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This is the second part in a series of blog posts looking at SOVN OrgAudit.  You can read the introduction here.  In this blog, I look at building the business case for implementing OrgAudit (also known as DataQualityConsole).

To build a business case, we need to consider the benefits and anticipated costs.

The key benefits for using OrgAudit are:

  1. Elimination of manual effort of auditing data quality.
  2. Reduction in costs of correcting poor data.
  3. More effective and quicker HR decisions.

The costs:

  1. SOVN licences (one off).
  2. SAP annual maintenance (recurring).
  3. Implementation (one off).
  4. Hardware (depreciating).
  5. Solution management (recurring).

So how do you estimate the values of these costs and benefits to your organisation in order to build a business case?  Well I can’t do it for your organisation, so I’ll use an example organisation and show my working, as well as provide a way you can revise for you own organisation. I have used “easily rounded” numbers for the sake of simplicity.

NOTE: This information comes with a disclaimer – this is an example and you should carry out due process on your organisation to assess the benefits and costs.


My Example Organisation

Employees:        10,000

Revenue:            £2Bn (using Billion = 1000 Million, i.e. 2000 Million)


Assumptions

Assumption Figure Note
FTE Cost £25,000 Based on estimated salary + benefits
Current man days effort used to audit HCM data 225 1 FTE
Current HR department budget (resources and technology) £5M Per annum
Spend on talent management (recruiting, salary, benefits, and development costs): £10M Per annum

Benefits calculation

     1. Manual effort of auditing data quality

          Reduce manual effort by 80% (from 225 to 45 days per annum).

          Saving: 80% @ £25,000 = £20,000 per annum (recurring saving)

     2. Cost of correcting poor data

          Estimate that inefficiency due to poor data costs 3%.

          Saving: 3% x £5M = £150,000 (saving if all data errors can be eradicated)

          Let’s assume one third of this can be saved each year => £50,000 per annum

     3. Ineffective HR decisions

          Estimate that inefficiency affecting the talent management costs 0.1% (one tenth of 1%).

          Saving: 0.1% x £10M = £10,000

In total company, with 10,000 employees is saving ~£80,000 per annum by using OrgAudit.

Solution costs

     1. SOVN licences

          Ask your SAP account manager for a quotation.

          Note: you will only need a small number of (the more expensive) Org Planning (for HR professionals) licences to use OrgAudit.

          Note: The OrgPlanning licence also licences those users to use OrgChart, OrgModeler and OrgManager, which can bring additional cost benefits if they are also implemented.

     2. SAP Maintenance

          SAP standard maintenance applies (usually 22%) – recurring cost.

     3. Implementation Cost

          Contact Nakisa or a Nakisa partner (but expect 15-30 days effort depending on your requirements, and complexity of environment).

     4. Hardware

          You’ll need a NetWeaver instance and database per environment (unless you are already hosting other applications on a NW instance).

     5. Solution management

          Recurring cost for solution management (IT support).

I can’t accurately decide the above for you but making a conservative estimation, I estimate the first year costs (when implementing) to be ~£55,000 and subsequent years to be ~£12,000 per annum.

Return on Investment

Using my example organisation and assumptions, the benefits and costs listed above would mean achieving a return on investment in ~8-10 months and ~£160,000 over 3 years.

What to adjust the figures for your organisation? Use this on-line Google Sheet and fill in the white boxes on the Summary tab with values appropriate to your business and see the estimated total saving over 3 years.

Summary

I think almost every SAP HCM customer can build a business case for implementing OrgAudit.  If you are already an SOVN customer then your benefits case should be even stronger, since you can re-use hardware and will therefore have a lower total cost of ownership across your SOVN solutions.

Think I’ve been too optimistic with my figures?  Try the on-line calculator for yourself or read the case study from Nakisa (also listed as first Related Link below).

In subsequent parts of this blog I will take a look at:

Related Links

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3 Comments

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  1. Luke Marson

    Hi Stephen,

    Great blog and one of your best yet. The calculator is a neat idea 🙂

    I’m wondering about the 225 man days per year you mention for auditing HCM data. In many organizations I’ve been to, they don’t invest this level of effort into data integrity (even if their data warrants it!) irrespective of size. Does this figure vary considerably for same size organizations or does it tend to be relative with the number of employees? What factors influence this figure?

    Even with a smaller amount of man hours spent, there would still be a cost benefit within the time-frame you used. In addition, there are other benefits such as having the correct data to make accurate decision-making and preventing support issues because bad data effects an end-user process. And if a customer is investing more man days than this there is no question of making a cost saving by implementing OrgAudit.

    I particularly think the reporting can help identify trouble areas and enable users to become proactive in data standards processes and thus reduce “reliance” on OrgAudit and data correction over time.

    Best regards,

    Luke

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    1. Stephen Burr Post author

      Hi Luke,

      Thanks for taking the time to read, comment and share on Twitter.

      I realised that whatever figures I put would not fit everyone’s company, which is why I put the calculator in and “showed my working”.  I did use quite a large company also.  As you mention, reducing the amount of time spent on data issues, even all the way from 1 FTE to 0, still results in a ROI. 

      I see OrgAudit as a pro-active tool but I agree that reporting can also be used.  With OrgAudit, there is the bonus of seeing the information within the context of the organisation and being able to compare the “state” of different parts, something I talk about more in part 3 … coming this week.

      Regards,

      Stephen

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  2. Ibrahim Nagy

    Hi Stephen,

    Very good blog, The calculator and the idea itself are brilliant.

    Concerning OrgAudit I think the Idea is great. However, as you said every Company is different especially what needs to be audited sometimes the company has very complicated logics for auditing. But at the end in my opinion the best benefit of OrgAudit is that the Company can right away see to what percent they have a clean data. This I can say from my experience is not that easy for each company.

    Best Regards

    Ibrahim

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