Value Management 2 · practice, program or ... SAP/AMR Value Management Survey Results 2010; 400+ Companies Surveyed ... System x, System z, System z10, System z9, z10, z9, iSeries

Value Management 2.0Riaz Raihan, Senior Vice President, SAP CanadaNovember 2011

© 2011 SAP AG. All rights reserved. 2

Agenda

What is Value ManagementValue Engineering OverviewValue Management 2.0

What Is Value Management?


What is Leading Performance?

On Time On Budget On Value

1.9X 1.5X 1.5XMORE MORE HIGHER

Value Management: applying proven frameworks, methodologies and tools to technology-enabled business projects (and portfolios) to

maximize business value


Most Organizations Have Not Adopted formal Value Management …

98%of organizations know they can extract more

value out of their initiatives

18%of organizations have

established a formal VM practice, program or

organization

Source: SAP/AMR Value Management Survey Results 2010; 400+ Companies Surveyed

Significant opportunity awaits you

Source: ASUG/SAP Va.lue Management Best practices Survey; 500+ Responses, Sept 2010


…Resulting in “Value Leakage”

Expected Value

Poor Selection & Prioritization

Inefficient Project Execution

Poor Value Tracking

Realized Value

100%

5% – 10%10% – 15%

20% – 25%

50-65%

Source: Corporate Executive Board -Applications Executive Council Research


Defining Value

StrategyEnablement

Measurable Benefit

Risk & Compliance

Innovation

OrganizationalValue

The Four Value “Buckets”


How Do Leading Organizations Realize Value?

Improving Management Practices*

Investing in IT Investing in IT while Improving Management

Practices

2%

* Key performance improvements i.e. Performance Mgmt., Six Sigma.Source: “When It Lifts Productivity”, The McKinsey Quarterly, 2004 Number 4

% Im

prov

ed P

rodu

ctiv

ity

20%

Incr

ease

d Va

lue

Joint IT and Business Driven Initiatives

IT and Business Units Disconnected

2XMoreValue

8%


31%

58%63%

Low VM Maturity Medium VM Maturity High VM Maturity

Value Management Matters

Value Attained+104%


Analysts Validate SAP’s Value Management

Analysts

“SAP has invested significant effort to develop services and intellectual property to help its clients get more value from their investments. Companies should evaluate these services to help identify opportunities, develop business cases and track results”

GartnerPress

“SAP’s value management program is the most advanced effort of its kind…offer[ing] advanced business solutions along with deep-domain expertise and insights.

InformationWeek Bob Evans, “Global CIO:

SAP Shares Corporate Treasures With Customers”

Value Engineering Overview


Value Engineering Overview

VALUEENGINEERING

Value OptimizationWhat is the value realized by the program, and how does it compare to TCO?How does the implementation compare to best practices?

Value Realization How should the organization mobilize and govern the program to achieve value? How can the business case be made actionable at the operating level?

Value Discovery What are the organization’s value creation imperatives?What is the expected impact of addressing these imperatives (business case)?


Value Engineering: Methodology & Intellectual Property

Over 200 Professionals

with Deep Industry Expertise

Benchmarking PlatformOver 10,000 benchmarking participantsBenchmarking and best practices in over 20 functional areas

Customer EngagementOver 2,000 customer engagementsOver 4,000 CXO interactions per year

Value Lifecycle Manager Platform Over 50,000 industry and process-specific pain points and best practicesNearly 15,000 individual operational metrics


Value Engineering Process

ProcessBenchmarking

BenefitsAssessment

Business Case Development

RoadmapDevelopment

How Does my Organization

Compare?

What Is ourPotential?

How Does SAP Enable?

How Do We Get There?


Value Drivers


SAP Value Creation Example

Strategic

Financial

OperationalImprovement

Organizational Strategy Themes

Operational Value Drivers

Value Creation Pillars

Accelerated Industry Solutions

Operations Benchmarking &

Value Management

Portfolio Synergies

Supply Chain

Revenue/Pricing

Procurement

Shared Services

Manufacturing

Value Management 2.0


% Adopted

Time

Value Management 2.0

ROI ANALYSIS

EXPERIENCED PROFESSIONALS

EXCEL-BASED TOOLS Customer Adoption

through SAP Value Academies

SAP CONFIDENTIAL - Page 4 - For subject company int ernal use only - This page is from the benchmarking analysis pr epared for subject company and subject to the terms, conditions and assumptions contained in the benchmar king analysis. Info rmation contained herein is not a guarantee of future results, per formance or cost savings.

KPI Benchm ark Performance Potential Benefit (in m il lions)3

Days In Inventory

Manufacturi ng Cycle Time (in days)

Manufacturi ng Cost as a % of Revenue

Bot tom 25% Average Top 25%



BENCHMARKING RESULTS AND VALUE POTENTIALESTIMATED BENEFITS1 OF

1) Benefits tot als may not add up exact ly from subtotals displayed on thi s page as they are calculated based on exac t, not rounded numbers

2) Full KPI results can be found in t he detail ed benchmarki ng assessment3) All currency in t his report is in U.S.Dollar, the selected peer group is I ndustry X

Benefit of Closing Gap to Top 25%

Benefit of Closing Gap to Average

61.3

12. 0

56.0

51.6 25. 539.6

14.0 2.07. 3

74.5 61. 266.7

14.9 - 24.5

6.4 - 13.7

0.0 - 0.00 .0

13 .7

2 4.5

0 .0

6.4

1 4.9

21.3M -38.2M

Performance of Primary KPIs2 and Potential Benef it (in millions of selected currency)

Primary P erformance Indicators

The SA P performance benchmark ing survey assessed your company’s performance against m ore than 20 KPIs. This summary highl ights the three indicators that determine most of the business value in the majori ty of manufacturing-related business cases.

These KPIs include: manufacturing costs manufacturing cycle timedays in inventory

The Benchmark Performance column above compares your KPIs (indicated by the black arrow) with those of your pr imary peer group (indicated by the top 25%, average, and bottom 25% values).

Identifying High Benefit Opportunities

The Potential Benefit column above calculates the value of closing the gap between your com pany’s KPI perform ance and that of the peer average and the top performers. With this in formation,

you can prioritize the improv ement ar eas that can help your or ganization achieve the greatest financ ial return.

What is the Bottom Line?

The opportunity for improvement is signi ficant. When we calculate the measurable benefi ts of achieving top performance, your potential value ranges frommi ll ion.

21.3 to 38.2

Performance Benchmarking

“Interactive” Customization Of Business Cases

1.0 Value Management 2.0

Early Adopter


ChallengeMove products across 20,000+ km of rails

SolutionProvide network spatial map view of mobile assetsTrigger business execution based on alerts

Value Management 2.0 Success: Keep Deliveries on Time


CN Rail

From Business Transformation Story published by SAP and CN Rail.

Operational BenefitsOver $400 M in hard benefitsOver $80 M in one-time savingsOver $100 M in annual savings

Strategic BenefitsRetired over 100 legacy systemsImprovement of the operating ratio: from 72% to 61% over 7 years


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Value Management 2 · practice, program or ... SAP/AMR Value Management Survey Results 2010; 400+ Companies Surveyed ... System x, System z, System z10, System z9, z10, z9, iSeries