SAP has helped us tightly integrate our widespread operations and align these operations with core corporate objectives, providing a strong return on our investment,’’

January 29, 2004 by SAP News 0

Says Kent Philpot, human resources business process leader and HR service center manager, Dow Corning.

Bangalore, IndiaDow Corning required operational excellence to maintain its competitive position in the shifting silicone market. The global implementation of mySAP Human Resources not only met that need through tight integration but also provided excellent return on investment.

Dow Corning initiated a cost-reduction strategy to maintain its market position in the increasingly cost competitive silicone industry. Niche entrants in the silicone market have created a shift from large-scale, bundled product and service offerings to vertical-specific, value-priced offerings. To remain competitive in these new market dynamics, silicone manufacturers have needed to streamline processes, reduce costs, and rationalize global operations.

Dow Corning responded to market pressures by first implementing a single global instance of SAP R/3, which supports the family of solutions contained in mySAP Business Suite. The company then took one of the solutions from this suite – mySAP Human Resources (mySAP HR) – and implemented it globally. The single global instance of mySAP HR has enabled Dow Corning to transform itself from a decentralized organization to one that is tightly integrated, from a global and vertical perspective.

SAP technology provides the technological foundation Dow Corning needs to support one of its strategic business objectives – operational excellence. The fundamental components of operational excellence are:

• Reduction in global organizational barriers
• Decrease in redundant activities
• Reduction in cycle time for key business processes

High ROI

Accordingly to a survey conducted by Gartner Consulting, Dow Corning achieved a 163 % return on investment (ROI) on its mySAP HR implementation with a payback period of 3.8 years. Ten-Year annualized savings come to U.S.$53.7 million. The results demonstrate how mySAP HR has the ability to help customers meet business objectives through improved operational speed, streamlined enterprise wide collaboration and people management, and higher employee efficiency and productivity.

The survey is based on Gartner’s ROI methodology*. “SAP has helped us tightly integrate our widespread operations and align these operations with core corporate objectives, providing a strong return on our investment,’’ says Kent Philpot, human resources business process leader and HR service center manager, Dow Corning.

“By leveraging the capabilities of mySAP HR, we have reduced operational costs without sacrificing country-sensitive flexibility. As a result, we have remained competitive in the silicon-based industry and have come a long way in reducing global organizational barriers, decreasing redundant activities and personnel, and reducing cycle time for key business processes. SAP has helped us bring down costs in many areas, including reducing human resources administration business processes cycle time from 10 days to three.”

Increased efficiency

mySAP HR has enabled Dow Corning to eliminate organizational and technological redundancies, streamline HR re-lated business processes, provide management visibility into the global organization, and use HR to support strategic globalization and cost-saving objectives. The solution centralizes the company’s HR operations on one global database, while providing a multilingual environment that supports a wide range of currencies and country-specific legal requirements.

The largest contributors to the total business-process savings occurred as a result of improvements in global employee management – through both organizational management and personnel administration. These cost savings resulted from the reallocation of HR staff resulting from the introduction of a more streamlined, centralized global management model. Other cost savings were derived from the integration of time-management and payroll areas and the creation of a more heterogeneous and standardized IT environment.

Although reasonable business efforts were utilized to un-cover an exhaustive list of the financial benefits associated with mySAP HR, it is unreasonable to suggest that all benefits have been identified; therefore this ROI may be considered a conservative estimate.

*The case studies are based on an ROI methodology researched and designed by Gartner: Gartner’s methodology and its use by SAP should not be deemed to be an endorsement of any SAP product or service, data, or sales technique. Gartner expressly disclaims all warranties, expressed or implied, of the fitness of its methodology for a particular purpose. Gartner does not endorse the findings of this case study, and the model results may vary from published Gartner research.