SAP Analytic Application Helps Reveal Full Profit Picture Behind B2B Operations

SAP® Net Margin Analysis Analytic Application Provides Detailed Data on Indirect Costs Produced in Business-to-Business Ecosystems

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SAP AG (NYSE: SAP) today announced the availability of the SAP® Net Margin Analysis analytic application to bring enterprises the most complete financial view of their business-to-business (B2B) operations. The application uses advanced analytics to capture cost-to-serve metrics - the indirect costs hidden in supply chains that service and support customers. Data captured by SAP Net Margin Analysis is readily accessible, helping businesses reduce costs at a granular level and perform better.

SAP Net Margin Analysis addresses the increasing complexity businesses have in servicing their customers effectively and efficiently. As the number of channels, services and stakeholders has grown exponentially, it has become much more difficult for organizations to get an accurate financial picture of an entire B2B ecosystem. "Who are my most profitable customers? Who are my most significant loss makers? Are there costs I can't account for? If so, where are they occurring?" SAP Net Margin Analysis enables users to answer these questions and more by providing full visibility into all costs. The application goes below the surface to uncover expenses and lines of profit that were not visible before. SAP estimates that enterprises can save up to five percent on indirect costs in the first year after implementation.

"SAP Net Margin Analysis provides actionable data on costs that up to this point were below the radar of many enterprises," said Karen Lynch, vice president, Global Wholesale Distribution, SAP. "Previous offerings could only provide a ballpark figure on such costs. Users can now drill down into that data and isolate it precisely to see who their profit and cost generators are. Detailed metrics that took months to produce can now be viewed and acted upon immediately."

Engineering Profits

With the analytic application, cost-to-serve metrics are presented via role-based dashboards and graphic reports that provide a full view across operations. Organizations can analyze indirect costs in sales, marketing and product management to quickly understand how product mix, order frequency, channel, distribution and customers served impact profitability. The solution can also pinpoint indirect costs across customers that share identical revenue numbers.

Armed with this data, users can intricately fine-tune their B2B sales and operations to better curtail these costs, or to better utilize the segments that are the most profitable for the business. SAP Net Margin Analysis offers a "what if" analysis tool so stakeholders can see the possible impact of their actions before they are implemented. Possible courses of action include the elimination of redundant services; creating, eliminating or minimizing discounts and reward options; and taking the best practice of a profitable segment and applying it to other areas of the business. Organizations can ultimately decide which scenario best fits their operations and since the data is shared in a unified view to all decision-makers, it is easier to align strategy with execution.

Reaching Out to Customers

Professor Barry Lawrence of Texas A&M University, a world-renowned expert of distributor competitiveness and a fellow of the National Association of Wholesaler-Distributors (NAW), and the research team from the Global Supply Chain Laboratory at Texas A&M University shared best practices with the SAP team during the development of this solution, with a particular focus on customer satisfaction.

"Customer stratification is a measurement process for managing and improving customer relationships," said Lawrence. "It identifies areas and strategies for improving net margin and sales with each individual customer. Today, best-practice distributors are using customer stratification in a variety of ways; from creating and penetrating core customers to the most effective design and deployment of the sales force and marketing efforts, the possibilities seem endless."

Rapid Deployment

SAP Net Margin Analysis is offered as a rapid-deployment solution, combining pre-configured content, best practices and pre-defined services to quickly deploy the solution and achieve more immediate cost-savings. Enterprises get full cost visibility leveraging existing cost allocation tools and financial applications. The average timeframe for a typical deployment is less than 90 days, which helps customers lower the cost of implementation and speed time to value while retaining the flexibility to extend the solution when needed.

For more information, visit the SAP Net Margin Analysis page on and the SAP Newsroom.

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

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