The Current State of SAP Master Data: From Challenges to Solutions

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1 The Current State of SAP Master Data: From Challenges to Solutions Fifty hours of interviews with business professionals on SAP master data challenges and priorities in today s marketplace Executive Summary Companies have invested billions of dollars in Enterprise Resource Planning systems, such as SAP, to automate their finance, supply chain and human resource functions. Well-managed master data is essential to any SAP business process. If material, customer, vendor, employee or financial data is inaccurate, missing or incomplete, the results can be catastrophic to business operations. This paper summarizes the findings from 48 interviews with SAP professionals representing every major enterprise department, conducted to identify current trends in master data processing. The key findings show that an overwhelming majority of companies approach master data in an extremely inefficient manner, leveraging multiple software applications and homegrown solutions to manage master data creation and maintenance on an ad-hoc basis. All interviewees described complex, multi-departmental information gathering and ad-hoc governance processes, requiring massive amounts of manual data entry and approvals. All participants acknowledged the critical importance of quality master data, but none expressed total confidence that their systems were bulletproof. Most recognized the need for a better way to create and manage master data, and a small percentage were aware of the potential to automate the entire process from transaction instantiation to SAP master data update. New solutions, such as Winshuttle for Master Data, fill the need for better master data process automation and management by allowing companies to effectively integrate all aspects of information governance with flexibility required to meet the ever-changing business requirements. Winshuttle for Master Data empowers business users to quickly create, edit and deploy master data governance workflows, as well as manage mass master data maintenance and strengthen data integrity, without programming, leveraging powerful validation routines.

2 Current Master Data Challenges At the core of any successful SAP implementation is well-managed master data. With hundreds of millions of data entities at stake, however, many companies have struggled to find reliable SAP solutions that combine business agility with master data integrity. The interviews revealed a number of common challenges stemming from the lack of solid master data business processing. These challenges spanned across all major departments at both large and small enterprises, illustrating that inefficient and ineffective processes not only jeopardize the quality of data and, thus, business operations, but also put enormous stress on all participants involved master data processing participants. The key challenges are summarized below. Development Costs: Evolving business requirements often necessitate frequent changes to master data workflows. Interviews revealed that business users reliance on IT to implement these changes depleted valuable IT resources, generated backlogs and drove up overhead costs. Additionally, while business users are typically responsible for defining master data needs, SAP developers are not well versed in specific master data business processes they are required to codify. Interviewees reported that this expertise mismatch put strain on both SAP developers and business users, often led to program rewrites, inaccurate processes and delays, and hindered productivity on both ends of the spectrum. One custom transaction took 400 hours to build, test and change a particular material creation process, leveraging our ABAP development team, and changes require significant resources. Manager, IT, Manufacturing Industry Master Data Entry and Maintenance Costs: Interviewees noted that companies heavily invested in shared services and IT support for master data entry, as well as poured significant resources into continually training employees on better master data processing. Despite these efforts, however, employees spent too much time on manual data entry and maintenance activities, and cumbersome entry and authorization processes contributed to their stress without resolving the underlying data accuracy issues. We have an internal form we submit to an individual with the role of entering and making changes on the vendor. Once that s done, she notifies me, signs the form, and the invoice is entered. Mainly, I submit a form to somebody to change the data. We are collapsing under the weight of this snail process. Data Steward, Procurement, Apparel Industry The Cost of Dirty Data: The costs related to dirty master data have never been higher. In a survey following the interviews, 29% of respondents estimated that a single incorrect entry for a master material creation (e.g., an incorrect material number) costs an organization between $1,000 and $10,000 per annum (Figure 1). With a majority reporting 1,000 to 10,000 material creations per year and a 2% error rate, this amounts to $50,000 to $5,000,000 annually. At a recent data governance conference, a chief financial officer of a Fortune 200 company reported that one incorrect shipping address cost his company $2 million. The Current State of SAP Master Data: From Challenges to Solutions 2

3 Please estimate the annual cost of a single incorrect entry for a material creation $10,001- $100,000 14% $101- $1,000 21% $1-$100 36% $1,001-$10,000 29% Figure 1. The cost of dirty data: results from a user survey conducted in Q Inadequate Master Data Governance: Only 1 of 48 companies had automated data stewardship processes in place to facilitate master data management, governance and reporting. In other enterprises, such capabilities were either non-existent or sporadic at best. For example, one organization reported that an automated process existed to create a part number, but only if a user asked for the status of that part would the remainder of the creation process be executed. Many interviewees expressed a need for master data service-level monitoring but had no idea how to implement this. The wide number of materials created per annum, ranging from 1,000 to over 5,000,000, contributed to the complexity of this issue. We have continuous projects to make sure [that] on an ongoing basis we take a dump of all the data and compare it system to system, just making sure that everything is okay, and we run reports to make sure everything looks good. Business Analyst, Order to Cash, Food and Beverages Industry Lack of Cross-Organization Business Process Standardization: Many companies took a tactical or silo approach to master data process improvement, addressing individual departmental needs on an ad-hoc basis, instead of developing a proactive, enterprise-wide strategy. These interviewees reported that the ad-hoc nature of input and disparate business processes often led to severe problems in data accuracy, processing and timing. Addressing these problems required massive amounts of churn, with multiple back-and-forth communications required to resolve each error and validate information. This challenge is further compounded by the volume of master data transactions: Over 40% of survey respondents reported 10,000 or more master data changes per year (Figure 2), with multiple functions (i.e., engineering, purchasing, etc.) typically contributing to each transaction through data creation, management, review and approval workflows. More than 1,000,000 8% How many master data records do you change per year (material, customer & vendor, inclusively)? 100,001-1,000,000 17% 10, ,000 31% 100-1,000 14% 1,001-10,000 30% Figure 2. Master data changes: results from a user survey conducted in Q The Current State of SAP Master Data: From Challenges to Solutions 3

4 Lack of Master Data Validation: All represented companies relied on forms for material creation. However, nearly all interviewees noted a lack of a heterogeneous, one size fits all form. This lack of data capture standardization forced each department to create custom forms, generating company-wide disparities in critical data-gathering requirements. The forms ranged from paper-based tools and Excel templates to direct entry into SAP GUI (e.g., MM01) and Web-based, Lotus Notes or InfoPath forms, each requiring anywhere from 30 to over 200 fields to be completed for a material creation. Users of an InfoPath form also reported a lack of escalation logic built into the workflow and the necessity to manually key in each approved transaction into SAP, thereby exponentially increasing the risk of data errors at the final step of the process. We [the form] to our fund accountant in finance. There re a million different checkboxes and different things that you have to fill out in order to create a project, so he just checks to make sure that we did our job right. Supply Chain Analyst, Corporate Procurement, Heavy Equipment Manufacturing Approaches: Past and Present In the effort to address the above-mentioned challenges and streamline productivity, companies have scrambled to improve their master data processes over the past two decades. Three approaches have evolved: No Loop Master Data Custom Development Methodology. Under this early methodology, businesses largely depended on IT to create and maintain all aspects of master data processes. Business units determined functional needs and master data requirements, relying on IT to create specific LSMW scripts and related ABAP/BASIS processes in order to create or maintain business workflows. IT tested applications, secured user acceptance and deployed solutions. However, as business requirements rapidly evolved, these solutions could not keep up with the ever-changing business needs. As a result, the entire development cycle had to be repeated over and over again, incurring enormous costs in terms of IT and corporate resources and time. Open Loop Master Data Patchwork Application Methodology. This approach has attempted to speed up master data process maintenance with a variety of patchwork applications. In this approach, business users determine a need for master data process improvement and work with IT to develop requirements. IT then rewrites portions of the existing process (as well as supporting help desk scripts) using form-based tools such as Excel and InfoPath and workflow solutions like Lotus Notes, WayPoint, ServiceNow and SAP Workflow. After testing and user acceptance, IT deploys the modified solution for business use. Based on the interviews conducted in late 2012, most companies are still employing this methodology today. Most, however, readily acknowledge that it does not effectively meet their business needs. Significant data reentry due to nonexistent programmatic validation and update capabilities has greatly hindered this approach, continuing to necessitate massive manual master data processing. Right now it seems to be a nightmare to maintain this [ServiceNow workflow] and the Excel forms. We want to have a solution where we can automate data [processing] from the approver until the entry into SAP. IT Analyst, Information Technology, Consumer Goods Industry Our master data workflow is in an ancient version of Lotus Notes that is almost unmaintainable at this current point. So, we are heavily starting to think about how we are going to manage this, change this, etc. IT Manager, Information Technology, Media Industry The open loop approach provides no reporting, monitoring or information governance; no transaction validation against SAP; no automated update; and no notification of master data creation or maintenance back to the originator. Moreover, the absence of a closed loop propagates data inaccuracies and prohibits auditability, leading to bad decision-making and incurred costs due to errors. The Current State of SAP Master Data: From Challenges to Solutions 4

5 Closed Loop Information Governance: This new approach calls for integrated master data validation, governance and mass maintenance capabilities, while alleviating the unnecessary reliance on IT. This closed loop approach empowers business users to assess their own needs and quickly develop reliable master data creation and maintenance solutions to meet those needs. Administrators also gain insight into master data process tracking, while proactively managing service levels with product planning, sales and other key departments affected by timely master data creation and maintenance. Beginning with an overall master data process assessment, business functions (not IT) identify the key master data processes across the organization, prioritize them, and create, test and deploy tools and workflows to meet current data stewardship business requirements. This results in faster development and deployment of business processes, as well as better management and governance of master data. Benefits of Closed Loop Information Governance The closed loop information governance solution offers a comprehensive set of business, process and technical benefits to the finance, supply chain and human resource organizations of all sizes. The majority of interviewees expressed the need for a better way to process, manage and govern master data, and a small number were actively looking into the possibility of automating master data creation and maintenance processes from transaction initiation through SAP system update. We re trying to automate and make it a more user-friendly experience, empower the users. Business Analyst, Procurement, Apparel and Footwear Industry We must develop service-level agreements with regard to timeliness of performing data requests. We must develop processes to manage the requests and workflows to handle approvals and authorizations. Additionally, we want to automate the actual data entry processes [into SAP] to minimize the number of people required to support the new organization. IT Analyst, Master Data Team, Automotive Manufacturing The closed loop solution answers this need by automating and integrating key master data management functions at a business level. With this approach, a business user files a request and the integrated workflow routes it to the various stakeholders in the material creation process. Leveraging workflow rules, a closed loop is set up to monitor the status, timing and responsiveness at each step in the process until completion. All of the data is pre-validated throughout the process, allowing the data steward to automatically update SAP without having to rekey any data. Leveraging process automation and user-friendly platforms, the closed loop solution alleviates the IT bottleneck, simplifies training and support requirements, and provides robust master data governance, with full auditability at each step of data creation and maintenance. By eliminating the need for excessive manual data entry, it also improves master data accuracy, consistency and completeness, leading to significant cost savings, as valuable corporate and IT resources are not entangled in correcting master data errors and ramifications thereof. By positioning the owner of the requirements (i.e., business user) as the author, developer and user of the rewritten process, this third-generation solution offers a high probability of effectively meeting an organization s business needs. With quick turnaround times, tight governance and built-in flexibility, it provides the agility companies need to remain competitive in today s economic climate. The Current State of SAP Master Data: From Challenges to Solutions 5

6 Choosing the Right Solution for Your Business Data shows that improving master data processes and integrity can achieve 8% to 30% capacity enablement. (WSDB 2012) To apply a successful solution, organizations must first identify their master data process inefficiencies and key areas for improvement. This requires conducting top-down and bottom-up analysis of existing SAP master data creation and maintenance processes and correlating results to the industry benchmark data. By doing so, companies can rapidly and accurately identify processes that would yield the highest benefit from an enhancement, such reducing transaction processing frequency or complexity. An effective master data solution should encompass both function and flexibility to meet short- and longterm business needs. Organizations should look for the following key capabilities: Data Validation: A technology solution should allow users to validate master data requests at the point of entry against rules inside and outside of SAP. Cross-Business Integration: A robust system should provide configurable workflows, multi-step approvals, conditional logic for branching, support for extensive notifications and alerts for servicelevel management, designed to work across a global enterprise platform such as SharePoint. Data Governance: Business users should be able to create role-based and traceable governance processes that route change requests to different stakeholders for input, review and approval. Streamlined Data Entry and Processing: An effective create-to-update solution should integrate processes from data lookup, extraction and filtering to data validation and the final SAP update, while eliminating the need for data re-entry and providing forms for specific department updates. Mass Maintenance: Users should be empowered to perform mass maintenance directly from Microsoft Excel without any programming. Winshuttle for Master Data As the leading provider of end-to-end SAP solutions, Winshuttle has helped hundreds of companies worldwide to optimize their master data processes. By integrating user-friendly interfaces such as SharePoint and Excel with SAP, Winshuttle s products transform inefficient, cumbersome master data processes into agile, automated workflows that speed up productivity and free up valuable resources. Winshuttle provides: 1. The expertise and industry benchmark data you can rely on for your master data usability assessment; 2. An industry benchmark database that is comprehensive in both volume and breadth of master data process improvement resources and data; 3. A consistent master data process methodology that guides usability process improvement; 4. A technology solution with closed loop, end-to-end master data creation and maintenance capabilities, from input, validation and workflow to auditing, reporting and SAP system update. 5. An integrated solution that fits master data processes to your business and input requirements not the other way around. The Current State of SAP Master Data: From Challenges to Solutions 6

7 Winshuttle for Master Data provides the quickest path to better SAP master data by empowering business teams to implement immediate master data improvements without programming. This market-leading toolset streamlines and enhances: Data Validation: Users can validate master data requests at the point of entry against rules inside and outside of SAP. Data Governance: Users can create role-based and traceable governance processes that route change requests to different stakeholders for input, review and approval. Mass Maintenance: Users can perform mass maintenance directly from Microsoft Excel without any programming. We found Winshuttle to be a really useful tool for getting [external] data loaded into SAP. That really gave us the ability to detail out what types of documents were going in, mapped to the location [of] the original files...we got about a thousand documents uploaded within an hour. Material Master Data Steward, Information Technology, Manufacturing Industry Winshuttle for Master Data allows business users to instantly resolve urgent problems with customer, material, vendor and other key master data objects. With better master data, users can reduce costly business interruptions in all areas of their organization, while gaining significant operational efficiency and cost-savings. For more information about how Winshuttle can help your company improve master data management and get the most out of your SAP installation, visit or info@winshuttle.com. Theresa Ciacchi Senior Account Executive - Business Solutions Group Adaptive Corporation, Inc. Providing 118 W. Streetsboro Rd. Suite 221, Innovation by Design The Current Hudson, OH State Solutions p. (440) Cleveland Dayton San Francisco 7 c. (440) Irvine Raleigh Dallas Toronto e. tciacchi@adaptivecorp.com