Collaborative Business:

Value Creation in the Internet Economy

Think Tank Session

Silicon Valley World Internet Center
February 15, 2001

Stefan Hack
SAP AG

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 1

 Agenda

Introduction
The Collaborative Business Opportunity
Collaborative Business Maps from SAP
Example of Collaborative Business Maps
Collaborative Business Maps under mySAP.com

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 2

 From ERP to Collaborative Business

Enterprise Resource Inter-Enterprise Collaborative

Planning Co-operation Business

E-Community

New Dimension &

SAP R/3 mySAP.com
Industry Solutions
● Cost reduction mySAPHosted Solutions

● Improved ● Value creation

mySAPServices
KW
and efficiency BW mySAP Workplace

effectiveness
SEM
through
through
mySAP HR
CFM
through collaboration within
mySAP SCM mySAP

R/3
integration of R/3 BBP APO mySAP
Financials
Industry
mySAP CRM

cooperation along business

E-Prcurement Solutions

business CRM mySAP PLM mySAP BI

the supplyIS.. chain communities

processes ESS
mySAP Marketplace
mySAP Technology

Collaborative Collaborative Collaborative

ERP ERP ERP
Business Business Business

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 3

 The mySAP.com E-Business Platform

mySAP Hosted Solutions

mySAP Services
mySAP Workplace

mySAP HR

mySAP SCM mySAP

Financials
mySAP CRM
mySAP Industry
E-Procurement Solutions

mySAP PLM mySAP BI

mySAP Marketplace
mySAP Technology

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 4

 What is mySAP.com ?

The mySAP.com e-business platform

is a family of software and services that
empowers customers, partners, and
employees to collaborate
successfully – anywhere, anytime.

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 5

 The Collaborative Business Opportunity

Collaborative Business is the next stage in the evolution of B2B.

For every order matching transaction there are 15 to 20 transactions
associated with it (like demand planning, purchase approval,
availability check, credit check, etc.)
Morgan Stanley Dean Witter study

Recent analysis indicates that e-Commerce is reducing costs by 20%

by improving buy & sell transactions, while Collaborative Commerce
can reduce costs by 80% by improving processes across the entire
supply chain.
Southwest Securities study

38% of CEOs worldwide say structure and business processes are

the greatest obstacle to pushing e-business initiatives inside their
company.
AT Kearney study of 251 CEOs

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 6

 Internet Business is more than Buy-and-Sell
For every order-matching event, there are
15-20 other transactions associated with that order
Business Partner 1 Your Company Business Partner 2

Product Information Promotions and Campaigns

Before the Purchase Approval Inventory Availability

Order Pricing Negotiation Credit Check and Financing
Supply and Demand Planning
Order Status Partial Shipments

During Backorder Information Substitute Products

Fulfillment Order Explosion to multiple suppliers
Scheduling Delivery
Warranty and Maintenance Replacement Parts
Asset Management Regulatory Compliance
After
Delivery Returns and Incorrect Shipments
Inspections Payment Settlement

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 7

 The New Value Equation of Collaborative Business

Value
Generation
= Cost
Advantages
+ Revenue
Growth
+ Eco
System,
Opportunities Network

Do the same Open new business Allow others to build

more efficiently opportunities their success around
your success

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 8

 Collaborative Business Maps from SAP –
Blueprints for e-Collaboration

Collaborative Business Maps

Are blueprints of business

OEM Importer Dealer
processes that transcend the
Vehicle Specification
borders of individual organizations
Vehicle
Locating and
Allocation Involve multiple parties and people
Reservation
Planning with defined activities and roles
Order
Processing
Make use of Internet technology and
Production
Production Order
OrderTracking
Tracking
Shipment
services
Tracking

Transport Span multiple IT environments and

Control
Goods Receipt
systems
Processing

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 9

 Advantages of Collaborative Business Maps –
Key Benefits at a Glance

Collaborative Business Maps provide customers

with a blueprint for e-Collaboration
Collaboration Innovation

Illustrate and describe Internet-based
Innovate and optimize the value chain
business processes of an enterprise

Enable collaboration with suppliers,
Conceive new business models and
business partners, and customers ways of collaboration

Relevance Value Generation

Validated with customers and experts
Create quantifiable business benefits

Implemented in customer projects
Enable ROI Calculations

Integration / Openness Communication

Leverage SAP and non-SAP solutions
Visualize complex processes and

Integrate into SAP Industry Solutions content
and user roles of mySAP Workplace
Tailored to stakeholder audiences

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 10

 Types of Collaborative Business Scenarios
Corporate-Driven Channel-Master Driven Market-Driven
Global Local
Bank Treasury Subsidiary OEM Importer Dealer Buy-Side Marketplace Sell-Side

Corporate
Corporate Network
Network Value-Chain
Value-Chain Hub
Hub Exchange
Exchange
e.g.,
e.g., Central
Central Payments
Payments e.g.,
e.g., Supplier
Supplier Workplace
Workplace e.g.,
e.g., Chemicals
Chemicals Marketplace
Marketplace

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 11

 Example for Enabling Collaborative Business
Automotive: A Global Network of Specialists
Automotive C-Business Value Chain
Supplier Supplier OEM Wholesale End
Tier 2 Tier 1 & Retail Consumer

Development and Production Sales and Service

Supplier 1 - Tier n
Importer

Dealer
Supplier - Tier 1
Supplier 2 - Tier n

Manufacturer

Customer

Carrier

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 12

 Collaboration across Organizations through Portals

Carrier

r
Carrie
er
Suppli
OEM

Collabo-
ration

Manufacturer

Supplier - Tier n

Supplier
 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 13
 Coherent Concept Aligning Business Strategy
with IT Systems Perspective
Value Value
Business Benefits OEM Importer Dealer Business Benefits
Potential Potential

Up to 50%
Reduced delivery
Cost advantage $ 800 per

2 months times Vehicle Specification/ via online sales vehicle**

Business View (Level 1)

- 2 weeks* Search Request
Reduced days From 75 to
via Internet
$ 250 per
Cost advantage Vehicle supply inventory 35 days**
vehicle** via online sales Locating and
Customer Self-
Up to
Reduction in Allocation Information 5.1%***
14%** Supply Chain Reservation
Interactive

Focus on business benefits/ROI

Costs Planning configuration 27.2%***

Reduced
Speed up buying
inventories Order
Processing
Consistent Dealer

Collect Database
information about

Validation with customer

Production Order Tracking
Online informa-
customer Production Order Tracking 7.5%***
requirements and tion to customer
Shipment reduces time of
preferences 12.6%***
Tracking communication

Improved market
intelligence
Pooled data on

Quantification with customer

Transport cars available

Level 1:

Faster reaction to
Control
Visibility of
market trends
tracking status

Increased Goods Receipt
customer Processing
Speed up
satisfaction handing over
of vehicle

Business View

Increased 5.5%***
planning security
Increased
and quality customer
satisfaction

OEM Importer Dealer

Interaction View (Level 2) Vehicle Specification/

Search Request
via Internet
Vehicle

Consistent modeling
Locating and
Allocation

Reservation
Planning

(process flow, document flow) Production

Order
Processing

Order Tracking

Link to employee roles Shipment

Tracking

Link to Solution Map Level 2: Transport

Control

Goods Receipt

Interaction View Processing

Component View (Level 3) SAP Logistics 4.6OEM

B APO 3.0+
SAP Importer
Logistics 4.6 B
SAP Automotive 2.0
Remote Access
Dealer
to Importer System

Drill-down on systems landscape,

Businesss Documents
Quantity Configure New Car
Vehicle Configuration
Reservation Allocate Vehicle Search Vehicle Pool
Plannning

application components
Businesss Documents
Businesss Documents Vehicle Configuration
Schedule Sales Order
Quantity Order Creation
Configuration Purchase Order

Coexistence restrictions (releases, etc.)

Order Creation

Production Businesss Documents

Planning Order Confirmation
Purchase Order Order Tracking
Businesss Documents
Prodcution

Link to implementation information

Execution Current Order Status

Level 3:
Transportation Shipment Tracking
Planning
Transportation
Businesss Documents Goods Receipt
Control

Component View
Delivery Document
Businesss Documents
Carrier Status Information

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 14

 Collaborative Business
Supplier Workplace – Business View
Value Value
Business Benefits OEM Supplier Carrier Business Benefits
Potential Potential
Up to 80%
Best data quality
Cost-effective Up to
available
Information in Create Internet alternative also 50%
electroni- real time releases for small- and reduced
cally* mid-sized costs*

Tracking of all List current suppliers for
process steps internet releases
exchanging
at any time information with
From
Information is OEM electroni-
Confirm releases
days to available on cally, from using
minutes* time, avoiding EDI to XML data
delays Check
Checkcurrent
current conversion
information
information
From 30%
Significant
Reduced Up to
up to 80%* increase in the Create delivery administration 50%*
number of and ASN costs compared
suppliers with manual
connected Carry
Carryout
out
shipment document
electronically shipment
distribution
Save up to
Best (electroni-
Using the Connec-
50% of cally available) View
Viewtracking
tracking Update tracking
Internet avoids tion cost
information
information information
manpower data quality for EDI-related cost is about
* further process for overhead 20% of
steps such as Post EDI*
goods receipt Postgoods
goodsreceipt
receipt

Information is From
and ASN-based available on time days to
coverage avoiding delays minutes*
analysis Sources: * Internet research, analysts, major global car manufacturer

%⇒$
 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 15
 Quantifying the Value Creation

The Collaboration Scorecard

Collaborative Business - Supplier Workplace
Quantifying the Value Creation for each Partner within the Collaborative Network EXAMPLE

OEM Supplier Carrier

Business Benefit
Value Base Percentage Benefit Value Value Base Percentage Benefit Value Value Base Percentage Benefit Value
(e.g., inventory) of Im provem ent for Partner (e.g., inventory) of Im provem ent for Partner (e.g., inventory) of Im provem ent for Partner

Best data quality

in real-time 1500000 20% 300000 300000 20% 60000
Avoiding delays due to
missing data 2300000 50% 1150000 350000 40% 140000
Increase number of
suppliers connected
electronically

Reduction in manpower
required for data entry 400000 50% 200000 100000 30% 30000

Reduced set-up cost 250000 50% 125000 150000 80% 120000

Reduced operating cost 150000 50% 75000 100000 50% 50000 100000 50% 50000
Reduced administration
cost 100000 50% 50000 100000 50% 50000 50000 50% 25000
Total Value Potential
by Business Partner 1775000 455000 195000

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 16

Collaborative Business
Supplier Workplace – Interaction View
OEM Supplier Carrier
Business Documents
Create Internet e-mail notification
Created releases
releases

List current
Internet releases Employee Role
MRP Controller
Features
Confirm releases Open supplier workplace via
Internet
List current releases according
Check current to different sort criteria
information

List current
Internet releases
Business partner taking part
Carry out in the c-Business Scenario,
shipment e.g., Carrier
Activity of business partner
involved in the c-Business
Update tracking
Scenario, e.g., Create Internet
information
releases
View tracking Information flow illustrating
information the sharing of information
between business partners
Business documents
Post goods receipt exchanged between business
partners, e.g., Delivery note

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 17

 mySAP Collaborative Business
Supplier Workplace – Component View
OEM Supplier Carrier
SAP Logistics 4.6 B Remote Access Remote Access Carrier Transportation
APO 3.0
Automotive 2.0 to OEM System to OEM System System

Demand
Plannning
Businesss Documents
Procurement E-mail notification
Plannning Created releases
Create Internet
releases

List current
Businesss Documents internet releases
Confirmed releases

Confirm releases
Businesss Documents
Check current
information Delivery / ASN

Create Delivery
and ASN
Carry out
shipment

View tracking Update tracking

information information
Businesss Documents
Businesss Documents
Updated ASN Transport documents
Post goods receipt
Delivery / ASN

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 18

 Focused Approach to Identify and Implement
Collaborative E-Business Strategies
Strategic Focus
Strategy Development / Strategy Review Operational
Focus
Vision / Mission


Implementation

Strategic
Value Chain Analysis Business

Focus
Objectives Benefits
Industry Value Chain
Value Potentials
Change Mgmt.

Industry Analysis
ROI
Inter-Company Value

Core Competencies
Business
Change Mgmt. Creation

Competitive Process
Systems through
Advantage Landscape Architecture Internet-

Business
Application based
Blueprint Fit Components Collabo-

Collaboration Analysis of (Solution Map)
Business
Analysis Collaborative Network ration

Organizational Documents

Collaborative
Structure Fit
Documentation
Advantage (Employee Roles
Workplaces)

Economic Model

Business Plan

Supported by
Business View Interaction View Component View
C-Business Scenario. . .

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 19

 Customer Projects – Selection across Industries

Industry Customer C-Business Map

Automotive BMW Supplier Workplace
Automotive PSA Vehicle Sales & Distribution
High Tech IDT Distribution Reseller Management
Chem/Pharm BASF, Bayer et al. Chem/Pharm Marketplace
Chem/Pharm Bristol-Myers Squibb Vendor Chargebacks
CP/Retail Osram Sylvania CRM for Consumer Distributor
CP/Retail Mott’s Vendor Managed Inventory
Media Amaury Selling Classified Ads
Service Provider Kuoni One-Step-Travel Management
Insurance Allstate Insurance Insurance Claims/Car Repair
Public Sector City of Mannheim Citizen Self Service
Engineering Saudi Aramco Collaborative Engineering
...

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 20

 Sample Portfolio of 150 Collaborative Business Maps
PROCESS LOGISTICS
LOGISTICS --
PROCESS INDUSTRIES
INDUSTRIES DISCRETE
DISCRETE MANUFACTURING
MANUFACTURING GENERIC
GENERIC C-Business
C-Business Maps
Maps
Plant-Centric
Plant-Centric MRO
MRO Marketplace
Marketplace Collaborative
Collaborative Engineering
Engineering and and Project
Project Mgmt.
Mgmt.
Chemical
Chemical & & Pharma
Pharma Marketplace
Marketplace Vehicle Product
Product Lifecycle
Lifecycle Mgmt.
Mgmt. -- Claim
Claim Management
Management
Vehicle Sales
Sales and
and Distribution
Distribution
Pharmaceutical
Pharmaceutical Vendor Chargebacks
Vendor Chargebacks Collaborative
Collaborative Demand
Demand and and Supply
Supply Planning
Planning
Automotive
Automotive Supplier Workplace
Supplier Workplace
Vendor
Vendor Managed
Managed Inventory
Inventory Advanced Shipping Notification
Advanced Shipping Notification
Distribution
Distribution Reseller
Reseller Collaboration
Collaboration
Marketplace
Marketplace forfor Raw
Raw Materials
Materials HighTech Sanctioned
Sanctioned Party
Party List,
List, Proof
Proof of
of Delivery
Delivery
HighTech DRM
DRM Price
Price Protection
Protection
Oil
Oil &
& Gas
Gas Marketplace
Marketplace Transportation
Transportation Marketplace
Marketplace
HighTech: DRM Sell-In/Sell-Through
HighTech: DRM Sell-In/Sell-Through
Oil
Oil &
& Gas
Gas Exchange
Exchange Reconciliation
Reconciliation QM-Certificates:
QM-Certificates: Interactive
Interactive Exchange
Exchange
One-Step
One-Step Business
Business with
with RosettaNet
RosettaNet
Oil
Oil Field Services Collaboration
Field Services Collaboration Online Inspection
Inspection Results Recording
Results Recording onon www
www
Online Sales
Sales Configurable
Configurable Materials
Materials
Oil
Oil &
& Gas
Gas Supply/Demand
Supply/Demand Matching
Matching Request
Request on
on Permission
Permission of of Deviation
Deviation
A&D:
A&D: SPEC2000 Buying and Selling
SPEC2000 Buying and Selling
Metal Pricing
Metal Pricing Procurement
Procurement Process
Process with
with XML
XML
Online
Online Wood
Wood Shop
Shop Purchasing Workbench
Purchasing Workbench

CONSUMER
CONSUMER PRODUCTS
PRODUCTS // FINANCIALS
FINANCIALS --
COMMUNICATION
COMMUNICATION &
& SERVICE
SERVICE RETAIL
RETAIL GENERIC
GENERIC C-Business
C-Business Maps
Maps
Electronic
Electronic Payments,
Payments, Change
Change Master
Master Data
Data
Media:
Media: Classified
Classified Ad
Ad CRM
CRM for
for Consumer
Consumer Distributor
Distributor Open Item Clearing, Reporting for Externals
Open Item Clearing, Reporting for Externals
Media:
Media: Subscription
Subscription Sales&Service
Sales&Service Collaborative
Collaborative Promotion
Promotion Planning
Planning Coll.
Coll. Planning
Planning and
and Performance
Performance Management
Management
Media:
Media: Publishing Rights Marketplace
Publishing Rights Marketplace Catalog Retailing
Catalog Retailing Investor
Investor Relationship
Relationship Management
Management
Utility:
Utility: Customer
Customer Self-Service
Self-Service Collaborative
Collaborative Demand
Demand Planning
Planning Benchmark
Benchmark Data
Data Collection
Collection
Utility:
Utility: Inter-Company
Inter-Company Data
Data Exchange
Exchange Trade
Trade Contract
Contract @@ Net
Net Real Estate Marketplace
Real Estate Marketplace
One-Step-Biz
One-Step-Biz Travel
Travel Management
Management Category
Category Management
Management Integrated
Integrated Facility
Facility Management
Management

PUBLIC
PUBLIC SECTOR
SECTOR // HUMAN
HUMAN RESOURCES
RESOURCES --
FINANCIAL
FINANCIAL SERVICES
SERVICES HEALTHCARE
HEALTHCARE GENERIC
GENERIC C-Business Maps
C-Business Maps
Public Job-Exchange
Job-Exchange
Public Sector:
Sector: Parking
Parking Sticker
Sticker
Banking:
Banking: Online
Online Brokerage
Brokerage onon WAP
WAP Public Salary
Salary Survey
Survey analysis
analysis
Public Sector: „Call before you
Sector: „Call before you dig“
dig“
Insurance: Consumer Portal
Insurance: Consumer Portal Public Training
Training Registration
Registration
Public Sector:
Sector: House
House Construction
Construction
Insurance:
Insurance: Claims/Car
Claims/Car Repair
Repair Job
Job Opportunities
Opportunities
Healthcare:
Healthcare: Patient
Patient Appointment
Appointment Training
Training Marketplace
Marketplace
Healthcare:
Healthcare: Patient Estimated Bill
Patient Estimated Bill Benefits
Benefits Administration
Administration Services
Services

. . . and many more

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 21
 Electronic Procurement Process @ SAP
Value Business Benefits Business Benefits Value
SAP Supplier Carrier
Potential SAP Supplier Potential
From 80 • Reduced internal • Reduced cost of Up to 10%
transaction costs, sales of sales**
to 95%* increased Create Requisition
efficiency
• Reduced Up to
Up to
100%* • Reduced Approve Requisition transaction costs, 75%**
inventory costs increased
Process order efficiency
and
About 2.5% • Improved terms send product
beyond and conditions • Increase sales to
existing (supplier Track status current customer
bundling reduction, volume base
contracts* bundling and • Improved
international Ship product customer service
purchasing and satisfaction
Receive product and • Increased
• Reduced delivery Deliver product
confirm delivery customer
times retention
Update
• Increased delivery • Seamless
employee volume integration of
satisfaction backend system
• Improved Issue credit note
transparency
• Seamless
integration of Receive payment
backend systems Sources: * SAP internal ROI Analysis (Sept. 2000)
** AMR Research

SAP pursues a global purchasing strategy

long-term strategic partnerships with key-suppliers

internet-based purchasing processes using SAP BBP
 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 22
 E-Procurement Process @ SAP

Total potential savings of 10 Mio € p.a.

process cost savings 6.5 Mio €

better prices by volume bundling 3.5 Mio €

Major reduction of transaction costs due to streamlined purchasing

processes and improved process quality (s. slide 18)

Traditional process without BBP 166.3 €

New process with BBP: 29.6 € for IT (Hardware and Software)
6.9 € for office supplies

Better terms and conditions due to supplier reduction, volume

bundling and international purchasing

Estimated cost savings 2.5 % of IT purchasing volume
(beyond existing bundling contracts)

Very high return on investment

Pay back period 2.29 months

ROI after 1 year 398%

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 23

 Collaborative Business:
Value Creation in the Internet Economy

Think Tank Session

Silicon Valley World Internet Center
February 15, 2001

Stefan Hack
SAP AG

 SAP 2000 S. Hack, SAP AG World Internet Center Feb. 2001/ 24