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“Silo’d” Thinking

Each Engineering-to-Order (ETO) scenario starts with the quoting and selling of proposed end solution.  Quite often, a preliminary offer must be created without knowing all the exact details required.  Given all the different stakeholders in the various “silos” necessary to complete an ETO quotation, a strong collaborative effort is required.  Clarification of detailed customer specifications combined with a typically high frequency of change requests makes documentation and traceability of various offer calculations challenging.

 

In many cases, quotations and proposals are generated using Microsoft Excel because calculation structures can be unique and most stakeholders typically know how to use spreadsheets, including the sometimes ominous and difficult to maintain “macros.”  As time passes, numerous changes and updates are made to the calculations, making it hard for anyone new to fully understand the details and original intent of the spreadsheet.  As a result, very few people really comprehend the underlying details of the spreadsheet and integration to the necessary process steps shown in the graphic below is not established.

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Engineer-to-Order Processes from the SAP Industrial Machinery & Components Value Map

 


SAP Commercial Project Management (CPM) Offers an Excel-Like User Experience and

Full Integration to SAP ERP Project Systems (PS)

The recently developed SAP CPM solution has sophisticated functionality to address all of the end-to-end ETO processes in the graphic above.   Although not yet widely known, SAP CPM is absolutely an excellent fit for ETO environments.  The solution contains many different functional areas, and the most interesting ones for ETO as well as project manufacturing scenarios are the “Project Financial Planning” capabilities.  With SAP CPM you can create a quotation or proposal using an Excel-like user interface that includes solid version control and comparative analysis functionality.  Furthermore, unlike Microsoft Excel, SAP CPM integrates seamlessly with SAP ERP PS as well as all of the SAP financial and cost-accounting solutions.

 

Challenges for ETO and Project Manufacturers

The main challenge ETO and project manufacturers face is low project profitability due to inaccurate planning.  Numerous manufacturers of complex equipment continue to use tools like Excel to provide quotations and estimates to their customers.  These tools are typically not very well integrated to corporate financial and operational systems, making accurate planning nearly impossible.  Because sales and engineering calculations are not adequately integrated to these back-end systems, data visibility, synchronization, and accuracy suffer greatly which can significantly erodes profit margins.

 

Benefits of a Completely Integrated and Easy-to-Use Application

The benefits of SAP CPM are clear.  A completely integrated ETO solution covering all phases of the project lifecycle (offer > planning > execution) drives:

  • increased accuracy of bid estimates
  • greater traceability of bid estimates
  • improved plan vs. actual comparisons
  • higher project profitability

SAP CPM provides increased visibility and transparency of project-driven cost drivers, productivity, and profitability at your fingertips.

 

 

Scope Covered by SAP CPM

The solution enables the planning and forecasting of quantities, costs, and revenues across the entire project lifecycle, including the tender stage, baseline planning, and execution, enabling:
  • high-level estimates during the proposal and forecasting stage based on flexible bill of material and bid structures
  • detailed baseline cost and revenue planning with integration to project execution in SAP ERP PS
  • planning support for resources, materials, expenses, and third-parties

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SAP CPM “Project Financial Planning” User Interface

 

Conclusion

AT SAP, we believe that it is high time for you to check out the “Project Financial Planning” capabilities available in SAP CPM.  Once you take a look at what the solution offers, we trust that you will want to retire your isolated, difficult to update and maintain Microsoft Excel spreadsheets and start using completely integrated end-to-end processes across all of the ETO projects in your portfolio.

 

Please visit the SAP Solution Explorer for more information on SAP Commercial Project Management

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