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Good Benchmarks Are Hard to Find — Or Are They?

by Mike Perroni | SAPinsider

January 1, 2007

SAP customers are constantly looking for benchmarks; they want to know how they’re performing and how they measure up to their competition. ASUG and SAP have responded to this demand by creating the ASUG/SAP Benchmarking and Best Practices program, which provides participating companies with customized, comprehensive reports and KPIs to gauge their success and growth. Best of all, participation is free – it’s one of the many member benefits companies get when they join ASUG.
 

Mike Perroni
Immediate Past President
ASUG

SAP customers are continually on the lookout for benchmarking information — they want to know how they're performing, how they measure up to their competitors, and how to identify and use best practices to add more value to the organization. In response to this demand, Americas' SAP Users' Group (ASUG) and SAP have joined forces to create the ASUG/SAP Benchmarking and Best Practices program. This program provides participating companies with a means to understand the value of their business processes and technology investments, as well as an opportunity to share and adopt best practices.

To date, the ASUG/SAP benchmarking program has launched nine initiatives, with more than 300 companies participating. In this interview, Mike Perroni, ASUG's Immediate Past President and Board owner of the benchmarking program, discusses customers' passion for benchmarking and why companies are finding value in the ASUG/SAP offering.

Q: What value do ASUG members receive by participating in the Benchmarking and Best Practices program?

A: After completing an in-depth survey, ASUG members receive a free, customized, comprehensive report that compares the efficiency and effectiveness of their processes and systems with best-in-class key performance indicators (KPIs). They also receive a Point of View white paper that summarizes all of the results and puts them in a strategic context. Companies that want even more in-depth feedback can schedule a one-on-one session with an SAP benchmarking consultant to review their findings. My company has completed several benchmarking surveys, and we've gained insight into how to improve our business processes each time. Best of all, survey participation is free — it's one of the many member benefits companies get when they join ASUG.

In response to ASUG members' demand for benchmarking information, the Benchmarking and Best Practices program was formulated by the ASUG CIO/CTO Executive Exchange. This Executive Exchange is a forum where C-level ASUG members come together to influence SAP technology solutions and develop processes by which customers can meaningfully document
their ROI.

Q: Do these surveys have relevance to the business beyond SAP technology?

A: The benchmarks study the extensiveness of each participant's SAP deployment. But since a lot of the data is based on KPIs, the study also focuses on the overall business. A great example of this can be seen in Human Capital Management (HCM) benchmarks. The KPIs tap into SAP tools and technology, but more importantly, they focus on trends around how companies are staffing their HR departments and the costs associated with providing employee-facing services. The results of the most recent HCM survey, for instance, indicate that there's a much lower cost per employee for companies that take a shared services approach to HR structures versus those with decentralized structures (see Figure 1). Technology is certainly part of the evaluation, but the surveys look at the bigger picture.

Figure 1
Human Capital Management benchmark results reveal strategic insights about how companies are staffing their HR departments and the associated costs and savings

Q: Can you share any specific examples of insights companies have gained through this program?

A: Organizations that participate in any of the program areas (see sidebar on page 56) have an opportunity to gain a significant advantage over their competitors. One of the best examples of this comes from a company that participated in the Total Cost of Ownership survey. They learned that the best-performing companies have reduced the number of monitoring and system management tools they use. When this company realized they weren't doing well by comparison, they applied resources to better leverage SAP Solution Manager, among other efforts. As a result, they were able to consolidate the number of systems they used and cut millions of dollars in system-monitoring costs.

ASUG's New Breed of Benchmarks

SAP customers can now participate in nine benchmark studies:

  1. Customer Contact Center

  2. Finance

  3. Governance, Risk, and Compliance (GRC)

  4. Human Capital Management (HCM)

  5. Manufacturing

  6. New Product Development and Introduction (NPDI)

  7. Supplier Relationship Management (SRM) and Procurement

  8. Supply Chain Planning

  9. Total Cost of Ownership (TCO)

Q: What's the average profile of a participating company?

A: That's a tough one, because participating companies come from all backgrounds. We have participating companies from both the public and private sectors, with revenues ranging from less than $1 billion to over $10 billion. Benchmarking also crosses all industry divisions, from technology, to pharmaceuticals, to telecommunications, to retail. In terms of geographic location, approximately two-thirds of program participants are North American companies, but as we expand the initiative globally, we're seeing more participation from European, Asian, and Latin American organizations. It will be interesting to see what the statistics look like a year from now as global interest in this program continues to grow.

Q: When can companies participate in these benchmarking initiatives?

A: ASUG members and SAP customers can access all initiatives on an ongoing basis through the ASUG or SAP Web sites (www.asug.com and www.sap.com, respectively). ASUG and SAP jointly launch new surveys year-round.

Q: In addition to widening the scope of the program to allow members to benchmark other areas of their business, how else are ASUG and SAP keeping the program fresh?

A: One aspect we're really excited about is year-over-year benchmarking. Our benchmarking program has been in place for about a year, and it's matured enough that we are now able to compare a company's progress from one year to the next. Companies can track their progress and see what quartile they fall into compared to the previous year. These companies are eligible to receive a current report and a variance report each year they participate in the benchmarking program. This benefit will only grow as the program expands. Several years from now, participating companies will have yearly reports that track their progress. If they drop in one quartile, they will have an opportunity to reference their past performance and take steps to get back on top.

In 2007, participants will have even more robust options to evaluate their businesses with enhanced, personalized, one-to-one analysis and practical solutions from ASUG and SAP.

My company has completed several benchmarking surveys, and we've gained insight into how to improve our business processes each time. Best of all, survey participation is free — it's one of the many member benefits companies get when they join ASUG.

Q: What advice would you give companies that say they don't have the time or resources available to put toward these comprehensive surveys?

A: Benchmarking is one of those investments for which the results are directly related to the amount of effort a company puts in. The comprehensive surveys will give companies the most complete picture of where they stand in relation to their peers.

What we're finding, though, is that some companies want to test the waters before diving into a larger benchmarking initiative. To address those concerns, we recently added abbreviated versions of each initiative. While these abbreviated versions will not provide comprehensive assessments of a company's KPIs, they will provide a starting point and an opportunity for a high-level scorecard on how a company stacks up against other organizations. However, if a company is looking for more specific feedback that they can use to build a business case or track performance improvement after an implementation, they should take advantage of the more complete surveys.

Q: What's the most important lesson that you'd like to see readers take away from benchmarking?

A: The ASUG/SAP Benchmarking and Best Practices program provides an inexpensive way for companies to do comparative analysis across their business. When they complete these surveys, we give them a way to measure the effectiveness of their financial management, the efficiency of their manufacturing processes, the success of their supply chain planning strategies, and the strength of their product development processes. Other firms typically charge upwards of $30,000 for this type of data — and it's a one-shot deal. As ASUG members, companies not only have access to the initial survey in each area, they also have the opportunity to participate in the year-over-year assessment, which adds huge ongoing value. I highly encourage all SAP customers to take advantage of the program.


Additional Resources

www.asug.com/benchmarking

www.sap.com/usa/solutions/asugbenchmarking/initiatives.epx

"Move Beyond Mundane Metrics to Benchmark Measures That Really Matter" with SAP's Chakib Bouhdary in the October-December 2006 issue of SAP Insider (www.SAPinsideronline.com)

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