Basing Decisions on Reliable Key Figures, Not Gut Feeling

Tape Roboter, Foto: All for One Midmarket AG

“The growing complexity and the sheer acceleration of value processes means that managers can’t rely on their gut feelings to make decisions. They need support in the form of reliable key figures. This changes the role of the ERP systems that support the value-added processes,’’ explains Volker Schnittler, a specialist in commercial company software in the VDMA.

Operational IT and key figures are often two very different things – a fact recognized not only by the companies that use IT, but also the VDMA’s central working group for Quality and Management (Q&M). Led by Schnittler and business specialists Dr. Frank Bünting and Dr. Hans-Willhelm Leyendecker, the cross-function group not only united business and IT, but also presented their results to 13 software providers. While the majority of the software manufacturers had to decline the challenge, SAP partner All For One was able to present a new cockpit tailored to meet the VDMA’s requirements.

Selected process key figures direct from the ERP system

On-time delivery performance? Service level? What are the key figures required for? How should the information be used? And how often? In reality, we know that key figure graveyards are often established and maintained without the most basic questions ever being asked, yet alone actually answered.

This is where VDMA wants to intervene: Based on an adaptable six figure reference model for the machinery and plant engineering and construction industry, it has defined roughly 70 key figures and their respective processes. The aim is to be able to measure, evaluate, and monitor entire value-added processes and provide the basis for continuous improvement. This requires up-to-date key figures that are continuously generated from the ERP system.

All For One Midmarket AG’s solution is known as the VDMA process key figure cockpit and is based on the SAP NetWeaver Business Intelligence component. New software technology such as service-orientated architectures (SOA) enable the cockpit to be enhanced with new releases and connected to existing solutions, without having to make changes to the core. This new development is an innovative addition to the All For Machine industry solution.

Understanding the key figures

Battery room, Foto: All for One Midmarket AG

A traffic light system helps users make sense of the key figures. The system is based on the threshold values that can be recorded for each individual key figure. By visually summarizing the data, the user’s attention is focused on the most important information. Since deviations can often only be identified by looking at the information in detail, the cockpit also offers excellent drill-down options. An information sheet shows how each key figure is defined.

Process key figures provide little information when viewed in isolation. By comparing or benchmarking them with key figures from other companies in the same industry, however, their value increases significantly. Process key figure systems that map an industry can be particularly helpful, therefore, in determining where an individual company should be located, for example.

The ERP system as a strategic tool for managers

“ERP solutions no longer simply support and carry out business processes; they are also a strategic tool for managers. Suddenly, the ERP system is not just essential for administration, but for managers too,” explains Schnittler.

Market observers are reporting an increasing demand for business intelligence solutions. Of the more than 250 All For One system customers, in Germany alone, over 60 use business intelligence (BI) solutions. In addition to the process key figure systems, BI can be used in a variety of ways, from running individual reports in areas such as marketing, purchasing, and inventory controlling, to mapping comprehensive key figure systems for balanced scorecards.