""Four Steps To A Best-Run Business"

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Invacare Corporation is the world's leading manufacturer of home medical equipment, manufacturing a wide range of products including power and manual wheelchairs, walkers, home oxygen systems and home care bed systems.

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Four Steps To A Best-Run Business

Content

• Executive Summary
• Overcoming Barriers to Profitable Growth
• Building a Unified Business
  • Establish and Align Key Performance Indicators
• Four Steps to a Best-Run Business
  • 1. See the Whole Picture to Make Faster, Smarter Decisions
  • 2. Control Your Cost Structure End to End
  • 3. Minimize Risk and Liability
  • 4. Anticipate change
• SAP Business ByDesign
  • Single, Integrated Solution for Faster, Smarter Decisions
  • Embedded Process Controls Improve Cost Structures
  • Consistently Meet Performance Standards and Control Risk
  • Adaptable and Scalable for Quick Response to Market Changes
• Getting Started
  • Find Your Path to Value
  • Process Automation
  • End-to-End Process Integration
  • Process Change Management
• For More Information

Executive Summary

It is often at this point that business leaders ask themselves, "What do we need to do to get out of our own way?"

This document describes how you can build a strategy to unify and run your business more effectively by:

• Driving faster, smarter decisions
• Applying better control over your cost structure
• Minimizing risk and liability
• Anticipating change

With the fever to win early deals and establish a core customer base, the business environment in young and fast-growing companies is often ruled by the principle that the ends justify the means. Setting up operational processes is something that big companies do to slow things down and is seen as a hindrance to creativity and innovation. Early on, this approach works well and helps establish business practices that allow a young company flourish in its unique competitive environment. Often, companies get combined and find themselves competing in whole new markets on a much larger scale, without the supporting infrastructure and processes to operate efficiently. At some point, however, the proliferation of one-offs and splintered processes creates obstacles for managing growth and scalability. Customer records reside in multiple places with little information sharing, and there's limited visibility into the pipeline. There are often multiple financial systems and data models, manual and distributed purchasing practices, informal governance, and ad hoc spreadsheet reporting based on the next board of directors meeting or customer visit.

Unstructured creativity compounded by fast growth leads to the inability of business leaders to make confident, fact-based business decisions. Multiple versions of the truth and increased internal complexity often become a bigger barrier for growth than outside, competitive influences. Technology has now become a limiting factor. Decisions based on logic have been replaced by decisions based on instinct.

Overcoming Barriers To Profitable Growth

According to a study focused on midsize companies by the Economist Intelligence Unit, downward pressure on prices combined with the rising cost of inputs (particularly energy and raw materials) are combining to squeeze margins (see Figure 1).1 Executives across industries represented in this survey ' but particularly manufacturers ' are extremely keen to reduce costs and improve operating efficiency as their companies grow (see Figure 2).2 Achieving these objectives will enable the companies to expand further through new customer acquisition, diversification, and global expansion. This study also found that globalization is not just for the big multinationals ' midsize companies are tapping into global markets to increase profits and decrease costs as well. To do this requires building a network of partners, customers, and suppliers spread all over the globe with more people involved in the value chain. Unfortunately, ramping up and managing operations come with challenges: localization, training, procurement, and visibility, to name only a few.

Responses indicate that maintaining profitable growth in an expanding global marketplace will require a primary focus on lowering ' and maintaining 'operational efficiency across the business.

Building A Unified Business

Building an operationally efficient business powered for growth starts with unifying the company. In order to control costs and consistently meet performance standards, best-run businesses strive for efficiency in operations, which comes from building a unified, streamlined business environment that fosters collaboration and agility. Even companies that only have a few hundred employees need structure and processes that support information sharing and focused execution ' without them, complexity and waste will continue to be a frustrating reality.

Establish and Align Key Performance Indicators

What is the first step to establishing structure and aligning the business? Unified metrics. This sounds obvious, but take the following example. One company measured its service desk staff on customer hold time, and the service representatives consistently exceeded their performance goals and received 100% of their performance bonuses. So why was employee productivity and customer satisfaction consistently decreasing? In an effort to get the calls off hold, the service representatives were forwarding them to anyone available who could pick them up. This led to endless call forwarding, distracted employees, and dissatisfied callers. The example may sound trite in hindsight, but it wasn't until management took a unified view of the impact on employee efficiency and customer satisfaction that the situation became obvious.

Establishing Key Performance Indicators (KPIs) early and measuring them often are a key trait of best-run businesses. By gaining visibility of their business and tracking metrics, leaders can drive accountability into the business (and extend it through their value chain). Once business processes are defined and unified, these KPIs can be built into automated tasks, reports, and real-time analytics. Metrics empower employee decision making at the point of action, reduce risk, and ensure better control and long-term business viability. Better yet, small decisions don't get bottlenecked at the top.

Building a business based on an aligned set of metrics that span departments and extend into the value chain gives you a unified view of your customers, operations, and financials. And you have the ability to make more confident, fact-based decisions.

The following table outlines examples of how to look at KPIs in the context of your business and how they help align objectives across various functions. Depending on where you need to gain the most efficiency ' whether it's in the supply chain or in sales and marketing ' it's important to align the goals and metrics into a unified operational system

KPI-Driven Paths to Efficiency

Four Steps To A Best-Run Business

A quarterly forecast meeting is often a task dreaded by senior sales leaders, as is the annual financial closing for the finance department. This is the time every quarter many companies set their most serious metric: projected revenue. Preparing often requires precious employee cycle time consolidating manual spreadsheets and guessing due to insufficient data. Time is spent that could otherwise be used in externally facing activities such as sales calls. However, sales revenue and pipeline are baseline levels of visibility required to manage a growing company and face major investment decisions involving capital, acquisitions, or global expansion. This one milestone often bears all the ugly inefficiencies all at once.

1. See the Whole Picture to Make Faster, Smarter Decisions

Your business environment is competitive and always changing. You need to be ready to act on new opportunities on a moment's notice ' whether it means bringing a new customer online, entering a new market, or creating innovative partnering arrangements. But the lack of timely, accurate information can make it difficult to reach the faster, smarter decisions required to respond to these market opportunities, let alone identify and mitigate market threats.

The first step to efficiency is to integrate your company's information into one solution that provides you with a single source of the truth. By integrating your data, analytics, and reporting into one solution that tracks against your KPIs, you and your employees can make faster, smarter decisions with confidence. In situations where decision making would be otherwise clouded by emotions, overlapping objectives, and spotty communication, you can make strategic choices based on reliable, accurate information.

With the right solutions in place to produce meaningful, company-wide data, you can act decisively to align resources and investments with the best opportunities; prioritize both short- and long-term goals; increase productivity throughout the organization; and generate remediation plans to minimize risks.

2. Control Your Cost Structure End to End

You face constant competitive pressures ' from increasing offshore manufacturing to large enterprises entering your market through vertical integration You hammer away at reducing waste and controlling labor costs because your customers are demanding lower prices and even higher quality. All the while, your shareholders and key investors are scrutinizing your every move to ensure you sustain profitability.

The second step in streamlining your business is to unify your business processes end to end. Of course you don't do this all at once. Instead, set up a structure for aligning processes in modules. Over time, you can standardize core processes across functions and keep noncore processes flexible or outsourced. You can automate routine tasks to strip out inefficiencies so your employees can focus on prioritized tasks and real-time decision making.

Setting up an environment that automates and integrates processes can help you unify the day-to-day operations of the business. By solving an immediate need in the business, say integrating sales and marketing activities, and then centralizing the company's fundamentals ' financials and supply chain operations ' you can establish a collaborative, optimized team across your company.

By automating performance standards into your processes, you can differentiate your company through consistent, predictable product and service delivery. Meeting quality standards means you reduce costs, cycle times, and warranty incidents associated with inferior or irregular products or services. As you drive toward zero defects, you can lower liability costs and increase customer satisfaction.

3. Minimize Risk and Liability

It seems like everywhere you turn, new performance standards are being placed on your business. You must consistently meet quality, service, and safety standards imposed by regulators, your customers, industry organizations ' and even your own company. The thought of going global is daunting

The third step to optimize your business is to embed metrics and reporting into your end-to-end processes ' whether you are being measured on financial performance, product quality, delivery standards, service level agreements, regulatory compliance, or technical  support and service.

SAP® Business ByDesign™ Starts at US$149 a Month Now you can afford a business solution designed to drive efficiency while growing and adapting with your company. SAP® Business ByDesign™ is offered on a subscription basis, starting at US$149 per user per month in the United States and China or €133 per user per month in Germany, the United Kingdom, and France.

Simplify IT
Because it's an on-demand solution, the SAP Business ByDesign solution greatly simplifies your IT requirements compared to traditional enterprise software. With dramatically lower costs to acquire and support the software, you can focus on managing your business rather than on managing IT.

4. Anticipate change

Market change is accelerating and your customers are more demanding than ever. The competition is closing in at the same time that markets and suppliers are becoming more global. Announcements of mergers, acquisitions, and divestitures regularly shake up the competitive landscape. And many markets you serve are cyclical or seasonal, adding to the undulating cadence of your business.

The fourth step in becoming a best-run business is to build a flexible business model to manage and embrace changes that will invariably come. When you open a new line of business, expand into a new geography, or decide to offer services in addition to products, your business model must be agile. You must be able to roll out new processes or adapt existing business processes to suit a global account or new supplier ' or extend these processes to new regions. You may also need to change your organizational structure, shifting people's goals or roles quickly to adjust to new opportunities so the company can quickly support them.

By setting your business up to easily adapt business processes and organizational structures, you can quickly shift course with minimal disruption to your day-to-day operations. When opportunities emerge from changing market conditions, you can capitalize on them before the competition does. What's more, as you adapt, you replicate and extend your efficiencies, keeping a unified business environment that helps you achieve peak performance.

Amid this market backdrop, responsiveness is the name of the game. But it is not merely offering the new products or services the market demands. You can consistently bring products and services to market in a timely fashion ' whether your strategic objective is to be first to market or a fast follower. You need to make your operations flexible to meet growth goals, respond to an economic downswing, or weather an unforeseen market shock. You need to be able to set your business to throttle up or down to meet rapidly changing and unpredictable customer requirements.

SAP Business ByDesign

SAP can help companies that are deter mined to achieve operational efficiency by building a best-run business. With SAP, you can build a unified business environment that integrates your information, processes, and performance metrics and enables your business to adapt as your needs expand. If you're ready to establish KPIs and build a unified business environment, then the SAP® Business ByDesign™ solution may be right for you. It's the most complete and adaptable on demand business solution available today. Ideal for companies between 100 to 500 employees, SAP Business ByDesign provides an affordable, predictable, and easy way to unify core business processes, track performance, and adapt to rapid changes in your business. Finally, the resources you need to drive efficiencies throughout your organization are within reach ' and from a trusted vendor with three decades of experience.

The solution tightly knits together your operations ' from finance to HR, customer relationship management to sales and marketing. With SAP Business ByDesign, you gain complete control over ' and visibility into ' your entire business. As a result, you can identify areas for improvement, innovation, and differentiation, and then organize resources to best achieve your business objectives. You can easily track performance with KPIs that always tell you where you stand and keep management apprised of problem areas with alerts of significant events and circumstances. Your core talent is  freed up to focus on important issues and make better-informed decisions.

SAP Business ByDesign helps companies like yours become unified, highly efficient businesses. With the solution, you can automate your processes, integrate them from end to end, and adapt the processes as your organization changes.

Single, Integrated Solution for Faster, Smarter Decisions

A single, integrated solution creates a single source of the truth that provides timely, accurate data on which to base faster, smarter decisions. SAP Business ByDesign offers an innovative approach to business intelligence, providing analytic tools that can easily work with any data set to produce ad hoc reports, thus providing decision makers with the timely data they need.

Embedded Process Controls Improve Cost Structures

SAP Business ByDesign helps you manage profit margins by controlling fixed and variable costs. With automated business process controls, you can actively reduce waste in manufacturing, minimize delays in service delivery, and limit overtime with more efficient scheduling. Process controls ' whether you use pricing minimums to limit unauthorized discounting, inventory controls to optimize inventory levels, or credit checks to ensure customers are able to pay ' ensure that responsible parties are notified when control thresholds are breached, providing more time to formulate an appropriate response.

Consistently Meet Performance Standards and Control Risk

With SAP Business ByDesign, you can automatically track key performance metrics ' whether you are tracking ROI or product defects ' with personalized scorecards and dashboards. These reports are not only timely and accurate, but actionable, enabling personnel to quickly assess performance standards that are out of range and take corrective action. Additionally, SAP offers guidance for implementing internal controls to meet quality, documentation, and other regulatory reporting standards.

Adaptable and Scalable for Quick Response to Market Changes

SAP Business ByDesign is available on demand on a flexible platform so you can quickly roll out core and new processes over time. Whether a new supplier is offering better prices or a competitor launches an innovative new product, you need flexible processes and solutions in place to respond quickly and efficiently to both opportunities and challenges. As your needs expand, you can leverage SAP's extensive experience in deep, industry-specific functionality. This is particularly important if you are serving multiple industries or a range of channel delivery models.

Getting Started

"SAP has done a tremendous job of translating our business requirements into an easy-to-digest business flow within SAP Business ByDesign ' it's clear that SAP really took the time to understand how smaller businesses think and operate." Kevin Flanagan, CEO, Compass Pharma Services LLC

Whether you are just starting out with basic task automation or have already done some business optimization and want to further improve it using industry-proven best practices, SAP can help you determine the right path. Some companies will begin with optimizing their sales and marketing organization, recognizing that with nonintegrated, misaligned efforts, they are throwing good money after bad. Getting a handle on which product lines are most profitable ' and which customers to target ' can result in a quick ROI.

If you find that keeping customers is an issue, then you may choose to shore up your customer relationships by identifying your most profitable customers and giving them more expanded offerings that better fit their needs. Getting your hands on data for first-time fix rate for service call resolution or customer retention rates can make a big difference in how you rethink your customer strategy.

Alternately, your shortest path to value may be to drive efficiencies throughout your manufacturing supply chain. Optimizing the supply chain can do wonders for your bottom line. Not only can you reduce costs, but you can ensure that you always have what you need to satisfy customer demand.

Find Your Path to Value

The following are some ideas for how to start

Process Automation

If you're just beginning to tackle your infrastructure challenges, you may need to focus first on process automation. Automating business processes is critical to building a truly unified and efficient business environment. You may initially tackle the areas that hinder you the most ' or that present the biggest opportunity. For example, if closing the books takes too long, you're having difficultly making informed decisions, or you're struggling to provide documentation for regulatory compliance, then you may want to turn your attention to automating financial processes. On the other hand, if your workforce is your biggest asset, but you are still relying on mostly manual HR processes, then automating these processes may be crucial to improving your operations

SAP Business ByDesign automates your business processes, streamlining or eliminating many common administrative tasks in your organization as well as across your network of suppliers and partners. It proactively delivers the most relevant and meaningful information and KPIs to your employees based on their roles in the organization, including alerts and requests for approval. Rather than slogging through infrastructure chaos, your employees can focus on the task at hand ' and on exchanging ideas that can ultimately drive your future growth.

End-to-End Process Integration

Perhaps you've automated your business processes and put into place a measurement strategy to drive internal accountability, but you aren't yet managing your business with facts. For example, you may have visibility into sales revenue but lack the integration of financial metrics and cannot track profitability in real time. In this case, you may want to focus on integrating processes throughout your organization.

SAP Business ByDesign links business processes across all areas of your organization ' from purchasing, manufacturing, and sales to processes supporting cash flow management and financial and managerial accounting. For example, an order entered by a sales executive automatically notifies the plant manager that he or she will need to start planning production for the requested product. The plant manager releases the purchase order, which is sent automatically to the supplier as an interactive form. The supplier confirms the order, and the sales executive can track it by carrier name and delivery status. At the end of the day, the CEO can view the sales forecast, getting an accurate picture of all orders to date.

By integrating your processes from end to end, you can experience new levels of efficiency ' and better decision making. KPIs extend throughout the business, so you can get a more sophisticated understanding of your performance. The information now at your fingertips can help you make decisions to improve operational excellence and asset utilization, launch strategic initiatives based on sophisticated financial metrics, and gain deeper insight into customer profitability.

Process Change Management

Change is a fact of life for all companies. With today's rapidly shifting marketplace, it's critical that you're primed to adapt processes when needed. With SAP Business ByDesign, stretching in new ways ' into new geographies, new lines of business, or new services ' doesn't require that you dismantle or disrupt your streamlined infrastructure. You have the flexibility to change, grow, and extend the reach of your business across your entire ecosystem.

Employees can reconfigure SAP Business ByDesign on the fly without disrupting critical business processes. When you need to make organizational changes ' either to accommodate a new hire, expand into a new line of business, or grow internationally ' you simply notify the software and the changes are immediately reflected throughout the organization. In addition, meeting regulations in new geographies no longer needs to be daunting

SAP Business ByDesign is suitable for the specific requirements of:

• Automotive ' supplier
• Chemicals ' specialty chemicals
• Consumer products ' consumer durables and appliances and home and personal care
• High tech ' business and consumer OEMs
• Industrial machinery and components ' components
• Life sciences ' biotechnology and medical devices
• Mill products ' building materials and metal products
• Professional services ' IT and business process outsourcing services and facilities management
• Wholesale distribution ' technical goods wholesale distribution

Reports and dashboards help you manage the business in real time, and there is built-in support for regulatory compliance, making it simple to address changing legal and reporting requirements for a global business. And you can now rapidly set up operations internationally and extend your SAP Business ByDesign solution to support them.

Whatever your company's specific path to value, SAP Business ByDesign delivers the end-to-end process automation, integration, and adaptability you need to meet efficiency goals in different areas of your business, such as:

• Finance ' rely on a single set of trusted, up-to-date data from which you can view business status, perform financial reporting, and make informed management decisions. Built-in compliance features help ensure that your records are auditable and meet all major accounting standards, even as you expand internationally.
• HR ' ensure efficient and effective HR operations and maximize the potential of your employees. Automating and simplifying day-to-day HR activities frees up time to focus on winning the talent war for competitive advantage.
  
• Sales and marketing ' gain insight into the long-term profitability of your customers, and focus marketing and sales activities where they count.Work closely with partners and channels to strategize new initiatives and create more value for your customers.
• Customer relationships ' respond rapidly to customer demands, while understanding the cost to serve each customer and fulfilling their needs in the most efficient, effective manner. Deliver the same quality customer service across all channels and geographies. Solicit customers' input in product and program development. Empower customers with self-service and build customer networks to encourage loyalty.
• Manufacturing supply chain ' lower costs and increase revenue with an efficient, flexible supply chain. Execute adaptable warehouse and manufacturing functions to fit your products and business model. Leverage the integrated processes in your supply chain to differentiate your products and services from competitors
• Services supply chain ' identify and collaborate with your best partners, enabling them to participate in your business processes. Optimize onetime delivery and increase the quality of the services you deliver.
  Let SAP help you drive efficiencies throughout your business and unify your business processes from end to end. With SAP Business ByDesign, your organization can optimize its operations, prepare for growth, and accelerate innovation.

"We expect further growth based on the platform strategy we will launch globally this year. Therefore, we also need a state-of-the-art  landscape that can grow with us and bring a certain structure to our company. We trust SAP and its long-term experience to enable our business processes." Dr. Reiner Stemme, CEO, STEMME AG

Through a fast and simple configuration process and using the built-in learning environment, anyone can quickly and easily explore, evaluate, and experience SAP Business ByDesign. The solution is easy to adapt to new needs as you grow, and you always have access to expert support for maximum availability and scala bility of the software with minimal IT costs.

SAP Business ByDesign automates business processes in a variety of areas across your business. Some of the areas and processes covered are listed in the table below.

Automated Business Processes

For More Information

The Security Myth Some companies balk at adopting on-demand software, fearing that their mission-critical data will be compromised because it's not located within their company walls. However, the opposite is often true. Industry-leading on-demand software vendors such as SAP invest heavily in securing your data.

For 30 years, SAP has proven its commitment to providing scalable, reliable, and secure solutions to companies of all sizes. When you adopt the SAP® Business ByDesign™ solution, your data will be located in state-of-the-art data centers and protected by up-to date access control systems. SAP maintains the highest standards in confidentiality and integrity. Your data is located on a single system that is not shared with other customers. Because SAP uses high-performance hardware and employs the most stringent security, backup, and recovery measures in these world-class data centers, you can be certain that your data is safe and always accessible. SAP regularly backs up your data, enabling pointing- time recovery, and also provides off-site data backup storage to ensure security and availability. In fact, SAP leverages its own experience operating a global business comprising over 40,000 employees to ensure that your business is always up and running.

To read more about what customers have to say about SAP Business ByDesign, go to
www.sap.com /solutions/sme/businessbydesign /customers/index.epx.
To download more information or find out more about how SAP Business ByDesign can help, visit www.sap.com/solutions/sme /businessbydesign.

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