breakout session homebuilding -...
TRANSCRIPT
Breakout SessionHomebuilding
Roland Schmid, SAP America
Ralph Jernigan, Jim Walter Homes
Atlanta March 2005
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SAP EC&O Customer Base Growth 1998 – 2004
Steadily Growing Number of EC&O Customers
55
64
69
91
60
22
1998 1999 2000 2001 2002 2003 2004
80
441
Customer base expanding
New customer growth consistent and sustained
Expanding footprint in all company sizes
Increasing number of installations within large customers as templates are rolled out
+33% average Customer Growth every year since 1998
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Construction Customers by Size/Employee Range
Range of Employees No.
X-Large > 25.000 11
Large 5.000-25.000 2828
Medium 1.000-4.999 84
Small < 1.000 215215
Not Assigned 103103
Total 441
64%
25%
8%
3%
The structure of SAP for Engineering, Construction & Operations The structure of SAP for Engineering, Construction & Operations customers is customers is dominated by companies with less than 5.000 employees. dominated by companies with less than 5.000 employees.
89%89% are belonging to this magnitude.are belonging to this magnitude.
Source: MKIS as of 2005-01-11
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SAP for EC&O – Customers per Sub-Segment
47
Homebuilding
325
69Others
Plant Contracting& Construction
441441 SAP for Engineering, Construction & Operations customers worldwSAP for Engineering, Construction & Operations customers worldwide ide are distributed to are distributed to 11% 11% on Homebuilding, on Homebuilding, 15% 15% on Shipbuilding,on Shipbuilding,
and and 74%74% on Plant Contracting and Construction. on Plant Contracting and Construction.
Source: MKIS as of 2005-01-11
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Great Companies… Great Relationships
Plant Contracting & ConstructionPlant Contracting & Construction HomebuildingHomebuilding
Shipbuilding &Transportation Equipment
Shipbuilding &Transportation Equipment
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Customer examples…One solution fits ALL!!!
Rank / Units / Revenue(rounded 2003 values)#430000 Units$10b#223700 Units$1b# 243500 Units$280m# 7 (Manufactured)6600 Units$230m# 9 (Manufactured) 4600 Units$215m
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Homebuilding Business Process Overview
MarketResearch
DemographicAnalysis
CompetitiveAnalysis
CommunityForecast
CommunityEvaluation
AbsorptionAnalysis
Product Line
Sales &MarketingDatabase
Marketing &Sales Plan
CommunityKick-off
SalesKick-off
Service & Warranty
ServiceHistory
Database
Service OrderExecution
Service RequestHandling
Warranty & ClaimManagement
ServiceRequest
ServiceHistory
Database
ProcurementVendor BidEvaluation
Request forProposal
Vendor ContractManagement
VendorSelection
Land Acquisition & Development
CommunityDesign Plan
CommunityBudget
Planning &Budgeting Land Acquisition Government
ApprovalCommunity Design LandDevelopment
Product Development
ArchitecturalDrawings
Technical DesignArchitecturalDesign
Engineering &Change
Management
Bill OfMaterial
DesignSelection
RulesQuantityTake off
Define DesignSelection Rules
ProductionMaterial &
SubcontractorManagement
Scheduling Inspection &Walk Through Handover
DocumentManagement
Document & CADManagement
ResourceManagementQuality Control Change
Management
ProgressReports
Cost Control
PayrollContracts QADocuments
Scheduling
Schedules
Planning
Budgets BillingPlans
ContractAdministration
FinancialManagementExecution
Data ChangeRequests
Material Control
WarehouseIssuesEstimates
Sales
Prospect &CustomerDatabase
Design SelectionProspect &Customer
Management
ContractManagement
ContractAward
CustomerSpecific Billsof Materials
SalesInformationDatabase
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SAP Homebuilding solution value
Create opportunities to increase revenuesFlexibility to new business areas and marketsImproves customer experience throughout the whole cycle
Enhances the marketing and sales processProspect management, traffic informationHome configurator with automatic pricingAutomated billing
Reduction of rework, elimination of duplicationSales, construction and procurement are fully integratedAutomatic procurement requirements are created from sales contractsThe integration enables identifying cycle time reduction opportunities
Reduction on procurement and inventory costsPurchasing consolidation by division or subdivisionEffective contractor managementOptimization of material specs and inventory levels
Early visibility on cost and margin with accurate information
Reduction on warranty risks and costsSupports inspection and track issue solution before delivery
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Benefits for the builder
OverallDramatic reduction on paperwork by integrating sales, purchasing and constructionIncreased access to real time informationImproved confidence in growing business due to SAP´s robustness
Marketing & SalesImproved management of marketing and sales (traffic, prospects, conversions)Improved visibility on lot status for saleIncreased accuracy on structural and design options with corresponding pricingReduced uncertainty of possible options across lots already configuredReduction on cycle time from quote to tender
Procurement and materialsCost savings by enabling purchasing consolidation across subdivisionsReduction on inventory
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Benefits for the builder (continued)
ConstructionReduction of construction timeImproved contractor and vendor communication with work paper reduction
FinancialsReduction of book closing cycletimeImproved cash managementImproved accuracy on cost information
Warranty & ServiceStreamlined and cost effective customer care on warranty and services after move-in
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Benefits for the customer
Improvement on customer experience due to Improved sales accuracy Reduction on construction cycle timesImprovement on quality
Extension of the timeline to change design options
Streamlined and faster sales process
Faster delivery
Up-to-date information on contract and construction status
Streamlines customer care on warranty issues related to contractors´ services
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Highly scalable – stress test result
Response Time for Creating a Quotation or Order25K On-Line Processing with
Full Scheduling of ~16,100 HomesNovember 26th, 2003
0
5
10
15
20
25
0:00
3:12
6:24
9:36
12:4
8
16:0
0
19:1
2
22:2
4
25:3
6:00
28:4
8:00
32:0
0:00
35:1
2:00
40:3
2:00
43:4
4:00
46:5
6:00
50:0
8:00
Test elapsed time in minutes
Pro
cess
ing
in s
econ
ds
Option SelectionSave TimeConfig buttonSucc
essfu
l stre
ss te
st
simulat
ion of Build
er
delive
ring 50
,000
homes/ye
ar
Save time average at peak level: ~13 seconds.Option selection response time at peak level: ~ 5 seconds.Subdivision scheduling processing time: ~ 1.7 min.Database server at 62% and sales application servers at 78%.
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SAP Mobile solutionsEmpower your team
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SAP Collaborationfor seamlessSubcontracting
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SAP CAD connectorfor effectiveProduct development
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SAP Reporting -Drill down into the details
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SAPThe right tool for successfulHomebuilders
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SAP value proposition
Four Reasons Why SAP
should be Your Company’s Partner of
Choice • Most comprehensive service offering (SAP + partners) enablesimplementations to be done up to 2x faster than competition
• Mid-market pre-configured and “pre-integrated”EC&O Partner Solution speeds implementation and cuts costs (both deployment & maintenance)
• Industry best practices imbedded in software based on 32 years of feedback from over 350 EC&O customers• Only solution to cover the complete business process: design & engineering to decommissioning• Open for highly collaborative business• Integrating CAD/CAFM and specific systems• Rated #1 solution by multiple analysts for discrete industries, asset management AND aftermarket service• Only solution to manage financials & logistics
1. Broadest Process Coverage
• In a turbulent ERP market, SAP provides the safest choice (analyst validated and customer supported)
• Leverage the knowledge of 32 years of experience, 19,000 customers, 12 million users, 8,800 developers, and over $1 billion in annual R&D spending
• Market leader used by leading global contractors.• 100% focused on application software• 54% market share and growing• $9B in 2003 revenue
4. Lowest Risk 3. Speed To Value
2. Delivers Real ValueSAP EC&O customers achieved
measurable value:
Homebuilding:material catalog: -85%; Service cost/home: -80%Inventory: -50%; production hrs/home: -20%workforce/home: -40%
• Flexibility to deploy all at once, in pieces, or by business processes as needed• Open architecture provides the flexibility to leverage and coexist with existing applications as needed
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SAP Delivers Value
SAP R/3“SAP is a very powerful system and its strength really resides within the integration of the operational side of the company and in the financial or accounting side of it."
SAP NetWeaver™"With SAP for EC&O, we're replacing legacy systems with an integrated, standard solution that lays the foundation for an even higher degree of accuracy in planning and enables increased transparency across all organizational levels. We can thus effectively manage each construction project as if it were its own business."
SAP R/3“The functional coverage offered by SAP R/3 was by far the most comprehensive of all standard software”
SAP R/3“We reduced raw material inventory by over 30%...we have reduced our service cost form an average $1150 a unit to under $250 a unit. We hae reduced production hours per home by 20% and produce products that have far superiorstandards in shops we have implemented SAP.”
SAP for EC&OSAP Netweaver“What SAP offers is unique in the marketplace. It is a fully integrated solution from the sales office to the back office to the field. Complete integration like this is a very desirable thing to have. It’s helping us to achieve our goals, which is to be unquestionably successful in this industry.”
SAP Business Suite”Legacy Systems … GONEIT Costs Reduce by 35%Transaction Processing Cost - 23%Process Improvements – Completed DSO Reduce by 36% ….. ALL TIME LOWTechnology NOW seen as a “Business Enabler”
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Morrison Homes Inc.
PROJECT OBJECTIVE
Reduce cycle time
Cost reductions
Better communications
Efficiency improvements
CUSTOMER PAIN POINTS
Hundreds of tasks have to be scheduled, coordinated, and tracked.
Most tasks are dependent on having a related task completed before a new one is started
Inconsistent sales order configurations
High cost of subcontractor management
WHY SAP SOLUTION WAS SELECTEDVery easy to learn with an easy-to-use user interface
Content-rich information.
Integrated solution
Morrison Homes is one of the top 25 homebuilders in the U.S., focusing on single-family homes, located in both stand-alone subdivisions and as part of master-planned communities. Owned by British company George Wimpey, PLC, Morrison operates in six Sunbelt states. The company’s success has been steady in a challenging marketplace with more than $800 million in revenues for 2002 and a growing staff of 700 employees in the U.S.
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Morrison Homes Inc.
BUSINESS VALUE REALIZEDImproved interactions with trade partners
Frontline employees are empowered with better tools and information
Key activities are fully integrated
Reduced cycle times
Higher quality and customer satisfaction
SAP SOLUTION SAP for Engineering, Construction & Operations
mySAP™ Enterprise Portal
mySAP™ Business Intelligence
SAP NetWeaverTM
“What SAP offers is unique in the marketplace. It is a fully integrated solution from the sales office to the back office to the field. Complete integration like this is a very desirable thing to have. It’s helping us to achieve our goals, which is to be unquestionably successful in this industry.”
Gregg GoldenbergVP and Project Manager
Morrison Homes Inc.
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Cavalier Homes
PROJECT OBJECTIVE
Increase market share, particularly in the high value manufactured home segment
Become lowest cost producer for all value points served
Enhance revenue opportunities in existing customer base
Improve efficiency of service operations
CUSTOMER PAIN POINTS
Business operations were costly relative to the competition, preventing the company from adapting quickly to emerging consumer demands.
Growth through acquisitions and a decentralized management structure had left each manufacturing facility operating independently.
Each plant designed floor plans, procured raw materials, manufactured and sold homes on its own.
WHY SAP SOLUTION WAS SELECTEDAbility to enable standardization of business practices, providevisibility into operations, and enable a clear view of performance metrics.
Cavalier Homes is a $400M company with ~1800 employees headquartered in Alabama that produced approximately 13,000 manufactured and modular homes in 15 facilities in 2001. In addition to having production capabilities, Cavalier also purchases sales contracts primarily for manufactured homes sold through its dealer network and provides insurance products to dealers and retail purchasers.
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Cavalier Homes
BUSINESS VALUE REALIZEDImproved market share from 4.6% to 7.6%. Increased home shipments 15%, while industry shipments declined 21%.
Lowered raw material inventory levels from $4.2 to $2.1 million and improved raw material inventory turns from 1.0 to 4.7 per month at a key manufacturing facility. Reduced dealer inventory by 10.4% to $171 million.
Lowered production hours per home by 20% and reduced production and administrative workforce by 40%. Reduced time required to determine the cost of a home from about 2 days to a few minutes.
Reduced administrative cost of service operations by $2.2 MM in a key region.
Reduced financial closing cycle time from 7 to 2 days as a result of more precise operational data.
SAP SOLUTION mySAP™ Engineering and Construction (mySAP E&C) capabilities in sales and distribution, service management, materials management, production planning (including the SAP® Variant Congurator), procurement and accounting.
“The SAP solution gives us the ability to view costs all the way through the value chain. We are producing products that have far superiorstandards and options than before – and our customers pay less than they would to competitors whose products offer less.”
Jay WilsonChief Information Officer
Cavalier Homes