Study on Next-Generation Business Centralization Underlines Efficiency Benefits

SAP APJ SSC credited with US$2 million operational cost savings per year and 40% cost reduction

Kuala Lumpur - In the current economic climate, when companies are accelerating efforts to cut costs and increase efficiency, The Frontier Strategy Group has issued a report, which outlines a replicable roadmap for significant gains in productivity and efficiency through next-generation business centralisation.

Highlighting SAP Asia Pacific Japan’s (APJ) shared service centre as best practice, the report – which leverages insight from over 30 independent and government organisations and experts – sheds light on the increased popularity of such and their effectiveness in centralising various functions to cut costs. SSCs, which facilitate the centralised management of activities for multiple users, are a means of capturing efficiency and effectiveness.

“In this crisis, companies are going to look to try to save money, to be more effective and to increase productivity. Next-generation centralisation of business functions can achieve that, bolstering bottom-line cost-savings and top-line growth,” said V.R. Srivatsan, Managing Director, SAP Malaysia.

For business software provider, SAP APJ, strategic IT initiatives have helped the organisation enable efficiency and enhance innovation in its business models and processes. It has consolidated operations of its 13 regional subsidiaries by centralising back-office functions into a SSC in Singapore.

Since it was established in 2003, the APJ SSC has been credited with US$2 million operational cost savings per year. Building on the success of the APJ SSC, SAP globally has consolidated operations in SSCs in Argentina, the Czech Republic and the USA.

With the goal of redesigning processes and improving productivity through implementing shared services and automation, SAP APJ has achieved a strong return on investment, including:

§ A 40 per cent cost reduction
§ An annual SSC headcount increase of only 10 per cent, while APJ’s annual country growth rates ranged from 30 to 50 per cent in each year between 2005 to 2007
§ A halving of Finance operations costs using SSC’s
§ A 59 per cent increase in total documents processed
§ A tripling in the average number of documents processed per employee

“We are proud of the results of our SSC’s transformation and its impact on our operating costs across the region,” said Geraldine McBride, President of SAP APJ. “During an economic slowdown, best-run businesses need to identify how they can improve and be more effective and efficient. This is where SAP’s best-practice and experience in providing industry-leading tools to help companies stay ahead, proves its merit.”

The full study is available from The Frontier Strategy Group: lzhao@frontierstrategygroup.com.