Improving Operational Efficiency for Profitable Growth

7/27/2019 Improving Operational Efficiency for Profitable Growth

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SAP Solutions for Small Businesses and Midsize Companies

IMPROVING OPERATIONAL

EFFICIENCY FOR PROFITABLE

GROWTHTHE IMPORTANCE OF CHOOSINGTHE RIGHT IT INFRASTRUCTURE


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CONTENT

4 Executive Summary

5 Market Challenges

6 Solutions for OperationalEfficiency

6 One Size Does Not Fit All7 Organizational Structure7 Business Process Specialization7 IT Infrastructure Strategy7 Different Business Models

8 SAP Solutions: Meeting DiverseNeeds

8 SAP Business One9 SAP Business ByDesign9 SAP Business All-in-One

11 Partner with SAP and GrowProfitably11 Predictable and Affordable

Deployment and Support11 SAP: A Trusted Partner for

Profitable Growth12 SAP Solutions for Small

Businesses and MidsizeCompanies


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Across nearly all industries, todays small businesses andmidsize companies are concerned with improving opera-tional efficiency to support profitable growth. Facing anincreasingly competitive marketplace characterized byglobalization, market consolidation, increasing regulation,competition for resources, and the rapid pace of innova-tion many companies report that improving operating

efficiency is critical to their ability to thrive.1

EXECUTIVE SUMMARY

1. Thinking big: Midsize companies and the challenges of growth, The Economist Intelligence Unit, February 2006.2. Ibid.3. Ibid.

of Blueprint to a Billion: 7 Essentialsfor Exponential Growth, agrees:Companies [that grow exponentially]invest in business systems infrastruc-ture to fuel growth.

However, choosing the right businesssystem and IT infrastructure can bechallenging. When it comes to imple-menting technology infrastructure,one size does not fit all. This paper

briefly delineates the market challengesfacing small businesses and midsizecompanies, explores technology require-ments, and concludes with overviewsof several SAP business solutionsspecifically designed to help smallbusinesses and midsize companiesimprove operational efficiency andgrow profitably.

Companies [that grow exponen-

tially] invest in business systems

infrastructure to fuel growth.

David Thomson, author of Blueprint to a Billion:

7 Essentials for Exponential Growth

In fact, boosting efficiency and calibrat-ing capacity to meet potential expan-sion are the hallmarks of a successfulcompany.2 Many report that their ITinfrastructures play a central role inachieving these goals. In a recent survey

of senior executives, 68% report thatIT is critical to their organizations abilityto grow, while an overwhelming 72%believe that retaining operational flexi-bility as they grow hinges on their ITinfrastructures.3 David Thomson, author

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Many small businesses and midsizecompanies report that their ability toinnovate continuously gives them acompetitive edge over rivals of all sizes.5The faster they can move, the fasterthey can deliver differentiated productsand services to market. With enablingIT, companies can improve productdesign and life-cycle management, andthus speed new products to market.

But knowing which business solutionto adopt can be daunting. Which optionwill best meet the overall goal of growthwhile supporting specific objectives foroperational efficiency, enhancing cus-tomer relationships, and speeding thepace of innovation?

One Size Does Not Fit All

Because each company has its ownparticular needs, finding the right busi-ness solution involves more than simplychecking boxes on a list of functionality.SAP has found that the most success-ful companies adopt a business solu-tion that fits the way they work. Thismeans choosing a solution that supportsthe companys organizational structure,

business processes, and IT infrastruc-ture strategy.

4. Ibid.5. Ibid.

An effective business solution stream-lines operations, supports teamworkand global operations, and fosters com-pliance. By ensuring speed, flexibility,and responsiveness as a companygrows, technology helps companies

improve operational efficiency, customerservice, and innovation.4

And increasing operational efficiencymeans reduced costs and increasedmargins. With the right business solu-tion, companies can improve businessoperations by using best practices andintroducing automation that speedsprocesses. Automation enables themto redirect resources away from admin-istrative tasks to focus on activities

that can differentiate their products orservices in the marketplace.

Understanding customer needs andresponding to them rapidly helps buildcustomer loyalty critical for business-es seeking to compete effectivelyagainst larger rivals. A business solu-tion that includes automated systemsand customer self-service for adminis-trative activities enables customers tofind answers quickly to routine ques-tions online. Meanwhile, critical cus-

tomer support resources are freed upto focus on more pressing customerneeds.

SOLUTIONS FOR OPERATIONAL EFFICIENCY

SPEEDING UP BUSINESS PROCESSES

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The third company is a medical productsdistributor whose goals include increas-ing margins, enhancing customer rela-tionships, and widening competitiveadvantage. The companys organizationis somewhat complex, with multipledivisions that include a clinical divisionand an over-the-counter division. Anin-house IT department maintains amature IT infrastructure, with a signifi-cant wide area network, that supports

highly unique business processesand 900 employees.

IT Infrastructure StrategyA third key consideration is the overallIT investment strategy. While one com-pany may require strict control and thusprefer software deployed in-house,another may seek to minimize its IT

resources through software deliveredas a service over the Internet. Choos-ing the business solution that matchesa companys IT philosophy is criticalto successful implementation andcompany-wide adoption.

Different Business Models

To illustrate, lets consider three differentcompanies. The first is a custom motor-cycle manufacturer with discrete manu-

facturing business processes. The com-panys main focus is on sustaining itsmargins and protecting customer loyal-ty. With 85 employees, two layers ofmanagement, and a basic IT infrastruc-ture supported by a single employee,the manufacturer needs a solution thatrequires a minimum investment of ITresources.

A second is a professional servicesfirm that focuses on getting new prod-ucts and services to market quickly to

sustain a competitive advantage. Thefirms basic business processes arestraightforward. With multiple officesand various subsidiaries, the firm out-sources its IT and has no desire toinvest heavily in a new infrastructure,preferring to focus resources insteadon meeting client demands.

Organizational StructureCompanies have varying degrees oforganizational complexity, influenced byfactors such as layers of management,number of employees, divisional struc-ture, subsidiary relationships, and the

number and location of their operations.These elements result in a level ofcomplexity when it comes to businessprocesses such as financial reconcilia-tion and reporting, budgeting, and con-solidations and therefore influencethe choice of a business solution.

Business Process SpecializationIts important to take a close look atbusiness processes to determinewhether they are straightforward and

industry-standard or highly specialized.The right business solution shouldprovide flexibility and customization forcompanies that require it and enableproven, standard business processesout of the box for companies that areeither able to adopt industry best prac-tices or use them as a starting point.

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SAP offers a range of solutions toaddress each companys diversebusiness requirements.

SAP Business One

Designed exclusively for small busi-nesses such as the motorcycle manu-facturer, the SAP Business One appli-cation manages the entire business from financials and sales to customerrelationship management and operations.

With SAP Business One, small busi-nesses can streamline their end-to-endoperations, get instant and completeinformation to respond faster to market

needs, and accelerate profitablegrowth. The following highlights keybenefits:Improved operational efficiency

By seamlessly integrating the entirebusiness through a single application,SAP Business One eliminates redun-dant data entries and errors.

Instant, complete, and accurateinformation With Microsoft Excelbased drill-down reports, employeescan navigate through a complete setof business data to get the informationthey need instantly, whether working

in the office or remotely over the Web.Improved sales effectiveness and

customer relationships With built-incustomer relationship managementfunctionality, companies can expandonline sales and provide better cus-tomer service using Web-basede-commerce and customerself-service.6

Improved productivity SAP BusinessOne helps employees proactively focuson the right priorities. Workflow-based

alerts enable employees to respond tothe most important business events asthey occur, freeing them up from con-stantly reacting to day-to-day issues.

Adaptability The innovative, model-driven approach and more than 350solutions from independent softwarevendors allow users to easily config-ure, customize, and extend the systemto meet specific business and industryneeds.

SAP Business One is ideally suited to

service, wholesale, retail, or light manu-facturing companies with 10 to 100employees and fewer than 50 users.Companies with relatively straightfor-ward business processes and annualrevenue of less than US$50 millionmay find SAP Business One to be aperfect fit.

SAP SOLUTIONS: MEETING DIVERSE NEEDS

THREE MAIN OPTIONS AFFORDABLE AND SCALABLE

SAP Business One is more than just a cost saver its an absolute

essential for doing business.

Lou Giovannone, Group Controller, Fagerdala USA

6. For a complete description of customer relationship management functionality within SAP Business One,visit www.sap.com/solutions/sme/businessone.

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SAP Business One would have beenperfect for the custom motorcycle man-ufacturer discussed earlier. It was alsothe perfect choice for Fagerdala WorldFoams, a company with similar size,organizational complexity, business pro-

cess differentiation, and IT strategy.Fagerdala World Foams needed acomprehensive business solution toimprove visibility, maximize efficiency,and reduce costs. The company imple-mented SAP Business One at one ofits U.S. subsidiaries, Fagerdala USA,and within 6 months achieved a return onits investment through costs savings.With its new solution, Fagerdalareduced the time it took to close thebooks from 45 to 6 days and cut

accounting staff from 9 full-time equiva-lents to 4.5. Lou Giovannone, groupcontroller for Fagerdala USA, sums up:SAP Business One is more than justa cost saver its an absolute essentialfor doing business.

SAP Business ByDesign

Designed specifically for midsize com-panies like the professional servicesfirm in our example, the SAP BusinessByDesign solution is a complete,

adaptable, on-demand business solutionwith broad support for cross-industryprocesses. Because business users canconfigure SAP Business ByDesign with-out relying on expensive IT resources,the application supports rapid changesand growth while providing a predictablecost of ownership. Here are a few ofthe benefits:

Control over and visibility into everyaspect of the business The softwarecentralizes business data across alldepartments and business process-es, providing managers with insightinto real-time data via dashboards

delivered to a work center tailored tothe individuals job responsibilities.

Adaptability to changing conditionswith little or no intervention by IT Companies can automate core busi-ness processes and adapt or extendthem across their entire ecosystemon the fly using everyday businesslanguage. If the company expandsglobally, the solution offers built-insupport for regulatory compliance forcountries around the world.

Reduced IT costs and complexity SAP Business ByDesign featuresready-to-use functionality and built-inservice and support. Customer servicefunctionality is automated through aglobal backbone, providing midsizecompanies with expert remote cus-tomer support that maximizes produc-tivity, minimizes IT costs, and mostimportantly, keeps customers happy.

Increased productivity With atry-and-buy purchasing process,companies can deploy SAP Business

ByDesign quickly and without anysurprises. Company employees findthe software easy to use, thanks toan intuitive user interface and built-inprocedure guides that enable real-timeprocess change. This unprecedenteduser experience helps employees getonboard quickly, rapidly enhancingproductivity.

SAP Business ByDesign is ideally suitedto midsize companies requiring an appli-cation that can handle increasing orga-nizational complexity while adapting tochanging business requirements.Candidates for SAP Business ByDesign

are likely to be growing quickly andneed to improve business agility, oper-ational scalability, and collaborationwith partners and suppliers at a pre-dictable cost. They need all of theirinternal resources focused on businessexecution. And while SAP BusinessByDesign is an end-to-end solutionthat provides companies better overallcontrol, it requires limited or no on-siteIT expertise or resources.

SAP Business All-in-OneSAP Business All-in-One solutionsleverage SAP Best Practices offeringsto provide midsize companies withdeep industry-specific functionality.Built on the proven SAP ERP applica-tion, SAP Business All-in-One solutionsalso meet the needs of midsize compa-nies that require adaptation and cus-tomization of complex business pro-cesses as their business changes andgrows.

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SAP Business All-in-One solutions areideally suited for midsize companiessuch as the medical products distribu-tor in our example. These companiestypically maintain a dedicated IT staffand prefer a business solution with anon-premise deployment option. Oftenwith global operations and multiple dis-tribution channels, they use SAP Busi-ness All-in-One to streamline end-to-end business processes, which they

can flexibly adapt when business needsshift. The following are a few highlights:

Business visibility SAP BusinessAll-in-One provides visibility into allaspects of business operations andperformance. With the ability tomanipulate, analyze, and visualizebusiness data through Microsoft

Excel, along with direct access toreports, managers get the real-timeinformation they need to stay ontrack.

Configurability and extensibility Leveraging SAP ERP and the SAPNetWeaver platform, roles and pro-cesses can be configured to alignwith changing organizational needs.SAP Business All-in-One solutionsare easily extensible through micro-vertical applications built by SAP

partners, and through integrationwith third-party applications.Ease of use and improved user pro-

ductivity SAP Business All-in-Oneoffers a simplified work environmentwith a user-friendly interface and role-based navigation that providesemployees with easy access to theinformation they need. Through inte-gration with Microsoft Excel, SAPBusiness All-in-One solutions offeran intuitive approach to analytics thatimproves the use of data for ad hoc

reporting and visualization therebyhelping employees make better-informed business decisions andexecute activities quickly.

Predictability and affordability Asa comprehensive solution, SAP Busi-ness All-in-One provides software aswell as all the documentation of bestpractices, deployment tools, andmethodologies needed to accelerateimplementation with predictable costs.With industry best practices and

deployment tools to guide implemen-tation from SAP, along with sales,services, and qualified solutions fromSAPs authorized partners, midsizecompanies achieve time to valuefaster typically implementing the

solution in anywhere from two tofour months.

SAP Business All-in-One is especiallysuited to companies with high trans-action volume, demanding financialreporting structures, distributed opera-tions, and the need to meet stringentregulatory requirements. As a case inpoint, Med-Health Companies adopteda qualified SAP Business All-in-Onepartner solution implemented by Ki

Solutions to increase its business agilityand improve customer intimacy. Thecompany sought to ramp up its sys-tems with extensive functionality tai-lored for pharmaceutical and wholesaledistribution management. Med-Healthselected industry best practices thatwould help it scale to meet futureneeds and adopted an infrastructurethat helped it interact more effectivelywith its customers and partners. Within10 weeks, Med-Health Companiesdeployed its qualified SAP Business

All-in-One partner solution and beganreaping its benefits.

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Predictable and AffordableDeployment and Support

SAP recognizes that small businessesand midsize companies prefer toexplore their options before making a

purchase decision. We offer onlineresources as well as a broad networkof authorized local partners that pro-vide industry expertise and guidance.You can count on extensive supportfrom SAP and its partners that includesin-depth documentation and a compre-hensive set of deployment tools toaccelerate implementation. This is aug-mented by a combination of direct sup-port from SAP, live support from a localSAP partner, and self-service options.

SAP: A Trusted Partner forProfitable Growth

Small businesses and midsize compa-nies overwhelmingly agree that profit-able growth is a top priority.8 In a chal-lenging global market, SAP believes

PARTNER WITH SAP AND GROW PROFITABLY

WORLD-CLASS SOLUTIONS FROM THE LEADER DESIGNED FOR YOUR BUSINESS

Historically, small businesses and mid-size companies have had few choicesamong IT solutions to help them man-age growth. One-size-fits-all packagedsolutions are generic, complex to learnand use, and expensive to buy and

maintain. Whats more, they rarely pro-vide the functionality required to increaseoperational efficiency, elevate customerservice, and boost innovation. On theother hand, niche applications are oftennot integrated, requiring manual dataentry leading to redundancy and errors.Many companies have simply chosento stick with manual processes ratherthan adopt an ill-fitting solution.

SAP solutions fill the gap. By working

with SAP, you get the support yourcompany needs to grow profitably witha solution specifically designed for yourrequirements. In fact, SAP has deepexpertise with small businesses andmidsize companies; they comprise65% of the SAP customer base. Thefollowing table illustrates your choices.

that those companies that align their ITinvestments with their business goals and requirements are best positionedto achieve profitable growth. Fully inte-grated, adaptable SAP solutions aretailored for companies like yours, deliv-

ering the level of industry-specific func-tionality, adaptability, and ease of useyou require. Through our network ofchannel partners, today we offer nearly350 solutions enabled by SAP BusinessOne and 700 qualified SAP BusinessAll-in-One partner solutions tailored tospecific industry needs.

SAP has over 35 years of experienceand more than 100,000 implementa-tions, making it a trusted partner for

industry solutions for small businessesand midsize companies around theworld. To find out which SAP solutionis right for your company, please visitwww.sap.com/solutions/sme orcontact your local SAP representative.

7. As of September 2007.8. Thinking big: Midsize companies and the challenges of growth, The Economist Intelligence Unit, February 2006.

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SAP Business One SAP Business ByDesign* SAP Business All-in-One

Summary of Solution

Requirements

A single solution to manage the

entire business

A complete, on-demand busi-

ness solution that is affordable,

predictable, and easy to adopt

A comprehensive, extensible, and

customizable business solution

with support for industry-specific

requirementsChallenges with Current

Solutions

Outgrown your accounting-only

systems

Decided to replace your point

solutions, manual processes,

and spreadsheets

Outgrown your point solutions or

legacy systems

Nature of Operations Relatively straightforward

business processes

Lower transaction volumes

Moderately complex business

processes

Moderate transaction volumes

Deep, microvertical and

industry-specific business

processes

Demanding, high-volume product,

manufacturing, and service

operations

Typical Organizational

Structure

Up to 5 locations and

independent subsidiaries

Multiple locations, multiple

divisions, and independentsubsidiaries

Multiple locations, multiple

divisions, and all types ofsubsidiaries

IT Preferences Limited IT capability with

preference for an on-premise

system

Limited IT capability with a

preference for an on-demand

solution

IT capability with a preference for

an on-premise solution

Typical Number of Employees Less than 100 employees 100-500 employees 100-2500 employees

SAP Solutions for Small Businesses and Midsize Companies

* Early customer availability and localization in in the United States, Germany, United Kingdom, France, and China

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Improving Operational Efficiency for Profitable Growth