Delivering Real-Time Business Value for Retail

Delivering Real-Time Business

Value for Retail SAP Business Suite Powered by SAP HANA

July 2013 Public

© 2013 SAP AG or an SAP affiliate company. All rights reserved. 2 Public

The real-time opportunity

Increasing consumer access to information and

choice has transferred power from the merchant to

the customer. Customers expect to interact with

retailers across multiple channels with increasingly

shorter response times. The result is that retailers

need to:

Transform the business with unified and simplified processes

Create a personalized experience

Create a seamless customer experience across channels


Toward a customer-driven enterprise

Redefined

customer

interaction

• Put the customer at the center of all processes

• Increase the number of customer touch points

• Engage with customers at every stage of the path to

purchase with personalized interactions

New level of

real-time

customer data

• Deliver real-time personalized offers to consumers via

any channel

• Achieve agility and speed in campaigns and promotions

• Use customer data as the heart of merchandise,

assortment, promotion, and demand planning

Global, channel-

agnostic supply

chain

• Use inventory efficiently across all channels and regions

• Create new levels of interaction with suppliers to reduce

costs throughout the supply chain

• Allow consumers to easily cross channels to order and

receive products whenever and wherever they want


SAP Business Suite powered by SAP HANA The next-generation business platform

Real-time business

In-memory

Business

transactions

Digital

connections

Collaborative

business

Cloud Social

Big Data Mobile

One platform bringing it all together

Advanced

analytics


Industry value map for retail Retail without boundaries

Technology

Solutions

Unified Customer Experience

Real-Time Customer Insight and

Personalization

Superior Web and Social

Experience

Store Excellence

Analytics Consumer

Experience Enterprise Mobility

SAP HANA Platform

Customer-Centric

Merchandising

Customer-Driven Supply Chain

Real-Time Customer and Supply

Chain Analytics

Integrated Demand and

Replenishment Planning

Optimized Logistics and Fulfillment

Execution

People and

Talent

Core Human

Resources and

Payroll

Talent

Management

Workforce Planning

and Analytics

Finance Financial

Performance

Management

Accounting and

Financial Close

Collaborative

Finance Operations

Enterprise Risk and

Compliance

Management

IT Management Application

Lifecycle

Management

IT Infrastructure

Management

IT Service

Management

IT Strategy and

Governance

Application

Development and

Integration

Data

Management

Time and

Attendance

Management

Treasury and

Financial Risk

Management

IT Portfolio and

Project

Management

Real-Time Customer Insight

and Predictive Analytics

Optimized Merchandise

and Assortment Planning

Marketing, Campaign and

Promotion Planning

Perfect Price and Promotion

Execution

Collaborative Sourcing, Buying

and Manufacturing

Vendor Discovery and Lifecycle

Management

Sourcing and Buying Excellence

Private Label Development and

Manufacturing

Collaborative Business

Networks Empowered Mobile Consumer

Real Estate

Lifecycle

Management

Indirect

Procurement


Industry value map for retail Retail without boundaries

Technology

Solutions

Unified Customer Experience

Real-Time Customer Insight and

Personalization

Superior Web and Social

Experience

Store Excellence

Analytics Consumer

Experience Enterprise Mobility

SAP HANA Platform

Customer-Centric

Merchandising

Customer-Driven Supply Chain

Real-Time Customer and Supply

Chain Analytics

Integrated Demand and

Replenishment Planning

Optimized Logistics and Fulfillment

Execution

People and

Talent

Core Human

Resources and

Payroll

Talent

Management

Workforce Planning

and Analytics

Finance Financial

Performance

Management

Accounting and

Financial Close

Collaborative

Finance Operations

Enterprise Risk and

Compliance

Management

IT Management Application

Lifecycle

Management

IT Infrastructure

Management

IT Service

Management

IT Strategy and

Governance

Application

Development and

Integration

Data

Management

Time and

Attendance

Management

Treasury and

Financial Risk

Management

IT Portfolio and

Project

Management

Real-Time Customer Insight

and Predictive Analytics

Optimized Merchandise

and Assortment Planning

Marketing, Campaign and

Promotion Planning

Perfect Price and Promotion

Execution

Collaborative Sourcing, Buying

and Manufacturing

Vendor Discovery and Lifecycle

Management

Sourcing and Buying Excellence

Private Label Development and

Manufacturing

Collaborative Business

Networks Empowered Mobile Consumer

Real Estate

Lifecycle

Management

Indirect

Procurement

7 8

1

2

3

4

6

5

Highest real-time

business value

for retail


Today

KPI improvements are high-level estimates and will have to be validated for each customer situation.

Real-time customer insight and predictive analytics Business value of customer analysis and segmentation

Customer data is fragmented and

difficult to access.

Users do not have easy access to

the metrics that they need.

Customer and sales information is

Big Data, which is difficult to process

in real time in order to make business

decisions such as segmentation and

targeted promotions.

Customer segments are not

generated based on tastes or

preferences.

Traditional data mining reports are

difficult to understand and utilize.

Ability to flexibly perform

segmentation on any object

represented by an SAP HANA

database view

Ready-to-use content and data

models

Fast response times and instant

display of result set counts and target

list generation on Big Data sets

Communication management and

load balancing

• Creation of customer segments

based on insights into customer

attributes and demand patterns

• Ability to visually mine and analyze

data via interactive charts

Minimize data fragmentation

and manual

processes

Increase

Improve

speed and

performance by

98%

understanding of

customer needs

and preferences

With SAP Business Suite on SAP HANA


Today


Optimized merchandise and assortment planning Business value of merchandise, financial, and assortment planning

It’s difficult to get products to the

customer in time to generate new

sales in a highly competitive

environment.

There is insufficient planning at the

store level to accurately match

customer demand and shopping

habits.

Different sources of information and

metrics deliver complicated,

disparate planning processes.

Integrated plan delivering aligned and

targeted product assortments across

channels

Real-time insight by product and

selling location to improve customer

service levels (in-stock percentage)

One unified view of customer

demand across all selling channels

Real-time visibility into trends,

customer demand, and profitability

measures to lift effectiveness of

merchandise departments

One centralized repository allowing

immediate reconciliation of financial,

merchandise and assortment plans

Fine-tune category mix and pricing

for local needs to increase sales and

profitability

Improve inventory turn by

25 basis points

Decrease

Improve

markdowns taken by

10−15%

gross margin by

25 basis points



Today


Marketing, campaign, and promotion planning Business value of marketing planning and campaign management


Market opportunities are missed due to lack of visibility and inefficient processes.

There is an explosion of data, driven

by new levels of connectivity of

consumers via mobile devices and

social networks.

Data is in disparate data sources,

which prevents true 360-degree view

of the customer.

Agile marketing to respond faster to

changing market dynamics and

opportunities

New analytical, data mining

capabilities on Big Data (social

media, predictive)

Near real-time monitoring and

reporting on marketing performance

One central place for collecting all

customer data, leading to 360-degree

view of customers in real time

Precision marketing to personalize

every interaction with the customer

Improve

Optimize

Increase

profitability by

0.5%

return on marketing

investments by

15%

customer

satisfaction by

40%


Today


Marketing, campaign, and promotion planning Business value of integrated promotion management

It’s difficult to understand customer

demand patterns and design

profitable and attractive promotions.

Retailers must quickly respond to

competitive threats and dynamic

customer preferences.

Promotions are too generalized and

do not appeal to specific customer

tastes and needs.

Manual processes and disconnected

data require long lead times and

involve rigid planning processes.

Tailored promotional offers based on

science-based predictive analysis

Fast, real-time analysis of promotion

performance

Access to customer information,

sales trends, and demand variations

to design and execute targeted

promotions

Single version of the truth for

promotion planning and execution

Increased efficiencies, shorter lead

times, and fewer errors

Improve profitability by

25%

Increase

Reduce

basket size by

15%

planning timelines

by

30%



Today


Superior Web and social experience Business value of customer service with interaction center

To successfully resolve customer

issues, companies must be able to

quickly locate the right experts or

resources within the organization,

whether those experts reside inside

the contact center or elsewhere.

Managers and supervisors lack

actionable reporting and visibility into

the workload of their teams.

High volume of customer records and

interactions results in increased

search times and greater difficulty

locating specific customer records.

With the new agent in-box based on

the SAP HANA platform, users can

more easily search for relevant

experts – whether on their own team

or elsewhere in the organization –

and dispatch/escalate issues to the

best-suited employee roles.

A new interactive work distribution

dashboard provides supervisors with

actionable insights into the workload

of their teams and employees.

Searches in the interaction center are

significantly faster, including account

searches, interaction history, and the

customer fact sheet.

Decrease average handling

time

Improve

Reduce

service-level

agreement (SLA)

compliance

service cost



Today


Store excellence Business value for real-time store operations

There’s no efficient way to detect on-

shelf availability situations and take

corrective actions – leading to loss of

sales and unhappy customers.

Store managers don’t have full

visibility of store performance and

can’t take corrective actions quickly.

Productivity is limited due to lack of

access to related and timely

information.

Detection of on-shelf availability

issues in real time

Optimization of on-shelf availability

and resource deployment

Increased customer satisfaction

Real-time access to most relevant

key performance indicators (KPIs) for

store performance: gross/net/weekly

sales, sales vs. plan, and so on, to

monitor store performance and meet

planned revenue

Increased productivity of store

associates and store managers by

providing them access to real-time

information whenever und wherever

they need it

Increase customer

satisfaction

Optimize

Increase

on-shelf availability

and store

performance

productivity



Today


Financial performance management Business value for profitability and cost analysis


Data latencies and processes delays

impact the ability to react to issues

and opportunities.

Lack of data depth and user self-

service affect internal decision

making.

Processes take a long time to run.

Data queries are time-intensive.

Data analysis is mostly manual.

Substantial amount of effort does not directly add value.

Resource efficiency and effectiveness is suboptimal.

Timely execution of critical business

processes that supports decision

making and increases the ability to

swiftly act (insight-to-action) in

dynamic market environments

Critical transactions and calculations

that run quickly

Instant response times on queries

Prebuilt analytics that automate the

data analysis process

Leaner processes from data capture

through data analysis

Increased productivity through

process-optimized analytics and

mobile support

Improve

Reduce

Minimize

cycle times and

manual effort by

75%

operating costs

service-level

performance


Today


Accounting and financial close Business value for entity close

Minimize time to close the

entities’ books

Reduce

Enhance

cost of finance

compliance and

accuracy


Processes take a long time to run.

Reconciliations are time-intensive.

There is limited time for analysis.

Inefficiencies are created due to

manual processes and low

automation.

Missing financial excellence

results in higher cost of equity

at the capital markets.

It’s difficult to support parallel financial reporting standards on a global basis and in simulation of scenarios.

More time for analysis, less overtime,

and earlier publishing of financial

results through faster

period-end processes and better

reconciliations

Increased efficiency through smarter

reconciliations and reporting,

reducing operating costs and

improving stakeholder satisfaction

Real-time analytics down to the

lowest level of detail – delivering

quality at source, transparency, and

process efficiencies


Customer case: global retailers Summary of validated scenarios

Feasibility

Bu

sin

ess v

alu

e

Lo

w

Hig

h

Low High

Value-driven

product innovation

(0.1% of revenue)

Account and trade

promotion optimization

(0.5% of revenue)

360-degree customer

insight

(0.5% of revenue)

Real-time inventory

visibility

(0.1% of revenue)

Supply chain

orchestration

(2.6% of revenue )

Merchandising

assortment planning

(0.4% of revenue)

SAP HANA use cases mapped to industry value map end-to-end solutions Phase – deployment road map

Legend

SAP Business

Suite on

SAP HANA

Applications

powered by

SAP HANA

SAP HANA

platform

SAP HANA Platform: customer-specific SAP HANA products: SAP NetWeaver BW on SAP HANA, high-performance applications (HPAs), apps powered by SAP HANA SAP Business Suite on SAP HANA

Scenario

(business value)

1 Short term

Planning: account and trade promotion

optimization, real-time planning analytics

Sales: 360-degree customer insight with SAP

HANA as multichannel data repository

2 Medium term

Product development: value-driven product

innovation

3 In evaluation

Planning: customer-centric merchandising

(increase efficiency of marketing campaigns and

promotions, lower days in inventory)

Other functions – to be determined in future

discovery workshops


Customer case: global retailers Summary of validated scenarios

-42.000

-10.000

147.069 147.069

13.733

-100.000

-50.000

0

50.000

100.000

150.000

200.000

2013 Phase 1 Phase 2

Costs SoH Applications Platform

$

Annual revenue: US$10 billion Based on actual SAP

customer engagements

SAP HANA Platform: Anything built on the platform that is customer-specific – new business processes and business models

SAP HANA products: SAP NetWeaver BW powered by SAP HANA; high-performance apps (HPAs); applications – mapped to

inventory value map (IVM) end-to-end (E2E) solutions

Currently available functionality (SP0, 1, 2) – 23 scenarios mapped to IVM E2E solutions, and planned functionality(all of the

E2E solutions on the IVM are in scope)

Annual benefits, SAP HANA

platform

Annual benefits, applications

powered by SAP HANA

Annual benefits, SAP Business Suite

on SAP HANA: US$7.16 million

Estimated deployment costs

Total transition cost: US$5 million

SAP HANA Platform

SAP HANA products

SAP Business Suite on SAP HANA

SoH = SAP Business Suite on SAP HANA


Next step Business scenario recommendation and value discovery workshop

SAP offers a proven methodology and approach to

discover the customer-specific business

improvement areas and quantify value potential.

We suggest such a workshop with your

line-of-business and IT experts.

As starting point, we recommend a performance

and usage analysis of your current system.

© 2013 SAP AG or an SAP affiliate company. All rights reserved.

Thank you

© 2013 SAP AG or an SAP affiliate company. All rights reserved.

Appendix with detailed customer cases


Note: Use cases in the global use case repository are captured directly from customers and internal SAP innovation

sessions and may not be completely validated.

Fashion retailer – supply chain orchestration for retail chain Retail

Business context and goals

The retailer is in a constant process of stock forecast and replenishment.

Business challenges

Fast-growing company is facing problems with supply chain orchestration due to increased

complexity, speed of changes, and data volumes. Due to the technological constraints, the

retailer prepares sales analytics overnight, which does not satisfy business need.

Process innovations

Interactive replenishment planning and tracking based on real-time sales and stock data

Contribution of SAP HANA

SAP HANA is enabling the new approach to supply chain management through fast analysis of

large volumes of fast-changing sales data.

Value drivers/KPIs

Increase sales

Reduce lost sales

Improve inventory turnover

Innovation scope

SAP HANA platform (customer-specific)

E2E solution

Retail – integrated demand and replenishment

planning

Value potential 4

Feasibility 4

Low High

1 5

Low High

1 5




Home furnishings retailer – reduce time to market

for new offerings Retail

Innovation scope


(now and future)

E2E solution

Retail – marketing, campaign, and promotion

planning

Value potential 4

Feasibility 3

Low High

1 5

Low High

1 5


Coordinate and tailor promotions around the world, reducing time of replication and increasing

promotion effectiveness

Business challenges

Need to analyze selling patterns and customer behavior around by geography, product, and line

of business to increase promotion effectiveness and scale promotions globally

Process innovations

Increased visibility into all trade-related processes to facilitate collaboration and allow reactive

decisions


Real-time expense data for accurate cost forecasting and promotion planning

Value drivers/KPIs

Increase revenue

Reduce days in inventory




Home furnishings retailer – value-driven product

innovation Retail

Innovation scope


(now and future)

E2E solution

Retail – application development and

innovation

Value potential 3

Feasibility 2

Low High

1 5

Low High

1 5


Develop new products and services based on value-driven investment decisions

Business challenges

Long time from recognizing new customer needs and new trends to new product realization

Process innovations

Develop innovative products and services to respond faster to customer inquiries, and coordinate

resources across a project’s entire lifecycle, as well as across several business functions


Manufacturers able to create a framework that can help them align product strategy and

development, streamline development processes

Value drivers/KPIs

Enable profitable growth




Fashion retailer – category management Retail


Optimize pricing and shelf space decisions; optimize pricing and shelf space for each SKU within

category; provide analytical support for markdown optimization; optimize shop-floor layouts by

store type and market; optimize promotions by store type and market; provide omni-channel view

of customer to manage impact of spend shift to the Web

Business challenges

Inability to optimize regular price and promo pricing with shelf space based on localized

requirements


Optimize pricing and shelf space decisions; optimize pricing and shelf space for each SKU within

category; provide analytical support for markdown optimization; optimize shop-floor layouts by

store type and market; optimize promotions by store type and market; provide omni-channel view

of customer to manage impact of spend shift to the Web

Value drivers/KPIs

Increase gross margin

Innovation scope


E2E solution

Retail – optimized merchandise and

assortment planning

Value potential 5

Feasibility 3

Low High

1 5

Low High

1 5




Fashion retailer – accelerated inventory reporting Retail


Inventory reporting/inventory extracts have a significant system overhead on the ERP system. In addition, from an end-user reporting perspective there are many time-outs and long-running jobs that impact users’ ability to perform their function. There is also significant use of SE16N against the MBEW table that causes performance issues as well as business risk.

Business challenges

Despite current archiving initiatives, the database is continuing to grow as businesses (transactional data) and related master data components are added. As data volume increases, performance decreases. Improved analytics require the large volume of current and historical data.

Process innovations

The retailer can benefit with SAP HANA for inventory reporting/extracts and can significantly reduce the impacts to overall batch schedule as well as provide users with better reporting options.

B52 reporting: Primary users are inventory control and sourcing teams. Mode: This report is run in both the background and in the foreground. A large number of system

time-outs occur when it runs in the foreground, especially around month-end.

Contribution of SAP HANA Value drivers/KPIs

Key inventory financial reports availability faster by hours

Opportunity to improve significant excess inventories without affecting service levels

Daily “best estimate” of inventory position/costing to facilitate a move to a value-creation culture – across planners, buyers, and merchandising

Business user productivity Key inventory financial reports availability faster

by hours Opportunity to improve significant excess

inventories without affecting service levels Daily “best estimate” of inventory position/costing

to facilitate a move to a value-creation culture – across planners, buyers, and merchandising

Innovation scope


(now and future)

E2E solution

Retail – real-time customer and supply chain

analytics

Value potential 2

Feasibility 5

Low High

1 5

Low High

1 5




Multinational retailer – real-time inventory visibility

(multichannel) Retail

Innovation scope

SAP HANA products (HPAs, apps)

E2E solution

Retail – integrated demand and replenishment

planning

Value potential 4

Feasibility 4

Low High

1 5

Low High

1 5


Real-time view of inventory is needed across multiple channels.

Business challenges

Lack of real-time view of stock across the supply chain results in a different customer experience

in different channels (stores, Internet, and so on), and also results in high stock cost (due, for

example, to safety stock being maintained separately for different channels).

Process innovations

SAP HANA would provide real-time cross-channel view of inventory across the customer's

supply chain. This would help customer to minimize out-of-stock situations, reduce product

markdowns, reduce safety stock inventory, reduce stock loss, and improve supply chain agility.


SAP HANA would provide real-time cross-channel view of inventory across the customer's

supply chain.

Value drivers/KPIs

Reduce inventory

Reduce stock-outs

Increase promotional effectiveness




Electronics retail – shop clustering Retail

Innovation scope

SAP HANA products (HPAs, apps)

E2E solution

Retail – optimized merchandise and

assortment planning

Value potential 3

Feasibility 3

Low High

1 5

Low High

1 5


Company manages assortment in 1,800 stores across the country and needs to forecast

inventory level and plan replenishment.

Business challenges

Suboptimal planning of assortment, resulting in high level of out-of-stocks

Process innovations

Store clustering based on real-time analytics to allow active replenishment planning and tracking


SAP NetWeaver Business Warehouse (SAP NetWeaver BW) application powered by SAP HANA

for fast data access

Value drivers/KPIs

Reduce out-of-stocks




Innovation scope


E2E solution

Retail – financial performance management

Value potential 5

Feasibility 3

Low High

1 5

Low High

1 5

Multinational retail – improve financial planning Retail


Financial planning Plan at granular levels, run complex scenarios and allocations. Provide faster analysis on larger data volumes. Develop financial models based on detailed drivers vs. roll-ups. Provide timely and accurate actuals to support planning. Enable planning, forecasting based on real-time operational data combined with analytics. Manage expenses with operational and financial drivers in a much faster and more automated way with reduced cycle time. Enable other applications/business processes to leverage business planning and consolidation (BPC ) software.

Business challenges

Financial planning Business warehouse to BPC process is very “clunky” with significant and variable data load times (45 min. to 8 hours) every day. As company grows, uncertain how system will handle data. Risk with delayed data loads: if actuals aren’t loaded on time, team cannot research variances and inform the next forecast. No line of sight to understand the increase in costs today because inability to view granular level of details. Pre-aggregate article/site data into category before BPC load. Need to get to additional levels of detail. Examples include: Expense management: finance relies on data to drive decisions; if not available, then forecast is overestimated with “cushion.” Headcount, indirect spend, project systems, and real estate expense management cannot be proactive without granular insight into data and ability to do detailed calculations. Comp sales: Company does not plan down to the article/site level, but if it did, this would unlock an “enormous value lever”; BPC calculations are available but system will crash because of too much data. Hurricane Sandy: manual process were necessary to know why comps were low, no tracking at site level; information was not provided in time.


Financial planning Plan at granular levels, run complex scenarios and allocations. Provide faster analysis on larger data volumes. Develop financial models based on detailed drivers vs. roll-ups. Provide timely and accurate actuals to support planning. Enable planning, forecasting based on real-time operational data combined with analytics. Manage expenses with operational and financial drivers in a much faster and more automated way with reduced cycle time. Enable other applications/business processes to leverage business planning and consolidation (BPC ) software.

Value drivers/KPIs

Reduce gross margin (reduce clearance/markdowns) Reduce selling, general and administrative expenses (SG&A), cost of sales Reduce consulting costs for SAP NetWeaver BW




Fashion retailer – 360-degree customer insight Retail

Innovation scope


E2E solution

Retail – consumer experience

Value potential 4

Feasibility 3

Low High

1 5

Low High

1 5


Company needs to grow in three dimensions: channels, brands, and formats.

Business challenges

To set the main strategy guidelines for growth (such as new market opportunities, new brand to

be acquired, format to be promoted), the company needs 360-degree customer insight.

Process innovations

Create a multichannel data repository


360-degree customer insight with SAP HANA as multichannel data repository

Value drivers/KPIs

Increase growth

Increase customer satisfaction

Delivering Real-Time Business Value for Retail

Technology

Transcript of Delivering Real-Time Business Value for Retail