Service Management from SAP: Driving Next-Generation Service Strategies. Marc McCluskey, Solution Principal

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1 from SAP: Driving Next-Generation Strategies Marc McCluskey, Solution Principal

2 Trends in SAP s Alignment SAP s Application Approach Customer Success

3 Executives View of IT and What is the Most Important Consideration in IT Investment? % Of Respondents What Business Process is Most Dependent on IT? % Of Respondents Other 8 Other 12 Improve Controls/Reporting 14 Sales 10 Cost Reduction 15 Product/ Development 10 Better Decision Making 15 Order Mgt 13 Improve Customer Increase Sales Customer Financial Reporting/Control Production/ Delivery Mckinsey, July 2004 Mckinsey, July 2004 Execs Focus On and IT Support For Success SAP AG 2002, Title of Presentation, Speaker Name / 3

4 Business Continues to Grow Percentage of Revenue % 29% 76% 71% Products Products AMR Research, June 2004 Average Change was 15% Over last 3 Years SAP AG 2002, Title of Presentation, Speaker Name / 4

5 Pain Points Current Pain Points Key Observations Create Revenue and Competitive Advantage Limited visibility of information between all business units No means of determining complete relationship with customer Difficult to manage pricing, resulting in margin losses Limited up sell and cross sell of products and services TCO of Legacy IT Many different legacy systems for pre and post sales Inconsistent data and processes across business units Limited capability to adopt new business best practices Adjusting to new customer demand is slow and costly Increased Business Risk legacy systems are too old and not supported anymore High service delivery costs regulations (i.e. Sarbanes Oxley ) require better internal controls Difficult to drive consistency due to mix of company and partner staff Incorrect customer information or parts result in repeat service visits. Poor coordination of service personnel yields sub-optimal utilization of resources Low customer loyalty Increasing competition causes customers to defect Inconsistent service performance impacts customer satisfaction Positive service experience can drive repeat sales Drive as a Strategic Line of Business SAP AG 2002, Title of Presentation, Speaker Name / 5

6 Technology Provider Preference Parts Planning Warehouse Source IRC - Base: Total Qualified Respondents (n = 148) Warranty Source: IRC - Base: Total Qualified Respondents (n = 97) Field Source: IRC - Base: Total Qualified Respondents (n = 34) Source: IRC - Base: Total Qualified Respondents (n = 60) SAP has Brand Equity Across SAP AG 2002, Title of Presentation, Speaker Name / 6

7 Trends in SAP s Alignment SAP s Application Approach Customer Success

8 SAP s Response Build Business Unit Focused on & Assets First Non Industrial Business Unit Drive Investment and Market Development Develop Business Process-Based Solutions Scenario driven business solutions Industry focused Invest in Resources Growing Organizational Knowledge and Subject Matter Expert team to focus on and Asset business Identified as one of our top investment priority Appointed dedicated resources to be the regional and subject matter experts and support our go to market and thought-leadership efforts Partner to Scale Delivery Capability Go to market partnerships by industry, region and scenario Engaged with most major SI s Recently held Partner Day in which over 30 firms participated Focused Experience To Meet Customer Need SAP AG 2002, Title of Presentation, Speaker Name / 8

9 is a Business Discipline Acquire Grow Marketing Field CRM Sales Order Installed Base Call Center CRM Analytics Master Data Mgmt QM Analytics & Procurement ERP/PLM Product Data Mgmt HR, FINS, PLM FIN/HR Analytics HR Time & Expense Fulfillment Supplier Support Eng Eng. Change Mgmt HR Skills SCM/SRM Planning Execution Analytics & Procurement Event Extended Warehouse Mgmt. Inventory Retain SAP AG 2002, Title of Presentation, Speaker Name / 9 SAP Delivers the Discipline

10 Process Integration Is Important and Significant... enterprises that develop a strategy by integrating PLM, SCM and CRM... will see a 40% improvement in effectiveness... [and] will see a 50% gain in customer satisfaction, when compared to those enterprises that do not. Michael Maoz, Gartner Fellow, June 2004 SAP AG 2002, Title of Presentation, Speaker Name / 10 SAP service management solutions include more than 300 integrated processes. Business Function Sales & Marketing Delivery 85 + Parts & Supply Chain 35 + Billing and Financials 35 + Analytics 40 + Total Source: Internal product data # of Integration Points Process not Point Integration Provides Results

11 Estimated Benefits of an Integrated Solution Tangible Benefits Revenue Increase in post-sale revenue Increase market share (over industry avg) % impact 8 15% 10 35% Operating cost Improve service efficiency & productivity Reduce service delivery costs Reduce service parts costs 10-20% 10-20% 20-25% Working capital Reduction in inventory levels Improve Days Sales Outstanding (DSO s) 25-40% 20-50% Source: Gartner Group; Patton Consultants; Accenture; Aberdeen Group; AMR; US Dept. of Commerce SAP Puts Customers in a Position to Succeed SAP AG 2002, Title of Presentation, Speaker Name / 11

12 Maturity Model High Economic Value Low Support Excellence For Profit Decision Baseline Grow Share Increase Revenue Protect Share Structured to Grow Operational Efficiency External AMR Research, June 2004 Reward Internal Model Guides Client Investment and Focus SAP AG 2002, Title of Presentation, Speaker Name / 12

13 Criteria for Maturity Stage 1 Stage 2 Stage 3 Stage 4 Baseline Operational Efficiency Customer Support Excellence Structured to Grow Processes Focus Handle inbound information in a timely manner. Reduce cost of operations; specifically in inventory, personnel and Infrastructure, without reducing service level. Increase the level of support given to a customer in a way that makes them more efficient. Develop solutions that grow the market opportunity and change the concept of what is service. Technology Focus on Automaton Electronic Product/Catalog Self /Knowledge Logistics Remote Diagnostics Technical Document Field and Repair Order Vendor Managed Inventory Complex Pricing and Contract Call Center Inventory and Parts Planning Demand Visibility Product Development and Defect management Customer Case Dispatch and Scheduling for Field service Order Promising and Availability Customer intelligence and Analysis Warranty Process Installed Base Information Measure Response time Cost to Serve Market Share Year over Year Growth AMR Research, June 2004 Map to Identify Client Needs vs. SAP Deliverables SAP AG 2002, Title of Presentation, Speaker Name / 13

14 Trends in SAP s Alignment SAP s Application Approach Customer Success

15 Performed in a Complex Ecosystem Supplier OEM Partners Manufacturing A/R & Collections Contracts & Warranty Dealer Repair Center Engineering Customer Facility Supplier Logistics Provider Field Technician Warehouse / Logistics Sales & Marketing End Customer Manager Field Technician Asset The Task is Simple the Organization is Critical SAP AG 2002, Title of Presentation, Speaker Name / 15

16 mysap Business Suite Internal & External Users A/R & Collections Manufacturing Engineering Sales & Marketing Customer Field Technician Dealer End Customer SAP NetWeaver SAP Sales & Applications Parts Field & Depot Repair Warranty and Claims Analytics Installed Base Marketing Lead & Opportunity Customer and Support Quote & Order Contract Enterprise s Data In Non-SAP Systems ERP Supply Chain Systems Dealer Systems SAP NetWeaver Asset In Field Mobile Device CRM drives Wider Scope = More Value Document Mgmt. PLM SAP AG 2002, Title of Presentation, Speaker Name / 16

17 SAP Process Components 9. Financial - Invoice Creation - A/R and Collections - Credits/Adjustments - Contract Profitability - Financial Analysis & Reporting 8. Parts - Parts Planning - Parts Fulfillment - Inventory - Multi-Echelon Stocking - Reverse Logistics 7. Depot Repair - Workload Planning - Repair Cycle - Loaners & Consignment - Reverse Logistics Tracking Parts Depot Repair Financial Field Warranty and Claims Mgmt. Sales and Marketing Contract Installed Base Mgmt. Customer and Support 1. Sales & Marketing - Targeted Marketing Campaigns - Proactive Sales - Lead - Quote & Order 2. Contract - Quote to Contract - Flexible Contract T s & C s - Level Agreement Monitoring - Contract Profitability Analysis 3. Customer & Support - Call Center - Web Self - Entitlement Verification - Problem Resolution 6. Field - Technician Assignment & Scheduling - Dispatch - Predictive/Preventive Maintenance - Mobile Notification and Updates - Alerts/Escalations 5. Warranty & Claims - Warranty Registration - Claims and Financial - RMA Processing - Supplier Warranty Recovery 4. Installed Base - Install Base Creation and Updates - Proactive Install Base Upgrades - Engineering & Safety Change Tracking - Contract Updates Designed to Work as One but built for Each Process SAP AG 2002, Title of Presentation, Speaker Name / 17

18 Understand the LOB and Value the CIO Internal & external users Customers can automate business Processes one at a time Enterprise s Business Systems A/R & Collections Customer Call Center Financial Sales and Marketing Enterprise Systems Engineering Field Technician Parts Depot Repair Contract Customer and Support SAP NetWeaver Integration Platform 3 rd Party Systems Sales & Marketing Dealer Field Warranty and Claims Mgmt. Installed Base Mgmt. Manufacturing End Customer Legacy Systems SAP Packages the Business Discipline SAP AG 2002, Title of Presentation, Speaker Name / 18

19 Trends in SAP s Alignment SAP s Application Approach Customer Success

20 Pratt Whitney Customer Example SAP Investment Paying Dividends to Support Growth SAP AG 2002, Title of Presentation, Speaker Name / 20

21 Siemens Medical - Customer SAP Drives Real Time Support Growth Model SAP AG 2002, Title of Presentation, Speaker Name / 21

22 Customer Stories and Success Increased Plan Sales: Grew revenue by $2M Faster Invoicing: Reduced from 14 days to 1 day Fewer Returns: Down 7% per year over 5 years Saved on Call Center Staffing: Reduced 11% Reduced Call Center Time: Shaved 39 seconds per call Shrunk service parts inventory: Dropped 28% Improved 1st service trip fix rate: Up 9% Reduced service to invoice time: Down 62% Creating Value from Complex Goods to High Tech SAP AG 2002, Title of Presentation, Speaker Name / 22

23 Maximizing Shareholder Value Key Levers Financial Goal Enhance Shareholder & Customer Value Ratio Financial Strategies Enhance Profitability Reduce Invested Capital Enhance Revenue Reduce Operating Costs Working Capital Fixed Capital Improved spare part fill rates Cross Sell & Up Sell Upgrades contracts and equipment New service offerings / capabilities Fuel new and repeat sales of equipment based on service capabilities Reduce field service costs via workforce efficiencies and optimization Reduce customer service & channel management costs Reduce warranty and contract revenue leakage Reduce inventory levels via: - Effective forecast management - Improved inventory placement - Extended supply chain stocking and replenishment strategies - Inventory segmentation Less locations 3PL outsourced operations Efficient warehouse space optimization Fulfillment hub strategies SAP AG 2002, Title of Presentation, Speaker Name / 23 Not Point Solutions but Margin Points

24 with SAP Benefits Summary Increase Revenue Experience Higher Margins Reduce Costs Contribute More To Bottom Line Increase Customer Satisfaction SAP Focuses on LOB Value and CIO Needs SAP AG 2002, Title of Presentation, Speaker Name / 24

25 Copyright 2005 SAP AG. All Rights Reserved No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft, Windows, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation. IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iseries, pseries, xseries, zseries, z/os, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, and Informix are trademarks or registered trademarks of IBM Corporation in the United States and/or other countries. Oracle is a registered trademark of Oracle Corporation. UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc. HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C, World Wide Web Consortium, Massachusetts Institute of Technology. Java is a registered trademark of Sun Microsystems, Inc. JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. MaxDB is a trademark of MySQL AB, Sweden. SAP, R/3, mysap, mysap.com, xapps, xapp, SAP NetWeaver and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. The information in this document is proprietary to SAP. No part of this document may be reproduced, copied, or transmitted in any form or for any purpose without the express prior written permission of SAP AG. This document is a preliminary version and not subject to your license agreement or any other agreement with SAP. This document contains only intended strategies, developments, and functionalities of the SAP product and is not intended to be binding upon SAP to any particular course of business, product strategy, and/or development. Please note that this document is subject to change and may be changed by SAP at any time without notice. SAP assumes no responsibility for errors or omissions in this document. SAP does not warrant the accuracy or completeness of the information, text, graphics, links, or other items contained within this material. This document is provided without a warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. SAP shall have no liability for damages of any kind including without limitation direct, special, indirect, or consequential damages that may result from the use of these materials. This limitation shall not apply in cases of intent or gross negligence. The statutory liability for personal injury and defective products is not affected. SAP has no control over the information that you may access through the use of hot links contained in these materials and does not endorse your use of third-party Web pages nor provide any warranty whatsoever relating to third-party Web pages. SAP AG 2002, Title of Presentation, Speaker Name / 25

26 Copyright 2005 SAP AG. Alle Rechte vorbehalten Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und in welcher Form auch immer, ohne die ausdrückliche schriftliche Genehmigung durch SAP AG nicht gestattet. In dieser Publikation enthaltene Informationen können ohne vorherige Ankündigung geändert werden. Die von SAP AG oder deren Vertriebsfirmen angebotenen Softwareprodukte können Softwarekomponenten auch anderer Softwarehersteller enthalten. Microsoft, Windows, Outlook, und PowerPoint sind eingetragene Marken der Microsoft Corporation. IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iseries, pseries, xseries, zseries, z/os, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, und Informix sind Marken oder eingetragene Marken der IBM Corporation in den USA und/oder anderen Ländern. Oracle ist eine eingetragene Marke der Oracle Corporation. UNIX, X/Open, OSF/1, und Motif sind eingetragene Marken der Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, und MultiWin sind Marken oder eingetragene Marken von Citrix Systems, Inc. HTML, XML, XHTML und W3C sind Marken oder eingetragene Marken des W3C, World Wide Web Consortium, Massachusetts Institute of Technology. Java ist eine eingetragene Marke von Sun Microsystems, Inc. JavaScript ist eine eingetragene Marke der Sun Microsystems, Inc., verwendet unter der Lizenz der von Netscape entwickelten und implementierten Technologie. MaxDB ist eine Marke von MySQL AB, Schweden. SAP, R/3, mysap, mysap.com, xapps, xapp, SAP NetWeaver und weitere im Text erwähnte SAP-Produkte und -Dienstleistungen sowie die entsprechenden Logos sind Marken oder eingetragene Marken der SAP AG in Deutschland und anderen Ländern weltweit. Alle anderen Namen von Produkten und Dienstleistungen sind Marken der jeweiligen Firmen. Die Angaben im Text sind unverbindlich und dienen lediglich zu Informationszwecken. Produkte können länderspezifische Unterschiede aufweisen. Die in dieser Publikation enthaltene Information ist Eigentum der SAP. Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und in welcher Form auch immer, nur mit ausdrücklicher schriftlicher Genehmigung durch SAP AG gestattet. Bei dieser Publikation handelt es sich um eine vorläufige Version, die nicht Ihrem gültigen Lizenzvertrag oder anderen Vereinbarungen mit SAP unterliegt. Diese Publikation enthält nur vorgesehene Strategien, Entwicklungen und Funktionen des SAP -Produkts. SAP entsteht aus dieser Publikation keine Verpflichtung zu einer bestimmten Geschäfts- oder Produktstrategie und/oder bestimmten Entwicklungen. Diese Publikation kann von SAP jederzeit ohne vorherige Ankündigung geändert werden. SAP übernimmt keine Haftung für Fehler oder Auslassungen in dieser Publikation. Des Weiteren übernimmt SAP keine Garantie für die Exaktheit oder Vollständigkeit der Informationen, Texte, Grafiken, Links und sonstigen in dieser Publikation enthaltenen Elementen. Diese Publikation wird ohne jegliche Gewähr, weder ausdrücklich noch stillschweigend, bereitgestellt. Dies gilt u. a., aber nicht ausschließlich, hinsichtlich der Gewährleistung der Marktgängigkeit und der Eignung für einen bestimmten Zweck sowie für die Gewährleistung der Nichtverletzung geltenden Rechts. SAP haftet nicht für entstandene Schäden. Dies gilt u. a. und uneingeschränkt für konkrete, besondere und mittelbare Schäden oder Folgeschäden, die aus der Nutzung dieser Materialien entstehen können. Diese Einschränkung gilt nicht bei Vorsatz oder grober Fahrlässigkeit. Die gesetzliche Haftung bei Personenschäden oder Produkthaftung bleibt unberührt. Die Informationen, auf die Sie möglicherweise über die in diesem Material enthaltenen Hotlinks zugreifen, unterliegen nicht dem Einfluss von SAP, und SAP unterstützt nicht die Nutzung von Internetseiten Dritter durch Sie und gibt keinerlei Gewährleistungen oder Zusagen über Internetseiten Dritter ab. SAP AG 2002, Title of Presentation, Speaker Name / 26

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