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

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:

• Functionality available (by standard) in OrgAudit
• Technical aspects of implementing OrgAudit
• OrgAudit – Ideas to Improve OrgAudit

Related Links

• DataQualityConsole Case Study: http://www.nakisa.com/a-resources/22.pdf
• http://www.a8i.co.uk/uploads/whitepapers/costofpoorhrdata.pdf
• http://hr.toolbox.com/blogs/succession-engagement-careers/dont-run-away-from-bad-hr-data-51111
• http://ebs.pbbiblogs.com/2009/09/08/the-business-case-for-data-quality/
• http://hr.toolbox.com/blogs/hcm-update/6-data-landmines-hr-execs-need-to-sidestep-54124
• http://www.gartner.com/newsroom/id/501733

Continue to Next Blog in Series