Driving digital transformation in Automotive industry

Delivering Instant Value for Automotive CompaniesRun Simpler with the Next-Generation Business Suite

SAP IndiaJuly, 2016

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2

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Agenda

• Industry Dynamics

• SAP S/4HANA Overview

• SAP Roadmap for Automotive Industry

• What Next


Agenda




• What Next


Market realities are forcing the need for business transformation

Evolving expectations Business complexityHyper-connectivity

>75 BConnected devicesin the Internet ofThings2

5BMiddle-classconsumers with €56trillion spend power1

90%Of the world’s datagenerated in the lasttwo years3

<15 yearsAverage lifespan on theFortune Global 5004

US$99.4BDaimler Market Cap, BenzPatent Motorwagen,automotive company,founded in 18865

Accelerating Pace of Business

Sources:1 Morgan Stanley: Asian Influence, The Emerging 21st Century Middle Class, June 20112 Kleiner Perkins Caufield Byers, Internet Trends 2015, May 20153 “Big Data, For Better or Worse: 90% of the World’s Data Generated in the Last Two Years,” ScienceDaily, May 20134 “Peggy Noonan on Steve Jobs and Why Big Companies Die,” Steve Denning, Forbes, November 20115 Yahoo Finance, July 13, 2015

US$175BAlibaba market cap,founded in 1999


Transformation does not come from incremental improvementbut from doing things fundamentally differently

Innovation and differentiation• Insights and answers “before”

questions• Highest reliability and fidelity of

real time information

Market Changer and Challenger• Advanced use of electronics and

telemetry data to deliver cleanperformance

• Changing the automotivedistribution chain with insight

Disruptive speed and efficiency• Accelerated MRP runs improves

planning• Reduced production inventory

potentially resulting in millions ofEuros in working capital

“By 2018, one-third of the top twenty market share leaders in most industries will be significantly disrupted by new competitors(and “reinvented” incumbents).”*

The common denominator: a digital value chain enabling flexible, agile, interconnected operations and new levels ofbusiness insight

#7 Private vehicle managementcompany, changingoperators behaviors

automotive manufacturer to dothings differently from design todelivery and to enter other batterymarkets

Global Automotive Supplier 1st #1

*Source: IDC, March 2015


Agenda




• What Next


SAP Framework for Digital BusinessAdapting to the Digital Economy Requires a Simple and Powerful Strategy Framework

Every company can develop adigital strategy across these 5pillars:

1. Outcome based customerexperience

2. Re-platform core businessprocesses for high throughputand combine business processand analytics

3. Smarter and engaged workforceacross all employees andcontractors

4. Supplier collaboration toaccelerate growth and innovation

5. Harness internet of things andbig data to drive real-timeinsights and new businessmodelsSAP HANA PLATFORM

Customer ExperienceOmni-Channels

WorkforceEngagement

Big Data & Internetof Things

Supplier CollaborationBusiness Networks

HANA CLOUDPLATFORM

SAP FIORI

Digital Core


Why embrace digital transformation?

Reimagining the business

The digital value network will help you enable business transformation by:

Simplifyingtechnology

Transformingbusiness processes

Empowering thebusiness

Customerexperience

omnichannel

Workforceengagement

Assets &Internet of Things

Suppliercollaboration

business networks


Simplify Technology: SAP S/4HANA simplifies technology for automotivecompanies

Reduce total cost of ownership Increase user productivityAccelerate execution

Simplified data model Simplified system landscape Simplified user experience

Classic SAP Business Suite11 Inventory aggregate tables2 Document aggregate tables11 History aggregate tables2 Material master tables

Role-based engagement acrossthe business

Instant access to any businessinsight

Simple design across businessprocesses

SAP GUI SAP Fiori UX DeltaDuration(seconds)

132 47 - 64%

Clicks 39 11 - 71%Screen changes 8 2 - 75%Fields filled 5 2 - 60%

Example: SAP S/4HANA Finance -receivables management

Reduced number of systems andbusiness warehouses

Flexible access to data and datacompression

Fewer interfaces between systems

Elimination of aggregates

Example: SAP S/4HANA Supply Chain– inventory management

SAP S/4HANA1 Document table

2 Material master tables

Example: MRP Horizontal and Verticalsystem consolidation using S/4HANAClassic SAP Business SuiteHigh data volume customerssplit their systems in severalinstances sometimes severalinstances per country orregion

SAP S/4HANAData compression andscalability with HANArequires only one MRPplan for complete productstructure resulting in• Reduced interface• Lower TCO

Simplification of master data

Unification of tables


Simplify Technology: S/4HANA Data Model Simplification – Example

SIMPLE DATA MODEL» Only main tables remaining, no redundancies

» Clear separation of master data from transactional data» Reduction of memory footprint

THROUGHPUT INCREASE» INSERT only on database level (MM-IM),

no locks for standard price valuation

Busi

ness

Suite

MATDOC ACDOCAMaterialPricesMaterial

MBEW

OBEW

QBEW

OBEW

MBEWH

OBEWH

QBEWH

OBEWH MLHDMLPP

MLITMLCR

Document

MLPPF MLCRF

CKMLPP CKMLCRTotals

CKMI1Index

GLPCAZZFISLA

FAGLFLEXAGLFUNCA

COFIS

BKPFBSEG

COBKCOEP

ANEKANEP

GLPCTZZFISLT

FAGLFLEXTGLFUNCT

COSPCOSS

COFIT

BSIMBSIDBSAD

BSIKBSAK

BSITBSAT

BSISBSAS

MARD

MARC

MSTQHMSTEH

MSTBHMSSQH

MSSAHMSPRH

MSLBHMSKUH

MSKAHMKOLH

MCHBHMARDH

MARCH

MSTQMSTE

MSTBMSSQ

MSSA

MSPRMSLB

MSKUMSKA

MKOLMCHB

MKPF

MSEG

Totals tables

Document

Totals

Totals

Indices

Documents

BKPF

PRINCIPLE OF ONE» Only one valuation method (Material Ledger)

instead of 2 (IM + ML)

» Flexible rebate management instead ofcumbersome and expensive redundancies

Inventory Mgmt.(Quantities)

Inventory Mgmt.(Valuation via „MBEW)

Material Ledger(multi GAAP, multi currency) Accounting

Master Data Inventory Mgmt(Quantities)

Material Ledger(multi GAAP, multi currency)

Accounting

VBAK LIKP VBRK

LIPSVBAP VBRP VBFA

VBUKVBUP

VAPMAVAKPA

VLPMAVLKPA

VRPMA

VBOX

S066S067

EIKPEIPO

NAST

Sales and Distribution

VRKPA

PrimaryDocument tables

Indextables

Sales and Distribution

Status tablesLIStables

Rebate index Output mgmt

Export/importtables

VBAK LIKB VBRK

LIPSVBAP VBRP VBFA

History tables


Simplify Technology: Combining transactions and analytics on a single in-memory platform

• Instant insight to action on live data• One copy of the data• No ETL and batch processing

• Decisions and actions on old Data• Multiple copies of the data• ETL and batch processing efforts and costs


Simplify Technology: SAP Smart Business – new user experience andworking model

SAP Smart Business provides a new User

Experience & working model -

§ Role-based access to all relevantinformation - KPIs, news feeds etc…

§ New working model supporting end to endinsight to action scenarios includingsimulation & forecasting

§ Users can easily personalize

§ New coherent and responsive userexperience supporting multiple devices

§ Color-coded visualization of violatedthresholds

§ SAP Smart Business is an openframework…

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express orimplied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement


Empower the Business: Unmatched advanced capabilities

DRILL DOWNS

REAL TIME

PREDICTIONS

SIMULATIONS RECOMMENDATIONS

RESPONSIVEEliminate batch processing,

data reconciliation

Discover and respond to futureopportunities and challenges

Explore the impact of businessdecisions on outcomes

Analyze at any levelwithout exporting data

Improve user satisfactionby reducing wait time

Built-in data-driven decisionsupport systems


Empower the Business: Reimagine planning and decision-making processes toalign around common goals

Monitor MRP situation globally with real-time calculationof key MRP KPIs to help focus on critical disruptions

Discover future material flow issues in real-timewith flexible filters across plants

Simulate multiple supply solution proposals instantlyand graphically evaluate ‘what-if’ demand-supply picturefor each solution option on the fly.

Solve the problem by selecting the most feasible supply alternativeguided by system recommendations – immediately initiate workflowto execute this decision (e.g. re-schedule order)

1 2

3 4


Empower the Business: SAP S/4HANA Embedded Analytics - Combiningtransactions and analytics on a single in-memory platform

Finance

Supply chain

Marketing

Sales

Procurement

Manufacturing

…

Up-to-the-second insights

Contextualized information

Internal and external data

Closed-loop execution

Exception handling

Data drilldown

…

Businessprocess

Businessintelligence

(Data and information)

Any device

SAP S/4HANA embedded analytics


Empower the Business: Example of Embedded Analytics in Procurement- Material order entry

Enter material order

Check budget overview

Check average supplierdelivery performance

Review detail report

Purchasingmanager

Choose best supplier andcomplete material order entry

Starttransaction

Completetransaction

All on one screen

ü Faster customer deliveryü Larger average deal sizeü Fewer warehouse stock outs

Analyze and predictBudget Overview

*Screenshots shown are for demonstration purposes only and are not final product commitments


Empower the Business: Self-service Analytics – from coding toConfiguration


Transform Business Processes: Reimagine business processes forfundamentally higher performance

Finance

Allow for visibility into the state of the businessat any time:• Enable real-time financial close for faster,

more accurate, and more collaborativedecision making and execution enterprise-wide

HR

Manage, develop, reward, and retain a globalworkforce:• Integrate end-to-end HR and financial

processes for budget and head count

Digital CoreSustainable Product

InnovationManufacturing and

LogisticsResponsive Supply

NetworksMarketing, Sales and

Aftermarket

Connect R&D areas and processes todeliver desired innovations quickly andwith high quality:• Enable real-time cross-functional

collaboration, from idea to launch• Higher product quality through rapid

root-cause analysis on product andprocess failures

• More accurate cost estimates withrole-based product cost estimationactivities

Increase the efficiency of supplynetworks:• Reduce supply chain risk and

disruption• Monitor real-time commodity

price-and-supply volatility• “Real-time” view of end-to-end

supply chain. Exception-basednotification and integratedresolution of issues

Increase profit margins, optimizeservices and innovate new offerings forinformed and demanding customers:• Provide real-time visibility into

customer demand across all channelsfor vehicles and parts

• Real-time marketing with increasedtransparency and internalcollaboration

• Provide enhanced customer serviceusing context-aware, Big Data insights

Respond to globalization and costpressures by reducing inventories andsynchronizing logistics processes:• Establish sub-daily material

requirements planning• Real-time inventory monitoring with

automated procurement proposals• Predict breakdowns to proactively

perform maintenance on assets• Gain instant transparency due to real-

time processing of inventoryconsumption

Eliminate supply disruption risk while protectingmargins:• Collaborate instantly with global suppliers• Monitor real-time commodity price-and-supply

volatility• Automate procurement proposal creation based

on real-time inventory

Procurement

Workforceengagement

Customer experienceomnichannel

Supplier collaborationbusiness networks

Assets &Internet of

Things


Transform Business Processes: Key Business Innovations in SAPS/4HANA Enterprise Management

This is the current state of planning and may be changed by SAP at any time.

Material RequirementsPlanning

InventoryManagement

Available To Promise &Backorder processing

Capacity Planning

MaterialValuation

Industry solutions tocore

UniversalJournal

Central Finance

Re-architecting forin-memory platform

Responsive userexperience design

Unifying functionalityin core

Sales RepresentativeOrder Management & Billing

Procurement Clerk Material Planner

> 20

3 < 1

Laggards Best-in-class Target

AcceleratedFinancial Close


Universal Journal: Single Source of TruthFunctional Enhancements

New Architecture» Concept: “Take the best of all worlds”

(e.g. ledger, market segment, codingblock, etc.)

» One line item table with full detail for allapplications - for instant insight & easyextensibility

» This replaces the “logical document” ofSAP Accounting 1.0.

» Data stored only once: no morereconciliation needed - by design

» Reduction of memory footprintthrough elimination of redundancy.

» Fast multi-dimensional reportingpossible without replicating data tobusiness warehouse (BW).

» If BW is in place anyway, only one singleextractor needed.

» Secondary cost elements are nowG/L accounts.A universal journal entry can have (technically) up to 999,999 line itemsà

less or no need for summarization (depending on data volume)


Transform Business Processes: Value Scenarios of SAP S/4HANAFinance

Close Books in a DayTask accelerationand automationIntra-period reconciliationSoft close and simulation(planned)

$ Optimize Working CapitalGroup cash managementWorking capital analyticsContinuous cash collectionsInvoice and discountoptimization

Ensure ComplianceFraud detection andpreventionAudit management

Plan DynamicallyIntegrated businessplanningPredictive forecastingBudget management(planned)

”“ Real-time analytics enabling real-time processes

Centralize FinanceReal-time financial and operational reportingHarmonized internal and external reportingGroup reporting in multi-ERP and M&A situationsFlexible reporting in matrix organizationsCentralized process execution

Analyze Plan Transact


Logistics in ERP –a system of record…

Simulation

Decision support

Materials Management and Operations in S/4HANA EnterpriseManagement -a decision support system…

Enterprise Management

Transform Business Processes: Scope of SAP S/4HANA MaterialsManagement and Operations

SAP S/4HANA EnterpriseManagement - MaterialsManagement and Operationsscope is -

ü similar to functionality coveredby ECC 6.0x logistics

ü It includes Core ERP functions(without FIN, HR & Marketing)

ü Is enhanced to support digitaltrends like Internet of Things,Business Networks, etc.


Transform Business Processes: Sales Order Fulfillment Cockpit

ü Resolvedü Deliveredü Billedü Paid

OLTP based systemsIssues & exceptions are typically identified by working down listsof multiple table & aggregate structures – a time consumingand error-prone process

A people centric collection of issues & exceptions via embedded analyticsand worklist access in realtime on primary data- to solve issues in seconds


nS/4HANA offers single approval workflow apps for various procurement objects. However, also a holistic view across all workflow items isoffered with a generic workflow inbox providing also document details. The workflow apps rely on preconfigured release strategy proceduresand business workflow.

Key Message

Unique Value of S/4HANA

• Provide single workflowapproval apps for purchaserequisition, contract, purchaseorder and invoice

• In a Generic Workflow Inbox,approvers get a holistic viewacross all workflow items andcan filter the list

• Mobile access to the workflowitems

• Notice all document detailslike attachments, notes,approval details

Transform Business Processes: Fiori Apps for Procurement – FioriInbox


ü Object Page for Supplier, PurchaseRequisition, Purchase Order,Purchase Contract, Invoice, InfoRecord and Material

ü Object Page design with quicknavigation to related areas and quicknavigation to related businessdocuments

ü Additional links to related follow onfunctions, e.g. from Purchase OrderObject Page you can navigate to theManage Purchase Order App tomaintain or change data

Transform Business Processes: Fiori Apps for Procurement – ObjectPages


nPressured to reduce supply costs, companies are seeking greater efficiencies and savings from procurement operations. With S/4, purchasersget role based and quick access to the procurement information they need to analyzing purchasing spend, suppliers and contracts in real-time.

Key Message

Unique Value of S/4HANA

• Real-time calculation of keyperformance indicators toanalyze managed and non-managed spend, contracts,and suppliers

• Fast and highly configurableKPIs

• Instant insight to actioncapabilities by navigating toother Fiori Apps andFactsheets

• Dynamic supplier evaluationscoring based on procurementdocuments in real-time

Transform Business Processes: Procurement Analytics


Reimagine the Business: Enabling digital transformation in the automotiveindustry

Customerexperience

omnichannel

Workforceengagement

Assets &Internet of Things

Suppliercollaboration

business networks

Onboard mergersand acquisitions

Expand in newmarkets

Quickly scale combinedoperations to acceleratetime to value

Create new businessopportunities by enteringinto new business areassuch as fleet operations todeliver new customervalue

Introduce newbusiness models

Sense and shapedemand

Deliver new andinnovative servicesincluding e-mobility basedupon data andconnectivity

Sense and respond todynamic customerdemand in real timeacross physical andvirtual channels

“We took an analytic that took us 6 months to develop and we redeployed it on HANA in two weeks. Results come back soquickly now, we don’t have time to get coffee.”Justin Replogle, Director – IT, Honeywell

SAP HANA PLATFORM


Reimagine the Business: Introduce new business models

Digital Business Scenario: SAP Connected Vehicles Value estimates

Internet of Thingsand Big Data

Customer experienceOmnichannels

Digital core

Suppliers collaborationBusiness networks

18%Lower unplanned downtime for organizations adoptingpreventive/predictive maintenance

Product lifecycle costing

Optimize supplychain

3-D print ofservice parts

5%Executing a true 1-to 1 marketing campaign at scale hasshown to lift overall revenues by more than 5%(Source: SAP (SeeWhy) research 2014: The ROI of Email Remarketing for

Ecommerce Brands)

4-5xMore revenue generated by value-added services thansimple connectivitySource: SAP and customer benchmarks / Forrester Research, 2012Time

8.2%higher Order Fill Rate (in %) for Automotive Companieswhich have higher Order Pick Accuracy (in %)

Monitorvehicle

telematics

Monitorvehicle

telematics

1Predictive

maintenance

3

Predict serviceparts demand

3

3

4

4

Gain Real-TimeCustomerInsights

5

Deliver uniquecustomer

experiences

6

Push real-timealerts to fleetdashboard

1

Data-drivenremote

diagnostic

2Real-time

contextual 1:1marketing

6

7 Insights-to-action into driver

behavior

Pay-as-you-drive

contracting

In-CarCommerce

7

7

Optimize PartsSourcing

4


Reimagine the Business: Digital business scenario for automotive

Customer experienceOmnichannels

Workforce engagementSuppliers collaborationBusiness networks

Internet of Things

Digital Core

SAP HANA Cloud Platform for vehicleinsights by integrating vehicle telematics dataand analytic insights into business processes

1

SAP Predictive Maintenance and ServiceS/4 to instantly trigger a maintenancedemand in the core system

2

Insight from SAP Predictive Analyticspowered by SAP HANA to calculateservice and parts requirements

3

Costs products in the early stages oflifecycle based on SAP Product Life CycleCosting

3

Service parts and tools sourcedthrough the Ariba Network

4

SAP Extended Warehouse ManagementSAP Transportation Management forservice order fulfillment and logistics

4

SAP hybris Marketing enables real-timeinsights into the context of each customerto deliver highly individualized customerexperiences across channels

6

With SAP hybris' omnichannel commerceyou engage with your customers better,wherever they are; example: driversportal - central access to vehicle insightsand loyalty information

5

SAP Cloud for Social Engagement: connectand engage with your prospects andcustomers via social networks providingbest in class customer experience

5

Mobile analytics on SAP S/4HANA provides360-degree view of operations and historicalmaintenance data to find most likelyproblem

7

SAP S/4HANA Finance solution to createprofit visibility

7

7


Only SAP enables a fully connected digital value network

Unique solution enablers . . . . . . delivered by SAP S/4HANA: a unique value platform

Digitalcore

Digitalenterprise

Digitalecosystem

Connected Predictive

Real-timeprocesses

Personalized

““By combining sensor technology from Modern Horsepower andSAP Business Suite powered by SAP HANA, we get engine testingresults in real time. This breakthrough innovation is just the start…..”

Reinhard Breyer, Chief Information Officer, Mercedes-AMG GmbH

“SAP Fiori UX is a radical rethink of the way people shouldinteract with an ERP system. . . . Based on these factors,Gartner believes that SAP Fiori UX is unavoidable.”Gartner, March 2015

Secure


Agenda




• What Next


SAP S/4HANA planned and future innovations forautomotive

Collaborative product innovationü Product safety: improved management of safety data sheets and dangerous goods

Manufacturing and logisticsü Simplify access to production planning (PP) and detailed scheduling (DS) as part of

manufacturing planningü Monitor material coverage with an app that supports make-to-order and make-to-

project manufacturingü Plan critical products with a Web-based graphical scheduling tool as part of

manufacturing planning

Responsive supply networksü Pallet algorithm for processes supported by SAP EWMü Extended warehouse management functionality embedded in SAP S/4HANA

Marketing, sales, and aftermarketü New product availability check optimized for SAP S/4HANAü SAP Fiori app for delivery managers to decide which sales orders should be part of

the next delivery wave (“release for delivery”)ü Enhancements to SAP Fiori apps for billing clerksü Customer engagement in SAP S/4HANA through SAP Hybris Marketing

Collaborative product innovationü Integration of SAP Product Lifecycle Costing to SAP Engineering Control Centerü Product compliance management with seamless integration into product

development processes (R&D, engineering, product lifecycle management)ü Project and portfolio management capabilities for SAP S/4HANA as the future

platform for integrated enterprise processes

Manufacturing and logisticsü Launch a shop-floor cockpit (new SAP Fiori apps for production supervisors)ü Integrate SAP Quality Issue Management to improve product and process qualityü Digitalize the just-in-time process with SAP Fiori apps that support lean planners

in their daily work and connect Internet of Things (IoT) scenariosü Simplify material valuation to enable parallel inventory postings for moving average

price-driven materials

Responsive supply networksü Back-order processing with improved flexibilityü Advanced available-to-promise capability with native rule-based sourcing and

product substitutionsü Extended manufacturing with PP and DS, an improved UI, and planning screens

Marketing, sales, and aftermarketü SAP Hybris Commerce integration to vehicle and part sales for B2B and B2C

Digital servicesü Vehicle insights to enhance service management

Future directionPlanned innovations

View all SAP S/4HANA innovations for automotive in SAP Innovation Discovery


Other innovation highlights for automotive

Future directionPlanned innovationsCollaborative product innovationü Enhance SAP Cloud for Product Stewardship to support supplier materials

managementü Integrate engineering change managementü Share project documents with internal and external parties using SAP Document Center

Manufacturing and logisticsü Enhancements to SAP Manufacturing Execution to support the IoTü Simplified production planning (PP) and detailed scheduling (DS) (on premise)ü SAP Manufacturing Execution enabled for SAP HANA

Responsive supply networksü Performance optimization in radio frequency pickingü Further enhancements in SAP Supply Chain Control Towerü Enhanced integration of SAP TM and SAP EWM to support shippers managementü Real-time analytics for SAP TM

Marketing, sales, and aftermarketü Omnichannel commerce: consolidation of customer master dataü Omnichannel commerce: in-store customer engagement and clienteling

Collaborative product innovationü Product intelligence and design for the IoTü Extended creative authoring tool for system engineeringü Integration of SAP Product Lifecycle Costing to SAP Engineering Control Center

Manufacturing and logisticsü Manufacturing planning and scheduling with a simplified application for an

improved user experienceü Support for IoT for Industry 4.0, connected logistics, predictive and remote

maintenance and servicesü Cloud for manufacturing solutions

Responsive supply networksü Supply chain orchestration with the logistics networkü Track and trace for traceability across networksü Next-generation available to promise functionality

Marketing, sales, and aftermarketü Integration of automotive digital services into SAP Hybrisü Real-time geolocation and event-triggered marketing management for individuals,

cars, and fleets

View all innovations for automotive in SAP Innovation Discovery


Agenda




• What Next

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Discover the power of SAP S/4HANA:

ü Visit us at the next SAP event nearyou (SAP global events).

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Thank you

Debashis MajumderInnovation Principal – SAP S/[email protected]