SAP NetWeaver Master Data Management

Developing an EnterpriseMaster Data Management Strategyto Unify and Manage Disparate DataDon Swenson, Platform Technology COEOctober 23, 2007

Agenda1. INFORMATION FOR COMPETITIVE ADVANTAGE1.1. Enterprise Information Management for Better Decision Making1.2. The SAP Business Process Platform Approach2. THE DATA PROBLEM2.1. The Cause of Inaccuracies2.2. The Affect on Operations and Profit3. DATA UNIFICATION WITH SAP NETWEAVER MASTER DATA MGMT3.1. SAP NetWeaver Master Data Management3.2. MDM Applied for Retail4. BEST PRACTICES AND GETTING STARTED4.1. Enterprise Data Management Strategy4.2. Phased Implementation and Incremental Value Approach© SAP 2007 / Page 10

No Consistent View of DataEvery department has different informationYOUR BUSINESS• Master datagenerated andtrapped in silosERPJane Peters199, 3 rd StreetPalo Alto, CAPart: B7521CallCenterJane Smith4418 N. Str.Chicago, IL60611Part: 2574© SAP 2007 / Page 11

Bad Master Data hinders process innovationsince every department has a different version of itYOUR VALUE CHAINERPJane Peters199, 3 rd StreetPalo Alto, CASRMPart: 8975VENDOR:ABC123LogisticsVENDOR:XYZ456• Master data isdata about yourcustomers,products,suppliers etc.• M & A’s areworsening theproblemPart: B7521CallCenterJane Smith4418 N. Str.Chicago, IL60611Part: 2574© SAP 2007 / Page 12

Master Data Management in RetailImpact across the enterpriseRetail Master Data Management Issues• Continuous stream of new and discontinued items• Prices and promotions change frequently• Lost sales and high logistic costs due to inconsistent data• Internal synchronization with heterogeneous landscape• Data consolidation for accurate reporting and decision making• Connectivity with Global Data Synchronization Network (GDSN)• Integration of newly acquired businesses or merger• Management of Private Label products with multiple vendors• With bad Master Data Management RFID is not possibleSavings Potentials for Retailers• Between 1 - 3% in supply chain cost (CGEY case study)• ATK concluded that retailer benefits ranged from $700K to $1M for every $1B in sales• Between 10 – 15% impact in bottom line (CGEY case study)• Over 5% of the revenue is annually written off in unmatched invoices (GMAUnsaleables Study).© SAP 2007 / Page 13

Master Data Management Value OpportunitiesMany processes are redundant, manual and error proneCorporate ManagementExamples:• Simplified corporate reporting• Enable global sourcing• Corporate transparency/sales synergy• Eliminate IT system redundancy• Opportunity for shared service creationAdministrative Data HandlingExamples:• Less catalogue maintenance• Eliminate need for cross-reference tables• Fewer invoice disputes• Fewer order defects• Improved fill rateCategory ManagementExamples:• Corporate sourcing price transparency• Improve visibility/stock-level planning• Reduce time spent on complaints• Enhanced category reporting• Reduce product introduction lead timeLogisticsExamples:• Error-free shipment receiving• Fewer return shipments• Fewer backorders• Less excess/safety stock• Optimized location dispatchSource: CGEY: Creating the Business Case forGlobal Data Synchronization in Your Company© SAP 2007 / Page 14

Why Customers are choosing SAP ?One solution for ALL master data in your industry specific processSAP NetWeaver Master Data ManagementOne master data solution for all business processesOPERATIONALVISIBILITYORDERACCURACYSUPPLIERMANAGEMENTCUSTOMERMARKETINGWhich employeeshould we assign to?Do I have theright product?Who is my bestvendor?Who is mycustomer?© SAP 2007 / Page 15

Prioritize High Value ProjectsValue Engineering StudyPotential One time Benefit$9.1$12.7Sales$1.3 - $1.9Increased revenue due toimproved deliveryOperations$6.4- $8.8MReduced inventory due tosingle view of the productReduced inventory carryingcostReduced damage and obsoletecostReduce Invoice ErrorReconciliationReduced cost in assetmanagementTransportation cost reductiondue to better segmentation$1.3$1.9$2.2$2.6$0.3$0.3$0.4$0.6$1.0$1.8$0.5$0.5$2.0$3.0Potential Annual Benefits$14.5MProcurement$6.8 - $9.9Reduced maverick spendand consolidation ofvendorsImproved DPO by bettermanagement of paymentterms attributesReduced spend by vendorconsolidation acrossCompanyImproved efficiency dueto reduction in systembreakdown$23.4M$2.8$3.2$2.6$3.7$1.4$3.0Information Technology$1.9 - $4.2Reduced master dataproject spendHuman Resource$0.2 - $0.2Reduced costs for ad-hocneeds, like a phone book$0.7$2.8$1.2$1.4$0.2$0.2Conservative EstimateLikely ScenarioOne-time benefitFinance$0.6 - $1.0Improved efficiency bystreamlining close processImproved reporting capabilityby streamlined master datarelationshipsNPI$5.4 - $8.3Improved revenue byreducing time to marketOngoing revenue uplift byreducing time to marketStrategic$1.0- $1.8M$4.3$6.4$0.3$0.5$0.3$0.5$1.1$1.9Reduced in capital$1.0expenditure by improveddecision making $1.8EfficiencyCost ReductionRevenueNote1:© SAP 2007 / Page 16This benefit calculation is based on publicly available information,SAP experience, and SAP as well as Industry benchmarks

Agenda1. INFORMATION FOR COMPETITIVE ADVANTAGE1.1. Enterprise Information Management for Better Decision Making1.2. The SAP Business Process Platform Approach2. THE DATA PROBLEM2.1. The Cause of Inaccuracies2.2. The Affect on Operations and Profit3. DATA UNIFICATION WITH SAP NETWEAVER MASTER DATA MGMT3.1. SAP NetWeaver Master Data Management3.2. MDM Applied for Retail4. BEST PRACTICES AND GETTING STARTED4.1. Enterprise Data Management Strategy4.2. Phased Implementation and Incremental Value Approach© SAP 2007 / Page 17

One PlatformEnterprise infrastructure, services and applicationsSAP Business SuiteStable core, industry-specificService enabledEvolutionary adoptionEnterprise ServicesProductized & governedCommon business semanticsCommunity drivenSAP NetWeaverRelevant & reliable InformationAdaptable processesHeterogeneous integration© SAP 2007 / Page 18

A Strategic Platform for Enterprise SOAHelps Customers Establish Their Business Process PlatformCompose xAppsCompose xAppsEnable All UsersEnable All Users• Texas Instruments: Reduced the time to partner• Carl Zeiss: Reduce time and cost to integrate new• General Electric: 400- 500 new launches, betterService Enabled AppsManage LifecycleManage LifecyclesManage InformationManage InformationClean Master Data DataIntegrate Processes© SAP 2007 / Page 19

Data Unification with SAP NetWeaverDelivers an integrated way of managing master dataManage Any Master Data• Compose cross applicationprocesses in SOA withconsistent master data• Infinitely configurableschema options• Support consolidation,harmonization, central mgmt• Pre-packaged IT andbusiness scenarios• 500+ customers© SAP 2007 / Page 20

Simplicity and Flexibility in the Corewith Master Data Management Business ContentMaterial / ProductMaster DataManagementCustomerSupplierBusinessPartnerUser Defined,i.e. CC, GLEmployee© SAP 2007 / Page 21

Versatility of SAP NetWeaver MDMConsolidate, harmonize and centrally manage master data© SAP 2007 / Page 22

Improved Business IntelligenceDeliver unique insights with an integrated platformBUSINESS INSIGHTMASTERDATATRANSACTIONALDATA =+• Understand your most profitableproducts, best customers andcheapest/reliable vendors• Gain insights by integratingtransactional data fromheterogeneous systems withmaster data for analysis© SAP 2007 / Page 23

MDM Application ArchitectureModel for Information Delivery and Business ValueImages andProductAttributeInformationsourced fromsuppliersloadedInto MDMManageattributessourcedfromsuppliersSuppliersManageHierarchyManageattributesMDMData MgmtMap HierarchiesImageintegrationManage country standardsSearching, comparing, MatchingDetailed searchProductscompareMulti-lingualUnits of measuresStandards conversionManualMatchingAutomaticmatchingProduct,Supplier &MatchInformationSales & MarginProductsStatisticsSupplierStatisticsNet Cost PriceAlignmentWhat’s newOvernightcomputationsAnalysisReportsComputationsAggregationsBrand statisticsSupplierContributionReporting Analysis capabilitiesSimplifiedSearchHierarchiesNavigationExcel ExportTop 200Commonality ofsuppliersSimulationComplexsearchDrill-downPrintReal-timecomputationsMDM 5.5BW© SAP 2007 / Page 24Product & Supplier Datafrom internal systems (OpCos)KPI Data from OpCos

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Supplier/Vendor Data IntegrationOne view of Vendor information anytime anywhereFleetIncorporated123 4 th StreetChicago, IL60610AnalysisDUNS # 45234FinancialRating A+++Fleet Inc123 4 th Street.Chicago, IL60611Feetincorporated2 Old HarborChicago, IL94304• Identify and categorize suppliers• Utilize external validation suchas D & B’s Duns Number• Leverage one view of suppliersto gain supplier visibility andnegotiate better procurementcontracts© SAP 2007 / Page 30

Match and Merge Duplicate RecordsRules based matching capabilities© SAP 2007 / Page 31

Map Vendor Data to SAP NetWeaver BILeverage pre-integration to simplify reporting© SAP 2007 / Page 32

Improved Analytics by Supplier/VendorMake better business decisionsBefore MDM:CompSmartand CompuMax weredifferentsuppliersAfter MDM:Notice theaggregatedsupplier,quantity, andpurchaseprice view© SAP 2007 / Page 33

Customer Data IntegrationOne view of customer information anytime anywhereJane PetersSmithAnalysis4418 North St.Chicago, IL60610Jane Smith4418 N. Str.Chicago, IL60611Jane Peters199, 3 rd StreetPalo Alto, CA94304• Extensive matchingframework• Provides web services tocustomer data access• SAP & Non-SAP integration© SAP 2007 / Page 34

Location Master ReferenceOne view of location information anytime anywhereAnalysisStoreAlignmentsServices andAttributesFulfillmentrelationships• Model location specific data• Manage store to DC relationships• Integrate with many downstreamapplications• Management and approval ofchanges• Simulate new reporting alignment© SAP 2007 / Page 35

Global Data SynchronizationLeverage master data consistency across the supply chain• Reduce supply chain costswith comprehensive solutionfor consumer productcompaniesData PoolSYNCHRONIZATIONData Pool• Certified to publish enrichedproduct data to 1Sync datapools• Unidirectional communicationwith R/3GlobalRegistry© SAP 2007 / Page 36

Interactive Forms: Reaching the Edge ofEnterprise© SAP 2007 / Page 37

SAP NetWeaver Master Data ManagementRetail Implementation Model1 Deliver Information forBetter Business Decisions2 Master Data ManagementFoundation* Consolidation* Harmonization* Synchronization3 Establish Data GovernanceDataGovernanceProcessPeople ProductivityDataManagerAnalyticsData StewardApprover13* Define Framework* Establish Processes2SAP NetWeaver MDM* Manage Exceptions* Enforce Data StandardsItemMasterRepositoryVendorMasterRepositoryLocationMasterRepositoryCustomerMasterRepository* Validations and Approvals4 Synchronize w/Applications* APO, IHC, SNC, CRM,5 Foundation for innovation* TPM, GDS, StoreExecution, PerformanceMonitoring, RFID4Legacy SAP OtherPlatformProcess Platform ComponentsProcess Components5© SAP 2007 / Page 38

Agenda1. INFORMATION FOR COMPETITIVE ADVANTAGE1.1. Enterprise Information Management for Better Decision Making1.2. The SAP Business Process Platform Approach2. THE DATA PROBLEM2.1. The Cause of Inaccuracies2.2. The Affect on Operations and Profit3. DATA UNIFICATION WITH SAP NETWEAVER MASTER DATA MGMT3.1. SAP NetWeaver Master Data Management3.2. MDM Applied for Retail4. BEST PRACTICES AND GETTING STARTED4.1. Enterprise Data Management Strategy4.2. Phased Implementation and Incremental Value Approach© SAP 2007 / Page 39

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Key Issues: Governance and ArchitectureAs projects address process improvements, they encounter unidentified data processes that cut across several business processes within theenterprise. Establishing formal data processes is challenging due to the greater need for collaboration and change management. Similarly,companies without a common data architecture that is understood by IT and business stakeholders suffer “discovery” delays in implementation.Governance and Architecture are theLeading Issues Faced During Projects% of overall responses, n-94Governance87Unclear data roles and responsibilities is thekey governance issue% of overall responses, n=94Unclear data roles andresponsibilitiesLack of or conflictingdata processes5467Architecture67Data processes notcapable or fully developed43Quality61Lack of current data model knowledge is thekey architecture-related issue% of overall responses, n=94Standards39Lack of knowledge ofcurrent data model38Deployment11Incompatible schemas34Previously unidentifieduser apps30© SAP 2007 / Page 42

Why Governance Combined with Strategy?Improved Business Efficiencies occur when Governance is combined with Strategy, and there is strongalignment between IT and the Business• Governance structures which are IT-centric have sometimes been unable to deliver on their mandate.• The corrective action has been ‘ownership’ at a high enough level in the Business.BusinessArchitecture• Paramount to the success and implementation ofOne (logical) SAP• Decision making driven by the business needsaccurate reporting and reliable data• Reduced costs thru well managed data• One Single View of Data• Reduce Risk• Improve Metrics & KPI• Data is Treated as an AssetFunctionalArchitecture• Common Data Definition• Common processes• Process and Procedures documented• Streamline, Standardize and Simplify• Improved Data Analysis• Consistent MethodologyOperationalArchitecture• Data Integration• Data Consistency• Data Cleansing & Profiling• Reduce Applications & Interfaces• Enterprise Application Roadmap• Real-Time Data Access© SAP 2007 / Page 43

For the data essential tobusiness competitiveness,take a comprehensiveapproach to ensuring dataquality• Architecture• Standards• Governance• Quality• Deployment© SAP 2007 / Page 44

SAP MDM Enables EDM Best PracticeAdoptionArchitecture• Each business has its own systems for processes with custom solutions and interfaces• Business strategy drives IT architecture; common systems for Global Shared ServicesSAP MDM enables a common, centralized data repository for key business areasStandardsGovernanceQuality• Data definitions vary between systems; Use of data fields is inconsistent• Data standards exist for all data used by the business and cover format, content andaccuracySAP MDM enables non-technical, business users to define data schemas• Data ownership is undefined or conflicting; few system-enforced rules and processes• Ownership and responsibility is established for all data elements used by the business;data processes are integrated into business processesSAP MDM employs role-based permissions at the field level to enforce governance• Data clean up efforts are occasional reactive• Data quality is viewed equally as important as product quality and service qualitySAP MDM enables data cleansing through a rules-based engine and data enrichmentvia external service provider integrationDeployment• Data considerations not "built in" to standard templates and project methodology• Data is considered an intrinsic part of all projectsSAP MDM enables cross-team adoption through workflow and validations• Low Adoption• Advanced Adoption© SAP 2007 / Page 45

Physical Architecture ViewManaging Data and ReportingEnterprise MasterData ManagementEnterpriseApplicationsEnterprise DecisionSupport SystemsEnterprise Reporting andInformation DeliveryGlobalMaster DataSAP ERPSAP BW/IWStandardReportsCorporateReportsAnalytics/ModelingCorporateAnalyticsScorecards/DashboardsCorporateScorecardsGlobal Definitions• Employee• COA• Cost Center• Customer• Vendor• Material• Product• Asset• Partner• SupplierAlignmentDriversNon-SAPSystemsData-Driven AlignmentDivisionDivisionReportsDivisionDivisionAnalytics ReportsFunctional FunctionalReports AnalyticsPortal InterfaceBroadcast ModelPresentationDivisionDivisionScorecards ReportsFunctionalScorecardsToolsDevicesBusiness-Driven Alignment© SAP 2007 / Page 46

Which approach?Examples# 3 - Key report andsupporting data onebusiness or functionP&L, Sales reports,inventoryReporting# 1 - Key report andsupporting data allbusinesses (slicethe pyramid)Enterprise reporting lucidity depends ontransactional activityPurchase orders, salesordersPricing, documentroutingMaterial, customer,vendorProfit centers,Cost centers,Material types,PurchasingOrg, etcTransactionalDataConditionalMaster DataMaster DataStructural & ReferenceMaster DataTransactional data depends onconditional data and master dataConditional data applies only in# 2 specific – One Data situations and timeframesDomain (if this (or cust. part and of material then thisone, i.e. price prod for this codes) year)Master data defines both thematerial, vendor and customerand how they will behave in thesystemDefines your system andthe limits of all elements© SAP 2007 / Page 47

Information Management Strategy ApproachSAP Value Realization accelerates business transformationAssess Design Build ManageActivities1. Confirm InformationManagement ProgramScope, Approach,Deliverables, and KPIsfor Value Realization2. Understand currentstate vs. best practices3. Provide Tools andTechniques forDeveloping InformationManagement Strategy1. Define InformationManagementRequirements and ShareBest Practices2. Define Application andInformation Architecturesbased on Business-DrivenKPIs and Analytics3. Develop InformationManagement Roadmap4. Build Case for Action andExecution Plan1. Monitor Development andCompletion of RoadmapDependencies2. Tailor Best Practices toCreate Data Model,Standards, Governance,Processes, KPIs toAccelerate Time to Value3. Assist in Formation of IMOrganization, Infrastructureand Creation of PrototypeValue Scorecards4. Conduct Program Reviewsand Assist with TechnicalReviews1. Conduct Benchmarking andProvide Company Specific Report2. Provide Expert Input and ReviewKey Deliverables3. Evaluate Portfolio Impacts4. Recommend Corrective Actionsas Required5. Provide Support and StrategicGuidance During ProgramExecution to Ensure Alignmentwith SAP’s Direction6. Perform Periodic Check-ups toEnsure Implementation Successand Speed AdoptionDeliverables• Scorecard -Assessment ofalignment to SAP’sbest practices• Prioritizedrecommendationsfor closing gaps• Data and InformationArchitecture based onBusiness Drivers• IM program Structureand Governance Model• Actionable Roadmapand Project Plan• IM Program Processes andStandards• Data, Information andAnalytics DesignRecommendations• Enterprise Architecturerecommendations• Company SpecificBenchmarking Results• Periodic Audit Reports© SAP 2007 / Page 48

SummaryTrusted Information critical for Improved Business Decisions• Master Data Management impacts all aspects of business operations from supply chain collaboration tomerchandising, promotional forecasting to customer analytics• Deliver the right information to the right users within the correct context• Strategic Enterprise Data Management approach for improved reportingSAP MDM establishes Data Quality through Data Governance• Establish core master data management processes to ensure quality throughout business applications• Model master data repositories to consider support for super-set of requirementsSAP NetWeaver Platform enables Process Innovation• Leverage data, UI flexibility, workflow, integration tools to provide collaborative information processes• Innovate to drive new value to the enterprise. Leverage eSOA and composition environment to createnew business applications and processes from service enabled MDM repositoriesGET STARTED – Phased Value Progression• SAP Value Engineering to help build the business case• SAP Value Realization to help architect an EDM strategy• Partner Ecosystem with both EDM and MDM expertise© SAP 2007 / Page 49

Developing an EnterpriseMaster Data Management Strategy toUnify and Manage Disparate DataThank you!Questions© SAP 2007 / Page 50

Natively Integrated Industry Processes on 1Open PlatformExample: Retailer Offers Branded Financial Services (Store Credit Card)ReceiveCustomerOrder At POSOnline / StoreVerify CustomerContact DataCheck CreditRatingOpenFinanceAccountAccountProcessingReceivablesAccountingProfessionalServices CompanyLogistic ServiceProviderCardProcessingServicesConsumer =Financial ServiceCustomerRetailFinancialInstitution = BankCard© SAP 2007 / Page 51

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SAP Customers and Prospects Attending(Companies in RED are Prospects)Ann Taylor- (US)Discount Tire Company -(US)JoAnne Stores Inc.PetSmartThe Children's PlaceAce HardwareFamily DollarJones Apparel GroupPharmasave Drugs –(CANADA)The Home DepotAdidas-GroupFreds - (US)Jos. A. Bank - (US)Plaza LamaThe Paradies ShopsASICSGarden RidgeKenneth Cole Productions, Inc.Red Door SpasTown Shoes LimitedAritziaGrand & ToyKent - (CANADA)Restoration HardwareTrader Joe'sBCBG Max AzriaGNC – (US)KirklandsRoom & BoardUltaBest BuyGoodyear Tire and RubberCompanyLimited BrandsSafeway, Inc - (US)Vitamin Shoppe - (US)BevMoHallmark CardsLondon Drugs Limited -(CANADA)SephoraWawaBen Bridge Jeweler -(US)Harry & DavidsMars Retail Group – (US)Spanx (US)ZapposBig Lot (US)HMSHostMGM Mirage- (US)Stein Mart. Inc. (US)Boscov'sHarrah's Entertainment -(US)Movado Group Inc.SobeysBrookshireHobby Lobby - (US)NBTY, Inc - (US)Sport ChaletCEO CREDITZ, INC -(Canada)Indigo Books & Music Inc.Nike2Steve and Barry'sChico'sJ.D. Irving, Limited -(CANADA)OfficeMaxSenukai - (LITHUANIA)Coldwater Creek© SAP 2007 / Page 53JSC "Senuku prekyboscentras - (LITHUANIA)OAKLEYTBC