IT Shared Services Costing

Costing, Cross Charging andPerformance Management inShared ServicesBusinessObjects Profitability and CostManagement in IT and other shared services

Department, Board Area or TeamDate

© SAP 2008 /

1. The challenge for IT and shared service function today2. Customer benefits from using shared service costing3. Activity-based costing and the foundation for IT

performance management4. SAP BusinessObjects Profitability and Cost Management overview5. Benefits of using SAP BusinessObjects Profitability and Cost

Management6. Screen walk through of the solution

Agenda

© SAP 2008 /

Many would say IT Management has not kept pace withthe demand for IT or the spending on IT

1960s 1970s 1980s 1990s 2000s

1,000

800

600

400

200

0

IT Spend

IT Demand

IT Management Capability

IT businessm

anagement

gap

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Source : 2006, IT Management SW

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IT is a complex business

Controls a myriad ofassets, applications,technologies and skills

Provides complex products,services and projects to amultitude of business users

Has a large amount ofindirect costs that cannotbe easily understood usingtraditional cost accounting:

Supervision andmanagementInfrastructureSystems architectsSecurity

Typical breakdown of IT expenses

People45%Application Software

13%

Other13%

Network11%

Hardware18%

CRM system

E mail

Marketing

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Dynamic Resource Allocation

Business ServiceRequests Priority 3

Priority 1Priority 2 Priority 3Priority 2

Priority 1 Priority 2

Virtualization

New challenges forIT costing and charge out

ServicesOrientatedInfrastructure

ServerPhysical / Virtual StorageNetwork

Metered Charge Out

Priority 3

Priority 2Priority 1Priority 1

Dynamic Resource AllocationService awareness | Business Priorities | Optimization | Automation

Virtual Server Images (VMs)App A App B App C

Metered Charge Out

OS OS OS

Client 1

DedicatedCharge Out

Client 3

DedicatedCharge Out

Client 2

DedicatedCharge Out

Application A Application CApplication B

© SAP 2008 /

Questions that IToften struggle to answer

Where can IT find cost savings withoutcompromising service levels?

What exactly is the total cost of projects,applications and services once IT supportcosts have been factored in?

How do we resolve all the internal dissentaround cross charging?

What information can IT provide to businessunits to help them make informed decisionsabout their consumption of IT services?

Are there any pockets of excess capacitywithin IT?

What information should IT provide to showthe business that we are in control?

How much iscompliancecosting me?

How do wedemonstrate thatwe are in control

of IT costs?

How can weconvince the

business to getrid of redundant

systems?

What are thecost benefits ofconsolidating

suppliers?

What is the totalcost of providinge-mail service?

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Impa

ct o

n Bu

sine

ssP

erfo

rman

ce

Maturity of IT Costing &Performance management

High

Low

Low High

EXCELLENCE

IT as a businesspartner

INNOCENCE

No real IT costsand Performance

Management

CONSISTENCY

Production ofreliable information

RELEVANCE Efficient IT Costs &PerformanceManagement

What we believe – and where IT needs to getto!

CIO is in charge of a large, complexbusiness and a huge amount ofexpenditure

Both boards and business unitsexpect IT to make improvements interms of transparency, focusing onthe right investments - andoptimizing the use of previous ITinvestments

IT needs business solutions thathelp it better manage its resources,make better decisions and facilitateinformed discussion with thebusiness

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Agenda

© SAP 2008 /

Proven experience inimproving financial performance

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In a review paper Accenture concluded that ABC can help to reduce acompany’s overall cost structure by between 3% and 5% CFO Project Vol. 2 October 2003

After improving the transparency of its cross charging, users stopped treatingIT as a “free buffet” and a retailer curtailed the rapid growth in its IT spend

… then there’s the intangible benefit of managers making more informed, andquicker, decisions!

A European bank eliminated unnecessary numerous new projects – 1 in 3was no longer wanted by the business users once they saw the costsinvolved

After doing an IT services and cross changing implementation a Europeanbank saw a 20% decrease in the number of PC’s and a 30% decrease in thecost of providing a fully loaded PC – amongst other benefits

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Compelling ROI

Removal / Optimization ofExcess Capacity

Within IT

Identification and Removal ofNon Value Activities in IT

Actionable insight for better costmanagement

Faster and more accuratebudgeting

Better information for supportinginvestment plans

Accurate reflection of IT costs inbusiness decisions

Within the business

Less bickering about crosscharges

Rational (and reduced)consumption of IT services

For the business

Quick improvement inbottom line

Reduce IT spend vs.competitors

Realized Benefits

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Analyst rating for Profitability andCost Management

© SAP 2008 / Page 12

5/5for SAP BusinessObjects

Profitability and CostManagement

Maximum

© SAP 2008 /




Agenda

© SAP 2008 /

Stove pipe or integrated?

Separateimplementations –frequently supported by amyriad of offlinespreadsheets

Data management anddata integrity issues

Tend to be historicallyfocused

Line item budgeting aspart of corporatebudgeting process

Key performanceindicatorsPerformance metricsBenchmarking

IT services costing andcross charging

Plan andBudget

Resources

Costing andCross

Charging

Measureand

Monitor

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Unique, integrated approach

All functionalityprovided in a singleuser interface

All data accessible toany type of model

Change any data itemonce only

On demand “What-if?”analysis andcalculation

Plan andBudget

Resources

OptimizeCosts andProfitability

Measureand

Monitor

IT services costing andcross charging

“What-if?” Scenario planningCapacity planningDriver-based budgetingActivity-based budgeting

Key performance indicatorsPerformance metricsBenchmarking“What-if?” scenarios

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Different typesof IT expense

Different typesof charge-back

“Identifiable” costs ofspecific business unit

applications and projects

Directassignment ofidentified costs

Residual cost

High levelapportionment

e.g. # staff, Revenue

Type of services costing and cross-chargingpracticed today is inadequate

Circa 50% of ITexpenses is for

support functions,administration andmanagement andthis is POORLY

understood – GartnerG00138617

Apportionment maynot reflect actual

usageLack of

transparency of howcross-charge is

made up

Indirect costs ofprojects,

applications andservices arefrequently

overlooked

Internal Customers

“Identifiable” costs ofspecific shared services

e.g. Helpdesk, Desktops

Low levelapportionment

e.g. # calls,# desktops

IT Expenses andAssets

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CO

STASSIG

NM

ENT

CO

STASSIG

NM

ENT

DR

IVES

DR

IVES

Resources

Properties People Capital TechnologyAssets

IndirectActivities

Designing systems ManagingDRIVES

CO

STASSIG

NM

ENT

Activity-based Costing(ABC) is the key

Services,Applications,InternalCustomers CRM system

DR

IVES

DirectActivities

Providing supportProcessing Storing

E mail Marketing

COSTREASSIGNMENT

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What’s neededto do the work?

What workis

performed?

What do weneed to do?

© SAP 2008 /

Activity-based Budgeting

ResourceDrivers

ActivityDrivers

Reforecast Resourcesand Line Item Expenses

ReforecastDemand fromBusiness Units

CostAssignment

CostAssignment

Activity-based C

osting

Robust andTransparent Costing

Bringing it all together around ABC

ACTIVITIESCost Drivers PerformanceManagement

Activity-based Management

RESOURCES& COSTS

COST OBJECTSServices, Applications, Projects, Internal Customers etc

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Activity-based budgeting

RESOURCES& COSTS

Activity-based Budgeting

ResourceDrivers

ActivityDrivers

Reforecast Resourcesand Line Item Expenses

ReforecastDemand fromBusiness Units

COST OBJECTSProduct, Services, Projects, Internal Customers etc

ACTIVITIES

CustomerForecasts 10% increase in staff

Activity20 GB more storage 50 User set ups20 Password resets 15 Helpdesk calls

Activity20 GB more storage 50 User set ups20 Password resets 15 Helpdesk calls

Resources1 additional support staff 1 new HW lease50 new SW licenses 10% more disk space

Service10% more email accounts

Marketing

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Pricing and Cost Recovery for “mature” services and products

Costing and pricing scenarios

GLChange behaviour tocontrol consumptionand reduce IT costs

Reconcile Expenseswith Charge Outs

Pricing and Cost Recovery for “new” services and products (e.g. Virtualization)

GL

ABC model

Enjoys savingscompared with adedicated server

Calculated cost ofexcess capacityRemains with IT untilsold to other users

Detailed Invoice toInternal CustomerABC model

Calculated cost basedon demand or usagefrom Business Users

Unit Rate forCharging Out

Actual as calculatedWith a Mark UpBundled (i.e. Laptop + Office + Support)Overridden with a Fixed Rate

Calculated cost basedon optimal capacity

Unit Rate forCharging Out

Detailed Invoice toInternal Customerbased on metered

usage

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Costs acrossvarious dimensions

Service | Project | BusinessUnit etc

Inputs and outputs

Asset ManagementSystems

Finance systems (GL)

Time ManagementSystems

Metering and MeasurementE.g. CPU, RAM, HDD, Time etc

Web-based data entry

IT Business ManagementTools E.g. Project Portfolio Management

Standard IT ServicesLibraries E.g. ITIL, CoBIT etc

Inputs

Transparent and Accurate CrossChargingInformed consumption – Reduce buffet mentality

Cost AnalysisCost of Service Levels, Non Value Added Costs, FixedCosts vs. Variable Costs

Performance Measures /BenchmarkingUnit rates, Cost drivers, Internal, External

Investment DecisionsMake or Buy, TCO, Replacement

Cost ReductionRemoval of Non Value Adding Activities, ChangingBehaviours

Planning and BudgetingCapacity planning, Resource Planning, MarginalCosting

Process ImprovementProcess costs, Process Re-engineering

Uses

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Integration with SAP Solution Manager

SAP Solution Monitoring

Key source of drivervolumes for true cause-and effect assignmentsand accurate costing

Measured usage usingdata from SAP SolutionManager provides fairand equitable crosscharging

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SAP Solution ManagerEnabling end-to-end solution operations

Solution Monitoring

Service Desk

Root CauseAnalysis

SAP Service DeliverChange Request

Management

ImplementationSupport

UpgradeManagement

SystemMonitoring

ServiceLevel

Monitoring

BusinessProcess

Monitoring

Real time monitoringSystem usagePerformance monitoring

Change requestmonitoringService requestmonitoring

Process orientedmonitoring of the mostcritical businessprocesses

SAP BusinessObjectsProfitability and Cost

Management

© SAP 2008 /

ITIL V3 financialmanagement and service economics

Service Consumption Modelingand Valuation

Quantifies funding sought for a defined set ofServices

Service Investment AnalysisInvestment appraisals, ROI, TCO

Planning ConfidenceBudgeting based on demand and supply

Service Portfolio ModelingCompares external vs. internal costs for optimalprovisioning

Variable Cost DynamicsEstablish what fixed and variable costs are linkedto a Service

Service Provisioning OptimizationCapacity management and continual improvement

Financial ComplianceProper and consistent accounting methods

Visible and Consistent CostStructure

Robust accounting methodology

Customer

Service Provider

Commonality of Interests and Benefits

Service InvestmentAnalysisFinancial

Compliance

Variable CostDynamics

ServiceProvisioningOptimization

Service PortfolioManagement

PlanningConfidence

ServiceConsumptionModeling and

Valuation

Visible andConsistent Cost

Structure

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Agenda

© SAP 2008 /

Pre-defined dimensionality for ABC

User friendly, rapid and efficient modelbuilding

Versions, periods,RC’s, currencies

Up to 5 cost objectdimensions

Revenue types

Services dimension

Attributes for alternatehierarchies

Data aliases forlanguages etc.

Flexible rules engine

Point and clickassignments acrossmultiple dimensions

Easy model control

Sophisticated security

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Rapid point and click assignments

User friendly, rapid and efficient modelbuilding

Select activity, serviceor line item by

Responsibility Center

Optional override byVersion and Period

Either “cascade”costs to CostObjects in a userdefined order

OR

Assign activity costmulti-dimensionally tothe exactintersection of costobjects in a singlestep

Select the activitydriver from theavailable list – andoverride byResponsibilityCenter if required

Select the Cost Objectseither individually orsimply assign to all

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Use the best costing methodologyfor the situation

Use the wizard for writing equations for time-driven costing for responsibility centers with highnumber of repetitious activities

Use time splits in the other responsibility centers

Complete flexibility with costing methodologies

User friendly, rapid and efficient modeling

Time-Splits Time-Driven

Embedded rules engine with a front-endwizard for easy and rapid modeling of morecomplex business rules

Totally flexible rules engine for bespoke model building

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Any new member detected in a hierarchyautomatically inherits the assignments of itssiblings - minimizing time and effort on modelmaintenance

Logical data structure for minimal model maintenance

Scalable, enterprise class solution

Service 1 Service 2 Service 3

Service Family

New Service

Expedite the collection off ofnon-system driver data using the workmanagement functionality of automatedalerts and reminders

Removes the drudgery and enablesmore frequent reporting even withremote contributors

Web books for automated data collection direct to the database

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Rather than “cascading” activity cost to eachcost object in turn, if the driver data isavailable, it can be assigned to the exactintersection - i.e. the cost when thiscustomer buys this product through thischannel – avoids erroneous assumptions!

Single step multi-dimensional assignment

Extending the value of profitability and costmanagement

Channel3Product

1

Cus

tom

er

22 1

Ability to trace back all assigned costs to lineitems and responsibility center

Comprehensive user defined trace-back

Resources& Costs

Cost Objects

Activities

Resource Driver

Activity Driver

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Scalable, enterprise class solution

Comprehensive security and access rights,by group, by role, by individual right down tocell level

Context aware views means users only seetheir data – and a single report caters formany, minimizing deployment time

Optional audit trail with date and time stamps

Comprehensive context-aware views, security and audit trail

End users can view screens that use theirlocal language and terminology - andentering financial amounts in their localcurrency, enabling cross border deployments

Multilingual aliases and multi-currency functionality

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Flexible methodologies for costing,pricing and cross-charging IT and othersupport services

Detailed invoices that provide transparencyinto cross-charging and information for aninformed discussion between business usersand service providers

Services dimension for cross charging IT and other shared services


Reiterative reallocations betweendepartments consuming each other’sservices with full trace-back ofreallocated costs

Delivers more accurate costs thatreflect reality Business

Unit 3

BusinessUnit 2

BusinessUnit 1

Reiterative reallocation for accurate services costing

HRRecruitment

ITNetwork

Maintenance

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Users can slice and dice the datathemselves with consolidated resultsbeing calculated on-demand and theirWeb book automatically refreshed

Using this functionality they can test outthe impact of changes before committingto them, resulting in better - and moreincisive - decisions

Unique on-demand query and what-if? analysis

Reliable on-demand “what-if?” analysis andscenario modeling

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Users can leverage the insight into thedrivers of cost and profitability inplanning and budgeting models. Thisprovides integrated budgeting andcosting solution giving deep insight intothe cost and profitability of products andcustomers in future periods

Changing the driver volumes and then“back-calculating” an existing ABC modeldelivers an activity-based budget

Driver-based budgeting is based on a moreiterative understanding of what drives costinside the organization

Both can be rapidly re-forecast byupdating driver data enablingoperational capacity to be tightlyaligned with demand

Costing and driver-based / activity-based budgeting in a single solution


Resources& Line ItemExpenses

Cost Objects

Activities

RevenuesProduct, Customer,

Channel etc

ProfitabilityProduct, Customer,

Channel etc

CostAssignment

CostAssignment

ResourceDrivers

ActivityDrivers

Adjust capacity infuture periods

Adjust prices andsales mix

Adjust resourceAdjust resourcecosts in future

periods

Adjustconsumption infuture periods

Adjustconsumption infuture periods

Adjust demand infuture periods

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Because all the assignments have been madein a multidimensional data structure, drill throughis automatic with no links to maintain

Consolidated measures are calculated byweighting “% achievement”

Seamless IT metrics

ProblemManagement

KEY

OBJECTIVE METRIC

# Problems

Problem ResolutionRate

Problem WorkaroundRate

Problem ReopenRate

# Major Problems

Customer ImpactRate

Average ResolutionTime

Minimize Impact ofIncidents

Resolve IncidentsEfficiently

Single step multi-dimensional assignment

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Single instance update filters through all models

Seamless functionality

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Cost analysisWhat are the resources involved?How much does it cost…?

Performance MeasurementWhich indicator shall we use?What did we improve?How do we perform compared to others?

Pricing and billingHow do I price my services?How do I justify invoices to customers?Are amounts paid in line with true costsand budget?

Planning and budgetingBased on forecast volumes and servicelevels, what resources do I need?If the demand changes, how quickly canI reforecast?

© SAP 2008 /

Solution architecture

Presentation layer

Model buildersModel structure / rules

Work management

End user dataentry, query &

analysisWeb or LAN

End user drillthrough dials and

gaugesWeb or LAN

Data layer

GL, Data Warehouse, CRM, Other transaction systems

Extract, Transform, LoadData Integration Tools

Export resultsto an external

Data Warehouse

Single opendatabase

Oracle or MS SQL

Applicationlayer

Profitability and CostManagement

MDX connector

Microsoft Excel

Business-Objects

Enterprise andSAP NetWeaver

BusinessObjectsCrystal Xcelsius

Other 3rd partyOLE-DB

compliantOLAP

© SAP 2008 /

Client layer

Application layer

Database layer

Application layer

Database layer

Scalable multi-tier architecture

ERP Database'sGL, Data Warehouse, CRM,Other transaction systemsProfitability and Cost Management

DatabaseSQL or Oracle

PCM ModelServer(s)

PCM MainServer(s)

Webclients

Win 32 clients

PCM WebServer(s)

Several clientscommunicate with adatabase server via themiddle-tier servers

This architecture enablesthe connection of largenumbers of client machineswith minimal performancedegradation

Extract, Transform, LoadData Integration Tools

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Summary

Benefits

User-friendly rapid and efficient modeling

Scalable enterprise-class solution

Extend the value of profitability and cost management

Reliable on-demand what-if analysis andscenario modeling

Visibility

Alignment

Incisive decisionmaking

Optimize costs andprofitability

© SAP 2008 / © SAP 2008 / Page 39

Summary

User-friendly rapid and efficient modelingPredefined logical data structure and point and click assignments meansrapid model build and minimal maintenance reducing your total cost ofownership (TCO) and accelerating your ROIModel complex situations across multiple periods and versionsSupports multiple ABC methodologies

Scalable enterprise-class solutionSpeedy deployment, training and user adoption; centralized model admin;Web books for collecting non system driver data from remote usersAbility to process high data volumes without compromising accuracyMulti-currency and multi-language aliases supportEnterprise class security and traceback – with full audit trail

Extend the value of profitability and cost managementUnique services costing and cross-chargingDeliver activity-based and driver-based planning and budgeting models;change driver volumes and “back-calc” existing ABC modelsRapidly reforecast; update driver data and align capacity with demand

Reliable on-demand what-if analysis and scenario modelingUnique on-demand query and what-if analysis, with web-accessible dataallowing users to assess the impact of changes before committing to themSlice and dice data and analyze results, create charts, drill down to detailedcost data and link to related budgeting and metrics modelsMaintain data in central repository for greater efficiency and control

BenefitsVisibility

Broad insight into the true driversimpacting costs and profitabilityincluding IT shared services viauser friendly interface

AlignmentKeep operational capacity andsupport functions tightly alignedwith both demand and strategy forflawless execution

Incisive decision makingRapid identification of underlyingcauses of changes in organizationalcost and profitability with thecapability to test out the impact ofchanges before committing to them

Optimize costs and profitabilityDetailed understanding of costsand profitability enables you to takeaction orientated decisions thatreduce the cost to serve andimprove the profitability of products,customers and channels

Print version for take away/handouts

© SAP 2008 /




Agenda

© SAP 2008 /

Benefits of sound financial management in IT

CostingMakes justified investment decisions

Measurement drives cost effectiveness

Have informed discussion withbusiness users in financial terms

GeneralAccurate costing information tosupport investment decisions and TCO

More efficient use of IT resources

Increase professionalism with peers

BudgetingEnsure funding is aligned with servicecommitments

Ensures services can be maintained

Provides early warnings of under- or over-consumption of resources

Increased confidence in setting andmanaging budgets

Cross ChargingCharge out is equitable

Drives accountability by business users

Provides basis for balancing provision ofservices with needs of the business

Encourages informed discussion aboutservice levels and price

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Everyone with alaptop and a

desktop? – it’s nolonger acceptable

Let’s set a date todecommission

Just virtualize allour stuff as soon as

you can

What’s the saving ifI accept a lowerlevel of service?

Rather than incurmore cost, we’ll

limit e-mail storage

If that’s the savingfrom pushing outreplacement, we’ll

live with it

I’ve told my folk –the free buffet’s

over!

The discriminating business user

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© SAP 2008 / © SAP 2008 / Page 43

For you as a Partner

Improved time-to-value for your customersSpeed of implementation – packaged product with greatdeal of flexibility vs. custom buildMore projects in less time – means further billable opportunitiesBuild expertise – assist in speeding up subsequentimplementations

Elevate customer relationshipProcess re-engineering opportunities – executive level visibilityEase of use – reduces training, encourages project adoptionCustomer able to participate more – potential for more strategicprojects

Increase revenue and expertiseDrive revenue for competitive vendor migration servicesDevelop expertise in SAP FPM to capitalize on servicesopportunitiesPossibly to integrate services across ERP, GRC and EPM

Strategic focus on SAPRevisit competitive implementations which are complex, sufferfrom lack of user adoption or are poorly integrated with SAPEngage with the larger SAP ecosystem

© SAP 2008 /

“Profitability and CostManagement allowed us toproduce reliable reportsand the reduce the timeand complexity inproducing them.”

Dorothée MassatCFO of SILCA

Description

Benefits

© SAP 2008 / Page 44

European bank

“Founded as a merger between the ITdepartments of Crédit Lyonnais, Calyon andCrédit Agricole, SILCA implemented servicescosting and cross charging

20% decrease in the number of PC’s

30% decrease in the cost of providing a fullyloaded PC

20% decrease in server costs

Reduced to produce costing reports

Gained financial credibility through transparency

Internal Use Only

© SAP 2008 /

“What really shows thequality of an IT budget orforecast is whether the unitprice of the service isdecreasing and otherproductivity indicators.Profitability and CostManagement provides therequired visibility on both.”

Jean-Louis BarsottiniCFO of I-CDC

Description

Benefits

© SAP 2008 / Page 45

European bank

“Informatique CDC is the IT shared servicesfunction that supports CDC, CNP Assurances,CNCE and Natexis

30% decrease in the number of PC’s

15% decrease in printing costs

Eliminated unnecessary new projects – 1 in 3 nolonger wanted by the business user

Improved the quality and accuracy of the ITbudget

Reduced the running cost of most applications

Internal Use Only

© SAP 2008 /

“What convinced us toselect the applicationahead of the competitionwas its open architecture.Plus, the modelingcapabilities using anactivity-based costingmethod and the ease withwhich data collectionoccurs and accountingreports can be generatedand circulated via ourIntranet.”

Joel RouressolHead of Analysis

Description

Benefits

© SAP 2008 / Page 46

European retailer

“Groupe Casino operates 9,123 retail outletsunder 40 different fascias in 15 countries withbrands such as Casino, Monoprix, Franprix,Leader Price and Geant

Every department, branch or subsidiary is billedwith highest degree of accuracy for IT servicesused

Visibility ensures better control over the volumesof services and hardware purchases

Provided tools for controlling costs of projects

© SAP 2008 /

The PresidentsManagement Agendachallenges all Agencies tobe responsible andaccountable for all taxpayerdollars

This helped USDAmodernize the FY09budget formulationprocess… a critical firststep to Budget andPerformance Integration

Description

Benefits

© SAP 2008 / Page 47

U.S. government agency

“With 15,000 employees, based at 2,359 localUSDA Service Centers, USDA has an annualbudget of $30B. It provides 2.2 million farmerswith support and assistance for disasterrecovery, income support, conservation anddevelopment loans

Ability to better justify spending

Replaced a system where USDA was trying todeliver PBB through thousands of spreadsheetsinvolving a lot of non-value adding work foranalysts and limited ability to trace commitments–running the risk of failing to comply withregulatory guidance and public law

Internal Use Only

© SAP 2008 /

“The actual cost of aproject is under continualmonitoring. ITManagement wants us toexplain any differences.SAFIR helps us to makeboth our sector customersas well as our IT teamsaware of the consequencesof these differences”

Muriel FallyDirector of the SAFI project

Description

Benefits

© SAP 2008 / Page 48

French postal service

“Group La Poste is one of the top 3 majorcompanies in France. The French Post Office isorganized in four trades and a transverse entity :Mail (La Poste Courrier), Postal bank (La BanquePostale), Parcel (La Poste Colis) and LPGP (LaPoste Grand Public)

Value creation – ability to trace costs andexpenses of IT costs and projects leading toability to record these as assets for the company

Automation – manager data preparation andprocessing takes around ten minutes…wherehad previously taken two days per month

Accuracy – cost model is based on actual, nottheoretical consumption

© SAP 2008 /

“BusinessObjects Profitability and CostManagement for IT” sample references

© SAP 2008 / Page 49

Internal Use Only

http://212.180.109.210/hsbc/fr/index.do

http://www.lamondiale.fr/main.htm

http://www2.marksandspencer.com/thecompany/index.shtml

http://www.csc.com/

© SAP 2008 /

Overview


Pricing and BillingHow do I price my services?How do I justify invoices to customers?Are amounts paid in line with true costsand budget?

Planning and BudgetingBased on forecast volumes and servicelevels, what resources do I need?If the demand changes, how quickly canI reforecast?

© SAP 2008 / Page 51

Cost AnalysisWhat are the resources involved?How much does it cost…?

© SAP 2008 /

Out of the box dimensionality

Versions,periods, RC’scurrencies

Up to 5 costobjectdimensions

Revenuedimension

Servicesdimension

User-definedrules

Attributes

Data aliases forlanguages etc.

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Activities and processes

Process andactivitydictionary

Attributes are used to group activities on asmany alternate hierarchies as necessary

Useful for comparison against standard ITservices libraries such as ITIL

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Activity re-assignments

Support activities are reallocated onto operational activities

For example, « 7.1 Management » is reassigned on all departmentsusing the total number of FTEs

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Cost Object costs

Select the activity,service or line itemby RC – overrideby Version and

Period if required

Select the activitydriver – override by

RC if required

Select the targetCost Objects either

individually or by“All”

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Cost Object costs analysis

Costs of services and projects per customer, period andversion are automatically calculatedand refreshed after any change in the model

The full traceability on services and customers costsauthorize access to underlying activity/process costs,source department and line items

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Pricing

Units costs are automaticallycalculated

Users can manually input a pricein place of the proposed one – oradd a fixed or variable markup

Split between budget and actualallows the IT department thechoice of invoicing using theforecasted demand or the actualdemand

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Cross charging

Each row details unit price,budgeted price, real volumes,budgeted volumes and thetotal amount + tax if relevant

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Reconciliation

Users can compare the budgeted amount with thecalculated invoice per customers

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Simulation using forecast volumes

Collect forecast volumes from users

.. Calculate new activity levels…

.. resource requirements and budgets ...

...as well as new unit rates for coming year

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Budget follow-up

The budget can be tracked atany level of detail in the model.

Line itemsActivity costsCost objects costsPerformance indicators etc.

Actual, budget and allre-forecasts are in the samedatabase and model, makingcomparisons and follow upvery easy

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Performance measurement

Performance objectives andmetrics can be calculated using:

Line item valuesActivity costsCost objects costsActivity drivers and resource volumesAny other external metic bought into the model

Indicators can be displayed in thegraphs and charts in PCM webbooks – or in drill through PCMgauges - or linked to other toolsusing the MDX connector

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On-demand – ‘What-if?’ analysis

© SAP 2008 / Page 66

Users can drill through to theunderlying data – and test outhow changes they makeimpact the achievement ofhigher level objectives in futureperiods

© SAP 2008 / © SAP 2008 / Page 67

For more information

See SAP.com for:White papers

Costing and cross-charging IT services (WIP)Implementing customer, product and channel profitabilityanalytics (WIP)

Solution briefsManage organizational costs andoptimize profitability

Solution in detailManage organizational costs and optimize profitability

Customer case studiesGroupe CasinoWH SmithAllied Irish BankMorleyBDL Hotel Group

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IT Shared Services Costing

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