Niall Cumming Manager Integration SAP EU

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Niall Cumming Manager Integration SAP EU

• Industry Best practice
• Case Study Business Transformation
• Kraft Foods business change implementation of
  SAP in EU
• 2001 - 2005

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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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About Kraft Business Facts

• Business Food Manufacturing Distribution.
• Turnover 37 billion including 13 billion non
  USA including 8 billion in EU.
• Brands 9 Brands of 1 billion, 50 of 100
  million, 40 over 100 years old.
• Product lines Snacks, Beverages, Cheese,
  Convenient Meals, Grocery.
• Trading Retail, Wholesale Away from home.
• Employees 103 000
• Global Representation 150 Countries, 18 in
  Western Central Europe.

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About Kraft - Products
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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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Kraft EU Challenge Time to Change

• Factors that pushed Kraft EU for Transformation
• Rapid growth of business by merger, acquisition
  organic
• Hundreds of business processes practices
• Thousands of interfaces
• Thousands of legacy systems on multiple platforms
• Cost of running Information systems
• Many approaches to Business change IS Project
  delivery
• Little EU Governance common business practice

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Kraft EU Challenge The Scale of the
Transformation

• The Scale of the Transformation
• Company with an operating revenue of over 8
  billion USD
• Approximately 11,000 users (SAP Modules ERP,
  EBP, WM and BW)
• 18 countries with 58 legal entities
• 165 plants (manufacturing units, distribution
  units, business units)
• 61,000 SKUs
• 400 thou customers placing 2,5 Mil sales orders
  representing 10 mil tonnes of product
• 400 thou materials (44 thou centrally controlled
  Direct Materials)
• 220 thou purchase order items placed with 80 thou
  vendors.

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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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Kraft Solution Business Drivers

• Harmonisation of business processes across Europe
• Provide a common platform for Europe
• Support existing European processes, e.g.
  manufacturing, purchasing, supply chain planning
• Enable the European geography to respond quickly
  and effectively to evolving trade and supplier
  structures
• Enable further opportunities for widening the
  European approach
• Provide greater consistency of reporting and
  control
• Support future integration of acquisitions and
  reorganisations

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Kraft Solution - Country Scope Rollout plan

• Complete
• Belgium, Luxembourg, Netherlands (Benelux)
• Norway, Sweden, Denmark, Finland, Estonia
  (Nordic)
• Switzerland
• Italy
• UK/Ireland/MEA
• Spain, Portugal (Iberia)
• Disenaa (STAR WM Pilot)
• Bern (STAR WM)
• Germany/Austria (including WM)
• France
• Strategic Plan moving forward
• Greece
• European Accession countries
• Simplification and harmonisation

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Kraft Solution Common Business Processes

• Financial Accounting
• Management Accounting
• Fixed Assets
• Treasury (limited only)
• Controlling
• Plant Maintenance
• Production
• Production Planning

• Inventory Management
• Raw Materials Warehousing
• Materials Management
• Project Management
• Sales and Distribution
• Trade Deals
• Marketing
• Procurement

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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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How was it Done Guiding Principles Governance

• Standard SAP used wherever practical
• Program to adopt a build once, use many
  approach
• Common Design business processes will be adopted
  wherever possible (aim for 90 commonality)
• Deviation from the Common Design only allowed for
  Legal and Trade reasons
• All deviations require business justification
• Business must validate that the Common Design
  meets business needs through active involvement
  in its design and implementation
• Business must own the solution

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How was it Done Common business Processes
Achieved

• Central team base setup in London Heathrow in
  2000
• For 10 months 600 staff from all functions in
  Europe participated in regular workshops
• Common template (STAR Common Design) was defined
  and signed off mid-2001 by country and European
  management
• Other deliverables
• Roll-Out organisation
• Roll-Out plan
• Roll-Out methodology and tools

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How was it Done What does common mean?
Commonality
Cost

• Finance
• Purchasing
• Chart of Accounts
• Master Data Structures
• Organisational Structures
• Reports

• Pricing
• Documentation
• Local Language

• Distribution
• Warehousing
• Statutory Reporting
• Billing
• Interfaces

Harder to achieve
Easier to achieve
The challenge was to move as much as possible
towards the left hand side and thus achieve a
large degree of commonality
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How was it done Features of the Program Approach

• Strong central and local program governance
  ensures
• Clear, concise and auditable decision making
• Control of scope, budget and risk
• Protection of the Common Design
• Effective command and control Roll-Outs
• Effective measurement of success
• Roll-Out approach ensures
• Local buy in to the change
• Effective local stakeholder management
• Implementation approach ensures
• Well documented central and local designs
• Thorough process and system design documentation
  held in a centrally controlled repository
• Controlled application build
• Tried and tested integrated testing approach

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How was it done One shared landscape

• STAR employs the SAP recommended 2 tier landscape
• Dedicated landscape for production support (bug
  fixes and minor changes)
• Dedicated landscape for on-going projects with
  scheduled release dates

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How was it done Common Integration Platform

• Common Integration for build once use many set
  up.
• There are approximately 170 legacy system
  connections centrally built supported
• Approximately 600 individual types of message
  flows are defined
• At peak periods more than 180,000 messages are
  processed in the Integration space each day

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How was it done Business led system Governance

• Functional Reference Groups have been setup to
  cover all critical areas of the business
• Communicate, promote and protect common business
  processes
• Ensure knowledge of the design across European
  countries to prevent wrong design definition and
  implementation
• Establish a forum where future requirements and
  solutions are assessed
• Reduce complexity by extending existing
  developments to other countries
• Share experience and speed up future
  implementation process
• Set the correct priorities from the business to
  direct the work of the SAP Competency Centre

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Presentation Content

• About Kraft
• Business Facts
• Products
• Kraft EU Challenge
• Time to Change
• Scale of Required Transformation
• Kraft Solution
• Business Drivers
• Country Scope Rollout plan
• Common Business processes
• How was it done
• Guiding Principles Governance
• Common business Processes Achieved
• What does common mean?
• Central Local Deployment
• Features of the Program Approach
• One shared landscape
• Common Integration Platform
• Business led system Governance

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What are our key learning's?

• Program was new and complex, we had to play
  catch up in both hardware and software, future
  implementations will benefit from this learning (
  Consulting provided new thinking on required
  architecture to support future growth )
• During early phases of STAR, too little resource
  was allocated to project control and benefit
  realisation ( Cost investment in project start up
  pays over project duration )
• Increased stakeholder commitment to both project,
  business and process change is required to
  succeed (Business Reference groups were created
  for Governing on going maintenance)
• You cannot do enough work on business change. It
  is critical to ensure that all users operate the
  system in the way it was designed ( Use common
  open standards processes is easier to upgrade
  support )
• Project timelines and costs can be further
  reduced by building once use many ( Methodologies
  created to identify opportunities in this area )

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What are our key learnings? (continued)

• Strong program governance and stakeholder
  management is vital
• Standardised methods documentation assisted in
  transition to 3rd Party Support
• Software has not been the constraint ( Use
  Standards wherever possible )
• People, processes and change have to be managed
• Keep it simple
• Data migration strategy is always more complex
  than you estimate
• Transaction and CPU sizing should be addressed up
  front
• Only use best people on the project team ( The
  use of Consulting services best practice in
  early stage a must )
• Empower the project team ( Taking decisions
  against agreed strategies saves time effort )
• Whilst originally positioned as a systems
  replacement project, STAR provides a platform for
  strategic initiatives such as European
  consolidation and Shared Services

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QUOTES FROM PWC PAN EUROPEAN AUDIT AND ALTRIA
AUDIT

• Project STAR has been implemented with a number
  of strong system and manual controls. Based on
  our experience of SAP audits, Project STAR is
  among the most thoroughly controlled systems we
  have reviewed. We have not identified significant
  areas of focus that continue to require immediate
  attention, although there will always be
  opportunities for improvement with any systems
  implementation of this scale.
• PWC Pan European STAR Audit Report, 2003
• ...we are investing considerable time and
  resource but cannot find any significant issues
  with STAR.
• Altria Audit verbal comments only, 2004

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QUESTIONS?
Kraft Vision Helping People Around the World
Eat and Live Better