Single Sourcing as Enabler for SAP Clients

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1 Single Sourcing as Enabler for SAP Clients Gert Keuschnigg IBM Business Consulting Services Vienna, April 2005

2 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 2

3 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 3

4 Forrester and Gartner about Single Sourcing Closer internal control over projects. The Forrester Report, Orchestrating Service Providers Communication breakdowns and lack of provider coordination are the top challenges of managing multiple providers. The Forrester Report, Orchestrating Service Providers Standards, methodologies and the relationship between different providers are not good or stable enough to ensure a smooth integration of activities provided by different sources. Gartner Research, Strategic Analysis Report, Sourcing Strategies: Relationship Models and Case Studies Makes the providers easier to manage. The Forrester Report, Orchestrating Service Providers Another reason for this is that the different providers are quite often competitors in the market. Gartner Research, Strategic Analysis Report, Sourcing Strategies: Relationship Models and Case Studies 4

5 Currently, many Clients Co-Operate with more than one Partner in the SAP Environment Current Situation Complex System Environment complex and integrated business processes must be reflected in organisation and IT systems Team of Best Individuals is the most common sourcing model Different Consultancies Depending on the processes concerned, various consultancies are involved. Process- and System Knowledge mostly is with the consultancy and not within the own company. problems resulting High Complexity in Partner Management Different Methodologies for implementation No consistent Quality-Standards in project delivery Processes and systems not harmonised and fragmented Know-How about systems and processes Insufficient Communication between project teams Synergies between projects not leveraged consistently Not all Projects in Time & Budget 5

6 Business Consulting Services An SAP Single Sourcing Approach has Positive Effects on Project Lead Times, Quality and Cost Reduction of Complexity in Partner Management (one partner undivided responsibility) Cost Reduction by Economies of Scale Organizational structure Organisation Reduced Project Lead Times due to reduced co-ordination effort Consistent Methodologies and quality standards Business process model Processes Increase of Company Efficiency by harmonised business processes Clear Communication based on transparent goals Systems (IT, ERP) Systems Leveraging of Cross-Project Synergies Concentrated Transfer of Know-How to the client People 6

7 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 7

8 The Degree of Involvment of the Partners is reflected by the Distribution of Responsibility for Resources and Results Single Sourcing Organisation Division of responsibilities with partner on each level Full Delivery Responsibility Program- Manager Architects and Project Managers Responsibility for Results Program Management Single sourcing strategy becomes body shopping unless the partner is involved in program management Resources Depending on the degree of involvement, single sourcing can reach up to Business Transformation Outsourcing Know-How Transfer Combined teams at all levels guarantee an optimal transfer of know-how Delivery Resources Body Shopping Roles With full shadowing of roles, the optimal quality will be achieved. In Sourcing Responsibility for Resources Business Transformation Outsourcing 8

9 As a First Step in Single Sourcing, IBM BCS proposes Common Responsibility for Resources and Results Proposed Single Sourcing Approach Common Program Responsibility Program Management IBM BCS actively participates in program management and therefore assumes responsibility for results Program- Manager Resources IBM BCS provides resources on each level of the program. Bodyleasing Architects and Project Managers Outsourcing Know-How Transfer With resources on all levels, we are able to create joint teams. Delivery Resources Common Responsibility for Resources Roles Full shadowing of client s resources on all levels from program management to ABAP programmers 9

10 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 10

11 Business Consulting Services By active Participation of the Partner in all Elements of the SAP Program, Single Sourcing Benefits are Leveraged Benefits of Single Sourcing SAP Program Reduction of Complexity in partner management Cost Reduction through Economies of Scale Reduced Project Lead Times through reduced coordination effort Consistent Methodology and quality standards Increase of Efficiency through harmonisation of business processes Clear Communication based on clear goals Leveraging of Cross-Project Synergies Concentrated Transfer of Know-How Single Sourcing Balanced Scorecard Governance Program Management Methodology Business Alignment & Design Authority Operations Support Resource Management Organizational structure Organisation Business process model Processes Systems (IT, ERP) Systems People 11

12 Governance of Process Owners and Architects ensures the increase of Efficiency through Harmonisation of Processes and Systems Governance Process Ownership IT Steering Board IT Steering Board SAP CC Business Alignment & Design Authority Sponsor Sponsor Programme Management Programme Management Office Office Quality Assurance Quality Assurance Design Authority & Business Alignment Project 1 Project Lead IT IT Project Lead LoB Project 2 Project 3 Project 4 Project 5 Process Ownership Process Model Level 1: Process Process Responsibilities Performance Responsibilities PO Scorecard Financial Customer Project SAP Competence Center Operation Level 2: Sub-Process Level 3: Activity People Process SPO Scorecard Financial Customer People Process Architects Group Delivery Group Application Support Operations Group Level 4: Task Level 5: Sub Task Team Scorecard Process People Other Training Academy 12

13 The Roles and Responsibilities of the Process Owners and the SAP Competence Center are Clearly defined Process Owners Responsible for implementation, improvement and enforcement of standardised end to end processes Taking of all important business decisions (e.g. assignment of stock values, basis for transfer prices etc.) Creating a network of local / regional sub process owners Architects Group Delivery Group Operations Group Application Support Promote and authorise all SAP process and system improvements Minimising of deviations from SAP standard Participation in the development of the future application portfolio Maintenance of an export network in departments Resource Pool Internal employees & external consultants Business & technical analysts, project managers & change managers Providing of appropriate resources as requested Responsible for ongoing system operations Survey and maintenance of technical infrastructure / SAP landscape 2 nd level - support Optimising of technical infrastructure and operations cost 1 st level support First point of contact for end users Training Academy Responsible for continous improvement of the end users' knowledge of processes and systems Support projects in development of training materials Create of a network of local trainers 13

14 A Successful Launch of Single Sourcing can be Achieved Within One Month Week 0 Week 1 Week 2 Week 3 Week 4 Single Sourcing Launch RFP Proposal Evaluation of Proposal Team Assessment Contract Transition Create RFP Select vendors Mail RFP Create proposal Discuss solutions Deliver proposal Evaluate proposals Create shortlist Invitation to team assessment Create business case Develop evaluation criteria Presentation of key resources Ranking Sign-off IT steering board Negotiate price card Negotiate T&C Sourcing decision Create contract Analyse project portfolio Risk assessment Transition planning Transition 14

15 Taking Into Account the Results of the Risk Assessment, the Program Portfolio is transferred to the Single Sourcing Team RFP Proposal Evaluation of Proposal Team Assessment Contract Transition Analyse Project Portfolio Risk Assessment Planning Realisation Analysis and evaluation of ongoing projects Projects of less than 3 months will be finished by the current project team Analysis of project status Identification of critical resources Evaluation of dependencies between projects Perform stakeholder analysis Create a handover plan per project Decide about measures for risk mitigation Establish contracts with subcontractors to assure availability of critical resources Governance Program management Methodology Business alignment & design authority Support Operations Resource management 15

16 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 16

17 Value Proposition for Single Sourcing The Best People of the Client can Concentrate on Projects instead of Vendor Selection Single Multi Sourcing Organisation Approach Single Sourcing Approach High Effort for Procurement and Administration Program Manager Architects and Project Managers Reduced effort in procurement of project resources Reduced effort in negotiation of contracts Reduced effort in contract administration and accounting Delivery Resources Focus on activities creating value 17

18 Value Proposition for Single Sourcing Typically, Potential Savings in Projects and System Maintenance are about 30% Current Internal Cost Harmonisation Internal Effort for Reduction of Effective Cost SAP Budget of Procurement of Fee Rates Contract Administration Lead Times with Single Sourcing 100% Potential Savings 30% 70% 2 m investment 3 m maintenance 10 RFPs 5 contracts 35 days of effort per contract/project 12% Reduction Based on common fee rates Monthly effort per project/maintenance contract 10% reduction Through tough program management Through effective communication and common methodology Quality increase has not been valuated in this example 18

19 Value Proposition for Single Sourcing Potential Savings leave additional Budget for Value Creating Investments Current SAP Budget Effective Cost Effective Reduction of Budget Potential for New Investment SAP Budget 2004 ff Improved Ratio Investments Maintenance 100% Investment Investment Maintenance Maintenance Internal effort for procurement Reduced fee rates Effort for contract administration Reduction of lead times Harmonisation of fee rates Internal effort for procurement Reduced fee rates Effort for contract administration Reduction of lead times Increase of Investment Budget 19

20 Table Of Contents Initial Situations at Clients and Goals of Single Sourcing Approaches of Single Sourcing How to realise Single Sourcing Benefits of Single Sourcing Single Sourcing References of IBM Business Consulting Services 20

21 Business Consulting Services IBM BCS has already proven it s Competence as Single Sourcing Partner in numerous Projects Organizational structure Organisation Organisation Program and project management Organisation & change strategy SAP security & business controls IBM BCS Single Sourcing References Business process model Processes Processes Business process analysis and design Performance management Industry know-how Systems (IT, ERP) Systems Systems SAP modules and configuration Technical environment: SAP and non-sap ABAP programming, data migration People People Organisation of training Change management Know-how transfer 21

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