Utilities Industry A Benchmarking Presentation

Pranav Bhushan, Value Engineering June 5, 2008

Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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What is Benchmarking?

What?
Enables continuous improvement Allows to target what does and does not work well Allows to adopt best practices Allows to put evidence behind decisions

Why?
Build a Business Case Assess value realization Compare performance Prove success

When?
Before business transformation During business transformation After business transformation

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ASUG/SAP Benchmarking Designed to get Actionable Results

Strategic Service by ASUG and SAP, launched end of 2004 as a forum to exchange metrics and best practices Additional industry partnerships include APICS, TPMA and SCL Program covers 20 processes, with 2,000+ participants from over 1,000 companies spread across North America, Latin America, Asia Pacific and Europe, who leverage the program to: Build a business case for change Compare performance to industry peers and between regions/divisions Assess value realization, year-over year Prove success Survey participation is free of charge Survey content relevant for business as well as IT audiences Core surveys also available in Spanish and Portuguese (global benchmarking) Focused 360o Approach to Problem Identification and Resolution

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The Link Between KPIs, Best Practices and Enabling Technology

What makes SAP Benchmarking Unique
KPI achievement is linked to best practice adherence to assess business process maturity Results can be used to establish a technology roadmap to increase your business process maturity and realize quantifiable business value Large number of participants allows for a very robust benchmarking comparison, e.g.: Industry peers Companies running on SAP

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Benchmarking Methodology and Study Deliverables

1 Company-Specific Report

Detailed, confidential report comparing your performance to peers

Gap to Q1 & Average

2 Intercompany/Global Benchmark
Inter-divisional comparison to peers and each other

3 Business Process Health-check

Key Performance Indicators Best Practice Adoption

Executive-level summary of findings across business units and processes

4 Year-over-Year Analysis

Comparison of current performance to peer and past performance

5 Business Transformation Study

Study on leading SAP customers who realize higher value from SAP solutions

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SAP Benchmarking Study Deliverables

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SAP Benchmarking Study Deliverables

Thought Papers (Example)

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Available Benchmarking and Best Practices Surveys

Corporate Services
Human Capital Management NEW: Talent Management

Supply Chain
SRM/ Procurement

Customer Lifecycle
NEW: Order to Cash/ Contract to Cash Customer Contact Centers

Best Run IT
Total Cost of Ownership (TCO) Business Intelligence/ Analytics Centers of Excellence Organizational Change Management Value Realization NEW: Winning the ERP Marathon AMR Terabyte Survey Enterprise Data Management IT Strategy

Supply Chain Planning Transportation Management Warehouse Management

Finance

NEW: Sales Effectiveness Trade Promotion Management1 Channel Management1

Financial Compliance

Manufacturing NEW: Enterprise Health Check Under Development: Shared Services NEW: Retail Merch./ Category Management Enterprise Asset Management NEW: Business Network Transformation Under Development: EH&S Compliance Under Development: S&OP
Note: 1) SAP owned surveys
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NPDI

Survey Registration and Completion

Survey Registration

Data Validation

Analysis & Report Creation

One-toOne session

Register and complete survey at: http://www.sap.co m/usa/solutions/be nchmarking/index.e px or www.asug.com

Validate data provided in the survey

Assess KPI and Best Practice Adoption Summarize key business pain points

Present findings to process owner(s)

1 Week Post-survey Submission

1-2 Weeks Postdata Validation

Key Stakeholders: Survey Participant Engagement Sponsor Business Process Owner(s) Process level IT Owners(s)

Key Stakeholders: SAP Engagement Sponsor VE Team Member(s) VE Business Process Expert(s)

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Best-Run Corporate Services: Analysis Framework

Type Metric Average
Employees per HR FTE % HR Staff allocated to Transactional Activities 101 40.5% 1.1% 48.6 2.9%

Overall Q1
195 21.7% 0.2% 23.8 0.3%

Utilities Average
77 39.3% 0.9% 49.7 2.1%

Q1
107 18.7% 0.4% 29.2 0.9%

Effectiveness
Finance Cost as a % of Revenue Days Sale Outstanding (Days)

Efficiency

Error rate in bills sent out

Practices that Differentiate the Top Performers

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Human Capital Management Sample Insights

Shared Services Reduces HR Costs
HR Costs per Employee depending on Shared Services Adoption

Right Pyramid Drives Employee Productivity

Operating Income per Employee +74% HR Costs as % of Revenues -29%

Strategic Decision Support Talent Management

Degree of Integration Reduces HR Costs

HR Costs per Employee by Number of HR Applications in addition to ERP system

Transactional Support Average Top Performer

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Finance Sample Insights

Integration of G/L with Downstream Systems Reduces Closing Times
Avg. Annual Closing Times (Days)

Right Pyramid Drives Employee Productivity

Operating Margin +38% Finance Costs as % of Revenues -30%

Strategic Decision Support Planning/ Expertise Based

Integration of Billing with Order Entry Systems Reduces Invoice Error Rates
Invoice Error Rate (in %)

Transactional Support Average Top Performer

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Best-Run Supplier Relationship Management : Analysis Framework

Metric
% of spend managed strategically (Indirect) % of spend managed strategically (Services) Average Annual Savings in Indirect spend as a % of Total Spend Average Annual Savings in Services spend as a % of Total Spend PO Error Rate 35.8% 36.5% 3.1% 2.8% 11.8%

Overall Average Q1
75% 75.3% 17.1% 7.6% 0.9%

Utilities Average
38.5% 41.9% 6.7% 3.2% 9.2%

Q1
80.8% 79.2% 16.4% 6% 1.8%

Practices that Differentiate the Top Performers

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Best-Run Enterprise Asset Management Analysis Framework

Defining EAM Top Performing Organizations
Effectiveness Return on Assets: >20% Annual Penalty Costs: <$1M Annual Lost Time Performance: <100 days Unplanned Annual Outages: <10% Monthly Asset Downtime: <15% Efficiency Schedule Attainment: >80% Maintenance Budget Adherence: 76-100% Cycle Time: <5 days Wrench Time: >50%

Strategy

Maintenance Approach: Emphasis on Reliability Centered Maintenance & Continuous Improvement Advanced Planning and Scheduling Practice High Strategic Importance of EAM Periodic Reporting and Analytics Updates Limited number of Software Applications

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Enterprise Asset Management - Sample Insights

KPIs
Schedule attainment Correlation between Maintenance Program and Compliance performance 87% 41% 34% 13%

Planning & Scheduling Reliability Functions

48% 70%

% allocation of time in maintenance function

Repair & Preventive Maintenance

High performers have a more productive utilization of time across different functions

Analyzing Readings Troubleshooting Looking for Materials Reporting Traveling

Note: 1) Figures mentioned for Utilities Industry

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Enterprise Asset Management - Sample Insights

Significant Differences in Performance Results on EAM KPIs Between Top Performing and Other Companies
Effectiveness: Return on Assets Efficiency: Schedule Attainment Strategy: Maintenance Approach (Sum of Reliability Centered Maintenance and Continuous Improvement as % of Overall Maintenance Approach)

Top Performing EAM organizations

All Other EAM Organizations

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Best-Run Customer Contact Center Management : Analysis Framework

Metric Average
Interaction Center Cost per Interaction ($) Interaction Center Average Queue Time (Sec.) Interaction Center Call Handle Time (Sec.) Interaction Center Post Call Work Time (Sec.) Abandonment Rate (%) 9.38 26 238 90 3.4%

Overall Q1
2.74 12 119 16 1.2%

Utilities Average
6 23 240 105 3.7%

Q1
3 12 145 30 0.9%

Practices that Differentiate the Top Performers

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Best-Run IT: Analysis Framework

Overall Type Metric Average

Support equivalent FTE per 100 Active Users 4.5 3.1 60.1 4

Utilities Q1
0.9 0.4 2.8 1

Average
3.5 1.8 43 2.1

Q1
1.9 0.7 8 1

Efficiency
Support quivalent FTE per 100 Named Users Number of critical interfaces

Effectiveness
Number of production instances

Practices that Differentiate the Top Performers

Best Practice Listing
1

Gap
2

The COE/Support organization is as centralized as possible within the constraints of the business model

The level of input form the business into the design and implementation of the COE/Support Organization is high

We have regular, formal reviews of the COE/Support Organization design and services

0.8

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Sample Participant Testimonials

Since participating in the Benchmarking and Best Practices program we can compare apples to apples. We know what each business process costs and we can go after technical improvements to reduce the costs. Mike Stoko, Assistant Director, SAP Global Operations and Value Capture, DuPont

We dont want to just be better than our competition. We want to be the best forest product company in the world and a global leader among all industries. With the findings of the Benchmarking study, ASUG and SAP helped us identify opportunities that enable that vision. Chris Van Liew, Director, IT Enterprise Systems SAP Support, Weyerhaeuser

Very valuable information it is good to see where we stand with respect to other Best in Class companies, and to learn about potential areas of improvement Senior Manager, SAP Center of Excellence, Canada Post

Great information, very well presented, and very useful explanations we will participate again next year SAP HR Support Supervisor, Marathon Oil

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Agenda

1. 2. 3. 4. 5. 6. 7.

Benchmarking Program Overview Corporate Services Enterprise Asset Management Customer Contact Center Management Best Run IT Participant Testimonials Appendix: Links to Surveys

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Links to Surveys (1)

Area Corporate Services

Survey HCM Comprehensive HCM Talent Management Finance Comprehensive Finance Financial Compliance Enterprise Health Check

Demo URL https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=2AGQX2&lg=english&rk=973912 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=DP7WSQ&lg=english&rk=791296 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=U69DGN&lg=english&rk=215418 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=FSBEHS&lg=english&rk=810548 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=GB37M2&lg=english&rk=266747 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=Q7NFJH&lg=english&rk=567899 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=JAC6QW&lg=english&rk=790520 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZUBWSK&lg=english&rk=536067 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=B4Z3GU&lg=english&rk=704783 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=R4CWC2&lg=english&rk=446653 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=3G8CAK&lg=english&rk=361218 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZRKEM8&lg=english&rk=920118 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=MAT52Z&lg=english&rk=333120 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=WDPMCX&lg=english&rk=451449 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=SQPPX4&lg=english&rk=444498 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=ZSNNN9&lg=english&rk=536709 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=A5BRHN&lg=english&rk=328516

Supply Chain

SRM/Procurement Comprehensive SRM/Procurement Supply Chain Planning Comprehensive Supply Chain Planning Transportation Mgt. Warehouse Management Manufacturing Compreh. Manufacturing NPDI Retail Merchandising

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Links to Surveys (2)

Area Customer Life Cycle

Survey Order to Cash Contract to Cash Customer Contact Centers Sales Effectiveness Trade Promotions Management Food Services Channel Management

Demo URL https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=K5DW3E&lg=english&rk=705234 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=9Z76SB&lg=english&rk=222560 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7VXYFY&lg=english&rk=314685 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=WUB8EM&lg=english&rk=490272 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=H9SR6B&lg=turkish&rk=324580 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=6Y84UQ&lg=turkish&rk=759333 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7BYDYS&lg=turkish&rk=430754 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=EE5Y3H&lg=english&rk=429224 https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=FD32FA&lg=english&rk=434471

Best Run IT

Business Intelligence TCO

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Other Important Links

1. ASUG registration page (all ASUG surveys): https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=N4J5ND&SRP1Q5=SAPPHIRE2008 2. Comprehensive registration page (all ASUG surveys + TPM, CHM and Food Services + Best Practices surveys): https://www.benchmarking.sap.com/cgi-bin/qwebcorporate.dll?idx=7UUCAD&SRP1Q5=SAPPHIRE2008 3. Access to Portuguese and Spanish registration pages: http://benchmarking.sap.com/Register/ 4. Benchmarking Veki Access to Sample Reports: https://wiki.wdf.sap.corp/display/VEISGWiki/Benchmarking+Toolkit

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Thank you!

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