SAP : September 2009 Archives

Optimizing the Design of a Warehouse- Part 1 of 3

In a world of longer and complex supply chains, automobile industry is faced with a challenge of framing competitive strategies which deal with customers demanding lower costs, greater product availability, increased product selection, value added services, and reduced delivery times.

Auto spare parts warehouses are often built to handle defined number of products and volumes, and limited unit loads. The recent boom in the spare parts business has often resulted in typical warehouses running out of space due to seasonal peaks, large discount buying, planned inventory builds for manufacturing shutdowns, or during slow sales period.

Then they are expected to be flexible in handling customer demands as well as being more productive over time. Apart from this, increased inventory references, decreased inventory turn ratio, increased product obsolescence and increased price and volume pressure make it mandatory for auto spare parts warehouse to be more robust and agile.

This makes it critical for auto companies to have a closer look at the way they manage their warehouses-and consider re-designing them if it makes for a profitable business case.

The potential benefits of a warehouse re-design can be- improved order turnaround time ensuring on time deliveries to the customer, optimal space utilization, reduced manpower requirements, improved stock accuracy, better matching of supply and demand and eventually more streamlined and responsive supply chain.

In the forthcoming posts, we shall be discussing in detail on the most common challenges in warehousing, propose an optimal warehouse layout along with material picking strategies and technical alternatives evaluation.

Posted by Varun Khanna at 6:12 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

SAP BPC: Unified tool for Planning & Consolidation (Part I of II)

In my last project, the planning and consolidation landscape was characterized by multiple tools for planning, budgeting and consolidation. The client had implemented sales planning in SAP BPS while financial planning & budgeting in SAP BPC. For consolidation the parent company is using SEM BCS whereas its subsidiary is using SAP BPC. Due to this, the reconciliation of consolidated figures was a challenge due to different tools, dimensionality and account structure.

This is not an exception but a norm. As per their needs, different functions in an organization implement planning/budgeting/consolidation tool of their choice. Hence each function only succeeds in achieving its limited objectives; failing to align the organization level objectives.

Multiple planning/consolidation landscape leads to number of challenges/issues, some of them are listed below:
• Integrating information silos for unified view of organizational data
• Maintaining data Integrity and quality.
• Higher maintenance cost as multiple applications are maintained.
• High dependency on IT for minor changes in the system.

What does an organization do to overcome these challenges? How does an organization bring together all its planning and consolidation applications? Well, they can use a single unified performance management solution with an integrated reporting structure. This provides collective insights into different business functions enabling better decision making capabilities for strategic alignment. I think SAP BusinessObjects Planning and Consolidation (SAP BPC) would be the right tool for such a platform; as it offers a unified solution for planning, financial consolidation and reporting.

Following are the key highlights of using such a solution using SAP BPC:
• One single view of data for all planning and consolidation. This reduces cycle time and maintains data consistency.
• Owned and managed by business with minimal support from IT.
• Recommended by SAP for all new planning and consolidation implementations.
• Excel based front end tool.
• Integrated with other EPM tools i.e. Profitability and cost management, Strategy management, Financial Consolidation, Intercompany etc.
• Also available in MS version targeted to non-SAP landscape.

In the next part of this blog I will illustrate further on -
1. What are the pros & cons of using multiple tools for planning & financial consolidation vs. a unified tool?
2. What are the best practices for designing a unified application for planning & financial consolidation using SAP BPC?

Posted by Aalok Kumar at 6:46 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

The Evolving Financial Consolidation Landscape (Part 2 of 2)

In my previous post, I introduced you to the new ‘financial controlling’ order and how SAP has evolved to keep abreast with the ever changing business requirements, especially the CFO’s office.

Moving ahead on the discussion of the evolution of financial consolidation tools, I have listed down some of the major pain points (Past-to-Present) of a financial consolidation process and the provisions of SAP offerings (Need of the hour/ Expected state).

PAST – TO – PRESENT	NEED OF THE HOUR/ EXPECTED STATE
Inefficient Processes · Duplication of computations at Corporate and unit level	Leaner Financial Processes · Systematically, eliminating all sources of waste using a root-cause analysis
Inaccurate Data · Huge variances between Forecasting, Planned and Actual data · Intercompany data discrepancies leading to added burden on the corporate team	Data quality checks and Process Governance at each stage · Multiple data validation options, through parameters and guidelines, to ensure data quality and accuracy · Intercompany reconciliation, before financial consolidation, thus shifting the responsibility from the corporate to the subsidiary
Manual Time consuming activities · Manually feeding accounting data · Tailoring the layout of Statutory and management reports	Automating Workflow for all consolidation activities · Automating data entry from multiple source systems (including NW). Manual Journal entries only for adjustments · Automated Process flows for carrying out all consolidation related tasks · In-Built reporting tool for all reporting and analytical needs (including built in templates)
Increased compliance pressure resulting in more inefficiencies	Deploying a consolidation system capable of increasing compliance efficiency · Multi-GAAP reporting · Performance enhancing implementation methodologies including audit reports for better audit trail and compliance
Slow Financial Closing process · Average annual Financial closing in Europe is 50 days as compared to 29 days in US (BPMi survey 2008)	Expediting the financial closing process · Some of the quickest financial closing is in less than 8 days in US and Europe (BPMi Survey)

Thus, in the mid-to-long term horizon, a consolidation system can drive down compliance costs through automation, increase efficiency by expediting the financial close (while ensuring the audit trail) and improve productivity of financial processes through workflow automation and multi-tasking. In addition to these capabilities, a consolidation system can also bring, the much needed, flexibility to the CFO’s office by bridging certain regulatory requirements especially in the short term -

1. IFRS reporting alongside local GAAP until the operational/transaction systems are geared up for complete changeover to IFRS

2. XBRL reporting to meet SEC requirements, until XBRL is adopted for management reporting as well

3. Building synergies during an M&A or diversification ( or hive off) scenario, until the IT architecture is re-aligned to cater to the new/additional regulatory and business requirements

Posted by Bharat Chadha at 6:59 AM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

BCP in ERP Business Processes

Business Continuity Plan (BCP) is a proactive plan to develop advance arrangements and procedures that enable an organisation to respond to an interruption in such a manner that critical business functions continue with planned levels of interruption. Most organizations’ BCP processes in practice only remain at a “talk” or “good definition” level and worst some organizations view this as an unutilized asset providing almost no returns to everyday business processes. Especially in tried economies, some organizations even abandoned their BCP teams due to its non-utilization (or less utilized) and re-directing back them for core processes. More so, other organizations view BCP only as a infrastructure (“hot site”) arrangement.

BCP is a cross-functional team possessing bringing champions of business knowledge from different functions and therefore should ideally be utilized at higher rates, that helps core business process continually improvise and operate at higher rate of efficiencies, so that, without underlying the major reasons of BCP setup, it should also be looked at how it can bring efficiency in every level within each department.

To explain in very simple example, if a facsimile message containing a purchase order not being able to sent at right time to a vendor/supplier could significantly result in loss or missed revenue opportunity and re-work for both purchaser and vendor. Not just that, imagine the cycle of impacts it brings to entire organization process - shipment trucks, overstocked warehouses etc.,

This multi-part series article brings in a view of how you can relate BCP to everyday business processes efficiencies and at what levels BCP can be invoked with a view to meet the demand and supply chain thereby gearing to a scalable operation.

In the next series, we will cover the levels of BCP definition and how additional efficiency can be brought to each business processes.

Posted by Senthil Muthuvelu at 1:27 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

SAP Consulting - changing faces Part 1

Are you an SAP Consultant? What is/are the module/s which you have worked on? How many implementation/roll out/support projects you have worked on? How are your configuration and technical skills? Which versions of SAP you have worked on? Do you have experience in handling client remotely and onsite?

These are the key questions which were asked when a company interviewed to hire a SAP consultant a few years back. How much of this has changed today? Now focus has shifted to the following questions besides the questions asked above:

What is your domain experience? How many business transformation projects you have worked on? Which industries you have experience or knowledge in implementing end to end business processes? How is your client engagement and business process consulting skills?

Marked difference has been additional expectation on business process part of the knowledge which was not much in focus few years back. One of the expectations from client today is for SAP consultants to bring business knowledge and experience along with SAP functional/technical skills to do the business transformation programs or rollouts or support. Client organization has a layer of business process experts who play the role of a bridge between SAP consultants and the business. This layer is fast disappearing as client expect this to be performed by SAP consultant as he/she gains more knowledge on client business processes

Key drivers for this expectation are:

· Client have matured on SAP product understanding and knowledge

· Same consultants understanding the business requirement, providing consulting on what process will work best for the client and implementing the same in system leads to less iterations and mismatch in what is expected by business and what is delivered

· More value from the consultant at the same price

· Reduction in time, effort and cost involved from client organization’s perspective besides reduction in overall cost for such programs

SAP roadmap is to be seen as its solutions providing end to end support to business process rather than a composite application of multiple modules to support key functions like finance, logistics, controlling etc. SAP business suite applications are all packaged with this aspect in mind.

With this as a background business process knowledge is critical to success for any SAP consultant be it on functional or technical side of the solution. Due to the rapid growth of SAP consulting market, average domain experience level of SAP consultant is coming down as demand for consultants cannot be met completely by experienced people from business joining the consulting. Different companies who provide SAP consulting services are finding different ways to fill up this gap – one of them being by hiring fresh graduates/post graduates from colleges/universities and grooming them on SAP and business process skills.

So how to build domain experience in these consultants in short span of time? How to groom them in a manner to make them more all round consultant – both SAP and domain? Besides that in this changed scenario how existing consultants have adapted themselves and what additional we need to do to meet client and market expectations?

Look out for answers to these questions in the next post.

Posted by Anoop Jain at 7:34 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

SAP ABAP - Is it Robust ?

Good morning all. It is a holiday season in India and I am also planning a week off from my work schedule starting today. But before I break, I wanted to put forward my thoughts about this topic that I has been there on my mind all for a long time now. I am an ABAP specialist and has been involved with multiple projects in various capacities over the last 9 years. And one consistent expectation I have experienced in every project is that the every client wants the best of the code to be developed for their system enhancements at the least of the costs and efforts.

Is it the inherent faith in SAP “the product”, that all a customer wants is already available and you just need to configure it or that ABAP actually is so robust that even if you move something to production it will necessarily work? I agree that SAP does have a strong Life Cycle Management component for ABAP and it has faithfully helped companies with the development process. It is so strong that SAP decided to retain the same principles even when they moved to Java and .Net. But that does not take away the need for well thought through process for development, the need for a neatly written code that is readable, easily maintainable, scalable and written using the latest and current code semantics. And the last part is very important. For backward compatibility SAP has never removed the original functionalities, but the intent was never to give an option to the client that chose between old and new. We have all seen how fast SAP has changed in last 10 years, we have seen how fast they have embraced open technologies in the last 10 years. All the new technology components were provided by SAP to keep us with time and ensure that we are putting the best possible technical solution to support the business and keep it agile.

But still year after year I have seen that clients and developers stick to the old code semantics, complete piece of code being written in haphazard way which nonetheless supports the business needs (black box philosophy), no peer/independent reviews, checkbox approach to testing by technical team, and building solution to the ‘just’ the customer need ‘today’, without consideration of the future trends. Still IT works, and every 3-4 years an upgrade or an re-implementation comes, that will provides them with an opportunity to clean up the system and the rigor starts again !!!

ABAP does instill good development principles in us and it is ROBUST in the way it continue to take development from developers with varied experiences and nothing ever crashes (before it is too late)…

Posted by Satinder Pal Singh at 8:55 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Why do you need profitability analysis? (Part - 1)

“Treat your best customers best; focus on your most profitable products” - is no brainer. But knowing the best customers and identifying the most profitable offering definitely is. In fact, it is more difficult than ever before as companies have been expanding their customer base across the globe and offering more complex products bundled with various services.

With focus on revenue and market share, top management has been undertaking various initiatives like starting a new product line, acquiring new customers and offering through new channels. But how many companies really have a fair idea, if they are just growing their business or really increasing shareholder value.

The recent recession has forced many companies to look for ways to optimize their operations. Many companies have undertaken a strategic initiative (one of six sigma/BPR/TOC/JIT/lean management etc) for doing this. How many companies have an objective way to measure the true business impact of these initiative on various business processes across the value chain and finally to the bottom line of the company?

There seems to be a definite need for a methodology that enables a company to identify its best customers and offerings; help them growing their business profitably and provide them a baseline for measuring their initiatives.

I think, Profitability Analysis can help us answer some of these questions. Let’s discuss how in the next part of this blog.

Posted by Vivek Madhav at 7:50 AM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

The Evolving Financial Consolidation Landscape (Part 1 of 2)

Over the past decade, the financial regulatory and management landscape has changed rapidly in response to the volatile economic and business environment. In an attempt to ward off economic pressures due to various asset bubbles, governments globally have tightened the regulatory noose, thus, escalating the compliance costs. This has, hence, initiated a change in power dynamics, in the top enterprise echelons, towards a more distributed governance structure.

The responsibilities of the CFO’s office, has since, evolved from an operational and tactical focused towards more strategic insight driven. This new focus primarily includes, improving financial integrity within the firm’s operational layer; fulfilling regulatory requirements while keeping the compliance costs under control; increasing transparency across all financial processes to minimize operational risks whilst improving performance.

The SAP Enterprise performance management (EPM) suite is best structured to cater to this changing regulatory and business landscape. Financial Consolidation, Planning, Profitability and Cost management are now seamlessly accessible to the corporate, alongside strategic management tools, thus, ensuring efficient regulatory compliance through governance and risk control whilst improving business value of management decision making.

Financial consolidation offerings have probably evolved the most due to the direct regulatory and managerial implications. Shareholder expectations have also further amplified the criticality of a financial consolidation system. It is now not merely a tool to consolidate financial numbers but is also expected to expedite the financial closure process while improving data quality and governance, ensuring leaner financial processes and lower compliance costs.

Financial consolidation has, thus, risen beyond, from an accounting feature of the ERP suite, to being an integral part of the performance management landscape. SAP has introduced two consolidation and reporting tools under its EPM umbrella. SAP BusinessObjects Business planning and consolidation (BPC) packs planning and consolidation inside a single box while delivering a Microsoft Office enabled user-friendly consolidation engine. SAP BusinessObjects Financial Consolidation on the other hand is a highly robust and advanced consolidation engine packing in a plethora of features including XBRL. Both of these offerings can be integrated either with the existing BI or ERP backbone to cater to various business requirements and also bridging in the short term gap created by the ever-changing regulatory environment.

(To Be Continued.......)

Posted by Bharat Chadha at 9:40 AM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

The ever evolving SAP landscape – Part 1 of 3

The objective of this blog series is to give an overview of how SAP has evolved in the recent years and what were the drivers that compelled them to grow the way they did. The blog series also gives a flavor of various components in SAP landscape today and how they form pieces of a Jigsaw puzzle that needs to be arranged correctly to be of business relevance.

Over the last 10 years, SAP has tried to transform itself from an Application vendor to a Platform Vendor. The earlier generation of SAP product suite was a monolithic layer of functionalities that could meet elementary business needs of any enterprise. The product was rich in transactional processing features and was very mediocre from usability and reporting perspective. At the same time SAP saw the opportunity to expand itself into areas such as Integration that could help it grow significantly by additional license sales.
At the turn of the century the ‘S/w and s/w related service revenue’ amounted to Euro 3.86bn with a total revenue of Euro 5.88bn. But over the next 3-4 years SAP saw a flat/negative growth from additional s/w license sales. With the introduction of Netweaver platform in the early part of the century and introduction of products like XI (a.k.a PI), BW (a.k.a SAP BI) and EP the license sales shot up again in 2004 clocking consistently in the range of 10 to 15% growth. With this SAP had smoothly transitioned from a monolithic ERP vendor to a more flexible and scalable IT platform vendor. The key components that have helped SAP achieve this growth are attributable to the ever reliable ABAP stack of SAP products, the Java stack that enables expansion and ease of use via XI and Enterprise Portal. SAP has positioned the SAP Netweaver stack as a business process platform that enables business driven software architecture to meet ever changing business needs. In simple terms, it means that with SAP Netweaver, companies now have an ability to build applications that can be composed using a layer of Enterprise and Web services. These are called composite applications.

The SAP System Integrator space being as competitive as it is, has SI’s working overtime to get an edge over each other. Each SI has built focused competencies to ensure they have credentials to demonstrate capability in these areas. In the next blog of this series we will see more on composite applications and the composite application architecture.
PS: Forrester has recently published The Forrester Wave™: SAP Implementation Providers, Q3 2009 report. To download and read the complete report, please see the link below

http://www.infosys.com/sap/SAP-implementation-leader/default.asp

Posted by Ravishankar Subramanyam Hossur at 8:36 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )