breakout session homebuilding -...

Breakout SessionHomebuilding

Roland Schmid, SAP America

Ralph Jernigan, Jim Walter Homes

Atlanta March 2005

SAP for the Construction Industries – SAP’s viewSAP@Jim Walter Homes – Customer’s viewQ&A

© SAP AG 2004, ECO Breakout, LB_BizForum, Schmid/Jernigan/Rocha 3

SAP EC&O Customer Base Growth 1998 – 2004

Steadily Growing Number of EC&O Customers

55

64

69

91

60

22

1998 1999 2000 2001 2002 2003 2004

80

441

Customer base expanding

New customer growth consistent and sustained

Expanding footprint in all company sizes

Increasing number of installations within large customers as templates are rolled out

+33% average Customer Growth every year since 1998


Construction Customers by Size/Employee Range

Range of Employees No.

X-Large > 25.000 11

Large 5.000-25.000 2828

Medium 1.000-4.999 84

Small < 1.000 215215

Not Assigned 103103

Total 441

64%

25%

8%

3%

The structure of SAP for Engineering, Construction & Operations The structure of SAP for Engineering, Construction & Operations customers is customers is dominated by companies with less than 5.000 employees. dominated by companies with less than 5.000 employees.

89%89% are belonging to this magnitude.are belonging to this magnitude.

Source: MKIS as of 2005-01-11


SAP for EC&O – Customers per Sub-Segment

47

Homebuilding

325

69Others

Plant Contracting& Construction

441441 SAP for Engineering, Construction & Operations customers worldwSAP for Engineering, Construction & Operations customers worldwide ide are distributed to are distributed to 11% 11% on Homebuilding, on Homebuilding, 15% 15% on Shipbuilding,on Shipbuilding,

and and 74%74% on Plant Contracting and Construction. on Plant Contracting and Construction.

Source: MKIS as of 2005-01-11


Great Companies… Great Relationships

Plant Contracting & ConstructionPlant Contracting & Construction HomebuildingHomebuilding

Shipbuilding &Transportation Equipment

Shipbuilding &Transportation Equipment


Customer examples…One solution fits ALL!!!

Rank / Units / Revenue(rounded 2003 values)#430000 Units$10b#223700 Units$1b# 243500 Units$280m# 7 (Manufactured)6600 Units$230m# 9 (Manufactured) 4600 Units$215m


Homebuilding Business Process Overview

MarketResearch

DemographicAnalysis

CompetitiveAnalysis

CommunityForecast

CommunityEvaluation

AbsorptionAnalysis

Product Line

Sales &MarketingDatabase

Marketing &Sales Plan

CommunityKick-off

SalesKick-off

Service & Warranty

ServiceHistory

Database

Service OrderExecution

Service RequestHandling

Warranty & ClaimManagement

ServiceRequest

ServiceHistory

Database

ProcurementVendor BidEvaluation

Request forProposal

Vendor ContractManagement

VendorSelection

Land Acquisition & Development

CommunityDesign Plan

CommunityBudget

Planning &Budgeting Land Acquisition Government

ApprovalCommunity Design LandDevelopment

Product Development

ArchitecturalDrawings

Technical DesignArchitecturalDesign

Engineering &Change

Management

Bill OfMaterial

DesignSelection

RulesQuantityTake off

Define DesignSelection Rules

ProductionMaterial &

SubcontractorManagement

Scheduling Inspection &Walk Through Handover

DocumentManagement

Document & CADManagement

ResourceManagementQuality Control Change

Management

ProgressReports

Cost Control

PayrollContracts QADocuments

Scheduling

Schedules

Planning

Budgets BillingPlans

ContractAdministration

FinancialManagementExecution

Data ChangeRequests

Material Control

WarehouseIssuesEstimates

Sales

Prospect &CustomerDatabase

Design SelectionProspect &Customer

Management

ContractManagement

ContractAward

CustomerSpecific Billsof Materials

SalesInformationDatabase


SAP’s EC&O Solution Map


SAP Homebuilding solution value

Create opportunities to increase revenuesFlexibility to new business areas and marketsImproves customer experience throughout the whole cycle

Enhances the marketing and sales processProspect management, traffic informationHome configurator with automatic pricingAutomated billing

Reduction of rework, elimination of duplicationSales, construction and procurement are fully integratedAutomatic procurement requirements are created from sales contractsThe integration enables identifying cycle time reduction opportunities

Reduction on procurement and inventory costsPurchasing consolidation by division or subdivisionEffective contractor managementOptimization of material specs and inventory levels

Early visibility on cost and margin with accurate information

Reduction on warranty risks and costsSupports inspection and track issue solution before delivery


Benefits for the builder

OverallDramatic reduction on paperwork by integrating sales, purchasing and constructionIncreased access to real time informationImproved confidence in growing business due to SAP´s robustness

Marketing & SalesImproved management of marketing and sales (traffic, prospects, conversions)Improved visibility on lot status for saleIncreased accuracy on structural and design options with corresponding pricingReduced uncertainty of possible options across lots already configuredReduction on cycle time from quote to tender

Procurement and materialsCost savings by enabling purchasing consolidation across subdivisionsReduction on inventory


Benefits for the builder (continued)

ConstructionReduction of construction timeImproved contractor and vendor communication with work paper reduction

FinancialsReduction of book closing cycletimeImproved cash managementImproved accuracy on cost information

Warranty & ServiceStreamlined and cost effective customer care on warranty and services after move-in


Benefits for the customer

Improvement on customer experience due to Improved sales accuracy Reduction on construction cycle timesImprovement on quality

Extension of the timeline to change design options

Streamlined and faster sales process

Faster delivery

Up-to-date information on contract and construction status

Streamlines customer care on warranty issues related to contractors´ services


Highly scalable – stress test result

Response Time for Creating a Quotation or Order25K On-Line Processing with

Full Scheduling of ~16,100 HomesNovember 26th, 2003

0

5

10

15

20

25

0:00

3:12

6:24

9:36

12:4

8

16:0

0

19:1

2

22:2

4

25:3

6:00

28:4

8:00

32:0

0:00

35:1

2:00

40:3

2:00

43:4

4:00

46:5

6:00

50:0

8:00

Test elapsed time in minutes

Pro

cess

ing

in s

econ

ds

Option SelectionSave TimeConfig buttonSucc

essfu

l stre

ss te

st

simulat

ion of Build

er

delive

ring 50

,000

homes/ye

ar

Save time average at peak level: ~13 seconds.Option selection response time at peak level: ~ 5 seconds.Subdivision scheduling processing time: ~ 1.7 min.Database server at 62% and sales application servers at 78%.


SAP Mobile solutionsEmpower your team


SAP Collaborationfor seamlessSubcontracting


SAP CAD connectorfor effectiveProduct development


SAP Reporting -Drill down into the details


SAPThe right tool for successfulHomebuilders


SAP value proposition

Four Reasons Why SAP

should be Your Company’s Partner of

Choice • Most comprehensive service offering (SAP + partners) enablesimplementations to be done up to 2x faster than competition

• Mid-market pre-configured and “pre-integrated”EC&O Partner Solution speeds implementation and cuts costs (both deployment & maintenance)

• Industry best practices imbedded in software based on 32 years of feedback from over 350 EC&O customers• Only solution to cover the complete business process: design & engineering to decommissioning• Open for highly collaborative business• Integrating CAD/CAFM and specific systems• Rated #1 solution by multiple analysts for discrete industries, asset management AND aftermarket service• Only solution to manage financials & logistics

1. Broadest Process Coverage

• In a turbulent ERP market, SAP provides the safest choice (analyst validated and customer supported)

• Leverage the knowledge of 32 years of experience, 19,000 customers, 12 million users, 8,800 developers, and over $1 billion in annual R&D spending

• Market leader used by leading global contractors.• 100% focused on application software• 54% market share and growing• $9B in 2003 revenue

4. Lowest Risk 3. Speed To Value

2. Delivers Real ValueSAP EC&O customers achieved

measurable value:

Homebuilding:material catalog: -85%; Service cost/home: -80%Inventory: -50%; production hrs/home: -20%workforce/home: -40%

• Flexibility to deploy all at once, in pieces, or by business processes as needed• Open architecture provides the flexibility to leverage and coexist with existing applications as needed


SAP Delivers Value

SAP R/3“SAP is a very powerful system and its strength really resides within the integration of the operational side of the company and in the financial or accounting side of it."

SAP NetWeaver™"With SAP for EC&O, we're replacing legacy systems with an integrated, standard solution that lays the foundation for an even higher degree of accuracy in planning and enables increased transparency across all organizational levels. We can thus effectively manage each construction project as if it were its own business."

SAP R/3“The functional coverage offered by SAP R/3 was by far the most comprehensive of all standard software”

SAP R/3“We reduced raw material inventory by over 30%...we have reduced our service cost form an average $1150 a unit to under $250 a unit. We hae reduced production hours per home by 20% and produce products that have far superiorstandards in shops we have implemented SAP.”

SAP for EC&OSAP Netweaver“What SAP offers is unique in the marketplace. It is a fully integrated solution from the sales office to the back office to the field. Complete integration like this is a very desirable thing to have. It’s helping us to achieve our goals, which is to be unquestionably successful in this industry.”

SAP Business Suite”Legacy Systems … GONEIT Costs Reduce by 35%Transaction Processing Cost - 23%Process Improvements – Completed DSO Reduce by 36% ….. ALL TIME LOWTechnology NOW seen as a “Business Enabler”


Morrison Homes Inc.

PROJECT OBJECTIVE

Reduce cycle time

Cost reductions

Better communications

Efficiency improvements

CUSTOMER PAIN POINTS

Hundreds of tasks have to be scheduled, coordinated, and tracked.

Most tasks are dependent on having a related task completed before a new one is started

Inconsistent sales order configurations

High cost of subcontractor management

WHY SAP SOLUTION WAS SELECTEDVery easy to learn with an easy-to-use user interface

Content-rich information.

Integrated solution

Morrison Homes is one of the top 25 homebuilders in the U.S., focusing on single-family homes, located in both stand-alone subdivisions and as part of master-planned communities. Owned by British company George Wimpey, PLC, Morrison operates in six Sunbelt states. The company’s success has been steady in a challenging marketplace with more than $800 million in revenues for 2002 and a growing staff of 700 employees in the U.S.


Morrison Homes Inc.

BUSINESS VALUE REALIZEDImproved interactions with trade partners

Frontline employees are empowered with better tools and information

Key activities are fully integrated

Reduced cycle times

Higher quality and customer satisfaction

SAP SOLUTION SAP for Engineering, Construction & Operations

mySAP™ Enterprise Portal

mySAP™ Business Intelligence

SAP NetWeaverTM

“What SAP offers is unique in the marketplace. It is a fully integrated solution from the sales office to the back office to the field. Complete integration like this is a very desirable thing to have. It’s helping us to achieve our goals, which is to be unquestionably successful in this industry.”

Gregg GoldenbergVP and Project Manager

Morrison Homes Inc.


Cavalier Homes

PROJECT OBJECTIVE

Increase market share, particularly in the high value manufactured home segment

Become lowest cost producer for all value points served

Enhance revenue opportunities in existing customer base

Improve efficiency of service operations

CUSTOMER PAIN POINTS

Business operations were costly relative to the competition, preventing the company from adapting quickly to emerging consumer demands.

Growth through acquisitions and a decentralized management structure had left each manufacturing facility operating independently.

Each plant designed floor plans, procured raw materials, manufactured and sold homes on its own.

WHY SAP SOLUTION WAS SELECTEDAbility to enable standardization of business practices, providevisibility into operations, and enable a clear view of performance metrics.

Cavalier Homes is a $400M company with ~1800 employees headquartered in Alabama that produced approximately 13,000 manufactured and modular homes in 15 facilities in 2001. In addition to having production capabilities, Cavalier also purchases sales contracts primarily for manufactured homes sold through its dealer network and provides insurance products to dealers and retail purchasers.


Cavalier Homes

BUSINESS VALUE REALIZEDImproved market share from 4.6% to 7.6%. Increased home shipments 15%, while industry shipments declined 21%.

Lowered raw material inventory levels from $4.2 to $2.1 million and improved raw material inventory turns from 1.0 to 4.7 per month at a key manufacturing facility. Reduced dealer inventory by 10.4% to $171 million.

Lowered production hours per home by 20% and reduced production and administrative workforce by 40%. Reduced time required to determine the cost of a home from about 2 days to a few minutes.

Reduced administrative cost of service operations by $2.2 MM in a key region.

Reduced financial closing cycle time from 7 to 2 days as a result of more precise operational data.

SAP SOLUTION mySAP™ Engineering and Construction (mySAP E&C) capabilities in sales and distribution, service management, materials management, production planning (including the SAP® Variant Congurator), procurement and accounting.

“The SAP solution gives us the ability to view costs all the way through the value chain. We are producing products that have far superiorstandards and options than before – and our customers pay less than they would to competitors whose products offer less.”

Jay WilsonChief Information Officer

Cavalier Homes

SAP for the Construction Industries – SAP’s viewSAP@Jim Walter Homes – Customer’s viewQ&A