How one of the uk s largest sap implementations saved money and improved performance
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How one of the UK’s largest SAP implementations saved money and improved performance. Lee Harris, Programme Manager . Outline of Presentation. Background Programme Overview Functionality Implemented Benefits Achieved. Royal Mail. Facts & Figures Turnover £8,408m, 224k employees

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How one of the uk s largest sap implementations saved money and improved performance l.jpg

How one of the UK’s largest SAP implementations saved money and improved performance

Lee Harris,

Programme Manager


Outline of presentation l.jpg
Outline of Presentation money and improved performance

  • Background

  • Programme Overview

  • Functionality Implemented

  • Benefits Achieved


Royal mail l.jpg
Royal Mail money and improved performance

  • Facts & Figures

  • Turnover £8,408m, 224k employees

  • Delivers letters and parcels to 27m UK addresses, Operates 17,500 retail outlets

  • 1 Shareholder – UK Government

  • Regulated Industry (PostComm) but still required to provide Universal Service Obligation.


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Why are we doing this? money and improved performance


The issues l.jpg
The Issues money and improved performance

  • De-centralised Businesses lack of corporate focus


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The Issues money and improved performance

  • Multiple Systems and processes

  • 10 significant legacy financial systems (inc. JBA, Walker Financials, Oracle and SAP).

  • Numerous variations on common processes mainly paper driven or local PC solutions with no integration to financials.

  • Aspiration to become an e-business difficult to support with current landscape.


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The Issues money and improved performance

  • Financial Backdrop

  • Underlying profitability was deteriorating.

  • Availability and consistency of financial performance information.

  • Planning was an annual event with 1 year horizon, which took 6 months.

  • On-set of regulation would furnish additional information demands.


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The Solution money and improved performance

  • Single SAP ERP for Royal Mail

  • 1 common Chart of accounts across all business operations

  • Common finance processes, e-enabled where ever possible

  • Cycle time improvements for results production from one-set of numbers.

  • “Getting a grip of the numbers”


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Programme Overview money and improved performance

  • Enterprise System Programme (ESP)

  • Programme initiated in early 2000, with SAP as strategic technology choice.

  • ITT led to selection of implementation partner – Deloitte Consulting.

  • Programme created with a mix of Internal process experts, Royal Mail IT staff and supplemented with External Consultants as required.


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Programme Overview money and improved performance

  • Programme Scope

  • 18 Individual Business Units

  • Over 7000 users (inc 4,000 EBP users).

  • 8,500 Profit/Cost Centres.

  • 40,000 vendors & 250,000 business customers

  • 1.5m invoices per annum.


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Programme Overview money and improved performance

  • Early Major Decisions

  • Single CO area.

  • Roll-out strategy (Functionality, Business Unit or by legacy system).

  • Business Unit ownership – Implementation Managers.

  • Technology Choices (Workplace, EBP).

  • Establish a specific governance group to chase benefit achievement.


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Programme Overview money and improved performance

IMPLEMENTATION TIMELINE

11/00 – 07/01

08/01 –11/01

12/01 – 03/02

04/00 - 11/00

Blueprint

Phase 1

Phase 2

Phase 3

  • EBP Pilot

  • R/3

  • 5 BU’s

  • FI/CO, EBP, AM, PM & MM

  • R/3

  • 8 BU’s

  • RE - Prototype

  • R/3

  • 6 BU’s

  • RE, PS

  • R/3

  • Blueprint


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Functionality Overview money and improved performance


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Inter-Business money and improved performance

FI

Financial

Accounting

Management

Reporting

CO

Functionality Overview

R/3 SCOPE : Version 4.6c

SD

FI-CA

Revenue

Management

EBP

MM

Procurement

Cash

Management

Inventory

Management

Treasury

IM

Asset

Management

AM

Plant

Maintenance

PM

Projects

PS

Real Estate

RE


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Functionality Overview money and improved performance

  • Key Functionality:

  • EBP – new functionality, incomplete content, piloted the technology first (100 days) – before productionising.

  • RE – Real Estate no previous UK versions, prototyped before developed (prototyping didn’t expose all the integration issues encountered later).


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Functionality Overview money and improved performance

  • Gaps in Solution

  • Demands from Regulator starting to materialise, which pose challenges for R/3 to handle.

    • Costing

    • Planning

  • Performance Management loop not closed by ERP alone.


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Functionality Review money and improved performance

  • Programme Response

  • Initiated additional project to deliver:

    • Business Warehouse Reporting Flexibility (BW2.1c)

    • Strategic Enterprise Management (SEM 3.0)

  • Also replaced AB Costing solution with Oros (SAS), including unique “bridge” to BW for distributed reporting.


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OROS money and improved performance

Revenue and

Cost Model

Bridge

SEM-BPS

Business

Planning and

Simulation

SDPRI

Reporting

SAP BW

HUB

Payroll

Ledger

SEM-BCS

Business

Consolidation

BW/SEM Scope

R/3

DataSources


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Programme Overview money and improved performance

IMPLEMENTATION TIMELINE

04/00 - 11/00

11/00 – 07/01

08/01 –11/01

12/01 – 03/02

03/02 – 10/02

Blueprint

Phase 3 (a)

Phase 1

Phase 2

Phase 3

  • R/3

  • 5 BU’s

  • FI/CO, EBP, AM, PM & MM

R/3, BW & SEM

  • R/3

  • Blueprint

  • R/3

  • 8 Bu’s

  • RE - Prototype

  • R/3 & BW

  • 6 BU’s

  • RE, PS & BW Functionality

  • BCS / BPS Functionality

  • EBP Pilot



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Programme Benefits money and improved performance

  • Targeted Benefits - Financial

  • Replacement of legacy applications.

  • Process Efficiencies – Reduction in Headcount.

  • Improved Control – Controlling demand (e.g.utilities / cleaning etc)

  • Supplier price reductions (conformance and supplier efficiencies)

  • Inventory reduction (JIT & automatic re-order levels)


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Programme Benefits money and improved performance

  • Targeted Benefits – Non Financial

  • Performance reporting, Product/Customer profitability, regulatory and statutory accounts are all produced from a common source.

  • Flash results available within 2 days of period close.

  • Actual product profitability reported on day 15 each month (previously quarterly).

  • Business Plans consolidated in a day (previously 2 weeks).


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Investment Costs & Benefits money and improved performance

Total £103m

Sunk £86m

Rec. Benefit £37m


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Programme Benefits money and improved performance

  • Measures of Success

  • Financial Benefit achievement

  • Stakeholder Perception of Programme

  • End user Perception

  • Non Financial Results.


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Programme Benefits money and improved performance

  • Enablers of Success

  • Keep it lean and mean – provides pace!

  • Business Ownership – Solutions Team, Implementation Managers, ASAP methodology.

  • Focused Board securing benefits (inc. Implementation partners “skin in the game”).

  • LEADERSHIP – within the Programme and the Business..


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Programme Benefits money and improved performance

  • Still to Finish!

  • Revenue management (SD/FI-CA).

  • Sustaining the gains!


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Thank You money and improved performance


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