05 pranav bhushan utility industry

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Pranav Bhushan, Value EngineeringJune 5, 2008

Ut i l i t ies Indust ry

A Benchmarking Presentation


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SAP Summit 08 / Page 2

1. Benchmarking Program Overview

2. Corporate Services

3. Enterprise Asset Management4. Customer Contact Center Management

5. Best Run IT

6. Participant Testimonials

7. Appendix: Links to Surveys

Agenda


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Enables continuousimprovement

Allows to target whatdoes and does not workwell

Allows to adopt bestpractices

Allows to put evidencebehind decisions

What is Benchm ark ing?

Before businesstransformation

During businesstransformation

After businesstransformation

What? When?

Build a Business Case

Assess value realization

Compare performance

Prove success

Why?


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ASUG/SAP Benc hm ark ing Designed t o get

Act ionable Resu l ts

Focused 360o Approach to Prob lem Ident i f i ca t i on and

Resolut ion

Strategic Service by ASUG and SAP, launched end of 2004 as aforum to exchange metrics and best practices

Additional industry partnerships include APICS, TPMA and SCL

Program covers 20 processes, with 2,000+ participants from over1,000 companies spread across North America, Latin America, AsiaPacific and Europe, who leverage the program to:

Build a business case for change

Compare performance to industry peers and betweenregions/divisions

Assess value realization, year-over year

Prove success

Survey participation is free of charge

Survey content relevant for business as well as IT audiences

Core surveys also available in Spanish and Portuguese (globalbenchmarking)


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The L ink Betw een KPIs , Best Prac t ic es and

Enabl ing Technology

What m ak es SAP Benchm arking Unique

KPI achievement is linked to best practice adherence to assess business process maturity

Results can be used to establish a technology roadmap to increase your business process maturity andrealize quantifiable business value

Large number of participants allows for a very robus t benchm ark ing com par ison , e.g.:

Industry peers

Companies running on SAP


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Benchm ark ing Met hodology and St udy

Del iverables

Company-Specific ReportDetailed, confidential report comparing yourperformance to peers

1

Intercompany/Global BenchmarkInter-divisional comparison to peers and eachother

2

Business Process Health-checkExecutive-level summary of findings acrossbusiness units and processes

3

Year-over-Year Analysis

Comparison of current performance to peerand past performance

4

Business Transformation StudyStudy on leading SAP customers who realizehigher value from SAP solutions

5

K ey

Performance

Ind ica tors

Best

Pract ice

Adopt ion

Gap to Q1 &

Average


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SAP Benc hm ark ing St udy Del iverables


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SAP Benc hm ark ing St udy Del iverablesThought Papers (Example)


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Avai lab le Benchm ark ing and Best Prac t ices

Surveys

Note: 1) SAP owned surveys

Cust om er Li fec yc l e Bes t Run ITCorporat e Serv ic es Supply Chain

NPDI

Customer Contact Centers

NEW: Sales Effectiveness

NEW: Order to Cash/Contract to Cash

Trade Promotion

Management1

Channel Management1

Total Cost of Ownership

(TCO)

Business Intelligence/Analytics

Centers of Excellence

Organizational Change

Management

NEW: Winning the ERPMarathon

Value Realization

AMR Terabyte Survey

Enterprise DataManagement

IT Strategy

Human Capital

Management

NEW: Talent Management

Finance

Financial Compliance

NEW:Enterprise Health Check

Under Development:Shared Services

Supply Chain Planning

Transportation

Management

Warehouse Management

SRM/ Procurement

Manufacturing

NEW: Retail Merch./Category Management

Enterprise AssetManagement

NEW: Business NetworkTransformation

Under Development:EH&S Compliance

Under Development: S&OP


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Survey Regis t rat ion and Complet ion

Key Stakeholders: Survey Participant Key Stakeholders: SAP

One-to-

On e

sess ion

Engagement Sponsor Business Process Owner(s) Process level IT Owners(s)

Engagement Sponsor VE Team Member(s) VE Business Process Expert(s)

Survey

Regis t rat ion

Data

Val idat ion

Analys is &

Report

Creat ion

Register andcomplete survey at:

http://www.sap.com/usa/solutions/benchmarking/index.epx orwww.asug.com

Validate dataprovided in the

survey

Assess KPI andBest Practice

Adoption Summarize key

business painpoints

Present findings toprocess owner(s)

1 Week Post -surveySubmiss ion

1-2 Weeks Post-data Val idat ion
http://www.sap.com/usa/solutions/benchmarking/index.epxhttp://www.sap.com/usa/solutions/benchmarking/index.epxhttp://www.sap.com/usa/solutions/benchmarking/index.epxhttp://www.sap.com/usa/solutions/benchmarking/index.epxhttp://www.sap.com/usa/solutions/benchmarking/index.epxhttp://www.sap.com/usa/solutions/benchmarking/index.epx


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Agenda




5. Best Run IT



Agenda


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Best -Run Corporat e Servic es: Analysis

Framework

Type MetricOverall Utilities

Average Q1 Average Q1

Effectiveness

Employees per HR FTE 101 195 77 107

% HR Staff allocated to Transactional Activities 40.5% 21.7% 39.3% 18.7%

Finance Cost as a % of Revenue 1.1% 0.2% 0.9% 0.4%

Days Sale Outstanding (Days) 48.6 23.8 49.7 29.2

Efficiency Error rate in bills sent out 2.9% 0.3% 2.1% 0.9%

Practices that Differentiate the Top Performers


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Human Capit a l Managem ent Sample Ins ights

Degree of Integration Reduces HR CostsHR Costs per Employee by Number of HR Applications

in addition to ERP system

Shared Services Reduces HR CostsHR Costs per Employee depending on Shared Services Adoption

Operating Incomeper Employee

+74%

HR Costs as %of Revenues

-29%Talent

Management

StrategicDecision

Support

Trans-actionalSupport

Average Top Performer

Right Pyramid Drives Employee Productivity


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Finance Sample Ins ights

Integration of Billing with Order EntrySystems Reduces Invoice Error Rates

Invoice Error Rate (in %)

Integration of G/L with DownstreamSystems Reduces Closing TimesAvg. Annual Closing Times (Days)

OperatingMargin +38%

FinanceCosts as %

of Revenues-30%

Planning/Expertise

Based

StrategicDecision

Support

Trans-actionalSupport

Average Top Performer

Right Pyramid Drives Employee Productivity


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5. Best Run IT



Agenda


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Best -Run Suppl ier Relat ionship Managem ent :

Analys is Framew ork

MetricOverall Utilities


% of spend managed strategically (Indirect) 35.8% 75% 38.5% 80.8%

% of spend managed strategically (Services) 36.5% 75.3% 41.9% 79.2%

Average Annual Savings in Indirect spend as a % of Total Spend 3.1% 17.1% 6.7% 16.4%

Average Annual Savings in Services spend as a % of Total Spend 2.8% 7.6% 3.2% 6%

PO Error Rate 11.8% 0.9% 9.2% 1.8%



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Best-Run Ent erpr ise Asset Management

Analys is Framew ork

Defining EAM Top Performing Organizations

Return on Assets: >20%

Annual Penalty Costs:


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Enterpr ise Asset Management - Sample

Ins ights

48%

70%

KPIs

Schedule attainment 87% 34%

Traveling

Planning & Scheduling

Reliability Functions

Repair & Preventive

Maintenance

Analyzing Readings

Troubleshooting

Looking for Materials

Reporting

High performershave a moreproductive

utilization of timeacross different

functions

Correlation between Maintenance 41% 13%Program and Compliance performance

% allocationof time in

maintenancefunction

Note: 1) Figures mentioned for Utilities Industry


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Enterpr ise Asset Management - Sample

Ins ights

Significant Differences in Performance Results on EAM KPIs Between Top Performingand Other Companies

Effectiveness:Return on Assets

Efficiency:Schedule Attainment

Strategy: MaintenanceApproach (Sum of ReliabilityCentered Maintenance andContinuous Improvement as% of Overall MaintenanceApproach)

All Other EAMOrganizations

Top PerformingEAM organizations


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5. Best Run IT



Agenda


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Best-Run Cust omer Cont ac t Center

Management : Analysis Fram ew ork

MetricOverall Utilities


Interaction Center Cost per Interaction ($) 9.38 2.74 6 3

Interaction Center Average Queue Time (Sec.) 26 12 23 12

Interaction Center Call Handle Time (Sec.) 238 119 240 145

Interaction Center Post Call Work Time (Sec.) 90 16 105 30

Abandonment Rate (%) 3.4% 1.2% 3.7% 0.9%



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5. Best Run IT



Agenda


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Best -Run IT: Analysis Framew ork

Type MetricOverall Utilities


EfficiencySupport equivalent FTE per 100 Active Users 4.5 0.9 3.5 1.9

Support quivalent FTE per 100 Named Users 3.1 0.4 1.8 0.7

EffectivenessNumber of critical interfaces 60.1 2.8 43 8

Number of production instances 4 1 2.1 1

Best Practice Listing Gap

1 The COE/Support organization is as centralized as possible within the constraints of the business model 2

2 The level of input form the business into the design and implementation of the COE/Support Organization is high 1

3 We have regular, formal reviews of the COE/Support Organization design and services 0.8



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5. Best Run IT



Agenda


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We dont want to just be better than ourcompetition. We want to be the best forestproduct company in the world and a globalleader among all industries. With the findings ofthe Benchmarking study, ASUG and SAP helpedus identify opportunities that enable that

vision.

Chris Van Liew, Director, IT Enterprise SystemsSAP Support, Weyerhaeuser

Since participating in the Benchmarking andBest Practices program we can compare applesto apples. We know what each business processcosts and we can go after technical

improvements to reduce the costs.

Mike Stoko, Assistant Director, SAP GlobalOperations and Value Capture, DuPont

Sample Par t ic ipant Test im onia ls

Great information, very well presented, and veryuseful explanations we will participate again

next year

SAP HR Support Supervisor,Marathon Oil

Very valuable information it is good to seewhere we stand with respect to other Best inClass companies, and to learn about potentialareas of improvement

Senior Manager, SAP Center of Excellence,

Canada Post
http://images.google.com/imgres?imgurl=http://www.x-cd.com/wepan06/Dupont.gif&imgrefurl=http://www.x-cd.com/wepan06/sponsors.html&h=293&w=748&sz=12&hl=en&start=2&um=1&tbnid=MDyWqGTe4LUj_M:&tbnh=55&tbnw=141&prev=/images?q=dupont&svnum=10&um=1&hl=en&rls=RNWN,RNWN:2006-47,RNWN:enhttp://images.google.com/imgres?imgurl=http://groups.engr.oregonstate.edu/SAE/Logos/weyerhaeuser%20logo.gif&imgrefurl=http://groups.engr.oregonstate.edu/SAE/sponsors.html&h=179&w=200&sz=8&hl=en&start=3&um=1&tbnid=jLIKgYrzOjY39M:&tbnh=93&tbnw=104&prev=/images?q=weyerhaeuser&svnum=10&um=1&hl=en&rls=RNWN,RNWN:2006-47,RNWN:en&sa=N


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5. Best Run IT



Agenda


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Links t o Surveys (1)

Area Survey Demo URL

CorporateServices

HCM Comprehensive https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=2AGQX2&lg=english&rk=973912

HCM https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=DP7WSQ&lg=english&rk=791296

Talent Management https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=U69DGN&lg=english&rk=215418

Finance Comprehensive https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=FSBEHS&lg=english&rk=810548

Finance https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=GB37M2&lg=english&rk=266747

Financial Compliance https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=Q7NFJH&lg=english&rk=567899

Enterprise Health Check https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=JAC6QW&lg=english&rk=790520

SupplyChain

SRM/ProcurementComprehensive

https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZUBWSK&lg=english&rk=536067

SRM/Procurement https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=B4Z3GU&lg=english&rk=704783

Supply Chain PlanningComprehensive

https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=R4CWC2&lg=english&rk=446653

Supply Chain Planning https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=3G8CAK&lg=english&rk=361218

Transportation Mgt. https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZRKEM8&lg=english&rk=920118

Warehouse Management https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=MAT52Z&lg=english&rk=333120

Manufacturing Compreh. https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=WDPMCX&lg=english&rk=451449

Manufacturing https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=SQPPX4&lg=english&rk=444498

NPDI https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZSNNN9&lg=english&rk=536709

Retail Merchandising https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=A5BRHN&lg=english&rk=328516


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Links t o Surveys (2)

Area Survey Demo URL

CustomerLife Cycle

Order to Cash https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=K5DW3E&lg=english&rk=705234

Contract to Cash https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=9Z76SB&lg=english&rk=222560

Customer Contact Centers https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7VXYFY&lg=english&rk=314685

Sales Effectiveness https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=WUB8EM&lg=english&rk=490272

Trade PromotionsManagement

https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=H9SR6B&lg=turkish&rk=324580

Food Services https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=6Y84UQ&lg=turkish&rk=759333

Channel Management https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7BYDYS&lg=turkish&rk=430754

Best Run IT Business Intelligence https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=EE5Y3H&lg=english&rk=429224

TCO https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=FD32FA&lg=english&rk=434471


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Ot her Impor tant L inks

1. ASUG registration page (all ASUG surveys):https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=N4J5ND&SRP1Q5=SAPPHIRE2008

2. Comprehensive registration page (all ASUG surveys + TPM, CHM and Food Services + Best Practicessurveys):https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7UUCAD&SRP1Q5=SAPPHIRE2008

3. Access to Portuguese and Spanish registration pages: http://benchmarking.sap.com/Register/

4. Benchmarking Veki Access to Sample Reports:https://wiki.wdf.sap.corp/display/VEISGWiki/Benchmarking+Toolkit
https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=N4J5ND&SRP1Q5=SAPPHIRE2008https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7UUCAD&SRP1Q5=SAPPHIRE2008http://benchmarking.sap.com/Register/https://wiki.wdf.sap.corp/display/VEISGWiki/Benchmarking+Toolkithttps://wiki.wdf.sap.corp/display/VEISGWiki/Benchmarking+Toolkithttp://benchmarking.sap.com/Register/https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7UUCAD&SRP1Q5=SAPPHIRE2008https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=N4J5ND&SRP1Q5=SAPPHIRE2008


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Thank you!


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