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How one of the UK’s largest SAP implementations saved money and improved performance. Lee Harris, Programme Manager. Outline of Presentation. Background Programme Overview Functionality Implemented Benefits Achieved. Royal Mail. Facts & Figures Turnover £8,408m, 224k employees - PowerPoint PPT Presentation
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How one of the UK’s largest SAP implementations saved money and improved performance
Lee Harris, Programme Manager
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Outline of Presentation
Background
Programme Overview
Functionality Implemented
Benefits Achieved
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Royal Mail
Facts & Figures
Turnover £8,408m, 224k employees
Delivers letters and parcels to 27m UK addresses, Operates
17,500 retail outlets
1 Shareholder – UK Government
Regulated Industry (PostComm) but still required to provide
Universal Service Obligation.
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Why are we doing this?
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The Issues
De-centralised Businesses lack of
corporate focus
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The Issues
Multiple Systems and processes 10 significant legacy financial systems (inc. JBA, Walker
Financials, Oracle and SAP).
Numerous variations on common processes mainly paper
driven or local PC solutions with no integration to financials.
Aspiration to become an e-business difficult to support with
current landscape.
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The Issues
Financial Backdrop
Underlying profitability was deteriorating.
Availability and consistency of financial performance information.
Planning was an annual event with 1 year horizon, which took 6
months.
On-set of regulation would furnish additional information
demands.
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The Solution
Single SAP ERP for Royal Mail
1 common Chart of accounts across all business operations
Common finance processes, e-enabled where ever possible
Cycle time improvements for results production from one-set
of numbers.
“Getting a grip of the numbers”
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Programme Overview
Enterprise System Programme (ESP)
Programme initiated in early 2000, with SAP as strategic
technology choice.
ITT led to selection of implementation partner – Deloitte
Consulting.
Programme created with a mix of Internal process experts,
Royal Mail IT staff and supplemented with External Consultants
as required.
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Programme Overview
Programme Scope
18 Individual Business Units
Over 7000 users (inc 4,000 EBP users).
8,500 Profit/Cost Centres.
40,000 vendors & 250,000 business customers
1.5m invoices per annum.
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Programme Overview
Early Major Decisions
Single CO area.
Roll-out strategy (Functionality, Business Unit or by legacy system).
Business Unit ownership – Implementation Managers.
Technology Choices (Workplace, EBP).
Establish a specific governance group to chase benefit achievement.
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Programme OverviewIMPLEMENTATION TIMELINE
Phase 1
04/00 - 11/00 11/00 – 07/01
Phase 2
12/01 – 03/02
Phase 3
08/01 –11/01
• EBP Pilot
R/3
• 5 BU’s
• FI/CO, EBP, AM, PM & MM
R/3
• 8 BU’s
• RE - Prototype
R/3
•6 BU’s
• RE, PS
Blueprint
R/3
• Blueprint
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Functionality Overview
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R/3 SCOPE : Version 4.6c
Procurement
InventoryManagement
PlantMaintenance
CashManagement
AssetManagement
Projects
RevenueManagement
EBP
MM
IM
PM
SD
FI-CA
AM
PS
TreasuryFinancial
Accounting
Inter-Business
ManagementReporting
FI
CO
Real EstateRE
Functionality Overview
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Functionality Overview
Key Functionality:
EBP – new functionality, incomplete content, piloted the
technology first (100 days) – before productionising.
RE – Real Estate no previous UK versions, prototyped before
developed (prototyping didn’t expose all the integration
issues encountered later).
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Functionality Overview
Gaps in Solution
Demands from Regulator starting to materialise, which pose
challenges for R/3 to handle.
• Costing
• Planning
Performance Management loop not closed by ERP alone.
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Functionality Review
Programme Response
Initiated additional project to deliver:
• Business Warehouse Reporting Flexibility (BW2.1c)
• Strategic Enterprise Management (SEM 3.0)
Also replaced AB Costing solution with Oros (SAS), including
unique “bridge” to BW for distributed reporting.
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R/3 Data Sources
SEM-BPSBusiness
Planning andSimulation
SEM-BPSBusiness
Planning andSimulation
OROSRevenue and Cost Model
OROSRevenue and Cost Model
Bridge
SEM-BCSBusiness
Consolidation
SEM-BCSBusiness
Consolidation
SDPRISDPRI
HUB
BW/SEM Scope
SAP BWReportingReporting
PayrollLedger
PayrollLedger
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Programme OverviewIMPLEMENTATION TIMELINE
Phase 1
04/00 - 11/00 11/00 – 07/01
Phase 2
12/01 – 03/02
Phase 3
08/01 –11/01
• EBP Pilot
R/3
• 5 BU’s
• FI/CO, EBP, AM, PM & MM
R/3
• 8 Bu’s
• RE - Prototype
R/3 & BW
• 6 BU’s
• RE, PS & BW Functionality
03/02 – 10/02
Blueprint
R/3
• Blueprint
Phase 3 (a)
R/3, BW & SEM
•BCS / BPS Functionality
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Somebody has to pay for all of this don’t they?
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Programme Benefits
Targeted Benefits - Financial
Replacement of legacy applications.
Process Efficiencies – Reduction in Headcount.
Improved Control – Controlling demand (e.g.utilities / cleaning etc)
Supplier price reductions (conformance and supplier efficiencies)
Inventory reduction (JIT & automatic re-order levels)
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Programme Benefits
Targeted Benefits – Non Financial Performance reporting, Product/Customer profitability,
regulatory and statutory accounts are all produced from a
common source.
Flash results available within 2 days of period close.
Actual product profitability reported on day 15 each month
(previously quarterly).
Business Plans consolidated in a day (previously 2 weeks).
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Investment Costs & Benefits
0
20
40
60
80
100
120
140
99-01 01-02 02-03 03-04 04-05 05-06
Financial Year
£m
Cumulative Benefit
Cumulative Cost
Sunk £86mTotal £103m
Rec. Benefit
£37m
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Programme Benefits
Measures of Success
Financial Benefit achievement
Stakeholder Perception of Programme
End user Perception
Non Financial Results.
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Programme Benefits
Enablers of Success
Keep it lean and mean – provides pace!
Business Ownership – Solutions Team, Implementation
Managers, ASAP methodology.
Focused Board securing benefits (inc. Implementation
partners “skin in the game”).
LEADERSHIP – within the Programme and the Business..
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Programme Benefits
Still to Finish!
Revenue management (SD/FI-CA).
Sustaining the gains!
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Thank You