent supports the varied decision-making requirements of users throughout the business unit. “SAP NetWeaver BIgives McKesson Pharmaceutical the ability to better under-stand its data, transform its data into information, and, fromthat, develop and impart knowledge,” says Jensen. “All of thatgets us to the point where we can start to create sophisticatedreporting and analytic solutions – based on exceptions, score-cards, and dashboards – to push critical information to keydecision makers.”

Building on Success: A Step-by-Step Implementation ApproachMcKesson Pharmaceutical planned to align the businessintelligence project with the implementation of SAP® R/3®software for sales and distribution and materials manage-ment in December 2002. However, before this happened, thebusiness intelligence project team deployed financial keyperformance indicators (KPIs) – allowing the business unit toreap early benefits. In addition, this quick win and positiveexperience enabled the team to understand, from a change-management perspective, how the solution should be rolledout in future. (SAP R/3 software is available today in themySAP™ ERP solution.)

“After this quick win we focused on the enterprise datawarehouse foundation, building the data-provisioning areaand the enterprise data warehouse layer that were about toreceive and hold tremendous amounts of new data fromsales, material management, finance, purchasing, and thewhole enterprise resource planning [ERP] suite, except HR,”Hickie says. “It took us seven months to define the principles,lay out the enterprise data warehouse, architect and deployit, and go live with it,” Jensen says. “After that, when thedata started to come in and we started to become proficient,we switched gears and focused much more on the analyticalside of the house,” adds Hickie. Beginning in September 2003,McKesson Pharmaceutical began to build its analytical solu-tions based on this enterprise data warehouse architecture(See Figure 2).

SAP NetWeaver BI: Right Enterprise Data Warehouse SolutionThe architectural layout of the enterprise data warehousesolution incorporates a sophisticated, multilayer approachderived from the concept of the corporate informationfactory (CIF)1. This architecture decouples transactional,provisioning, and reporting while providing for a large 10-terabyte-capacity data store. Multiple source systems –such as the SAP R/3 solution, the mainframe, a warehousemanagement system, and a purchasing system – delivermore than 150 gigabytes of data every month. From thetransactional systems, the information is either pulled out or trickled-out/trickled-in to the landing pad and dataprovisioning area. This area is built using DataStage, a leadingextraction, transformation, and load (ETL) solution fromAscential, powered by SAP NetWeaver.

Serving as a lean, highly available hub-and-spoke for informa-tion, the ETL platform stages, transforms, and manages thedata, then moves it to various transactional or analytical datatargets. Financial data that is not shared by downstreamoperational systems moves directly from the SAP R/3 systeminto the SAP data warehouse, using the built-in connectivityof SAP NetWeaver BI (See Figure 3). Whenever a downstreamdistribution of data from the SAP R/3 system to transactionalsystems is necessary, the information moves to the DataStagesystem, which in this case wraps SAP business content“DataSources.” (DataSources are how data is made availableto the SAP data warehouse.)

The data provisioning area holds about 90 days of informationonline, before it is moved to near-line storage. Any down-stream application may subscribe to this layer and receive theinformation as needed. The current landscape still includesan Oracle-based legacy data warehouse, since part of thehistorical data is available only there. “Within the next two years, I expect to have all the reporting and analyticstransition to SAP NetWeaver BI,” Hickie says. “There arecomplexities in the legacy environment, but my hope hasbeen that as we implement SAP data warehousing functions

1 W.H. Inmon, Claudia Imhoff, and Ryan Sousa, Corporate Information Factory, 2nd ed (John Wiley, 2001)

and people have seen the power of these analytic solutions,they move away from their old way of doing things in theirlegacy data warehouse. And that’s what we’re starting tosee,” Hickie adds.

From the data provisioning area, the information flows into the first layer of the SAP data warehouse – called the“staging” or “passthru” area – that facilitates parallelism and logical partitioning. Data is received throughout the daywithout compromising the consistency in the reportablewarehouse layers across all applications. Once the informa-tion is complete in this staging/passthru area, the systemmoves the data in parallel to the corporate memory layer, tothe operational data store, and to the multidimensional datamart reporting layer, which is built with SAP “InfoCubes”(multidimensional datasets) (See Figure 4). “Since the data inthe passthru area is deleted as soon as the logical deltas havebeen published successfully to all subscribers, it doesn’t holdany data persistently,” Jensen explains.

56

Figure 4: SAP NetWeaver® Business Intelligence Architectural Framework

BI Services

Analytical SolutionsReporting Layer (MultiProvider views)

SAP NetWeaver® BI – Front EndBEx Analyzer

Alerting

MultiProvider

Multidimensional Reporting StructuresReporting Layer (InfoCubes)Basic Cube

Corporate Memory Layer (ODS)ODS

DPA LayerOLTP “like” SLAExtract/Load 1 Extract/Load N Extract/Load M

Staging/PassThru Layer (ODS) – Non reportableODS

AnalysisPrecalculation Reporting

BEx Web

SAP® R/3® PurchasingSystem

WarehouseSystemMainframe

{{

Data load SLA 10 Hours

“Trickle”Data intoBW & DPA

Planned Capa-bility – Logical

PartitioningArchive Near-line Storage

DB Compress

OLTP layer

Archive/NLS

Legacy DataWarehouse

Archive/NLS

30 days

daily

SAP NetWeaver Business Intelligence Component

McKesson

57

Architectural Principles and Guidelines for the Enterprise Data WarehouseInfoCube data marts allow the flexible generation of queriesand navigation to integrated, granular, or aggregated data.With the help of the InfoCube model, McKesson Pharma-ceutical can easily implement horizontal consistency withinthe data mart layer. “Another key function of SAP NetWeaverBI that is making us so successful is the SAP “MultiProvider”concept, which enables a comprehensive view of differentbusiness documents distributed among several informationmodels,” says Hickie.

“Take, for example, the inventory-adjustment-process ana-lytics solution,” Hickie continues. “The MultiProvider conceptallows those analysts/users accessing this solution to drilldown directly from the finance document (journal entry)through to the material movement document to under-stand the root cause of an inventory adjustment. Prior to this solution, the analysts/users would need to look up thejournal entry in the SAP R/3 software and then go searchingfor the related material movement document either in theseparate warehouse management systems or in the SAP R/3system. The research process is made much more efficient,effective, and timely through the MultiProvider concept.”

Data marts, however, are by definition solution focused. Theyfocus on the reporting needs of a certain target group. Toavoid the limited reusability of data marts, to guarantee dataconsistency across all analytical solutions, and to controldata redundancy, McKesson Pharmaceutical implemented a centralized global version of data “truth” into what thebusiness unit calls the corporate memory layer.

“Holding granular, nonvolatile, and unflavored data, thecorporate memory incorporates the flexibility to supportunknown future requirements for analytical solutions,” saysJensen. “By strictly following the corporate guideline toextract data only once and deploy it many times, a trace-backof data is always guaranteed.” McKesson Pharmaceuticaldesigned the corporate memory layer to hold the completedata history, including snapshots and time-dependent viewsof the data. Within the corporate memory layer, data is firststored in the form in which it’s delivered by the extraction

process. It is then merged and written to the integratedenterprise data warehouse layer. The analytical data martlayer is more transient because it reflects business rules andflavors that are always adapted to changes in the businessmodel. Altogether, the reportable layers hold more than 5 terabytes of data.

To handle the mass of data McKesson Pharmaceuticalproduces, the business unit had to consider scalability andperformance from the very beginning of the design process.“We used the concept called ‘logical partitioning’ – groupinginformation according to logical buckets, such as fiscal year,customer segments, plants, or distribution centers. Thisallows us really to leverage the native parallelism functionsthat SAP NetWeaver has built in,” says Jensen.

“At the same time, it allows us to facilitate change, mainte-nance, and archiving in a much easier fashion, because wecan change going forward without impacting anything wehave already loaded. The enterprise data warehouse layerallows us to build additional analytical solutions by mergingthe various functional or subject areas together. The morethan 300 InfoProviders we’ve implemented so far mainlycenter on the logical partitioning of the information models.Altogether, SAP NetWeaver BI provides strong businessintelligence tools that we use – like an integrated set ofbuilding blocks for modeling, automated development, and efficient operation of our enterprise data warehousesolution,” Jensen adds.

With the tremendous growth of the solution, the manage-ment of metadata gains in importance. While moving thedata through the enterprise data warehouse, metadata isstaged to a metadata repository. There it is available as areference for any new development of analytical applications.It’s also available for end-user browsing of documentation –to investigate the semantics of the information models andanalytical solutions built on top of the enterprise data ware-house layer. “Having the metadata dictionary helps us tosteer the users to the right places,” says Jensen. “Complexityfor the user is further reduced by authorizations onInfoAreas. A user might see just a drop-ship area or fee-billing area.”

Business Intelligence Services and Information Deployment StrategyFor its more than 1,500 named users, McKesson Pharma-ceutical has created a five-level reporting and analyticssolution that’s both powerful and simple to use – userssimply drill down from one level to the next (See Figure 5).The business intelligence home page provides a central pointof entry for users, eliminating the frustration of searching forreports. The scorecard is where McKesson Pharmaceutical isin the process of housing high-level KPIs or executive-levelmeasurements. The dashboards provide as many as sixmeasures to support one single KPI (for example, viewing a regional analytic by distribution center or customer).Scorecard and dashboard analytics are being delivered via the Web applications of the SAP business explorer tool.Additional Web reports enable users to get answers toquestions through further research or by drilling down tospecifics (for example, analyzing inventory discrepancies).Finally, McKesson Pharmaceutical uses the MicrosoftExcel–based SAP business explorer tool to create detailedanalytic reports regarding, for example, profitability analysis.

“Basically, by using a top-down strategy we can handle highvolumes,” Hickie says. “We can bring the right informationwith the right tools at the right time to the right user group.And as we deliver each analytic solution, the business startsto understand the data, transforms the data into information,and gains a developed knowledge at the very end. With theknowledge gained, we can then start to develop the appropri-ate exception thresholds for our management by exceptionor corporate performance management (CPM) approach,”says Hickie.

58

Figure 5: Business Intelligence Deployment Strategy

Executive Analytics,Scorecards, & Dashboards

Predefined Analytics,Queries, & Reports

Infrastructure,Architecture,& Database Tables

Scorecards

Flexible Reporting

Data Provisioning

ERP/BI Release – September ’03

Quarterly Releases – April ‘04 to August ‘05

Weekly/Monthly Releases

McKesson

59

Organize for Business IntelligenceA group of business team leads was in charge for the initialsetup of the enterprise data warehouse layer. Each lead wasresponsible for a specific process-based “workstream” such asprofitability, compliance, sales, operations, purchasing,finance, or supplier interaction. Together with the technicalteam they defined specifications for their information modelsand coordinated any cross-workstream developments. “Forall major reporting entities we assigned responsibilities clearly,to ensure horizontal consistency of the layers through allfuture developments,” says Jensen. “Since the corporatememory layer is designed to support the unknown, we willsignificantly reduce the involvement of IT in building process-based analytics and shift resources to set up new content areas.The business team leads, and even the analysts themselves,can build additional SAP data warehouse queries and work-books,” says Hickie.

McKesson Pharmaceutical is transitioning the businessintelligence project organization to become a supportorganization. A business team is dedicated to quickly providea resolution for any requests coming from the users ofvarious analytical solutions. Beneath this initial layer ofsupport there is a business intelligence center of excellence,which provides second-level support from technical solutionexperts. Both organizational levels support the process ofinformation deployment and watch over the architecturalprinciples of the enterprise data warehouse with regards tofuture developments.

Analytical ApplicationsSAP NetWeaver BI is helping McKesson Pharmaceuticalachieve its business objectives by streamlining key businessprocesses. Two examples are the analytic solutions for theinventory-adjustment process and the drop-ship process.

Inventory Adjustment AnalyticsMcKesson Pharmaceutical’s business model combines high-value products with low margins. Even a modest loss ininventory – through expired shelf life, for example – canhave a severe financial impact. Before it implemented theSAP solution, McKesson Pharmaceutical used semiannualreconciliation – a process that hindered predictability. Withthe new process, the McKesson Pharmaceutical distributioncenter and financial managers get an automated, enterprise-wide view of inventory adjustments on a next-day basis. They can quickly perform root-cause analyses and resolvediscrepancies as they occur. McKesson Pharmaceutical is in the process of computing actual cost savings. Hickie saysthe potential for savings is significant, since McKessonPharmaceutical’s inventory is a multibillion dollar asset.

Drop-Ship AnalyticsMcKesson Pharmaceutical frequently drop-ships ordersdirectly from manufacturers to its customers. For tracking,this process requires a cross-functional view that includescustomer order, purchase order, customer billing, collection,and vendor payment processes. Prior to using SAP NetWeaverBI, managers had to pull data extracts from each of thesesystems, then merge them manually and perform ad hocanalyses in order to see exceptions. Now, managers getautomatic next-day updates instead of monthly ones, andquickly drill into the business process through a specializeddata mart. “This has enabled in-depth visibility into thisprocess,” says Hickie. As a result, managers can make better-informed, faster decisions about inventory and other relatedmatters, customers are better served, and McKessonPharmaceutical is more competitive.

The Road AheadMcKesson Pharmaceutical’s next steps will focus on extendingthe reach of the SAP NetWeaver BI component by addressingmore and more information consumers. The business unit islooking to integrate the Web-based infrastructure that’salready available into a new, role-based portal solution. “Themain benefits we expect to investigate in a portal environmentare a simplified and personalized access to information thatbetter fits the needs of the information consumers in ourcompany – as well as the native infrastructure for collabora-tion provided by the portal,” says Hickie. “We are going toembed and interrelate our analytical solutions into the taskcontext provided by operational applications that run in theportal. Alerting and management by exception will reducethe volume of information significantly, guide users toanswers more quickly, and thus improve the likelihood ofresults,” he says. To further improve the top level of thedeployment pyramid, McKesson Pharmaceutical will launcheven more advanced scorecards.

At the same time, the enterprise data warehouse solutionwill grow from a content perspective. An enhancedprofitability analysis is another powerful analytical solutionthat is now coming online. “Never before were we able toanalyze profitability as we do it today,” Jensen explains.“We’re able to drill down to line-item details to analyzeprofitability by customer, supplier, products, or markets.This solution is being validated by finance and will be rolledout to our sales force in the near future.” Another solutionallows McKesson Pharmaceutical to analyze in more detailhow well customers, suppliers, and even the company itselfcomply with the contracts. “This solution gives us a look at an unprecedented level of detail,” says Jensen. “Thesecontracts can be complex and difficult to measure, but withSAP NetWeaver BI we’ll be able to monitor them much moreclosely. Before the [contract] period ends we can determineproactively if there is the potential to not reach contractedtargets.”

60

McKesson

61

Lessons Learned – Aligning Strategy and ExecutionThe step-by-step approach McKesson Pharmaceuticalundertook with its SAP NetWeaver BI release schedule hasworked out successfully. “A quick win proved that thearchitecture generally worked out, allowing us to switchfocus on the planning of this 10-terabyte warehouse solution.After a series of proof-of-concept projects we knew that wecould handle these volumes and the large number of dataloads,” says Jensen. “We needed to build for the future. It isdefinitely a lesson learned that we can handle the volumeswe’ve got today and we know we can handle the volumeswe’ll have down the road.”

“Another key success factor for building the enterprise data warehouse foundation was the support of executivemanagement – providing a budget for business intelligencedevelopment independent of any departmental solution.This allowed us to design and implement the corporatememory layer that guarantees vertical and horizontal dataconsistency. Speed and flexibility to answer any incomingrequests have significantly improved. At the same time, weoffer high-quality information at a level of granularity thatthis company has never seen before,” says Hickie. “The valueof information is intangible and hard to measure . . . but weare talking about significant savings using the new businessintelligence solutions we have here.

“Altogether, the improvements permitted by SAP NetWeaverBI are helping McKesson Pharmaceutical realize its over-riding objective of aligning business strategy with execution,”says Hickie. “SAP NetWeaver BI is providing unprecedentedinsight and transparency into our data. With our SAPNetWeaver infrastructure we are now able to make informeddecisions more effectively and efficiently, as well as evaluatethem more immediately.” This ability – to align strategy and execution – may be something a small business can take for granted, since the manager holds all the necessaryinformation in his or her head. But in a business this size, it’s a major challenge – and a necessity – if McKessonPharmaceutical is going to continue to grow and thrive in its industry.

Technical Information

• Solution Environment

– SAP NetWeaver, SAP NetWeaver BI, SAP R/3 software

– Integration of non-SAP data (mainframe, warehouse, and purchasing systems)

– Ascential DataStage for data provisioning to SAP NetWeaver BI and downstream operational systems

• Users: 1,500 registered

• Size: current size 5 TB, monthly growth 150 GB (sized for10 TB capacity)

• Hardware: IBM pSeries 690

• Operating System: UNIX

Photographer: Anne Knudsen

62

CompanyVolkswagen Financial Services AG(VW FS) is Europe’s largest providerof automobile financing services.The fully owned subsidiary ofVolkswagen AG is headquartered inBrunswick (Braunschweig), Germany.With over 5,000 employees world-wide, the company achieved annualearnings of €341 million in the 2004 financial year.

Challenges and Strategic IT Goals• To increase the company’s ability

to respond, and to furtherenhance the risk managementsystem, through ongoing optimiza-tion and more widespread use ofinformation and control systems

• To provide the flexibility requiredfor integrating additional compa-nies in other countries into theexisting IT landscape against abackdrop of strong internationalgrowth

• As competitive pressure increas-es, to strengthen core areas ofexpertise by establishing andexpanding new sales channels

• To sustainably boost customerloyalty through business intelli-gence embedded in best-practiceprocesses conducted close to thecustomer, which in turn are basedon closely integrated analyticalapplications

Solution• To formulate business intelligence

standards that apply across theentire enterprise

• To establish an enterprise datawarehouse with comprehensive,integrated overviews of all decision-relevant enterprise data,using the SAP NetWeaver® platform as the strategic businessintelligence platform

• To employ a wide range of business intelligence services to handle all of the company’sanalytical needs: planning, report-ing, analysis, and the design ofanalytical processes and data mining

• To enable approximately 1,000end users to use the MicrosoftExcel–based BEx Analyzer or portal-integrated BEx Web appli-cations to incorporate informationfrom the enterprise data ware-house into their decision-makingprocesses

Results• Lowering of infrastructure costs

with SAP NetWeaver as an end-to-end solution for all processesinvolved with data integration,data maintenance, and the distribution of information

• Avoidance of “data isolation”coupled with improvements indata and analysis quality, thanksto centralized data provision with simultaneous reduction incomplexity

• Synergy effects thanks to a standardized service and supportconcept, with centralized hostingand the more widespread utiliza-tion of existing expertise to generate further potential savings

• Reduced burden on the IT depart-ment, thanks to users’ ability toprocess data more independently

63

VOLKSWAGEN FINANCIALSERVICES AGSAP NetWeaver® as a Strategic Business Intelligence Platformat Volkswagen Financial Services AG

The implementation of international growth objectives and the ongoing

improvement of control systems necessitate a comprehensive and integrated

overview of corporate, customer, and contract data. As part of an extensive

restructuring project, Volkswagen Financial Services AG (VW FS) is consoli-

dating its system environment, creating a future-focused company-wide

enterprise data warehouse based on the business intelligence component of

the SAP NetWeaver® platform. The company now has integrated, uniform,

transparent data, together with powerful business intelligence services that

enable users to plan and analyze their business processes with total flexibility.


Volkswagen Financial Services AG –

Financial Services for Every Aspect of Car Ownership 65

Flexibility and Transparency – The Key to Success 65

Integrated Business Intelligence Platform for

Global Growth and Rising Revenues 65

Creating Transparency with SAP NetWeaver 66

Finding the Best Way to Tackle the Problem 67

Consistent Information Thanks to a Clearly Defined

Layer Concept 68

Added Value Through Integrated Overviews and

Flexible Analysis Options 69

On the Tracks of the Most Profitable Customers

with Analytical Customer Relationship Management 69

Ready for Basel II 71

Into the Future with SAP NetWeaver Exchange Infrastructure 71

Executive SummaryVolkswagen Financial Services AG (VW FS) had a heteroge-neous, distributed system landscape that made it difficult to obtain a uniform overview of its corporate, customer, and contract data. Flexible, comprehensive processing andevaluation of business-critical information was alsohampered. To support its plans for international growth and to boost the company’s core areas of expertise, VW FSdecided to provide all of its decision-relevant information ina central enterprise data warehouse that offered flexibility forexpansion. VW FS chose the SAP NetWeaver® platform overthe alternatives because its business intelligence componentoffered flexible processing of information and integratedoverviews of large volumes of data from various, mainly non-SAP source systems – all with a comparatively low totalcost of ownership.

Using the SAP NetWeaver Business Intelligence component(SAP NetWeaver BI) as an enterprise data warehouse, thecompany is able to continuously expand and improve itsgroupwide planning and control processes. Up-to-dateinformation on the development of contract agreements, forexample, can be compared with previous periods with verylittle effort. The data can be categorized, based on its origin,into regions or dealers. Thanks to integrated customer andcontract data, the company also benefits from a holisticoverview of its customers in the customer interaction center,enabling more precise targeting of customers and moreefficient campaign management. Because of these powerfulbusiness intelligence functions, SAP NetWeaver also enjoys a high level of acceptance among users, thus fosteringsystematic use of data to support the company’s objectives.

64

Volkswagen Financial Services AG

65

Volkswagen Financial Services AG – FinancialServices for Every Aspect of Car OwnershipAs a holding company, VW FS combines all of the financialservices companies within the Volkswagen Group in Europeand the Asia/Pacific regions under one roof. Serving cus-tomers of Volkswagen, Audi, Seat, and Skoda, VW FS offers acomprehensive portfolio of services relating to the financingof new and used cars, together with direct banking.

In recent years competitive pressure in the automotiveindustry has been hiked up further as a result of the relativelyrestrained demand worldwide. While margins in the carmanufacturing industry have remained extremely low, theproportion of financial services in the automobile added-value chain has risen sharply.

To live up to its strategic role within the Volkswagen Group,VW FS specifically capitalizes on international growthopportunities, focusing particularly on eastern Europe andsoutheast Asia. The company tries to address the growingdemands of dynamic international competition in terms of responsiveness and risk management by constantlyoptimizing its information and control systems.

Using innovative financing and leasing concepts, tailor-made insurance packages, and direct banking, the companyplays a key role in promoting sales for the automobile brandsit serves. The stronger market position is based on theestablishment and maintenance of new sales channels forproviding intensive customer support and, ultimately,delivering a lasting increase in customer loyalty.

Flexibility and Transparency – The Key to SuccessThe increasing internationalization of its business activitiesmeans VW FS faces the challenge of integrating additionalcompanies abroad, complete with their own special charac-teristics, into its existing IT environment – quickly andflexibly. Its primary focus in this context is to utilize invest-ments already made in existing solutions and to find ways ofadapting these solutions for the new markets. To preventdata and processes from being isolated from other data andprocesses, VW FS uses SAP NetWeaver as a flexible applicationand integration platform for cross-system mapping ofbusiness processes. A complete, integrated overview of alldecision-relevant corporate, contract, and customer data is essential for optimizing controllability and customerrelationship management, and identifying and analyzingpotential risks – even though the volume of data is expand-ing rapidly into the terabyte range. “Primarily, we needed aglobally standardized database with a future-focused businessintelligence architecture that can be adapted flexibly andquickly to market changes,” explains Frank Semrau, head ofbusiness warehouse systems development at VW FS.

Integrated Business Intelligence Platform forGlobal Growth and Rising RevenuesTo address this challenge, VW FS decided to formulatebusiness intelligence standards that would apply across theentire company. By introducing SAP NetWeaver, VW FS tookadvantage of a strategic business intelligence platformcapable of integrating data from a range of different systems,providing decision makers and operational applications witha comprehensive overview that had never before beenpossible. With planning, reporting, and analysis functions,including extended data analysis provided by the analysisprocess designer functionality in SAP NetWeaver BI, thecompany provides a wide range of business intelligenceservices that cover all of the users’ analytical requirements.Depending on their requirements and level of knowledge,the VW FS end users, who number just under 1,000, useeither the Microsoft Excel–based BEx Analyzer or the portal-integrated BEx Web applications for access to the enterprisedata warehouse. Relevant information can then be factoredinto their decision-making processes.

Creating Transparency with SAP NetWeaverEven in 2001 a range of proprietary solutions, isolated datastocks, and nonconsolidated, partially redundant data were clouding the company’s view of its mission-criticalinformation (See Figure 1). Contract-related data – vehiclefinancing and leasing together with direct banking andinsurance services, for example – was distributed locally over isolated host systems and SAP® R/3® software. (SAP R/3functionality is now available in mySAP™ ERP.) A compre-hensive platform that would facilitate integration wasmissing. The data was merged in a mainframe-based datawarehouse, which merely allowed the retrieval of rigidlypredefined standard reports.

“The existing solution offered only limited added value forthe company’s business units, since there were no options forselecting and linking data or obtaining up-to-date, integratedoverviews,” recalls Semrau. “Every change to a user’srequirements resulted in additional programming efforts.”

VW FS formulated a business intelligence strategy that usedSAP NetWeaver BI as the basis for establishing a comprehen-sive overview of all of its corporate data, providing extensiveoptions for management reporting and analyses and creatinga flexible infrastructure to closely embed integrated infor-mation in operational business processes. For the projectmanagers, the key reasons for choosing SAP NetWeaver BIincluded its openness for integrating SAP and non-SAPsource systems, along with its scalability for processing largevolumes of data.

Around 90% of the raw data that was to be integratedoriginated from non-SAP systems, and the volume of datawas growing continually as a result of the firm’s rapidexpansion over the course of several years. Back in 2003 thecompany handled a data volume of 24 GB a month. Now, it handles around 350 GB of raw data in the same period.Because more and more proprietorial developed systems will

66

Figure 1: Historical Business Intelligence Environment

Field Service Information System, Dealer Competition Diverse MIS Systems (Microsoft Excel, Microsoft Access)

Host-Based Data Warehouse Monthly Updated

Ad HocReporting

150 Users

Data Provisioning

TerminalEmulation

HostLeasing

Flatfile – ExtractionHost Systems

Internal Data

HostLoans

CarDeliveries

ExternalData

SourceSystems

DealerData

SAP®R/3®

104 Interfaces


67

be replaced in the future by SAP standard software, VW FSwill profit increasingly from the semantic integration of theoperational SAP solutions and the metadata of the enterprisedata warehouse.

“Ultimately, SAP NetWeaver BI placed us in the position toimplement our enterprise-wide platform strategy success-fully,” says Semrau. Cost considerations were a major factorin the decision-making process too, however. “We believethat SAP NetWeaver BI, as an end-to-end solution, offerslong-term potential savings. Starting with data integration,continuing via complex selections with the analytical processdesigner, and ending with a user-friendly, portal-integratedanalysis and reporting environment, we are able to establishall of the required components on a single, open platform,”he explains. “As a result, we can avoid isolated solutions,thereby reducing the complexity and costs associated withour system environment. SAP NetWeaver BI and our opera-tional SAP solutions run on the same technology platform.A uniform service and support concept, centralized hosting,the ability to exchange experiences, and synergy effects whenaccessing development resources are all leading to consider-able reductions in costs.”

Finding the Best Way to Tackle the ProblemOnce the project began in September 2002, Semrau’s teamspent the next two months making a detailed inventory ofthe company’s current status. “Before the migration to SAPNetWeaver BI, we first had to meticulously document every-thing we had and everything we needed,” reports Semrau. In December 2002 the team carried out reporting workshops,focusing on adaptation and conversion of the 400 affectedreports. “Because data provision up to that point had beenorganized on a local level, there was a significant level of redun-dancy in the applications and reports, explains Rayk Fenske,business intelligence system architect. “A lot needed to begathered together, and most importantly its semantics clearlydefined, to yield conclusions for the data modeling process.”

The data modeling process in particular required a lot ofrethinking on the part of the VW FS project team. “We hadto move away from our original project-oriented way ofthinking, and go more towards solutions based on verticallyand horizontally integrated layers of data,” explains AdrianBourcevet, business intelligence system architect at VW FS.“With this perspective we could use standards that wereapplicable across the company to provide cross-projectanswers.”

Consistent Information Thanks to a ClearlyDefined Layer ConceptBecause SAP NetWeaver BI provides powerful standardizedfunctions for extraction, transformation, and loading (ETL),the project managers were able to choose from a range ofoptions for extracting the data from the various sourcesystems. While the data from the contract management hostsystems Kredis (financing) and Leasis (leasing) is extracted via flat files and loaded into SAP NetWeaver BI, data fromother systems (SAP R/3, the mySAP Customer RelationshipManagement solution, the central business partner system,and BCA) is mostly transferred via standard and generic extrac-tor tools. All operational systems could also be integrated,including direct banking, insurance systems, and externalsystems such as the Volkswagen Group’s dealer system. Thedata from the English and French companies, which are nowalso online, is integrated via direct database connects.

Between December 2002 and March 2003 VW FS drafted andimplemented three layers of data (See Figure 2). Initially, allthe data has to be stored as a “corporate memory” in theoperational data store layer, or ODS in a format similar tothe source system. “The initial layer acts as a single version of the truth,” says Fenske. “To avoid data redundancy, or atleast control it, all data is extracted only once and updatedfrom there. At the same time, the initial layer contains all the information we need to support future requirements that we may not be aware of yet.” If operational reporting is required from a local perspective, the information can be stored and analyzed without any further integrationprocesses in a specially designated “InfoMart” area. However,the crucial layer for establishing a data model that is standard across the company is the enterprise datawarehouse. Bourcevet explains, “In this layer, customer,product, contract, and market data is streamlined andintegrated via key relationships, for example. Within ourarchitecture, the enterprise data warehouse layer thusintegrates data from selected information models that are of interest throughout the company.”

68

Figure 2: Enterprise Data Warehouse with SAP NetWeaver® BI

SAP NetWeaver® BI Front End

SAPNetWeaver BI Component

BI toolThird party

SAP CRMSAP® R/3® CO

BI Services

Calculations% + –

MicrosoftExcel

Alerting &Precalculation

Data Layer 3:InfoMartReporting Layer

Data Layer 1:Operational Data StoreNo Reporting

ConsolidatedMaster Data Plan Data

PlanningData Mining &Analysis Processes

Reporting &Analysis

Portal Web

Data Layer 2:EnterpriseData Warehouse

. . .

. . .

InfoSource . . .

Leasing


Loans FIS

DatabasesDB-Connect

UK + FBCA

Standard, Generic ExtractorsSAP Source Systems

ZGP ... CRM

SourceSystems

Dat

a S

tagi

ngO

vern

ight

Dat

a S

tora

geIn

form

atio

nD

eplo

ymen

tD

ata

Inte

grat

ion

&Tr

ansf

orm

atio

n


69

When new “InfoObjects” (data elements) are developed, VW FS always takes account of the entire company’s needs.“An InfoObject must be set up so that it can also be under-stood in an international context and no semantic misunder-standings can arise,” explains Fenske. The informationmodels now comprise more than 10,000 InfoObjects andaround 1,000 “InfoProviders” such as ODS objects.

Added Value Through Integrated Overviews and Flexible Analysis OptionsAfter a four-month test phase the new business intelligencecomponent went live at VW FS in August 2003. It initiallyhad around 150 users, primarily from the business units’controlling, risk management, and human resources depart-ments. “Over the long term the number of informationconsumers will grow sharply, and the majority of them willaccess Web reports via the enterprise portal,” says Bourcevet.“As a zero-footprint application, Web reporting (BEx Web) is also the most cost-effective solution from a maintenanceperspective. Users in controlling and risk managementgenerally prefer to access the data they need via MicrosoftExcel (BEx Analyzer). In light of very positive experiences, we optionally offer the BEx Analyzer to all of the company’suser groups.”

A group of about 60 analysts, in addition to using the OLAPanalysis functions, also use the analysis process designer,which combines extended analysis, transformation, and datamining, and also enables newly generated secondary datasuch as classifications or cross-selling rules to be storedwithin SAP NetWeaver BI or in the connected source systems.“SAP NetWeaver BI also provides considerable added valuethanks to the automated distribution of integrated corporatedata from the business intelligence component, both to our end users and to downstream operational solutions such as mySAP Customer Relationship Management and mySAPERP,” explains Fenske.

With the “information broadcaster” feature, VW FS can alsoautomatically provide information to people outside thecompany who do not have direct access to the enterprise

data warehouse (dealers, for example). This informationtakes the form of precalculated reports. Feedback from usersis positive, since users are experiencing no deterioration inperformance despite the data volume of around 2.5 terabytes.On the contrary, SAP NetWeaver BI not only offers userssimple and fast access to data, but also makes previouslyunheard-of analysis options possible thanks to the linking of different data sources and simultaneous accesses via OLAP.Says Semrau: “Users can effortlessly compare up-to-dateinformation on the progress of contract agreements withprevious periods, for example, and the data can be analyzed,based on its origin, by region or dealer. Even the users’ own complex scenarios can be handled. “The flexibility and user-friendliness of the business intelligence toolsencourage a creative approach to the extended possibilities.Valuable information is thus unearthed that previously could only be obtained with the IT department’s support, or couldn’t actually be generated at all,” explains Semrau.

On the Tracks of the Most Profitable Customers with Analytical CustomerRelationship ManagementSAP NetWeaver BI is bringing significant benefits in the customer interaction center, for example. Since February 2004 customer service reps have been able to usemySAP Customer Relationship Management to accessintegrated, uniform customer data from across the entirecompany. The holistic overview builds up a multifacetedpicture of the customer. With just a few glances at the masterdata and product details, the customer support team cantell, for example, the stage of a customer’s life cycle, andwhich products might still interest that customer. SaysSemrau, “Thanks to SAP NetWeaver BI, significantlyimproved cross-selling is now possible especially in the case of customer calls, since customers are generally morereceptive in these situations than they are in response toproactive contacts made as part of conventional productcampaigns.” To document the success of an offer, or thecustomer’s response, the relevant information on a contactor a new campaign is fed back into the enterprise datawarehouse via a closed-loop process.

At VW FS, the customer comes first. To ensure the quality ofthe complaints-processing system, the company implementedan analytical application that regularly enables customerswith complaints to be selected based on predefined criteriaand transferred as a target group into the customer relation-ship management system. Supported by the campaignmanagement system, activities that are enhanced automati-cally with information from the original complaint (forexample, the reason for the complaint) are generated for allcustomers in the target group. The effort required for pro-cessing activities in the customer care center is thus kept to a minimum. When a service rep documents the customer’ssatisfaction with the way a complaint has been processed, therep has an overview of all the relevant information at his orher disposal. All of the customer’s feedback is ultimatelycondensed into satisfaction indices using SAP NetWeaver BI.An activity relevance analysis offers valuable clues for deter-mining the aspects of support quality that most influencethe customer’s overall satisfaction and the measures that canbe used to systematically improve quality.

70

Figure 3: Enterprise Data Warehouse Following Integrationwith SAP NetWeaver® Exchange Infrastructure (SAP NetWeaver XI), Basel II, and Near-Time Analysis

SAP NetWeaver® BI Front End

SAPNetWeaver BI Component

BI toolThird party

SAPNetWeaver XI

SAP CRMSAP® R/3® CO

BI Services

Calculations% + –

MicrosoftExcel

Alerting &Precalculation

Data Layer 3:InfoMartReporting Layer

Data Layer 1:Operational Data StoreNo Reporting

ConsolidatedMaster Data Plan Data

PlanningData Mining &Analysis Processes

Reporting &Analysis

Portal Web

Data Layer 2:EnterpriseData Warehouse

. . .

. . .

InfoSource . . .

Leasing


Loans FIS

DatabasesDB-Connect

UK + FSAP

NetWeaver XI

Standard, Generic ExtractorsSAP Source Systems

ZGP ...BCA CRM

SourceSystems

Dat

a S

tagi

ngO

vern

ight

Dat

a S

tora

geIn

form

atio

nD

eplo

ymen

tD

ata

Inte

grat

ion

&Tr

ansf

orm

atio

n

Near TimeAnalysis

History


71

Ready for Basel IILike all banks in Europe, VW FS is also facing the challenge of implementing the revised capital requirements and riskmanagement standards under the terms of the Basel IIagreement. (Banks are for instance obliged to store historicalsnapshots of their contracts to be able to trace back anychanges to the documents.) “In the initial layer of thebusiness intelligence platform, we need to establish andmaintain a complete history for all of the data affected byBasel II,” explains Bourcevet. Increased demands will also bemade on the traceability of the data. In addition to the data,the data transformation rules will also be stored as versionsin a historical format.

With SAP NetWeaver BI the company is ideally equipped forall of these requirements. “Because many of the new businessintelligence projects run synchronously, and since theypotentially access shared functions and configurations, wecoordinate our distributed development projects in onecentral instance via clearly defined standards and processes,”explains Fenske. “As a result, the development environment,along with the transport and authorizations system of SAPNetWeaver BI, brings security to our distributed developmentwork. And it makes it easier for us to fulfill the requirementsof Basel II.”

Additional foreign companies can also be integrated asrequired with minimal effort. “In projects such as Basel IIcompliance, SAP NetWeaver BI delivers efficient imple-mentation, since the data can be obtained largely from thecorporate memory already set up in previous projects,” saysSemrau. Today, all of the data relevant for Basel II is alreadyavailable in the initial layer. The processing and calculationkernel, which will be used to derive further secondary datafrom the primary data, is due to be implemented this year.“The actual Basel II reporting system itself is due to comeonline as planned by 2007,” he adds.

Into the Future with SAP NetWeaver ExchangeInfrastructureNow, there are two key tasks to be addressed in addition tothe advancing internationalization of the enterprise-wideplatform and the ever-greater integration of business intelli-gence into the company’s operational processes. “First, we’reworking on implementing a system for reporting our keyperformance indicators to the group’s top-echelon manage-ment in order to give them the information they need fortheir work. As an overarching goal we are also pursuing amore focused, service-oriented networking of our entiresolution environment,” reports Semrau.

Semrau believes that the SAP NetWeaver ExchangeInfrastructure (SAP NetWeaver XI) component offerstremendous potential (See Figure 3). “SAP NetWeaver XIintegrates our systems into a fully communicative whole,offering all applications direct access to integrated corporatedata,” he remarks. “We took one of the first steps towardsturning our vision into reality at the start of 2005 with the linkup of SAP NetWeaver XI and SAP NetWeaver BI.”With message-based information distribution from SAP NetWeaver XI to the enterprise data warehouse, the foundations are also laid for near-time data analysis. For specific real-time analysis requirements, the data can be made available record by record immediately after it isposted in the source system and can be integrated into the information models.

72

Brief ProfileWith a company motto of “Henkel –A Brand like a Friend,” Henkel, whichemploys around 51,000 people,achieved sales of around €10.6billion in its 2004 financial year. The company, which has its headoffice in Dusseldorf, operates in the fields of laundry and home-caredetergents, cosmetics and toiletries,adhesives, sealants, and surfacetechnologies. Henkel products aredistributed in 125 countries aroundthe world and the company and itssubsidiaries are present in over 75nations.

Challenges• Extend the exchange of data,

information, and expertise acrosssites and business units

• Standardize key businessprocesses (for example: supplychains, finances) to increasecompetitiveness

• Answer relevant businessquestions and make sounderdecisions through standardizedreporting of heterogeneous data

• Bundle business intelligenceexpertise and deploy it efficiently

Goals• Replace a broad spectrum of

legacy business intelligencesolutions with a strategic businessintelligence platform

• Obtain standardized key perfor-mance indicators (KPIs) acrossthe company

• Use synergies within the companyfor increased market proximityand flexibility

• Reduce system administrationoverheads

Solution Approach• Use the SAP NetWeaver®

Business Intelligence (SAPNetWeaver BI) component tocreate a central businessintelligence platform for reportingand planning

• Gradually replace non-SAPbusiness intelligence systems

• Build up a virtual businessintelligence competence centerwith global responsibility withinthe international IT department

• Implement a cascading datawarehouse architecture based on SAP NetWeaver BI and rolloutof best practices via templates

Results• Better strategic and operational

management of the company• “Best of both worlds”: exploit the

benefits of standardization whileat the same time enhancingreaction speeds, customerproximity, and market penetration

• Reduced system administrationcosts

73

HENKELSAP NetWeaver® – Strategic Business Intelligence Platform at Henkel

Henkel is a global, brand-name manufacturer of laundry and home-care

detergents, cosmetics, toiletries, adhesives, sealants, and surface technologies –

running subsidiaries in 75 countries while selling its products in 125 countries.

When looking to replace a heterogeneous spectrum of legacy business

intelligence solutions with a strategic business intelligence platform, Henkel

opted for the SAP NetWeaver® Business Intelligence (SAP NetWeaver BI)

component – part of the SAP NetWeaver platform – to consolidate its group-

wide IT landscape and realize synergies and more flexibility. As a central

platform for reporting and planning, SAP NetWeaver BI enables data and

information to be exchanged across different sites and business units. Powerful

reporting and analysis functions support transparency and flexibility, which

enables Henkel to make better decisions based on up-to-date information.


Decentralized Management Culture, Heterogeneous Systems 75

Phase 1: “Stovepipe” Business Intelligence Tools (Past Solution) 75

New SAP NetWeaver BI Component Comes Out on Top in Performance Tests 75

Towards an SAP-Based Business Intelligence Landscape 76

Phase 2: Integrated Business Intelligence Platform (Current Solution) 77

Business Intelligence Services for the Information Consumer 77

Target: SAP NetWeaver as a Strategic Platform for Business Intelligence and Analytics 78

Controlled Redundancy in a Cascading Data WarehouseLandscape 78

BI-Landscape@Henkel: Target Architecture 78

Answers to Concrete Questions 79

IT Creates Added Value 80

Lessons Learned 81

Executive SummaryHenkel’s international corporate structure was reflected inits heterogeneous system landscape. Business intelligenceapplications from several large vendors were used in differentareas – from reporting through to customer relationshipmanagement (CRM). Henkel decided to consolidate its ITlandscape in order to create a strategic business intelligenceplatform and exploit synergies for increased marketproximity and flexibility. Its objective was to standardizeimportant business processes and to be in a position toprovide rapid and reliable answers to all fundamentalbusiness questions using standardized reporting procedures.

The SAP NetWeaver® Business Intelligence (SAP NetWeaverBI) component was the solution of choice. The decidingfactors were the solution’s flexible reporting and analysisfunctions, its tight integration with the SAP enterpriseresource planning (ERP) world, and its openness to non-SAPsystems. Henkel now deploys SAP NetWeaver BI across all itsbusiness sectors; existing business intelligence applicationsfrom other vendors are gradually being phased out. With the international data harmonization (IDH) layer, Henkelintroduced a master data management strategy thatsafeguards and globally harmonizes the quality of criticalmaster data.

By the end of 2006, the “BI-Landscape@Henkel” architecturewill be implemented in regionally consolidated ERP systemsfor western and eastern Europe, North America, the Asia-Pacific region, and Latin America. This forms the basis forregional SAP data warehouses that are structured by businesssector. The integrated business content of SAP NetWeaver BIspeeds up implementation and reduces development over-head. Flexible reporting and analysis functions provide fortransparency and flexibility at Henkel. Information updateddaily on global sales trends and profit margins optimizescompany management on both strategic and operationallevels. Henkel additionally benefits from a reduction insystem running costs.

74

Interna-tional DW

(IDIS, ICIS)

Non-SAP

PlanningApps

Figure 1: Stovepipe Business Intelligence Tools (Past Solution)

SyndicatedData

Legacy Planning DBs

Regional Legacy Infosystems and Non-SAP BI Tools

Other RegionalOperational

Systems

Regional Non-SAPLegacy ERP

Systems

Henkel

75

Decentralized Management Culture,Heterogeneous SystemsAs a result of its international scope, Henkel was character-ized by a decentralized management culture that wasreflected in a heterogeneous system landscape. In order tomaintain and increase its competitiveness, Henkel has beenworking towards an IT structure that is both uniform andflexible. “By consolidating our applications we are able tobenefit from the possibilities of bundling key processes –including business intelligence – while at the same timegoing some way towards overcoming the existing mentalityof stovepipe thinking,” is how Peter Hinzmann, CIO ofHenkel, summarizes the motivation. “We are increasinglyfocusing on the whole picture, which in turn raises theimportance of centralized management of the company. This process is actively supported by IT.”

Henkel has been a pioneer when it comes to the topic ofbusiness intelligence. The company began setting up its first data warehouse as early as 1991 with 1,600 users in 11 European countries and a data volume of over one terabyte.This was based around information systems for sales andmarketing in the areas of detergents (IDIS – internationaldetergent information system) and cosmetics (ICIS –international cosmetics information system). This datawarehouse provided reports and analyses for productmanagers, account managers, and sales managers based oninternal data such as invoices, orders, planning data, andexternal market research data. The data warehouse catered toboth local and regional information requirements and alsoallowed access to global and consolidated views of the data.

As information and planning requirements grew and compa-nies were acquired during the 1990s, Henkel deployed a widerange of different applications, including some in-housedevelopments. This meant that, at the beginning of 2000,Henkel was using business intelligence applications fromseveral large vendors for reporting, planning, and CRMpurposes. “Although these systems fulfilled the respectiverequirements at each site, only a limited exchange of

information and expertise was possible between the sites,”reports Werner Böttiger, IT project manager at Henkel’sbusiness intelligence competence center. A further disad-vantage in terms of effectiveness and costs was that businessintelligence expertise was dissipated across the company.

Phase 1: “Stovepipe” Business Intelligence Tools(Past Solution)Business intelligence became a key issue of strategic impor-tance within Henkel’s IT restructuring program. “Instead of continuing to work with lots of different applications inlots of different ways, we decided to consolidate the systemlandscape and opted for SAP NetWeaver BI as a strategicplatform,” says Peter Hinzmann.

New SAP NetWeaver BI Component Comes Outon Top in Performance TestsIn the run-up to the system selection, Henkel, in collabora-tion with the universities of Duisburg and Dusseldorf, drewup a list of criteria relating to costs, technical architecture,end-user functionality, and business content. This list wasused to assess various business intelligence software providers,and SAP NetWeaver BI was ultimately selected.

The reasons for the decision in favor of SAP NetWeaver BI canbe summarized as follows:

• Flexible and user-friendly analysis and reportingfunctionality

• Tight integration with the SAP® ERP world

• Openness to non-SAP systems

• Business content enables easy implementation of datawarehouses

• Existing SAP expertise can be used and expanded

• Scalable and suited to large data volumes

Performance tests in which data cubes with between 120 and130 million records were loaded and aggregated were a furtherkey factor in deciding to use SAP NetWeaver BI to handleongoing business intelligence projects. “SAP [NetWeaver BI]was twice as fast as our old system,” says Johan Scheepers –project manager, strategic sales unit detergents at Henkel –summarizing the result. As well as its poor performance, thelegacy system, which was an in-house development based onanother business intelligence vendor’s relational database,exhibited further weaknesses. For example, the ongoingdevelopment of the legacy system was no longer ensured, its maintenance overhead was very high, and its rigid datamodel was very difficult to expand when Henkel made newacquisitions. Furthermore, the large numbers of items andmarkets covered by the detergents and cosmetics sectorscalled for a very high level of data detail.

Towards an SAP-Based Business IntelligenceLandscape“We can realize our business intelligence strategy with SAP NetWeaver BI,” says Böttiger, explaining the objective.“Existing data marts can be consolidated and expanded tocreate global data warehouses that contain all the informa-tion we need for managing the business.” This requires astandardized data model, clear identification of the origin ofthe data, globally uniform master data, and an architecturethat can be logically integrated while physically being spreadacross different locations.

“SAP NetWeaver BI enables us to create a situation in whichwe can consolidate local and regional data from the informa-tion systems of the different countries and regions – forexample data relating to production, the value-added chain,sales and marketing – into global perspectives. Only when we have done that can we prepare global KPIs for use by topmanagement,” Scheepers explains.

The manifold benefits of SAP NetWeaver BI convincedHenkel to use the technology platform as a strategic businessintelligence platform across all business sectors. This strategyis linked to the gradual phase-out of existing businessintelligence applications from other vendors in countriessuch as France, Italy, Spain, Portugal, and Greece.

76

Figure 2: Integrated Business Intelligence Platform(Current Solution)

Henkel Portal/Intranet (.NET)

SAP NetWeaver® Business Intelligence(Reporting, Analysis, Planning)

Global SAP R/3Central

Functions

mySAP™CRM

Regional SAP R/3Surface Tech.

RegionalSAP R/3

CPG

Other Operational

Systems

Other ERP Systems

MARSTOP

AccountingSystem

UTILIZE



MARSTOP

Accounting System UTILIZE

Figure 3: Target – SAP NetWeaver® Business Intelligence as a Strategic Platform for Business Intelligence and Analytics

International Data Harmonization SAP® R/3® (IDH)

Regional SAP R/3Central

Functions

Regional SAPERP CPG

mySAP™CRM

Regional SAP ERPCentral

Functions

Regional SAPERP

Surface Tech.

Non-SAPERP

Non-SAPothers

International Data Harmonization SAP® R/3® (IDH)

Global SAP ERPCentral Functions

Henkel

77

Phase 2: Integrated Business IntelligencePlatform (Current Solution)With the IDH layer, Henkel introduced a master data manage-ment strategy that safeguards and globally harmonizes thequality of key master data. Based on SAP® R/3® software (nowavailable in the mySAP™ ERP solution), the item, customer,and supplier master data is recorded and managed centrally.“This enables us to reduce the maintenance overhead andavoid redundant data,” Böttiger explains. The IDH layercontains all necessary master data and attributes for theregional SAP systems, and master data for non-SAP systems(termed “IDH Light”) is also managed within this system.This data is then supplied to the live SAP and non-SAPsystems and the data warehouses within SAP NetWeaver BI.

Henkel also deploys an integrated planning solution usingSAP NetWeaver BI. An initial project was started in April 2001in the surface technologies division with the aim of creatingan integrated database for the global planning of unit sales,sales revenue, and results within the framework of theannual operating plan. At the time, about 60 associatedcompanies around the world supplied their planning figuresin Microsoft Excel format to the head office in Dusseldorf. As well as the fact that deadlines were often missed, largenumbers of queries spawned further versions and made itdifficult to retain an overview of the project. The planningand simulation functionality within SAP NetWeaver BIassisted the integration of the 23 Microsoft Excel planningsheets into the business intelligence platform. This enabledHenkel to considerably reduce the necessary consolidationeffort, which involved some manual data input, and tominimize the associated risk of mistakes. Inconsistencies arenow identified earlier and more easily, thus improving thequality of the planning. Further, integrated plan versusactual deviation reporting as well as detailed analyses ofhistorical data uncover critical business developments. Todayall divisions use the planning and simulation functionswithin SAP NetWeaver BI.

Business Intelligence Services for theInformation ConsumerThe SAP NetWeaver BI component makes a range of businessintelligence services available to the different user groups,mainly via Web reporting. The TOP accounting system(TOPAS) at the top of the information pyramid essentiallyprovides key financial data (for example: reporting of balancesheet and profit and loss account) for top management at the global level. Local sales and marketing reporting isdone via the management analysis and reporting system(MARS) for the consumer packaged goods (CPG) businessand UTILIZE for the technology division (U-T).

Henkel realized early that the majority of users are informa-tion consumers and acknowledged this fact with its front-end strategy. “80% to 90% of our end users are ‘readers’ andreceive information via Web reports and cockpits. The restare ‘power users’ who use the Microsoft Excel–based analysisand reporting functions of the business explorer suite oftools,” explains Böttiger. For this reason, as many workstationsas possible are provided with business intelligence applicationsvia the Web. Intuitive and user-friendly Web applications thatare integrated into the Henkel intranet enable even untrainedusers to access the necessary information and analyze thebusiness. As well as reduced training overheads, this zero-footprint approach also means that there is no need forseparate installations at each client, thus cutting downadministration requirements.

Target: SAP NetWeaver as a Strategic Platformfor Business Intelligence and AnalyticsThe end of 2004 saw the Henkel IT department start a pilotproject with the SAP NetWeaver Portal component – the SAP NetWeaver portal solution. In a proof-of-concept project,the IT staff will initially perform a full road test of the role-specific deployment of content in SAP NetWeaver Portalbefore the solution is offered to the individual departments.

Controlled Redundancy in a Cascading DataWarehouse LandscapeAs part of the process of implementing its strategy and goals,Henkel has drawn up the BI-Landscape@Henkel architecturethat will be gradually implemented by the end of 2006. Thisproject is based on regionally consolidated ERP systems forwestern and eastern Europe, North America, the Asia-Pacificregion, and Latin America – systems that are set up for eachbusiness sector. These systems provide the basis for regionalSAP data warehouses that are also subdivided into businesssectors and regions. These data warehouses supply the datafor the global SAP business warehouses, one of which is forthe CPG sector and one for the Henkel Technologiesdivision. The architecture further consists of separate globalbusiness warehouses for human resources and other corefunctions. As a result of the seamless integration of the SAPdata warehouses, this cascading system landscape enablesboth maximum flexibility at the regional level and a globalperspective.

BI-Landscape@Henkel: Target ArchitectureIn order to prevent the data volume of individual “Info-Providers” in the SAP data warehouse from becoming toolarge – and to enable the company to react flexibly toincreasing data volumes and new reporting requirements –Henkel has logically partitioned its data and uses “Multi-Providers” to create virtual connections between the basic,underlying, individual InfoProviders. MARS, for example,employs individual basic InfoProviders for each countrywhere data cannot be accessed directly for analysis purposes.Cross-country reporting is effected via MultiProviders.

78

Figure 4: BI-Landscape@Henkel: Target Architecture

•External Balance Sheet/P&L•Internal Reporting

•Global KPIs

HR WORLDWIDE

•Market Segments, Customer, Product

•Supply Chain Measurements

RegionalSystem

NA

RegionalSystem

CEE

RegionalSystem

LA

RegionalSystem

AP

Regional European System

Figure 5: The Henkel Data Layer Architecture

TOPACCOUNTING

SYSTEM

HR(BW)

Central(BW/SEM)

CPG(BW/SEM)

U-T(BW/SEM)

Global Business Warehouses per Business

Regional Business Warehouses Structured Accordingto Regional ERP Structure

(based on common template rules and developmentsystems where possible)Eu

rope

North

Amer

ica

Asia/P

acific

U-W

HFS Europe

U-K U-A U-T

Archiving

EDWLayer

TransactionalData

+Master Data

Information A

ccess

StagingLayer (PSA)

SA

P®

Sou

rce

Non

-SA

P S

ourc

e

ArchitectedDataMarts

Operational Data Store

Henkel

79

When setting up the data marts for the individual divisions,Henkel largely uses the master data objects from the SAPbusiness content as shared dimensions. “However, this isaccompanied by certain problems – for instance, when achange run relating to all central, shared objects affects alldata marts in which the objects are used,” explains Böttiger.

To get around these problems and to separate the loadprocess from the data staging process within the data ware-house, Henkel’s next step will be to introduce an additionaldata layer into its systems. “The enterprise data warehouse(EDW) layer does lead to a degree of redundant data, but thiscan be kept under control. All transactional data from thesource systems need to pass the EDW layer before it is writtento the final data destinations or data marts. This enables usto safeguard data quality and create a single version of truththat contains all historical data,” states Böttiger, summing upthe thinking behind this architecture.

The objects in SAP NetWeaver BI (for example: master dataobjects, data store objects, InfoCubes) are ideally suited tothe deployment of this architecture.

Answers to Concrete QuestionsThe increasing significance of business intelligence for Henkelis also a reflection of the market situation. The high pressureof pricing in the company’s markets requires indicators thatare transparent and as detailed and up-to-the-minute aspossible. These indicators enable Henkel to manage itself in a market-oriented and profitable way. In the detergent,cosmetics, and adhesives business (CPG), for example, theindicators include the internal sales data. The importance ofthese indicators is why Henkel’s latest business intelligenceproject focused on this topic.

“SAP NetWeaver BI provides us with rapid answers to concretequestions in everyday business life,” says Hinzmann, as hesummarizes the result of the project that Henkel realizedbetween January 2003 and August 2004. He adds: “For ourproduct and marketing managers, business intelligence is anessential tool for creating synergies despite differing localrequirements and standardizing aspects such as packagingdesigns or recipes as far as possible.”

Thanks to the new business intelligence applications basedon SAP NetWeaver BI, important sales data indicators areupdated on a daily basis, not weekly as before. At present, thisparticular business intelligence system for the CPG divisioncontains around 600 gigabytes of internal data. However, ITexpert Böttiger estimates that, in coming years, the systemwill easily exceed the one terabyte mark. Henkel will intro-duce the application into other key markets in the comingmonths to reach new user groups and to further expandinformation distribution within the detergents, cosmetics,and adhesives sectors. This will increase the number of usersduring the course of 2005 from the current figure of around1,100 to somewhere in the region of 3,000. Across the company,however, Henkel has more than 3,000 users currently usingSAP NetWeaver BI. By the end of 2006, this figure will rise to 5,000.

By means of this kind of business intelligence project withSAP NetWeaver, Henkel is also advancing content-orientedstandardization in reporting and planning. “Previously, eachcountry had its own reporting style,” explains Scheepers.“However, about 90% of key questions on the data areidentical.” For this reason, Henkel has defined a templatewith standard reporting content, based on best practices.This increases transparency in reporting and makesinternational business easier to manage, as all companiesspeak the same language when it comes to performanceindicators.

IT Creates Added Value“Our experience of projects up to now shows that SAPNetWeaver BI is enabling us to achieve our objectives in theconflict area between standardization and differentiation,”says Böttiger. “Standards help us to deploy IT solutions morecheaply and more rapidly and to reduce the complexity ofour processes. And at the same time we are improving cus-tomer proximity, reaction speeds, and market penetration.”

A further key factor is that the new technology platformenables Böttiger and his colleagues in the IT department tocreate added value for the company. This is why Böttigerbelieves that, because operating costs are significantly reduced,the company will be able to amortize individual businessintelligence projects within two years. SAP NetWeaver BI, he states, not only enables the IT department to definestandards more easily but also to ensure these standards areadhered to. Henkel’s IT experts are therefore happy to relyon their business intelligence competence center, whichconsists of a virtual team of 20 employees from 10 countrieswith global responsibility for all issues concerning businessintelligence.

80

Henkel

81

Lessons Learned

• Stable, scalable platform that can also handle large datavolumes

• Use of the business content for ease of implementation andreduced development overhead

• Initial front-end disadvantages compared to other toolslargely resolved with later software releases

• Use of Web reports and cockpits for information readersreduces training requirements – zero footprint reducesadministrative overhead

• Different requirements for global and local reportingrequire “controlled redundancy”

• “Think big, start small!” – start with a clearly definedproject that can be realized within a foreseeable period oftime

82

Company ProfileSony Ericsson Mobile Communi-cations is a leading worldwideprovider of mobile telecommunica-tions products. The company wasfounded in 2001 as a joint ventureby Swedish telecommunicationsgroup Ericsson and the SonyCorporation. The company’sheadquarters are in London and theR & D departments are located inSweden, Japan, China, the UnitedStates, and Great Britain. Duringfiscal year 2003 the company hadapproximately 3,500 employees andworldwide revenues of €4.7 billion.

ChallengesThe company faces a number ofmajor challenges, including thefollowing:• Strong competitive pressure on

the global markets for mobilemultimedia products

• Merging IS/IT landscapes afterthe launch of the joint venture

• Need to optimize the supply chain by improving visibility in theplanning process for productionand sales

• Difficulty in getting informationfrom SAP® R/3® software andgenerating reports by cross-company code and controllingarea

Strategic IS GoalsTo achieve success in facing itschallenges, Sony Ericsson hasformulated some strategic goals,including the following:• Optimize the support of manage-

ment decision-making processesby merging business intelligenceand commercial data into a single,integrated platform

• Ensure optimized sales andproduction planning by analyzingall key performance indicatorsfrom the sales funnel via a single,strategic business intelligenceplatform

• Improve the efficiency of produc-tion planning and the managementof worldwide sales activities

SolutionAs part of the solution for its busi-ness challenges, the company hasdecided to use the SAP NetWeaver®platform. Sony Ericsson is usingSAP NetWeaver as a strategicplatform to create a single, centralbusiness intelligence landscape formanagement and operationalreporting, and for production andsales planning.

ResultsThe creation of a central businessintelligence platform provides thecompany with the followingimportant results:• Standardized management and

operational reporting that providesup-to-date, transparent, andreliable information

• Improved management control ofsales and production planning

83

SONY ERICSSONSAP NetWeaver® – Strategic Business Intelligence Platform at Sony Ericsson

After Sony Ericsson was founded as a joint venture by two global companies,

a duplicated system landscape made operational planning and management

extremely difficult. In order to bring greater transparency and reliability to

the organization, Sony Ericsson decided to introduce the business intelligence

component of the SAP NetWeaver platform.


Technology Leader for Mobile Multimedia Products 85

Market Dynamics Require Transparent Reporting 85

Lack of Integrated Platform to Support Management

Decision-Making Processes 85

Step-by-Step Deployment 85

Phase 1: Sales and Profit Margin Reports

(Duration – Four Months) 86

Phase 2: Product Life-Cycle Management Analysis

(Duration – Two Months) 86

Phase 3: Sales and Purchase Order Analysis

(Duration – Three Months) 87

Phase 4: SCM Analytics (Duration – Four Months) 87

Phase 5: Enterprise Portal Integration, CRM Analytics,

and Financial Planning (Duration – Two Months) 87

Business Content Accelerates Implementation 87

Flexible Front Ends Ensure Acceptance 88

Lasting Added Value with SAP NetWeaver Business

Intelligence Functions 89

Lessons Learned 89

Executive SummaryAfter Sony Ericsson was founded as a joint venture by twoglobal companies, a duplicated system landscape madeoperational planning and management extremely difficult.In order to bring greater transparency and reliability to theorganization, Sony Ericsson decided to introduce thebusiness intelligence component of the SAP NetWeaver®platform. Crucial to this decision was the SAP NetWeaverBusiness Intelligence (SAP NetWeaver BI) component tointegrate large data volumes from both SAP and non-SAPsolutions and of processing them without performanceproblems. In addition, the built-in business content of SAPNetWeaver BI could be deployed at once and this speeded upthe implementation process considerably. The predefinedreports and analysis tools also helped to rapidly demonstrateearly benefits from the project at Sony Ericsson.

Sony Ericsson has since been using SAP NetWeaver as itsstrategic information platform to analyze, plan, and manageits operations. Daily information updates regarding salestrends and profit margins allow prompt corporate action.Optimized reporting and analysis tools provide the trans-parency and agility to deal with market dynamics and theflexibility to react to changes in demand. The consistentincrease in the number of registered and active users is anindication of the tremendous practical benefits and thecompany-wide usage of SAP NetWeaver BI at Sony Ericsson.

84

Non-SAPERP Systems

Non-SAP BI ToolsSAP BW

Figure 1: Scattered System Landscape

SAP R/3 JapanFI/CO

SAP R/3ReportingLIS, ABAP,

RP, RW

SAP® R/3®Reporting

LIS, ABAP™,RP, RW

Non-SAPERP System

Mexico

Non-SAPERP System

Japan

Non-SAPERP System

BrazilSAP R/3

Global

Sony Ericsson

85

Technology Leader for Mobile Multimedia ProductsSony Ericsson Mobile Communications was launched in 2001by Ericsson, a market leader in the telecommunications field,and by Sony Corporation, a leading manufacturer of enter-tainment electronics products. The mobile communicationsjoint venture is owned in equal parts by Ericsson and Sony.Sony Ericsson is responsible for research, design, anddevelopment – as well as for marketing, distribution, andsales – of mobile consumer products and customer supportservices. The company’s worldwide management is head-quartered in London, while R & D departments are locatedin Sweden, Japan, China, the United States, and GreatBritain. In 2003 the company employed approximately 3,500 staff and achieved revenues of €4.7 billion.

Market Dynamics Require Transparent ReportingAfter a few years with less demand the market for cellulartelephones is now very dynamic again. A special feature ofthe industry is that product life cycles are getting shorter andshorter. Devices that were upscale yesterday may already betechnologically obsolete today. The trend is towards multi-media cellular telephones with color displays and addedfeatures such as digital camera, games platform, MP3 player,or live stream video. To deal with these market dynamics andto have the development and production flexibility to reactto changes in demand, Sony Ericsson, as a global company,has to rely on powerful reporting. A high level of processtransparency and clear, up-to-the-minute reports are impor-tant basic requirements for successful corporate action. “Our IT systems must ensure a current and systematic analysisacross the entire sales funnel at all times, that is to say allsales activities worldwide, to support accurate sales forecastsand optimum process transparency,” says Roger Jalsing,business warehouse solution manager at Sony Ericsson.

Lack of Integrated Platform to SupportManagement Decision-Making ProcessesAs a consequence of the two companies combining forces thesystem landscape at Sony Ericsson was heterogeneous (seeFigure 1). This disparate landscape and lack of integrationmade it difficult to consolidate information from the

different sources and suppliers and get a global view. “We did a lot of manual work to create and deliver reports tomanagement,” reports Jalsing. Data had to be retrieved viaMicrosoft Excel, Microsoft Access, and SAP® R/3® softwareand was merged with great effort in time and labor.

Step-by-Step DeploymentThe need for operational optimization was obvious, and itwas not difficult for Jalsing to win support for the SAPbusiness intelligence project within the company. “Total data management optimization with the goal of enhancedanalysis and reporting functions for our global activities metwith broad agreement,” he adds. Since Ericsson had deployedan enterprise resource planning (ERP) solution with SAPNetWeaver BI even before the joint venture with Sony, thoseresponsible for the project decided to use it as a template toquickly establish a powerful solution for the entire company.Jalsing says, “Time was short. We had only two months tobuild a fully operational ERP system.”

But practical aspects were just one of the reasons that tipped the scales in favor of the company-wide use of SAP NetWeaverBI. “With SAP NetWeaver BI we can handle even large datavolumes from SAP R/3 software, the mySAP™ CustomerRelationship Management (mySAP CRM) solution, themySAP Supply Chain Management solution, different non-SAP source systems, and the ERP systems of our suppliers.We can easily and quickly extract, process, and load data intothe operational data store for operational reasons. From therethe data can be assessed for analysis and reporting,” Jalsingexplains. As the global company does not have its own pro-duction facilities but merely looks after product developmentand sales, system connectivity with supply companies wasparticularly important. “Easy and efficient system integrationwith our suppliers was important to us,” Jalsing says.

To avoid having to load data from the source systems two or more times – and to prevent isolated data stores – thecompany applied the principle “extract once, deploy many” and implemented the business intelligence projectstep-by-step.

Phase 1: Sales and Profit Margin Reports(Duration – Four Months)The first step, after a preliminary study and feasibilityanalysis, included prototyping and the first phase ofdeployment, during which data from the heterogeneoussource systems was extracted, consolidated, and integrated.The reason for consolidating this information was to supportthe new reporting requirements, which were not feasible inthe old scattered system landscape. The company achievedthis in the next phase when they merged the data from theconsolidation system for non-SAP global solution companieswith profitability analysis data from the global SAP solution (see Figure 2). It was only at this point that the operationalrequirements for the standard and ad hoc queries – that SAPNetWeaver BI was to provide – were incorporated. Duringthe next two steps it was the project team’s responsibility tocreate predefined reports and the appropriate functionalityfor drawing up generic analyses. Initially, the focus was on predefined reports with relatively highly aggregatedinformation such as profit and loss, sales, and profit marginreports. Sony Ericsson went live with the same InfoCubesEricsson had already used but changed the strategy to use the information on a more operational level.

Phase 2: Product Life-Cycle ManagementAnalysis (Duration – Two Months)The focus then shifted to support the product life-cyclemanagement process – when a new product should belaunched, where it is planned, how many units will be sold,and how long the life cycle will be. In the past it was not possi-ble to follow up on this process, but by integrating forecastingdata via Microsoft Excel files with data from the profitabilityanalysis functions in the SAP R/3 software, it was nowpossible. This was a request from the product planners to getbetter control on the product life-cycle management process.

86



mySAP™ ERP mySAP CRM mySAP SCM

Non-SAP


FIN AnalyticsPlanning

CRM Analytics Opportunity Management

Figure 3: SAP NetWeaver® BI as a Strategic Platform for Business Intelligence and Analytics

SAP NetWeaver® Business Intelligence (Reporting, Analysis)

Figure 2: Harmonization of IT System Landscape and Creationof a Single, Integrated Business Intelligence Platform

SAP® R/3®Global

Non-SAPERP Systems

Brazil

Non-SAPERP Systems

Mexico

Non-SAPERP Systems

Japan

SAP R/3JapanFI/CO

Non-SAPSystems

Sony Ericsson

87

Phase 3: Sales and Purchase Order Analysis(Duration – Three Months)In the next phase the project focused on providing moredetailed sales and purchase order analysis for the controllersand sales planners. To make information more easily accessibleto a broader user base, the project team implemented Webreporting. The creation of individual reports went hand inhand with the design and development of user-orientedlayouts for online and offline cockpits, which use clear struc-tures to make the SAP NetWeaver BI services user-friendly.

Phase 4: SCM Analytics (Duration – Four Months)In the next phase, after implementing standard reports andanalysis, Sony Ericsson started to exploit the functions of SAP analytics. The company began to implement the SAPanalytical applications to use analysis as a way of optimizingits operational processes. For example, to improve theefficiency in production planning and to increase deliveryprecision Sony Ericsson had to extract data from its i2-basedcapacity planning tool – via Microsoft Excel files. Theextracted data was then combined with stock and inventoryvalues from supplier ERP systems (such as Oracle and Baan)– via XML files that are loaded into the SAP NetWeaver BIcomponent using a standard HTTP/SOAP (Simple ObjectAccess Protocol) interface. To get the desired demandforecasting, the company also integrated the demand andsupply network functions of the SAP Advanced Planning &Optimization component.

Phase 5: Enterprise Portal Integration, CRMAnalytics, and Financial Planning (Duration –Two Months)As part of the implementation of a new sales methodologybased on mySAP CRM, the project focused on providingbetter control of the sales funnel and the progress of salesactivities by improving the opportunity management andactivity management process. The resulting reports andanalysis were published in SAP NetWeaver Portal to provideeasy access for members of the sales organization. Thecompany also implemented the planning tools of SAPNetWeaver. This enables Sony Ericsson to improve itsfinancial planning by doing sales and cost-of-sales planningin a more detailed structure.

As a result of these different phases Sony Ericsson now hasone single, harmonized, integrated, and strategic businessintelligence platform that guarantees consistent and reliabledata in their decision-making processes (see Figure 3). Thisenables the company to perform more efficient controllingand optimization of the sales and supply chain processes.

Business Content Accelerates ImplementationKey to the quick project implementation was the successfuluse of the business content that is built into SAP NetWeaverBI. In some areas – for example, in profitability analysis –Sony Ericsson was able to use the existing templates entirely“out of the box” – without any changes. “In total, SAP’sexisting business content already met 70% to 80% of ourrequirements. This allowed us to cut deployment times byapproximately half, which in turn clearly reduced the costsfor implementing the whole project,” Jalsing explains. SonyEricsson also found SAP NetWeaver BI compelling in terms of the solution’s scalability and performance. Jalsing pointsout: “The data-cube design ensures excellent and solidperformance even with large data volumes.” Currently thedata volume amounts to approximately 700 gigabytes; thecompany will probably reach the “one-terabyte threshold”next year.

Flexible Front Ends Ensure AcceptanceToday, users throughout the company hierarchy at SonyEricsson – from the executive management to controllingand operational units – use optimized management report-ing based on SAP NetWeaver BI. “At the moment there aremore than 1,300 registered users of whom approximately 300 to 400 – that is, about 10% of our employees worldwide –regularly access the analyses,” Jalsing reports.

To execute complex analyses and detailed data mining,controlling staff uses the company intranet to access theMicrosoft Excel interface in the business explorer function ofSAP NetWeaver BI. What is more, SAP NetWeaver BI servicessupport the creative use of ad hoc analyses; Sony Ericssonusers can combine different data areas using filter options.For example, users can analyze revenue proceeds withcriteria such as product, regions, and customers, or regionsand products. Users can thus customize and group precon-figured reports as well as save them in Microsoft Excel or Web format for later use or for forwarding to others. “Wherebefore we needed a daily staff of 10 to put together anintegrated set of individual offline management reports forexecutive management, today it takes only two employees to retrieve all required reports from SAP NetWeaver BI – inno time at all,” says Jalsing. More and more Sony Ericssonexecutives use Web reporting and SAP NetWeaver Portal forquick and easy access to predefined management reports and analyses.

88

Sony Ericsson

89

Lasting Added Value with SAP NetWeaverBusiness Intelligence FunctionsIn combination with the SAP Advanced Planning &Optimization component, SAP NetWeaver BI brings reliabilityand efficiency to the processes at Sony Ericsson. In particular,sales and logistics controlling derive lasting benefits from theimproved data quality and the up-to-the-minute nature ofreports. The company can analyze total expense trendssystematically by cost types and can break down the dataacross all organizational units, right down to cost centerlevel, if required. “This gives us a very powerful tool foranalyzing our overall performance and allows us to takeimmediate corrective action when deviations from our pro-jected values occur,” says Rikard Tunedal, vice president ofcorporate business control at Sony Ericsson. By leveraging theSAP NetWeaver BI business planning and simulation functions,Sony Ericsson can carry out integrated performance manage-ment. This enables executives to use extensive simulations –and analyses of scenarios based on actual operational figures– to manage the company in a forward-looking way. SonyEricsson’s customers also benefit from the improved contextfor analyzing current market demand trends; the companycan respond to changes much faster than before. Jalsing says,“Thanks to SAP NetWeaver BI, we now have greater trans-parency and planning reliability to ensure that the distribu-tion logistics for our mobile consumer products meet thedemand and provide timely delivery. Satisfaction on the partof our customers has risen noticeably.”

Lessons LearnedSony Ericsson has learned the following lessons by using SAPNetWeaver BI:

• Realize that the data model design is crucial forconsistency and reliability

• Implement SAP NetWeaver BI step-by-step to avoid havingto load data from the source more than once and toprevent creating isolated data stores

• Create consistent base of data as a single version of the truth

• Use the prepackaged business content within SAPNetWeaver BI to speed up the implementation process

• When creating predefined reporting and analysisfunctionality, focus on highly aggregated information inthe beginning and refine later

• Educate power users in each process area and have astrategy for training and support of end users

50 076 007 (05/09) © 2005 by SAP AG. All rights reserved. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registeredtrademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. Printed on environmentally friendly paper.

These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statementsaccompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

www.sap.com/contactsap

sap netweaver® as a strategic business intelligence platform

Documents

sap netweaver platform

business reporting

business users

sap netweaver infrastructure

introduction sap netweaver

business intelligence

sap netweaveras

sap solutions