Best Practices for Achieving

Higher
g Return on Investment (ROI)
( )
for Your SAP ERP HCM Implementation
 In This Session We’ll Learn …
• How to present a Business Case for SAP HCM
• How yyour SAP HR investment can make a difference
• How your organization can prepare to implement HCM
• Where you can look to measure sustainable ROI after
go-live

1
 What We’ll Cover …
• Defining the Purpose of Your SAP HCM Initiative
• The Business Case for Implementing
p g SAP HCM
• The SAP HCM ROI Value Proposition: Making Human
Assets the Competitive Advantage
• ROI Challenges and Risk Mitigation
• Wrap-up

2
 What Is ROI, Anyway?
y y
Return on Investment (ROI) is usually thought of as the
ratio of money gained or lost on an investment relative to
the amount
amo nt of money
mone invested,
in ested calculated
calc lated as
as:
(Gain for Investment – Cost of Investment)
ROI =
Cost of Investment

Real ROI,, however,, involves

much more than can be
captured in this simple
calculus

3
 Weighing the Costs: Financial and Non-Financial
Benefits
• Decision makers — both business process owners and
IT p
professionals — naturallyy tend to look p
primarily
y at the
financial costs and benefits when considering the
employment of a new system
• This means that they may be overlooking those benefits that do not
translate into immediate or obvious financial benefits
• But today’s decision makers must also consider these apparently
“non-financial” benefits of IT investments when evaluating their potential
ROI
• In fact, these benefits may provide just the added-value the company
needs to thrive in an increasingly competitive environment

4
Giving
g Hard and Soft Benefits Their Actual Weight
g
• Grasping the real ROI that comes from implementing
SAP HCM means recognizing and weighing the
respective hard (financial) and soft (non-financial)
benefits
– Hard (financial) benefits are those which are immediately
quantifiable in financial terms
– Soft (non-financial) benefits, while no less tangible than financial
benefits are qualitative in nature and,
benefits, and so,
so more difficult to
measure
 Financial Gains and Benefits
• Financial benefits include positive impacts on the
organization’s budget and finances, such as:
– Reduction in cost due to elimination of payroll outsourcing
providers
– Fewer development
p and test staff needed for application
pp
customization and integration
– Lower annual maintenance and support fees for application
software
– Lower administration and support costs for applications and
databases
– Reduction or elimination of support fees for mission-critical
mission critical
consulting and professional services
6
 Financial Calculations
• Payback period: The time it will take for the benefits to
pay back the cost of the project
• Net Present Value (NPV): The value of future benefits
restated in terms of today’s monetary value
• Internal
I t l Rate
R t off Return
R t (IRR):
(IRR) Those
Th same benefits
b fit
restated as an interest rate, indicating how efficient the
investment in the project is

7
 Three Kinds of Soft Benefits: A Balancing
g Act
• Three basic categories of
soft (non-financial) Strategic
Benefits
benefits play a Operational
Technical
vital role in
Benefits Benefits
the true
realization
of ROI
 Technical Benefits
• Integration with all the other capabilities of SAP Business
Suite
• One entry point for employees and managers to access
key information and execute business processes
• Data
D t accuracy
• Less system downtime (compared to legacy systems)
• Integrated Portal
• SAP HCM is a state of the art HR system
 Strategic
g Benefits
• Increased SOX compliance thanks to higher data
consistency and transparency
• Improved employee morale
• Lower turnover
• Attrition and retention of best human assets in the
marketplace
• Most competitive compensation packages compared to
competitors
 Operational Benefits
• Streamlined personnel-administration processes for new
hires, promotions, leaves of absence, and terminations
• Reduced effort for Time and Expense entry
• Check printing efficiencies
• Increased payment consistency
• Better access to information
• Integrated workflows
 What We’ll Cover …
• Defining the Purpose of Your SAP HCM Initiative
• The Business Case for Implementing
p g SAP HCM
• The SAP HCM ROI Value Proposition: Making Human
Assets the Competitive Advantage
• ROI Challenges and Risk Mitigation
• Wrap-up
 Laying
y g a Foundation for SAP HCM ROI
• Form a clear vision of what you want to accomplish
– What are your pain areas?
– What are your project goals?
– Take 6-18 months to implement
– Deliver payback within 12-24 months after the project start
• Deployments
p y and user adoption
p take time to accomplish
p
• Business change needs to occur around the technology
platform
• Analyze the impact of the implementation
– What soft benefits were gained?
– How did the project costs break down?
– Use questionnaires for critical HR business processes — both before and
after HCM implementation
Identify the Major Pain Points That Are Costly and
I ffi i t
Inefficient
• IT pain points
– Outdated HR system architecture
– Heavily customized system requiring upgrade
– Limited ability to add functionality
• Business pain points
– The need for business innovation while reducing IT costs
– The need to improve workforce productivity
– The need to ensure compliance controls and proper governance
– The need for greater visibility, predictability, and control

14
 What Are the Pain Points Specific to HR?
• Do we manually gather data from different business
areas and use Microsoft Office products for reporting?
• Are we able to perform global headcount reporting?
• Do we know how many positions and open vacancies
we have?
h ?
• Do we know what internal talent we have?
• Are we in compliance with OSHA for Training?
• Do we have a common employee review process and
the tools to support it?

15
 What Are the Pain Points Specific to HR? (cont.)
( )
• How much time do we spend each year processing open
enrollment?
• Is there a way to facilitate expense processing?
• Do we know if we pay our associates competitively?

16
 Critical Tasks for Preparing
g Your Business Case
• Analyze and prioritize areas that can be improved via SAP
HCM
– Manual Processes
– Governance and Compliance
– Analytics
• Review your corporate objectives and how SAP HCM can
help align the HR Department with that overall strategy
• Study HR best practices and case studies
• Align your global business processes
• Define the baseline scope for the project
– Countries
– Modules
– Portal
P t l functions
f ti

17
 Cost Reduction Analysis:
y An Example
Process Before SAP HCM Description Process with SAP HCM
Headcount Reporting Manual Spreadsheet Reconciliations Global Headcount report

x hours per month Time saved per month???

Manual Spreadsheet and Paper-based

Time Entry for Factory Personnel Approval CATS via Portal with Approval WF

x minutes per week Time saved per week?

Employee Productivity increased by x%?

New Hire Processing Several Systems PA New Hire Event with WF Automation

x hours per week Time saved per week?

Salary Budgeting and Increases Excel Spreadsheets Compensation Planning

x hours per year Time saved per year?

Cash Flow improved by $$$?

Governance and Compliance Paper Forms, Access DB Various SAP HCM functions

x hours per month Time saved per month?

Compliance improved by x%?

18
 Business-Case Outcome
• Presentation to upper management of all the business
benefits that justify the time, resource, and financial
commitment necessary for implementing SAP HCM
• A good business case for SAP HCM should be:
– A joint effort by HR and IT
– A demonstration of the value that a state of the art HCM system
brings to the organization
– The
Th foundation
f d ti ffor an overallll HR
HR-transformation
t f ti strategy
t t

19
 What We’ll Cover …
• Defining the Purpose of Your SAP HCM Initiative
• The Business Case for Implementing
p g SAP HCM
• The SAP HCM ROI Value Proposition: Making Human
Assets the Competitive Advantage
• ROI Challenges and Risk Mitigation
• Wrap-up

20
 HCM Makes HR Your Business Partner, with the
Focus On …
• Attracting and acquiring talent
• Educating and developing talent
• Identifying and growing future leaders
• Ali i and
Aligning d motivating
ti ti ttalent
l t
• Paying for performance

21
 Foundations of SAP HCM
• Core components are
essential pieces of the SELF-
SERVICE
puzzle COMPONENTS

• Encompass day-to-day HR EMPLOYEE

LIFECYCLE MANAGEMENT
transactions and functions Performance Management
Recruitment Training and Events/LSO

• Essential that key Compensation Management

components CORPORATE SERVICES

Travel Management
are scalable and business Environment, Health, and Safety Governance

requirements
i t are globally
l b ll I
Incentive
ti and d Commission
C i i Management
M t

defined EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management

22
Employee
y Transaction Management
g
SELF-
SERVICE
COMPONENTS

EMPLOYEE
LIFECYCLE MANAGEMENT
Performance Management
Recruitment Training and Events/LSO
C
Compensation
ti M
Managementt

CORPORATE SERVICES
Travel Management
Environment, Health, and Safety Governance
Incentive and Commission Management

EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management
 Employee
y Transaction Management
g ((cont.))
• Employee Transaction Management lowers the costs of
compliance and employee administration
– Employee administration
• Supports all basic Employee
Lifecycle
processes related to
personnel management
p g
– Employees and
management always
have instant access to Time and Payroll
Capturing
up-to-date and complete
information E l
Employee
– Organizational management Development

• Supports key processes

g g the
for managing
organizational structure
 Employee
y Transaction Management
g ((cont.))
• Benefits management
– Supports diverse plan definitions and automatically tailors benefit
offers to individual employees
• Time and attendance management
– Provides convenient tracking
tracking, monitoring
monitoring, record keeping
keeping, and
evaluation of time data
• Payroll
– H
Handles
dl complex l payrollll processes and
d supports
t llegall
regulations for more than 50 countries worldwide

25
 Corporate Services
SELF-
SERVICE
COMPONENTS

EMPLOYEE
LIFECYCLE MANAGEMENT
Performance Management
Recruitment Training and Events/LSO
C
Compensation
ti M
Managementt

CORPORATE SERVICES
Travel Management
Environment, Health, and Safety Governance
Incentive and Commission Management

EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management
 Corporate Services (cont.)
( )
• Travel and Expense Management
– Streamlines the booking of travel, the processing of expense
reports, and settlement process
– Ability to implement travel policies and control travel budgets
globally, ensuring compliance
• Incentive and Commission Management
– Implement variable pay schemes
– Ability to align incentives and commissions with business
objectives

27
 Corporate Services (cont.)
( )
• Environment, Health, and Safety
– Ability to manage risk and comply with government regulations
– Solution integrates a variety of environment, health, and safety
functions
• Governance
– Unifies corporate strategy, control initiatives, opportunity
discovery, and loss mitigation across the enterprise
– Allows processes and strategies to be evaluated within the
company and extended to partners, suppliers, and customers

28
Employee
y Lifecycle
y Management
g
SELF-
SERVICE
COMPONENTS

EMPLOYEE
LIFECYCLE MANAGEMENT
Performance Management
Recruitment Training and Events/LSO
C
Compensation
ti M
Managementt

CORPORATE SERVICES
Travel Management
Environment, Health, and Safety Governance
Incentive and Commission Management

EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management
 Employee
y Lifecycle
y Management
g
• Recruiting and talent management Solution
– Attrition of the most qualified human assets in the marketplace
• Attracting and acquiring talent
• Enterprise learning management
– The Learning Solution enables the effective administration of
business and learning processes and supports both e-learning and
classroom training
• Educating and developing talent
• Performance management
– Alignment of workforce with organizational objectives
– Management-by-objective documents can be linked directly to
performance reviews, appraisals, and compensation administration
• Identifying and growing future leaders
• Aligning and motivating talent
 Employee
y Lifecycle
y Management
g ((cont.))
• Compensation management
– Allows the implementation of innovative reward strategies, such
as performance- and competency-based pay, variable pay plans,
and long-term incentives reward programs
• Retention of talented employees
p y
• Paying for performance

31
 Self-Service Components
SELF-
SERVICE
COMPONENTS

EMPLOYEE
LIFECYCLE MANAGEMENT
Performance Management
Recruitment Training and Events/LSO
C
Compensation
ti M
Managementt

CORPORATE SERVICES
Travel Management
Environment, Health, and Safety Governance
Incentive and Commission Management

EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management
 Self-Service
• Manager Self-Service (MSS)
– Managers obtain the information and applications they need to
perform budget and staffing tasks quickly and efficiently
• Employee Self-Service (ESS)
– Employees are provided with easy access to the information and
applications related to their employment
• The application enables employees to create,
view,
i and
d modify
dif personall d
data
t and
d manage
routine HR tasks —anytime, anywhere

33
 Real-Time People Analytics
y
• SAP delivers unmatched HCM reporting
– Standard reports
– Queries
• SAP Query
• Ad H
Hoc Q
Query
– Business Warehouse/Business Intelligence
• Over 200 p
predefined HCM q queries
• Over 300 HCM key figures
• 100 templates for standard calculation
• 29 HCM-specific information cubes
34
 HCM Is Integrated
g with Other Modules
HCM
Payroll Results Accounting
Employee Master Data
Organizational Management
Payroll Controlling
Master Data

HR Master
Data

Time and Time and

Attendance Attendance
Logistics CATS Sales
SAP HCM Integration
g

Source: SAP
 What We’ll Cover …
• Defining the Purpose of Your SAP HCM Initiative
• The Business Case for Implementing
p g SAP HCM
• The SAP HCM ROI Value Proposition: Making Human
Assets the Competitive Advantage
• ROI Challenges and Risk Mitigation
• Wrap-up

37
 ROI Challenge
g #1: Implementation Costs
• Scope Control
– Focus on “biggest bang for your bucks”
– Adopt a phased rollout approach
• Customization Control
– Adopt common processes
– Design a global template
– Keep ABAP specifications to a minimum
• Software, servers, and licenses
– Do not buy licenses for functionality that as a business you
cannot roll out in the foreseeable future

38
 ROI Challenge
g #1: Implementation Costs ((cont.))
• Expertise of your Integrator
– Within HCM and within your industry
– Interview the consultants
– Review the proposed project methodology and approach
– Ask for references
• Project Management Controls
– Project plan with milestones Client
Issue
– Weekly PMO meetings
– Weekly status reports
– 24-hour decision-making gppolicy
y

39
 ROI Challenge
g #2: Poor User Acceptance
• The Role of Change Management
– Everyone affected by the implementation should recognize how
SAP HCM will improve their operations
• More gain than pain
• Training
– Train the Project Team prior to project start
– Insist on ongoing knowledge transfer so that you can handle the
system
t post-go-live
t li
– Have your super users train the end users

40
 ROI Challenge #3: Cost of Ownership and
M i t
Maintenance
• Cost of Ownership can be reduced by:
– Leveraging,
L i b
building,
ildi and
d kkeeping
i your iin-house
h ttalent
l t
– Establishing centers of excellence to share knowledge
– Adopting standardization
– Simplifying your system landscape
– Implementing rigorous change controls

41
 Do Your Homework Prior to Project
j Start!
• Identify most suitable Project Team members
– Analytical skills
– Technical skills
– Project management skills
– Go getter attitude
• Training
– A trained Project Team can be more productive from day one!
– Make a sandbox environment available
• Infrastructure
– Plan for your hardware requirements and sizing!

42
 Preparing
g Your Implementation Strategy
gy
• Design an SAP HCM implementation strategy, tailoring its
building blocks to your organization’s unique needs
• Use your business case as a guide to design its scope
scope,
distinguishing between …
– Critical functionality
– Nice
Nice-to-have
to have functionality
• Carry out a risk assessment to identify your readiness for SAP
HCM
– Do we have the right g resources?
– Are we motivated enough for this effort?
– Do we have executive sponsorship and endorsement?
– Is this project consistent with our organization’s goals?
– Will this initiative improve our competitiveness?

43
 Implementing
g Best Practices During
g the Project
j
• Insist on ongoing knowledge transfer
• Stayy within scope
p
• Use KPIs
• Design your support organization

44
 SAP HCM Return on Investment (ROI)
( )
• Where to look for ROI after go-live:
– A shift within HR from highly administrative tasks to more
strategic ones
– Improved decision making through the delivery of accurate, real-
time employee metrics
– Lower costs and risks of noncompliance issues
– A reduction in turnover due to fair, accurate, and known
performance management
p g p
practices
– The elimination of non-performers
– Self-Service components transforming paper-based manual
processes into highly automated processes

45
 Self-Service Components
SELF-
SERVICE
COMPONENTS

EMPLOYEE
LIFECYCLE MANAGEMENT
Performance Management
Recruitment Training and Events/LSO
C
Compensation
ti M
Managementt

CORPORATE SERVICES
Travel Management
Environment, Health, and Safety Governance
Incentive and Commission Management

EMPLOYEE TRANSACTION MANANGEMENT

CORE COMPONENTS
Global Payroll Benefits HR Administration — Master Data
Time and Attendance Organizational Management
 What We’ll Cover …
• Defining the Purpose of Your SAP HCM Initiative
• The Business Case for Implementing
p g SAP HCM
• The SAP HCM ROI Value Proposition: Making Human
Assets the Competitive Advantage
• ROI Challenges and Risk Mitigation
• Wrap-up

47
 Resources
• SAP White Paper, mySAP ERP Human Capital Management
– Human Capital Management — A Measurement Breakthrough on
the Horizon
• www.sap.com/solutions/business-suite/erp/pdf/BWP
_WP_Human_Capital_Management.PDF
• Top 10 Reasons to choose SAP ERP Human Capital
Management
– http://www.sap.com/community/pub/showdetail.epx?itemID=8727
• Requires free registration
• SAP Case
C St
Study
d Where
– mySAP ERP HCM: ROI Analysis — SAB Limited to
• www.sap.com/solutions/business- FIND it
suite/erp/pdf/CCS SAB Limited pdf
suite/erp/pdf/CCS_SAB_Limited.pdf

48
 7 Keyy Points to Take Home
• Define the purpose of your SAP HCM initiative
• Estimate the total costs and benefits to be gained — both
h d (fi
hard (financial)
i l) and
d soft
ft ((non-financial)
fi i l)
• Evaluate the time savings due to newly engineered processes
and automation tools
• Study SAP HCM best practices and case studies
• Adopt common processes and avoid customizing SAP HCM
to accommodate company practices
• Choose your consulting firm carefully — always asking for
references
• Monitor ROI post-go-live
p g
 Contact Us
Kristin Schuster
Business Development Manager
(704) 556-2288
info@symphony-consulting.com
www.symphony consulting.com
www.symphony-consulting.com

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