Is your organization ready for S4 HANA

Transformation Journey?
Jainender Kumar, Director, SAP America
Session ID # 84373

May 7 – 9, 2019
About the Speaker
Jainender (Jai) Kumar
Director, Chief Customer Office

• MBA Finance, Engineer (Robotics)

• Collaborate with C-Execs of strategic SAP customers to build strong
foundation and effective transformation roadmap for Intelligent
Enterprise

Fun Fact(s): Passionate about World Travel and Trekking.

Volunteer to teach Robotics and STEM topics at School Districts
Key Outcomes/Objectives
1. Review learnings from 200+ Business Process workshops
conducted across SAP’s strategic customer base

2. Understand the business impact of common design

mistakes and/or critical blueprint decisions

3. Utilize information gained, to share with your

organization for the S4HANA transformation journey
Agenda
• S4HANA Simplification and Value Overview
• Business Process Roadmap (Lead to Cash)
• Key business issues and related business impact
• Takeaways / Action plan
We’ve come a long way together

Innovate ü 46 years of innovation across all industries

Standardize ü 390,000 customers in 193 countries
Scale ü 74% of the world’s transaction revenue touches an SAP system
Trust ü Always providing multiple ways of innovation adoption
“X”/4HANA
SAP S/4HANA Intelligent Suite
SAP S/4HANA Intelligent ERP
Suite on HANA Digital Core SAP Cloud Platform
SAP Hana ERP on Hana
SAP ERP with Fiori UX
SAP R/3 In Memory
SAP R/2 mysap.com
Client/Server
Mainframe

1972 1992 2004 2011 2013 2015 2018 2025

Are you ready for tomorrow?

Increasing Pressure on
globalization margins

Higher complexity of New technologies

supply chains

Reduced time to Regulation is

market here to stay
A Comprehensive Lead to Cash process
 Typical Business Challenges – Lead to Cash

Sales and Service Business Data Contract and Delivery and Invoicing and Bill Analytics and
(Partners, Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor)

What complicates business process execution across industries?

§ Tribal and scattered functional/process knowledge

§ Google as a solution to key business and transactional problems
§ Heavy reliance on external consulting sources
§ One expert (go-to person) in each process function
§ Offline Spreadsheets / cheat sheets maintained by each business leads to handle daily tasks
§ System & business process design based on legacy ERP, or by inexperienced consultants
§ Heavy customization and tedious integration scenarios to accommodate unique business scenarios
§ More focus on operational KPI’s instead on strategic dashboards
§ i.e. No. of defects, invoice count, errors per team member instead of Customer engagement and profitability
§ More team FTE’s or resources translate to process efficiency and business success?
 Typical Business Challenges – Lead to Cash

Sales and Service Business Data Contract and Delivery and Invoicing and Bill Analytics and
(Customer, Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor)
• Lack of Customer
intelligence
• Intertwined system
landscape solutions
• Heavy offline and Business Impact
spreadsheet driven • Customer engagement discrepancies
processes • Elevated cost of operations
• Inability to conduct • Business Dashboards represent operational key figures
What if analysis • Business leads spend most time firefighting issues
• Limited Real-time • Limited/missing business innovation
reporting and
analysis
Typical Business Challenges – Lead to Cash

Customer Sales Business Data Contract and Delivery and Invoicing and Bill Analytics and
and Service (Customer, Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor)
• Duplicate,
decentralized and
inaccurate data
• Offline SFA tools and Business Impact
management • Lack of customer centric engagement model due to inaccurate, duplicate and
• incomplete data
unreliable data in ERP
hierarchy/ structure
definitions • Inefficient and inaccurate sales data aggregation and financial reconciliation reporting
• Sales area, chart of • Ineffective sales pipeline performance and demand generation
accounts not • Inaccuracies in Sales commissions/incentive planning and payout
comprehensive
• Middleware/
Integration replication
issues
Typical Business Challenges – Lead to Cash

Customer Sales Business Data Contract, quote Delivery and Invoicing and Bill Analytics and
and Service (Customer, and Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor) • Complex product
configuration and
bundling options
• Complicated and
manually driven
pricing controls Business Impact
• Offline or manual • Inaccurate pricing and product (bundling) cost and pricing
discount, rebates
promotion accruals determination leading to customer chargebacks
• Manual order entry, • Elevated operational and resourcing related costs
validations and • Scalability and process optimization costs
processing • Lack of accuracies in accruals, commissions and margin
• Quote to Order computations impacting profitability and strategic decisions
conversion issues
• 3rd party solution
integration (CAD,
PCM, PLM)
Typical Business Challenges – Lead to Cash

Customer Sales Business Data Contract and Delivery and Invoicing and Bill Analytics and
and Service (Customer, Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor)
• Offline inventory
status and visibility
• Manual adjustments
Business Impact to ATP, RDD, pricing
dates, etc.
• Complex, inaccurate and manually intensive order
• 3rd party/ offline
fulfilment process Routing, resource,
• Escalated freight costs with limited ability to monitor and carrier pick
and optimize variables • Limited monitoring
• High operational costs for integration and inventory and event tracking
synchronization across supplying plants • Limited freight cost
management and
• Limited ability to perform multi-echelon supply chain
financial reporting
planning across distribution network
Typical Business Challenges – Lead to Cash

Customer Sales Business Data Contract and Delivery and Billing and Analytics and
and Service (Customer, Order Logistics Invoicing Collaboration
Product, Plants, Management Execution
• Discrepancies in
Vendor) Customer expected
product pricing
• Revenue account
determination issues
Business Impact • Improper Accruals
• Escalated customer engagement issues impacting customer and expense mgmt.
brand/product loyalty and future revenue stream for sales incentives,
promotions etc.
• Resource intensive billing and invoicing process leading to
• Complexities in
heightened operational costs reconciliation of
• Inaccurate customer invoicing, accruals and account account balances,
determination leading to profitability and margin calc. issues prepayments,
• Substantial open A/R balances, chargebacks with prolonged chargebacks etc.
customer negotiations impacting corporate sales revenue and • Ineffective dunning
product profitability process, high open
A/R balances and
other deductions
Typical Business Challenges – Lead to Cash

Customer Sales Business Data Contract and Delivery and Invoicing and Bill Analytics and
and Service (Customer, Order Logistics Presentment Collaboration
Product, Plants, Management Execution
Vendor) • Complexities in
consolidating Siloed
critical data across
heterogeneous
landscape
• Focus on operational
KPI’s vs strategic
numbers
• Multiple Custom
Business Benefits reports and queries
• Lack of real-time, data-driven decision making process built over time
impacting business agility and customer collaboration • Missing account
• Reduced in-depth business insights planning dashboard
• Heavy data complexity and reporting requirements or system driven
strategic digital
boardrooms
 How it Impacts Business Metrics – Case Study 1
Peer Group Benchmarking

CPG Peer Group

Metric
Customer Top Average Bottom
Cycle Time for Financial Forecasts (in The FP&A process is manual in excel sheets and outside the
150 30 61.4 90
days) system with no scenario planning
Days To Close Annual Books 21 6 13.7 20 Manually extensive journal entry and reconciliation entries
Days To Close Quarterly Books 8 4 6.9 9 and Financial structure does not align to current business
model
Days To Close Monthly Books 6 4 5.7 7
Days Payable Outstanding 23.2 98.2 53.7 28.8 The gap between demand planning/actual order entry and
manufacturing planning drives inventory imbalances- lack of
Days in Inventory 73.4 32.5 66.3 85.3 Inventory visibility across sales locations and WH
Inventory Carrying Cost (% of revenue) 1.18 1 1.46 1.96
Inventory Write-offs (% of revenue) 0.259 0.093 0.144 0.196 Disconnect between planning / inventory may end up producing
wrong SKUs that are non-moving and reach end of shelf life.
Days Sales Outstanding 30 24.7 38.3 52
Overdue Accounts Receivable (in %) 85 2.5 10.1 15
The ability to manage real time credit check at the time of
Uncollectible A/R Write-offs (% of order entry can lead to sale to “ risky customers – add to
.045 .01 .08 .14
Revenue) that error in pricing reflecting in invoices

Ranking: Below Average Between Average and Top 25% Top 25%

Peer Group

Industry : Consumer Products

Sub: Beverages 16
Revenue Max : $300,000,000
 Today’s Key Challenges using SAP
(Analysis from 200+ workshops)

Process Poor Business

Complexity Adoption Data Integrity
• Business • Latency
• Too many
Ownership
Applications • Duplicates
• End 2 End
• Ease of Use - UX • Discipline
Visibility
• Performance
• IT Dependency
How did we get here ?
Culture /
SAP Design =
Resistance to
Legacy Design
Change

Key
Reasons

Lack of compelling/
Business Vs IT
Disruptive event
 How S/4 HANA helps to Transform & Improves Business
Outcomes

§ Simplified – Business Processes, § Real Time sensing, reporting

Data Models o In- memory computing
o Minimal Touch

§ Native Integration § Embedded Intelligence with ML

o Robust connectivity in Technologies
transactions
Critical Success Factors to get ready for S/4 Journey
Business Objectives & Ownership
§ Consider S/4 HANA journey as a means to achieving Transformation goals & not address “end of ECC support”
§ Define end State Business Outcomes from Transformation
§ Business owns Transformation and IT enables through technology
§ Business owns data and IT maintains it
Typical Transformation Objectives:
§ Customer Centricity – simplify the
Right Data Strategy, Right People and Right Tools way your customer does business
§ Cleansed, Streamlined and well structured Data as foundation with your company
§ Engage experienced business users and IT resources § Supply Chain Effectiveness - Order
§ Evaluate different deployment options - OP/Cloud/Hybrid fulfillment on time improved with an
§ Chalk out Migration strategies : Greenfield /Brownfield/System Conversion end to end supply chain
§ Use SAP provided tools for S/4 migration and adoption effectiveness

§ Working Capital & Free Cash Flow –

Address and Manage Change better insights to predict Working
§ Embrace change and be ready to disrupt and re-invent existing processes Capital Optimization
§ Drive employee engagement through corporate communication
§ Focus on User Experience (UX) apps – e.g. FIORI to drive simplification
§ Leverage out of the box - S/4 HANA Reporting and analytics to deliver insights and predictions
 SAP Readiness Check for SAP S/4HANA
Available for all customers free of charge,
Customers can initiate their ERP system analysis, covering the
most important aspects of an SAP S/4HANA system
conversion. Minimum source release is SAP ERP 6.0 EHP 0,
any database
Custom Code & Custom Dev
• Custom Code must be analyzed with respect to SAP
S/4HANA compliance, based on the SAP
simplification database
• SAP Readiness Check provides BOM of affected
objects as well as SAP Custom Development Projects
(CDP‘s)
• An in-depth custom code management activities to
follow during project execution
Simplification items
• Simplification Items represent application or architecture
changes in comparison to ERP NEW
• They are grouped by business priority (e.g. Core Finance)
and industry, respectively
AddOn’s & Business Functions S/4HANA Sizing
• SAP AddOn’s and Business Functions as well as 3rd party • To prepare for SAP S/4HANA, a system sizing is the
AddOn’s have to be checked for their compatibility with SAP baseline regarding the future target size
S/4HANA • SAP Readiness Check summarizes the technical sizing
• SAP software is listed and rated result so customers can discuss internally with SAP or
• 3rd party software is listed only partners the future target system size
Recommended Fiori Apps
• Fiori apps recommended based on the transaction
usage history in the evaluated system
Transactions
• Evaluate use of SAP GUI transactions replaced or
deprecated in SAP S/4HANA
§ Business Warehouse Extractors check to show whether the SAP BW extractors in the customers’ ERP system can still be used
(SAP Note 2500202)
§ Data Volume Management check to show the size of the archiving potential based on the top 30 database tables.
Customers who have already generated an analysis in the past, the only additional setup is to implement the data volume management note
2612179 and implement the latest version of 2310438. If the SAP Solution Manager is used , implement the latest version of 2290622 as well.
Summary - Key Take Aways
• Simplify, standardize, streamline process chains

• Leverage generally accepted industry best practices

• Utilize industry experts and SAP resources

• Build strong foundation to leap into business

innovation – instead of daily firefighting

• S4HANA delivers value and innovation – Need

launchpad to be ready
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 Presentation Materials
Access the slides from 2019 ASUG Annual Conference here:
http://info.asug.com/2019-ac-slides
 Q&A
For questions after this session, contact us at [email] and [email].
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