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www.celonis.com
CELOSPHERE 2019
BUILDING A NEW BUSINESS
CASE FROM SCRATCH
Sam Attias
Solution Engineer, Celonis
Bertram Lutz
Head of Solution Engineering UKI
03/04/2019
Agenda
1. Motivation
• Order-to-cash examples
• Why build a business case?
2. Key Value Drivers
• Efficiency
• Speed
• Direct Cash Effects
• Cost of Diagnosis
3. How to present a business case
4. Summary
$237 bn Because of the failure to find and eliminate
inefficiencies in their processes, Fortune
200 companies are losing $237 bn a year.
the price of inefficiency
Value Proof from existing customers: Summary
Target Area Transformation Metric Business Impact
Order-to-Cash
On-time-delivery € 1,234,120 p.a.
Reduced cycle times € 820,000 p.a.
Perfect orders € 1,124,271 p.a.
Late production orders € 72,347 p.a.
Reduced delivery times € 1,030,000 p.a.
Internal cycle time benchmarking
Strategic targeting of sales organizations with above-
average cycle times.
3,7 Mio € p.a.
Process Harmonization
Consolidation of process variants covering
1,300,000 cases
1,3 Mio € p.a.
OnTime Delivery
62 % 87 %
Days from
Sales Order toGoods Issue
25 22.5
Perfect Orders
21 % 40 %
Late production
orders
23 % 18 %
Delivery time
days
6.5 5
Business Case Value
Give robustness to an investment proposal
Prioritize improvement initiatives
Give a sense of magnitude/urgency
Highlight time-to-value
Why build a Business Case?
Business case areas
Putting a number to
business transformation
Efficiency
SpeedDirect Cash Effect
Cost of diagnosis
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we measure efficiency?
• Eliminate Rework
• Targeted Automation
• Reduce Manual Changes
• Process Specific
• Efficient Order Bundling
• Reduce Delivery Blocks
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we measure efficiency?
No. rework activities × Avg. effort (min) × FTE Cost (€/min) × realization
potential.
Calculation
Operational metrics
Process Experts
Define and identify
unwanted rework activities
within the process.
Highlight high-volume
activities to target.
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we measure speed?
• Increase Throughput time
• Cut-down Late payments
• Increase No-touch orders
• Increase First-time-right orders
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we measure speed?
Calculation
Affected Vol. (€) × ROIC (%) × Reduction of Cycle Times (d)
Operational
metrics Process Experts
&
Use Celonis to calculate
cash volume subject to
delay due to process
bottlenecks and
inefficiencies.
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we determine cost of diagnosis?
Reduced Reporting effortCut-down Consulting spend
Reduce the number of narrow-
focused reports that need to be
produced to diagnose process
problems.
Reduce reliance on both external
and internal consulting services.
Focus on delivery rather than
diagnosis.
Tool
Synergy
Reporting &
Dashboards
Benchmarking
Effort
Data
Provisioning
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we calculate direct cash effects?
• Reduce Order Cancellations
• Eliminate Material Loss
• Identify Missed Invoices
• Evaluate Mis-matched deliveries
Business Case Value Drivers
Efficiency Cost of diagnosis Direct Cash EffectSpeed
How do we calculate direct cash effects?
Calculation
Lost revenue × Gross profit margin × realization potential
Operational
metrics Process Experts
Use Celonis to identify
direct lost revenue due to
factors including order
cancellations, lost inventory,
and missed invoicing.
Business case areas
Putting a number to
business transformation
Efficiency
SpeedDirect Cash Effect
Cost of diagnosis
Business Case Value Drivers
How to present a business case?
• Structure impact areas
• Give a ranged estimate
• Identify priorities
• Highlight effect on P&L
• Specify ramp-up (present long-term business case)
ORDER-TO-CASH POTENTIAL QUANTITATIVE BUSINESS IMPACT
Type Topic
Conservative
Estimate
Description
Speed
Throughput Time
##,### €
Fasten internal throughput time to free up cashflow and avoid unnecessary
interest loss
Late Payments
##,### €
Reduce working capital expenditure by reducing late payments
No touch orders
##,### €
Increase processing speed through orders without a single human interaction
Quality &
Fulfillment
##,### €
Rejected Items a)
##,### €
Find your major rejection reasons and realize additional revenue
Efficiency
Manual Changes ##,### €Reduce manual change activities associated to impact process costs
Delivery blocks ##,### €Reduce manual effort associated with delivery blocks
Automation rates ##,### €Identify and realize automation potentials in the process
Electronic ordering ##,### €Realize untapped EDI potentials
Annual Financial Impact ###,### €
Empiric Values*
20 %
(ROI Realized)
10 %
(Reduction potential)
30 %
(Opti. potential)
30 %
(Reduction potential)
15 %
(Reduction potential)
10 %
(Reduction potential)
20 %
(Improvement potential)
+25 %
(Target ratio)
Rejected Items b) Reduce manual effort that resulted in rejected orders
First Time Right Orders Increased speed through first time right orders
Order Bundling Bundle frequent orders of the same customer to save internal resources
20 %
(Reduction potential)
##,### €
##,### €
5 %
(Reduction potential)
30 %
(Reduction potential)
Rework Streamline your process by eliminating rework activities that add no value
30 %
(Reduction potential) ##,### €
*Empiric values based on actual realization
potential of Celonis customers within one year
###,### €
###,### €
###,### €
###,### €
###,### €
###,### €
###,### €
###,### €
###,### €
#,###,### €
###,### €
###,### €
###,### €
Optimistic
Estimate
Business Case Value Drivers
Highlight potential
Lo
w
Lo
w
High
High
ValuePotential
Feasibility
Quick wins
Avoid Nice to have
Long-term goals
Value Potential
• Cost Savings
• Efficiencies
• Strategic Benefits
• Key Differentiators
• Compliance
Feasibility
• Low Technology /
Business Risk
• Organizational Readiness
• Low Transition Cost
3-year Impact
Cumulated impact, 3 years
50% 75% 100%
Degree of ramp-up in %
Business Impact for
Order to Cash (p. a.)
€X.XXM
Assumptions
Always state assumptions.
Top three priorities
1. Priority 1
2. Priority 2
3. Priority 3
BUSINESS CASE – ORDER-TO-CASH
Year 1 Impact
Year 2 Impact
Year 3 Impact
2019 2020 2021
SUMMARY
Efficiency
Cost of diagnosis
Direct Cash Effect
Speed
Operational Metrics
+
+
Process Experts
€ #,###,###
Cumulated impact, 3 years
50% 75% 100%
Degree of ramp-up in %
Calculate Methodology Present

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Starting from Scratch: Build a New Business Case

  • 1. www.celonis.com CELOSPHERE 2019 BUILDING A NEW BUSINESS CASE FROM SCRATCH Sam Attias Solution Engineer, Celonis Bertram Lutz Head of Solution Engineering UKI 03/04/2019
  • 2. Agenda 1. Motivation • Order-to-cash examples • Why build a business case? 2. Key Value Drivers • Efficiency • Speed • Direct Cash Effects • Cost of Diagnosis 3. How to present a business case 4. Summary
  • 3. $237 bn Because of the failure to find and eliminate inefficiencies in their processes, Fortune 200 companies are losing $237 bn a year. the price of inefficiency
  • 4. Value Proof from existing customers: Summary Target Area Transformation Metric Business Impact Order-to-Cash On-time-delivery € 1,234,120 p.a. Reduced cycle times € 820,000 p.a. Perfect orders € 1,124,271 p.a. Late production orders € 72,347 p.a. Reduced delivery times € 1,030,000 p.a. Internal cycle time benchmarking Strategic targeting of sales organizations with above- average cycle times. 3,7 Mio € p.a. Process Harmonization Consolidation of process variants covering 1,300,000 cases 1,3 Mio € p.a. OnTime Delivery 62 % 87 % Days from Sales Order toGoods Issue 25 22.5 Perfect Orders 21 % 40 % Late production orders 23 % 18 % Delivery time days 6.5 5
  • 5. Business Case Value Give robustness to an investment proposal Prioritize improvement initiatives Give a sense of magnitude/urgency Highlight time-to-value Why build a Business Case?
  • 6. Business case areas Putting a number to business transformation Efficiency SpeedDirect Cash Effect Cost of diagnosis
  • 7. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we measure efficiency? • Eliminate Rework • Targeted Automation • Reduce Manual Changes • Process Specific • Efficient Order Bundling • Reduce Delivery Blocks
  • 8. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we measure efficiency? No. rework activities × Avg. effort (min) × FTE Cost (€/min) × realization potential. Calculation Operational metrics Process Experts Define and identify unwanted rework activities within the process. Highlight high-volume activities to target.
  • 9. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we measure speed? • Increase Throughput time • Cut-down Late payments • Increase No-touch orders • Increase First-time-right orders
  • 10. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we measure speed? Calculation Affected Vol. (€) × ROIC (%) × Reduction of Cycle Times (d) Operational metrics Process Experts & Use Celonis to calculate cash volume subject to delay due to process bottlenecks and inefficiencies.
  • 11. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we determine cost of diagnosis? Reduced Reporting effortCut-down Consulting spend Reduce the number of narrow- focused reports that need to be produced to diagnose process problems. Reduce reliance on both external and internal consulting services. Focus on delivery rather than diagnosis. Tool Synergy Reporting & Dashboards Benchmarking Effort Data Provisioning
  • 12. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we calculate direct cash effects? • Reduce Order Cancellations • Eliminate Material Loss • Identify Missed Invoices • Evaluate Mis-matched deliveries
  • 13. Business Case Value Drivers Efficiency Cost of diagnosis Direct Cash EffectSpeed How do we calculate direct cash effects? Calculation Lost revenue × Gross profit margin × realization potential Operational metrics Process Experts Use Celonis to identify direct lost revenue due to factors including order cancellations, lost inventory, and missed invoicing.
  • 14. Business case areas Putting a number to business transformation Efficiency SpeedDirect Cash Effect Cost of diagnosis
  • 15. Business Case Value Drivers How to present a business case? • Structure impact areas • Give a ranged estimate • Identify priorities • Highlight effect on P&L • Specify ramp-up (present long-term business case)
  • 16. ORDER-TO-CASH POTENTIAL QUANTITATIVE BUSINESS IMPACT Type Topic Conservative Estimate Description Speed Throughput Time ##,### € Fasten internal throughput time to free up cashflow and avoid unnecessary interest loss Late Payments ##,### € Reduce working capital expenditure by reducing late payments No touch orders ##,### € Increase processing speed through orders without a single human interaction Quality & Fulfillment ##,### € Rejected Items a) ##,### € Find your major rejection reasons and realize additional revenue Efficiency Manual Changes ##,### €Reduce manual change activities associated to impact process costs Delivery blocks ##,### €Reduce manual effort associated with delivery blocks Automation rates ##,### €Identify and realize automation potentials in the process Electronic ordering ##,### €Realize untapped EDI potentials Annual Financial Impact ###,### € Empiric Values* 20 % (ROI Realized) 10 % (Reduction potential) 30 % (Opti. potential) 30 % (Reduction potential) 15 % (Reduction potential) 10 % (Reduction potential) 20 % (Improvement potential) +25 % (Target ratio) Rejected Items b) Reduce manual effort that resulted in rejected orders First Time Right Orders Increased speed through first time right orders Order Bundling Bundle frequent orders of the same customer to save internal resources 20 % (Reduction potential) ##,### € ##,### € 5 % (Reduction potential) 30 % (Reduction potential) Rework Streamline your process by eliminating rework activities that add no value 30 % (Reduction potential) ##,### € *Empiric values based on actual realization potential of Celonis customers within one year ###,### € ###,### € ###,### € ###,### € ###,### € ###,### € ###,### € ###,### € ###,### € #,###,### € ###,### € ###,### € ###,### € Optimistic Estimate
  • 17. Business Case Value Drivers Highlight potential Lo w Lo w High High ValuePotential Feasibility Quick wins Avoid Nice to have Long-term goals Value Potential • Cost Savings • Efficiencies • Strategic Benefits • Key Differentiators • Compliance Feasibility • Low Technology / Business Risk • Organizational Readiness • Low Transition Cost
  • 18. 3-year Impact Cumulated impact, 3 years 50% 75% 100% Degree of ramp-up in % Business Impact for Order to Cash (p. a.) €X.XXM Assumptions Always state assumptions. Top three priorities 1. Priority 1 2. Priority 2 3. Priority 3 BUSINESS CASE – ORDER-TO-CASH Year 1 Impact Year 2 Impact Year 3 Impact 2019 2020 2021
  • 19. SUMMARY Efficiency Cost of diagnosis Direct Cash Effect Speed Operational Metrics + + Process Experts € #,###,### Cumulated impact, 3 years 50% 75% 100% Degree of ramp-up in % Calculate Methodology Present

Hinweis der Redaktion

  1. Entering new age of constant digital innovation. Success means being visionary, agile, and decisive about role as follower or leader.
  2. Why is this topic of crucial relevance? Because inefficieny in your business processes directly translates into significant cost and decrease in profit of your organization. 237 bn$ this is the value that only the fortune 200 companies loose annualy due to inefficient processes. You want to make sure to be able to improve your processes. BUT
  3. Animation? First few examples and then display all: there are many many more Prioritization Fact based Root cause Prior Reduction manual Shorten throughput times 5 Leverage Harmonization IT effort