Benefits of Master Data Governance (MDG) ROI Study

Transcription

1 Benefits of Master Data Governance (MDG) ROI Study Presented by Nelson Lin of Konica Minolta Business Solutions USA, Inc. and Uli Neubert of ICM America, LLC

2 Learning Points Why MDG? Best Practices Associated With an MDG Initiative Estimating MDG ROIs Operational Efficiencies Reduced Data and Maintenance Cost Savings Associated with Improved Analytics (Spend Analysis) Cost Savings Associated with Reduced Storage Costs

3 Aberdeen Group Study (Reported by *ASUG News) Organizations without MDM initiatives reported that their employees spent five times longer searching for data (6.2 hours per week versus 1.3) than those that had MDM programs. When it came to inventory management, those organizations with MDM programs had more complete and on-time deliveries (3 percent), better inventory accuracy (4 percent) and better improvements in inventory turns achieved by an ERP implementation (7 percent). In turn, customer satisfaction in these organizations was 17 percent better than those that didn t have MDM programs. Those organizations with MDM programs paid, on average, 7 percent less in storage costs and 5 percent less in data management costs than those without MDM programs.* Posted by Courtney Bjorlin 8/11/2011

4 Introduction: Uli Neubert and ICM America About ICM America LLC SAP Consulting Firm Since 1997 Has Successfully Delivered 100+ SAP Projects to Mid-size and Global Customers Expertise includes SAP Technical Consulting, Functional Consulting, Project Management, Advisory, and Quality Assurance SAP Partner About Uli Neubert Managing Partner of ICM America 25+ Years in the SAP Industry

5 Introduction: Nelson Lin and Konica Minolta Business Solutions Pending Konica Minolta is in the midst of a business transformation with the long term vision of linking all products and services, and ultimately changing the DNA of the organization from being an expert on the product to an expert on the customer.

6 Business Transformation: Shaping Our Future HW (Hardware) Provider HW Centric Selling a Box (one product) bizhub Focus MPS (Managed Print Solutions) Focus Expert on Product BPM (Business Process Management) Solutions Provider Services Centric Selling Services (suite of products/services) best platform + EnvisionIT Offering Enterprise Services Strategy MPS Managed IT Services Commercial Print Management Services & Solutions Expert on Customer

7 PROCESS MANAGEMENT METRICS Strategic Offerings Portfolio SERVICES & SOLUTIONS PLATFORM Customer Requirements INFORMATION MANAGEMENT SOLUTION BLUEPRINT IT SERVICES HARDWARE ECM WORKFLOW MOBILITY DOCUMENT MANAGEMENT SECURITY/COMPLIANCE CAPTURE/STORAGE PRODUCTIVITY EFFICIENCY INFRASTRUCTURE CLOUD MOBILITY HELPDESK BUSINESS CONTINUITY REPORTING OFFICE PRODUCTION PRINT WIDE FORMAT 3-D PRINTING INK JET 7

8 Why MDG? Master Data is a Significant Asset Clean Master Data - the most undervalued ROI potential in the Company 80/20 Rule: 80 % of the time is spent on 20% of the issues, which are Problems often caused by faulty Master Data Average lifecycle: HW 2-4 years; SW 5-8 years; Master Data years Clean Master-data is needed for: Accurate internal, external & legal Reporting Correct communication to Customers & Vendors Sound decision making Risk assessment and Mitigation

9 MDG Best Practices The Business owns the Master-data, IT provides the tools Maintain Data: First where it originates, and then where the expertise is (if needed) Use electronic workflows and sign offs A Master Data Governance Organization includes: Steering Committee / Master Data Council (Executive Sponsorship) Tactical Committee (Assigned members, meeting regularly deciding on Data Usage in all areas) Data Stewards (Responsible Representative for a Data area) Data Entry / Maintenance workers Most Data Governance Organizations have a Matrix reporting structure

10 MDG Best Practices continued Good definitions of Rules, Responsibilities, Processes, and KPIs are essential Phased Approach (Crawl, Walk, Run) Key Factors in Prioritization of Opportunities: Significant Achievable Success = Organizational Confidence and Continued Support Build a Business Case, including ROI

11 Foundational Project: Why MDG at KM Several Options for EDM had been evaluated by KM over past years Good time to address the Master Data challenges: For three years, SAP has stable and suitable solutions in three important EDM areas: Data Governance (SAP-MDG): Workflow, alerts, Parked documents, - access for all potential users, since costs are based on #of records Dashboards & scorecards based on established rules (SAP-Information Steward) Data Cleansing & Conversion Hub (SAP-Data Services BODS) Considerations: 1. Foundational Project to implement the tools for a first domain: Drives more expertise on the IT side Allows the business to build a data governance organization Allows KM to build greater expertise on processes and reporting 2. Business Consulting Engagement to review Material Master and build MDG organization: Allow KM to build competency in Material/ Service Master and document standards Smaller investment to get started

12 KM Priorities - Material Master, Vendor Master- In! Material Master Very central to all operations, biggest bang for the buck Need to understand and improve in order to establish foundation for new service offerings Maintenance processes and responsibilities well understood and established Operations will benefit from additional data, which can be housed in existing standard fields and structures Available status logic can support much tighter management of obsolescence, which will yield a large ROI Vendor Master Small Population Preferably to be done in conjunction with implementation of Ariba or similar procurement tool Large percentage of Spend Analysis Savings will be realized through Data cleansing on the indirect vendor side

13 KM Priorities: Customer Master- Not In High Need and great efficiency and saving potential Complex to establish hierarchies and categorization Difficult to find owner / sponsor Will take time to get buy in and synchronization of all affected areas Connected to many different systems also external Not recommended as the first domain, due to complexity and importance

14 Issues identified (Material Master) Obsolete Materials o Across ERP, CRM, BW More Detailed PLM Material Status EOL Date Duplicate Materials o Across ERP, CRM, BW Missing extensions Incorrect discount codes association missing o Machine accessory o Machine Supply o Supply Machine o Accessory - Machine Dimension & Weight missing, incorrect Weight & Dimensions should be UOM, not text Harmonize code for Import & Export Incorrect Material Group o Commissions o Subsidy from Japan Missing own produced / 3 rd Party indicator Mislabeled Part / Product Product price different per plant Some plant view fields need to be global level Missing or incorrect ABC indicator Model Name field missing OPS Product description & Details missing Detail account for CGS per Mat Group

15 Issues Identified (Vendor Master) Obsolete Vendors Duplicate Vendors Missing hierarchy Missing buying group association Missing Duns Number Incorrect / missing Industry code Spend analysis incorrect / rudimentary Missing physical address & return address. (only remit to is maintained) Missing Minority Status details: o What minority o Certificate # o Expiration Missing Insurance Details (certificates) Attachment of other Certificates and renewal deadlines Incorrect Affiliation Reconciliation account

16 Benefits & ROI The proposed MDG Project already has a good ROI based on the quantifiable Benefits in the areas of: Inventory savings through significantly reduced Obsolescence Warehouse space savings through reduced Obsolescence Spend Analysis savings based on Vendor De-duplication and hierarchies Time Savings in various areas due to specific additional information Real Savings are intangible through higher efficiency, better performance, reduced errors and more reliable information. Clean Master Data- one of the most undervalued ROI potentials in the Company: 80/20 Rule: 80 % of the time is spent on 20% of the issues, which are Problems often caused by faulty Master Data

17 Benefit Calculation- Time Savings Process Type of error $ 1,000 / annually General Pricing & Billing Pricing & Billing Pricing & Billing Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Mat Master Create Bid Desk Service Logistics Product Logistics Product Logistics Product Logistics Product Logistics Product Logistics Product Logistics Product Accounts Payable Accounts Payable Accounts Payable Finance Finance Finance Finance Purchasing Indirect Purchasing Indirect Purchasing Direct Purchasing Direct Purchasing Direct Purchasing Direct Purchasing Direct discard obsolete Portions of reports Item can not be put on Order Discount Codes Accessory/machine association Classification inconsistent KM produced flag, for subsidies commission calculation KM produced flag, for inventory rpts Part / Product mislabeled Late submission for Create non active items duplicated to CRM, BW, Description for 3rd party OPS items inconsistent Mat extension high volume / cumbersome Automated PINS creation for Product Addtl Attributes (f.e. first Call fixes target) Dimensions are Text Wrong Harmonization code Addtl Info on Items Inventory count obsolete Other handling???? Cycle Counting Savings for Obsolescence Whs Space savings for Obsolescence wrong vendor associated Payment Method not maintained Payment to obsolete vendor code Reclassification due to incorrect account code Calculate Inventory Reserve Incorrect Cost or Profit Center Other Master Data low hanging fruit Vendor obsolescence / archiving Minority Attributes - Minority spend analysis Vendor obsolescence / archiving Minority Attributes - Minority spend analysis 3rd Party: Wrong part due to missing info 3rd Party: Wrong part due to not updated info OPS: Wrong part due to missing info TOTAL $250k

18 Projected Benefit Calculation- Non Time Savings Inventory Savings Process Type of error Total % % Reduct. $ 1,000 / annually Carrying Cost % 15% Mat Master Create Obsolescence Product Mat Master Create Obsolescence Accessories Mat Master Create Obsolescence Supplies Mat Master Create Obsolescence regular Parts Mat Master Create Obsolescence Trunk Stock Purchasing Direct OPS: Obsolescence Purchasing Direct 3rd Party: Obsolescence of invent. Item Total Obsolescence $1,913.0 Purchasing Indirect Vendor de-dup Spend analysis Impact Purchasing Indirect Minority Attributes - Minority spend analysis Purchasing Direct Vendor de-dup Spend analysis Impact Purchasing Direct Minority Attributes - Minority spend analysis Total Spend Analysis $420.0 Purchasing Direct 3rd Party: Wrong part due to missing info 50 10% Purchasing Direct OPS: Wrong part due to missing info Bid Desk Total Incorrect Parts $0.0 Total Time Savings $0.0 Total Annual Savings $2,333.0

19 Estimated Savings Summary Time Related Savings- $252,000 Non-Time Related Savings- $2,334,000 Total- $2,586,000

20 Question and Answer Session a

21 THANK YOU FOR PARTICIPATING For ongoing education on this area of focus, visit or contact Gary Riemersma