QAD Explore 2012 Building the Right Business Case

QAD Explore 2012 Building the Right Business Case

QAD Explore 2012 Building the Right Business Case Eric Frantz Solution Consultant - Value Creation, QAD Building the Right Business Case Safe Harbor Statement The following is intended to outline QADs general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QADs products remains at the sole discretion of

QAD. 2 Building the Right Business Case Leveraging QAD Investment To Achieve The Effective Enterprise An Effective Enterprise is one where every business process is working at peak efficiency and perfectly aligned to the companys strategic goals QAD solutions are aligned to the customers business objectives Speed of information aligns with the velocity of business 3

Building the Right Business Case Business Case For Investments Align business objectives to best practices Leverage the Vision and Q-Scan process - Identify prioritized areas of improvement - Identify investments, business benefits, process improvements, and ROI/payback Align QAD solutions to enable improvements Establish metrics for monitoring effectiveness 4 Building the Right Business Case Vision Process Outcomes

Identified 5 Building the Right Business Case Outcome of the Vision Driven by metrics, not just guessing - Empirical versus anecdotal Provides basis for building the business case - Quantified benefits vs. investments 6 Building the Right Business Case Business Goals Impact

Revenue Net Income COGS Costs R&D SG&A Distribution Return on Net Assets/EVA/Value/ Free Cash Flow Net Assets Working Capital

Inventory Receivable s Cash Fixed Assets 7 Building the Right Business Case KPI Example Inventory Turns Bar Coding / RF Tracking Inventory Accuracy

Collaborative Forecasting Requirements Plan Accuracy Vendor Managed Inventory Safety Stock Level KPI Metrics Consignment Best Practices QAD Solutions

8 Building the Right Business Case Key Metrics Metric Inventory Turns Gross Margin % Delivery Performance In Full by Order/Line Forecast Accuracy by product line (units) Etc. Current 8 40% 85%

Target 10 45% 95% 75% 90% 9 Building the Right Business Case Investment Alternatives 10 Building the Right Business Case

Benefits / Investment Estimates High Inventory Turns Benefits On Demand Electronic Comm Learning Plans Upgrade Configured Products

Delivery Cycle Time Low Low Investment High 11 Building the Right Business Case Implementation Plan 2012 2014

2013 Learning Plans Configured Products Electronic Communication Inventory Effectiveness Q-Scan On Demand Deployment, Upgrade Upgrade Q-Scan Current SystemNew Products 12 Building the Right Business Case Q-Scan Building the Business Case 13

Building the Right Business Case How To Get Started Q-Scan Assessment - Pre-defined services engagement Predetermined scope Fixed fee & time - Assessment within a specific business area Diagnostic and prescriptive Can be tailored to specific situation Many Q-Scans use common elements 14 Building the Right Business Case

Q-Scan Assessments Process Enable Complianc e Design Finance FDA Validation Engage Transportation 21 CFR Part 11

Technical Plan Asset Management MMOG/LE Analytics Analytics Make EDI IFRS

Learning Source Lot/Serial Tracking Sarbanes Oxley KPI Deliver Configured Products Service Projects

General Upgrade / Upgrade / Deployme Deployment nt Performance Monitoring KPI Warehousing 15 Building the Right Business Case

Deliverables Business case Project plan Resource plan Training plan Project budget Business risk Total cost of ownership 16

Building the Right Business Case Business Case Process TCO Alternative Total cost of ownership - Comparison of On Premise vs. On Demand - Typically a 2-3 week duration Final workshop and executive presentation Delivers total cost of ownership comparison analysis 17 Building the Right Business Case Total Cost of Ownership Process Comparison of On Premise vs. On Demand alternatives Identify Requirement Overview, Scoping 1 hr. Web Meeting

Data Collection QAD, Customer 1-2 weeks On Site Final Workshop, Deliverable Prep 4 hrs. Executive Presentation 2 hrs. 18 Building the Right Business Case On Demand TCO Analysis 19 Building the Right Business Case Business Case Process - Business Value Business Value assessment of added

benefits due to changes in delivery method, new functionality, and other business model enhancements - Typically a 4-8 week duration, On-site workshops, Final workshop and executive presentation - Subset of Q-Scan - Delivers benefits vs. investment (e.g. Payback, ROI, IRR, etc.) 20 Building the Right Business Case Business Value Process Assessment of added benefits due to changes in delivery method, new functionality, and other business model enhancements

Identify Requirement Identify Requirement Overview, Scoping 2 hr. Web Meeting Overview, Scoping 2 hr. Web Meeting Pre-Work QAD, Customer

1-2 weeks Pre-Work QAD, Customer 1-2 weeks On Site Workshops per site 2-3 days per On Site Workshops per

site 2-3 days per On Site Final Workshop, Deliverable Prep On Site Final Workshop, Deliverable Prep 1-2 days

1-2 days Executive Presentation 2-4 hrs. Executive Presentation 2-4 hrs. 21 Building the Right Business Case Quantified Benefits Potential By Module QAD Value Cards - a starting point but should be validated during the Q-Scan with the customer.

QAD Value Cards deck 22 Building the Right Business Case Business Case Executive Presentation Solution Description, Roadmap (What, When) Strategic Benefits Financial Projection Payback, P&L/Balance Sheet Intangibles 23 Building the Right Business Case

Time Phased Business Value 24 Building the Right Business Case Case Study 25 Building the Right Business Case Example 1 Situation On Demand vs. On Premise $100,000 annual Maintenance (QAD 2011SE) Need to upgrade Servers - $100,000 2 IT personnel dedicated to QAD

26 Building the Right Business Case Example 1 Analysis On Demand 5 yr TCO favorable 9% Strategic benefits include - High uptime Rapid implementation Risk avoidance Capital reduction Scalability 27 Building the Right Business Case

Example 2 Opportunity 1 - 10 Schedulers *$60,000 total compensation = $600,000 annual - 10% efficiency = $600,000 * 10% = $60,000 annual savings - Investment in implementation of MSW/PSW = $50,000 (Services) - $60,000 Benefit vs. $50,000 Investment Payback in less than 1 year 28 Building the Right Business Case Example 2 Opportunity 2 Reduce inventory level from $20 M to $16 M by improved forecasting and inventory planning with Demand Management

- $4 Million Inventory reduction - $1 Million Annual carrying costs savings ($4M * 25%) - Investment in Demand Management = $100,000 software, $100,000 Services - $200,000 Investment vs. Annual Benefit $1 Million Payback in less than 1 year 29 Building the Right Business Case Final Thoughts Achieving the Effective Enterprise is supported by KPI-led Business Case assessments of proposed business changes. - Align business objectives to QAD solutions - Establish metrics for empirical validation of focused improvement How youll know you

are improving - Quantify metrics improvement to establish the business case for investment How much is it worth to the customer? 30 Building the Right Business Case Questions & Answers Eric Frantz Solution Consultant - Value Creation, QAD [email protected] 31 www.qad.com QAD Inc 2012 32

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