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Tune Your Business Processes and Boost Your Bottom Line

by Dr. Samuel Jesgarz and Marcel Jung | SAPinsider

October 1, 2012

For a company to remain competitive, it is imperative that its business processes run efficiently, accurately, and dependably. But, how can companies keep track of all of their processes without enduring a time-consuming and tedious evaluation of every last detail? Read this article to see how SAP Enterprise Support’s business process improvement (BPI) methodology can help your company save time and money, increase customer satisfaction, and produce more accurate business reporting.
 

The health of your business processes plays a critical role in whether or not your company remains competitive. Stuck processes or backlogs can translate directly into lost revenue, while delays or inaccuracies in financial reporting can have adverse effects on auditing and the ability to detect fraud. So, how can you ensure that your processes support your organization by executing efficiently, accurately, and dependably — preferably without enduring a painstaking, resource-consuming evaluation of every last process detail?

You could, of course, start from scratch, but nobody wants to reinvent the wheel, and with the business process improvement (BPI) methodology from SAP Enterprise Support, you don’t have to. By identifying problem areas in the processes you already have, SAP Enterprise Support helps you gain:

  • Quick, easy wins, including global transparency across your processes
  • Time and cost savings
  • Increased customer satisfaction
  • Faster revenue streams
  • Better planning
  • More accurate business reporting

A Simple Methodology for Business Process Improvement

Imagine a system of water pipes equipped with screws at the various pipe intersections to adjust the flow of the water running through the system. In a business process scenario, end users act as the adjusting screws, influencing the flow of the process through the process framework. While influencing process flows is necessary to respond quickly to changing business requirements and stay on the leading edge of innovation, over time this can lead to increasingly complex processes that are at risk for inefficiencies, dead ends, and disruptions.

To minimize risks and ensure healthy processes, the BPI methodology helps business process operations teams optimize their organizations’ processes. This methodology is based on the concept of “neuralgic points,” which are process steps that exist regardless of the details of a particular process scenario. For example, while the details of the order-to-cash process may vary among different organizations, every order-to-cash process involves creating a sales order and an invoice. Thus, the business process steps “create sales order” and “create invoice” are neuralgic points.

Through its business process analysis service, the SAP Enterprise Support team identifies the relevant neuralgic points and suitable key performance indicators (KPIs) for your individual customer scenario. It also provides the tools and experience necessary to embed these KPIs into your processes, measure them, analyze the results, and identify areas for improvement.

Using neuralgic points for these measurements enables the team at SAP to apply the methodology to your processes remotely and seamlessly, without having to know every detail of the process. This means you get results in a very short time and with very little effort on your part.

The Measurements That Drive Business Process Improvement

To identify areas for improvement in your individual business processes, the BPI methodology focuses on measuring areas where your processes become stuck or do not run optimally, including:

  • Throughput, which measures the number of objects created per unit of time (for instance, the created sales order items per day).
  • Backlogs, which are generally related to overdue business documents. In the order-to-cash process, for example, this could be a sales order in which the requested delivery date has passed without delivery of the requested materials or services.
  • Dead ends, which occur when process steps are not executed as designed. For example, if the end user does not set the final delivery flag for a completed sales order, the order remains open in the system indefinitely, leaving the order-to-cash process at a standstill.
  • Loops, which take place when steps are processed repeatedly. For example, when a credit memo is created, if the invoice is corrected or reprocessed, it can cause such a loop.

Applying the BPI Methodology with the Business Process Analysis Service

The business process analysis service offered by SAP Enterprise Support is an assessment service that enables experts from SAP Enterprise Support to apply the BPI methodology to your processes to identify areas for improvement. Here’s how it works:

  1. Experts from SAP Enterprise Support log on remotely to your back-end SAP ERP system and scan the system to determine which business documents are in use.
  2. Based on this information, the team at SAP can determine which high-level business process scenarios are used in your SAP ERP system.
  3. For each scenario, a subset of predefined BPI KPIs is executed at the neuralgic points to analyze each process scenario specifically.1
  4. As an additional service, customers can choose to have the team at SAP analyze, evaluate, and rate the output of these key figures and present the findings in a management summary.

Let’s take a look at how measurements can be applied to process steps using an example process scenario. Then we’ll examine how the measurements are analyzed, and how the analysis can be presented in the optional management summary.

Measurement Points in the Order-to-Cash Process

Using measurements at the neuralgic points in the order-to-cash process, experts from SAP Enterprise Support can analyze each key step in the process for inefficiencies. These steps are:

  1. Create sales order. Once a customer places an order, the end user creates a sales order in the SAP system. For this step, measurements can be used to analyze sales orders with overdue deliveries.
  2. Create outbound delivery. Here, measurements can be used to determine if any deliveries are overdue.
  3. Post goods issue. At this point, measurements can be used to see if a goods issue has been posted for deliveries — that is, if goods have been shipped to customers, but corresponding invoices have not been created for some reason.
  4. Create/print billing document. Here, measurements can be used to check for invoices that have not been posted to accounting, which means that the corresponding accounting document was not created on time.
  5. Create accounting document. Measurements can be used at this step to look for overdue open items in accounting, which can occur when a bill is unpaid or when the corresponding payment could not be assigned to the open item from the invoice.

The BPI methodology uses internal benchmarking, which compares different units within the same company that are operating the same process, ensuring realistic, reliable, and cost-effective benchmarks.

Assessing a Process with the Business Process Analysis Service

Figure 1 shows the results for the “create sales order” measurement point in the order-to-cash process, which analyzed the number of overdue sales orders. Results are displayed according to organizational unit. When analyzing sales orders, for example, the results are displayed according to the different sales organizations in your company.

The “create sales order” analysis results for the example order-to-cash process
Figure 1 The “create sales order” analysis results for the example order-to-cash process

To identify improvement areas and company best-practice areas, the BPI methodology uses internal benchmarking, which compares different units within the same company that are operating the same process, ensuring realistic, reliable, and cost-effective benchmarks. External benchmarking, in contrast, uses processes from other customers for the comparison, which can be unreliable due to process differences and can require a significant investment to achieve meaningful results.

The results for the “create sales order” example, for instance, shows that:

  • There is a best-practice organizational unit (the DE20 sales organization) that has only a small backlog of orders with delayed delivery compared to other units.
  • A sales organization (HU10) has a significantly higher backlog than the company average — a potential candidate for improvement.

Using the results from the initial analysis, the team at SAP then rates the measured KPIs, using their experience gleaned from hundreds of service deliveries worldwide. Each KPI is rated individually, with a “red” rating (which indicates that a KPI significantly exceeds the average value), a “yellow” rating, or a “green” rating. Then, the expert rates 5-7 KPIs for each of the following categories:

  • Customer satisfaction
  • Revenue stream
  • Supply chain
  • Period-end closing
  • Interface management

Each value category is assigned points based on the KPI ratings. Finally, if the customer has opted to add a management summary onto their BPI engagement, the SAP team generates a summary highlighting the findings and identifying the areas with low, medium, and high potential for improvement (see Figure 2).

The “create sales order” analysis results for the example order-to-cash process
Figure 2 The “create sales order” analysis results for the example order-to-cash process

Taking Control with the Business Process Improvement Campaign

The BPI methodology helps you save time and money by enabling you to improve what you already have. By applying this methodology to your processes, SAP Enterprise Support helps you gain insight into the areas with the most improvement potential, without needing to know the particular details of your processes and using your own organizational units for benchmarking comparisons. This means fast, reliable results that you can put to use right away for tangible cost and time savings.

To help expand your process improvement potential and enable you to take full advantage of the potential benefits, SAP Enterprise Support has also initiated the BPI Campaign, which is included in your SAP Enterprise Support engagement. By participating in the BPI Campaign, in addition to the business process analysis service, you gain direct, on-demand access to BPI experts at SAP, who can also optionally guide you through the improvement steps or set up automated monitoring and alerting in your SAP Solution Manager implementation.

To start realizing the benefits of the BPI Campaign in your own business processes, visit http://service.sap.com/bpi. To learn more about the BPI Campaign, sign up for the SAP Enterprise Support Academy’s live meet-the-expert session on this topic at http://bit.ly/RUgvKv

Dr. Samuel Jesgarz (samuel.jesgarz@sap.com) joined SAP in 2004 and now serves as an Engineering Architect in the SAP Active Global Support organization. He is the owner of the Business Process Improvement Campaign.

Marcel Jung (marcel.jung@sap.com) joined SAP in 1998. As Head of SAP Enterprise Support Operations EMEA within the SAP Active Global Support organization, he is responsible for securing the service delivery, supporting the embedded support office, and establishing a back office.

1.A complete catalog of out-of-the-box key figures is available at http://service.sap.com/bpm. [back]

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