My Term Paper about EvoBus in SAP, Grade: 94% In this term paper you will discover about SAP implementation challenges, benefits on the example of the german company EvoBus Ltd., Mercedes' subsidiary. EvoBus will demonstrate what has to be considered when planning a SAP project and why SAP EWM implementation was an success.

1. COLOGNE BUSINESS SCHOOL (CBS)
Case Study: EvoBus GmbH
How a coach bus company benefits from
the SAP EWM application and its
implementation challenges
Term paper for Enterprise Resource Planning & SAP
Summer Semester 2014/2015
Lecturer: XXX
Anton Wischnewski
BA12 in International Business / International Trade
Student-No. XXX

2. Table of contents
1. Introduction .................................................................................................. 2
2. Company’s Background .............................................................................. 3
3. Problem Analysis ......................................................................................... 4
4. Reasons for SAP Implementation and Its Exceptional Feature ............... 4
5. The SAP EWM Warehouse Process Integration ........................................ 6
5.1. Goods Receipt .......................................................................................... 7
5.2. Goods Issue ............................................................................................. 8
6. Benefits for Business Processes Through SAP EWM ............................. 9
6.1. SAP EWM Full Integration ........................................................................ 9
6.2. Wireless Network ...................................................................................... 9
6.3. Integration of Mobile Devices ................................................................... 9
6.4. Further Benefits ........................................................................................ 9
7. Critical Analysis ......................................................................................... 12
7.1. Competition in the ERP Market .............................................................. 12
7.2. EvoBus’ Risk as the First User of SAP EWM Application ...................... 14
7.3. Cooperation between SAP, the EvoBus’ IT-Department and Users ...... 14
7.4. Disadvantages of SAP ERP Systems .................................................... 15
8. Conclusion .................................................................................................. 18
9. Reference List ............................................................................................ 19
1

3. 1. Introduction
As there is an increase in complexity of business processes because of
Globalisation and a change in business structure new advanced technologies are
providing companies with more possibilities to deal with the emerging challenges.
The companies nowadays need to be able to coordinate and collaborate across
all business processes including planning, procurement, transportation,
warehousing, and fulfilment in real time in order to save time, resources and
costs.
An Enterprise Resource Planning (ERP) system offers a possible solution. ERP
systems facilitate the flow of information between all business functions inside
the organization resulting in time reduction of business processes and, thus, in
profit increase.
The SAP Group is a multinational corporation and is the German leader vendor
in enterprise system SAP ERP. It belongs to one of the largest software
companies in the world with a revenue of €16.81 billion.
EvoBus GmbH is one of 253,500 SAP’s customers. In order to run the spare
parts logistics operations as efficient as possible EvoBus GmbH management
has decided to implement the SAP Extended Warehouse Management (SAP
EWM) application.
On the example of the bus and coach constructor EvoBus GmbH I would like to
analyse if the Evobus' management has made the right decision by choosing
SAP EWM for its business processes figuring out what benefits the SAP ERP-EWM
has to offer and what problems and challenges might occur throughout the
implementation process. This term paper is going to answer the question: How
does EvoBus GmbH benefit from the SAP EWM implementation and which
problems and challenges is the SAP ERP hiding?
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4. 2. Company’s Background
EvoBus GmbH has been created as a result of a merger between Setra and
Mercedes-Benz in 1995 operating in the automotive, vehicle construction
industry (SAP, 2010; EvoBus GmbH, 2014).
EvoBus GmbH is a 100% subsidiary of the Daimler Group corporation, which
also owns Mercedes-Benz. Mercedes-Benz is pioneer in the bus and coach
business having more than 100 years of experience in the bus and coach
industry with its headquarter in Stuttgart, Germany (SAP, 2010). The company’s
subsidiaries locations are distributed amongst Europe such as Germany, France,
Spain, Czech Republic, etc. (EvoBus GmbH, 2014). Throughout the SAP
analysis we are focusing on the warehouse location Neu-Ulm in Germany.
EvoBus offers products such as buses and coaches, and bus-specific services.
SAP EWM implementation partner is SAP Consulting. (SAP, 2010)
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5. 3. Problem Analysis
Since the merger of Setra and Mercedes-Benz to EvoBus GmbH in 1995 the new
company started to face new challenges:
1. The warehouse management system was out-dated
2. By the year 2004 it becomes clear that the spare parts business started to
grow by 10% every year causing serious capacity problems
So there emerged the question how to deal with the warehousing challenges and
how to proceed with business operations in the future. Trying to solve the
problem in 2004, the EvoBus management, finally, came to the decision to invest
€47 million to build a new spare parts logistic centre in Neu-Ulm, Germany.
Through the project an area of 320,000 square feet with a capacity to store
about 100,000 original spare parts has been built.
4. Reasons for SAP Implementation and Its
Exceptional Feature
In order to run the spare parts logistics operations in the new warehouse centre
as efficiently as possible, EvoBus was in need of a powerful warehouse
management system. At that time, the structure was based on the central spare
parts warehouse and five external warehouses. As the warehouses had already
a SAP software system established, the goal was to integrate a new central
warehouse system into the existing SAP system to ensure stability, high
availability, and ease of maintenance. The new SAP system should:
§ Optimise capacity
§ Close all external warehouses
§ Efficient and optimal processing of operations in the spare parts business
§ Extending order deadlines
§ Increasing delivery frequency
4

6. The decision was made in favour of the SAP Extended Warehouse
Management (SAP EWM). The application was designed for highly complex
warehouses as the EvoBus' new warehouse centre. It should enable the
company to reduce investments in service spare parts while ensuring to have
the right parts in the right place at the right time.
Interestingly for the decision is that the SAP EWM application was never tried out
before, meaning EvoBus GmbH would be the first customer using the SAP EWM
application for the first time in practise.
5

7. 5. The SAP EWM Warehouse Process Integration
The decision to implement SAP Extended Warehouse Management (SAP EWM)
application was made based on evaluation of factors from which the company
would benefit in the future. In this part, I would like to explain the integration
process of SAP EWM.
The warehouse size and spare parts quantities of EvoBus’ demonstrate a very
complex operational process and tasks, which must be managed with a special
accuracy and a proper planning if the project SAP EWM implementation should
succeed and remain sustainable. In order to understand the processes effected
by the SAP EWM application it is necessary to have an understanding of
business processes and functions being run at the EvoBus’ warehouse centre
which are explained as followed:
6

8. 7
Figure 1
Source: SAP Help Portal, n.d., Storage Type. Retrieved n.d. from
http://help.sap.com/saphelp_ewm70/helpdata/en/97/d94541c47a6e24e10000000a155106/frames
et.htm
5.1. Goods Receipt
Incoming goods are transported to one of three different goods receipt areas:
• High Rack Storage Area
• Block Storage Area
• Fixed Bin Storage Area
According to their size or material number inspected the incoming goods are
distributed amongst the different areas. A conveyor belt moves the spare parts
automatically to the according storage area.

9. The remaining goods are transported by shuttle from the transfer bins to the
correct put-away bins (SAP, 2010).
8
5.2. Goods Issue
The multi-step goods issue process takes place via process-oriented routing:
from picking, packing, and staging through loading. Workload is shared across
the various packing stations. There is a variety of loading scenarios:
1. Staging and loading individual handling units (HUs)
Handling Unit (HU) is a physical unit consisting of packaging materials and
the goods contained in it.
2. Loading all HUs on a single dispatch staging area in a single step
3. Direct loading onto the swap body
Those loading scenarios help ensure that the goods issue processes run
smoothly (SAP, 2010).

10. 6. Benefits for Business Processes Through SAP EWM
6.1. SAP EWM Full Integration
SAP EWM enables full integration with the already established SAP ERP used in
the warehouse centre operations (see: Figure 2).
SAP EWM application offers complete integration of warehouse management
and control with the inventory management and delivery processes. It enables a
smoothly use of other, not-SAP application for goods movements, which can be
organised, controlled, and monitored by the SAP warehousing solution.
9
6.2. Wireless Network
Wireless network that supports all manual logistics processes as for example
scanned Data that can be transmitted quickly via wireless network, warehouse
orders that are transmitted directly to the picking device.
6.3. Integration of Mobile Devices
The SAP EWM system enables company’s employees a web-based and user-friendly
integration of mobile devices. For example, the employees in the storage
area can use mobile or stationary terminals on the stacker cranes to manage all
processes, so that the warehouse process paperwork becomes unnecessary
(SAP, 2010).
6.4. Further Benefits
SAP EWM handles all of these comprehensive processes helping to ensure that:

11. § The end-to-end infrastructure controls the small-parts storage area
§ The location network connection, and the server services are fully
10
integrated
§ Greater flexibility and efficiency
§ Maximum security
Figure 2 illustrates how the SAP EWM application is integrated into the already
established SAP ERP System.
Figure 2
Source: SAP, n.d., Warehouse Integration Completion. Retrieved n.d. from
http://help.sap.com/SCENARIOS_BUS2012/helpdata/EN/fe/4d7267e8d84ed9924b24ef56234d3e
/content.htm

12. As explained by Horst Pöschl, head of the parts center for EvoBus
IT management: “All of it gives a transparent processes and optimum data
quality” (SAP, 2003).
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13. 7. Critical Analysis
7.1. Competition in the ERP Market
According to the infamous Forbes magazine (2013) and Panorama Consulting
Solution (2012) SAP posses a market share between 22-25%, which makes SAP
the market share leader in the ERP market. But there are many alternative ERP
systems in the market as for example Oracle, Microsoft Dynamics amongst the
market leaders. The question emerges if EvoBus made the right decision to
select SAP EWM as the best ERP solution.
The consulting company Panorama Consulting Solutions has compared the
three biggest ERP systems vendors as SAP, Oracle, Microsoft Dynamics and
discovered the shortcomings of the three ERP systems.
Contra: It must be considered that EvoBus GmbH is a subsidiary of the Daimler
Group (SAP, 2010, p.2). The whole Daimler corporation make use of SAP
system, thus, it was a reasonable step of EvoBus' management in the decision
making process to choose SAP EWM as a solution, which makes the integration
and interactive operations with SAP ERP much more easier in total.
As stated by SAP (2002), DaimlerChrysler is one of SAP's largest international
customers. "SAP is one of our strategic partners in this evolution, supporting our
wide range of business processes on a global scale.” explained Sue Unger, the
senior vice president of DaimlerChrysler AG (SAP, 2002).
EvoBus’ management focused on key factors when choosing SAP EWM making
decisions based on experience from the Daimler Group and made a reasonable
strategic evaluation.
12

14. 1. Implementation Duration
Panorama Consulting Solutions has conducted a survey about implementation
duration of the ERP systems amongst different companies. Its findings have
shown that 61% of project implementation are finished over-schedule (Panorama
Consulting Solutions, 2012, p.11). The reasons revealed have been
organisational issues, extension of initial project scope, data issues and resource
constraints, to name a few examples (Panorama Consulting Solutions, 2012,
p.12).
Contra: 61% of over-scheduled project implementation refers to all the ERP
systems providers. That does not differentiate between SAP, Microsoft Dynamics
and Oracle ERP systems. The argument tells us about the tendency of any ERP
systems implementation to be delayed.
13
2. Payback Period
Payback is defined as a period of time when the organisation recoups its initial
investment on the project. Panorama research reveals that the average payback
period is 2.4 years. Interestingly, the majority of SAP implementations took
longer than three years to provide 36% payback and amongst its competitors as
Oracle and Microsoft Dynamics the highest payback rate of 9% that took less
than a year (Panorama Consulting Solutions, 2012, pp.13-14).
Contra: The implementation phase in EvoBus’ case ran from July 2006 through
April 2007 and was followed by four months of intensive integration testing. SAP
EWM went live for the first time on September 17, 2007 (SAP, 2010).
Those statistics highlight the success of the implementation of EvoBus' SAP
project. It shows that it took EvoBus approximately 1.5 years less than the
companies’ average of 2.4 years to implement the SAP EWM application. It
would be interesting to know the payback percentage of its initial investments.

15. 7.2. EvoBus’ Risk as the First User of SAP EWM Application
EvoBus GmbH has been the first customer trying to implement SAP EWM
application. The fact of being the first user of SAP EWM application is indicating
a huge financial and operational risk as the software was never tried out before.
Contra: Daimler Group is a large financially stable corporation with a turnover of
€118 billion (Daimler, 2014), which can allow itself to make such big investments
and being slightly risky.
“SAP has been Daimler’s software partner since 1984 and became Daimler’s top
strategic software partner by entering a software development partnership in
2002.” (SAP, 2008). The Daimler Group has a long-term experience and
expertise with SAP Group and its applications. Besides, the continuation of SAP
integration helps to establish compatibility throughout the Daimler corporate
network (SAP, 2002).
7.3. Cooperation between SAP, the EvoBus’ IT-Department
14
and Users
In such a large corporation as EvoBus the engagement of all participants is a key
feature of a successful SAP EWM implementation in order to run all business
processes smoothly. Proper communication and training is vital to manage the
change and familiarise the 3.699 employees (Daimler, 2014) working at EvoBus
with the new SAP EWM application.
Dr. C.V. Brown and Dr. I. Vessey both, professors of information systems, have
indicated through their extensive research key success factors for a successful
ERP implementations.
§ Top management is engaged in the project, not just involved
§ Project leaders are veterans, and team members are decision makers

16. § Third parties fill gaps in expertise and transfer their knowledge
§ Change management goes hand-in-hand with project management
§ A satisficing mindset prevails
To summarise, both professors came to the conclusion that a well-organised
management structure, an accurate management selection and co-operative
communication between all shareholders involved leads to a successful ERP
implementation (Brown and Vessey, 2003, pp.66-68).
Contra:
Coming back to SAP’s statement […] the entire project – from specification,
development, and customizing through integration tests – was processed in
cooperation with highly competent experts from SAP. The project team received
maximum attention from company management and was able to rely on first-class
support from Daimler and SAP (SAP, 2010).
[…] [T]here was outstanding cooperation between the SAP experts, the
IT department, and the users, characterized by an atmosphere of openness and
fairness (SAP, 2010).
All those involved in coordinating activities […] from middle management through
forepersons and individual employees – acted with the utmost commitment and
professionalism and contributed to a unique and all-embracing sense of team
spirit.
Based on the SAP’s statement it can be concluded that the SAP EWM project
was properly planned by the EvoBus’ management, which supported the project
with clear, detailed communication.
7.4. Disadvantages of SAP ERP Systems
Mr D. Weisinger, from the IT company Formtek, has indicated the problems with
ERP systems in his article ‘Enterprise Software: Top 10 ERP System Problems’
problems occurring. He has summarised the survey conducted by the ERP
15

17. software vendor Intact Software and created a list of 10 most common problems
with ERP Systems (Weisinger, 2011). Based on the article’s critical evaluation I
analysed the arguments and proved them by scientific sources.
16
1. ERP Maintaining Costs
22% of ERP users complain about maintenance costs.
As Mr Wallace and Mr Kremzar would certainly agree to the statistic as they
themselves explain:
ERP implementation requires people to be educated and trained (Wallance and
Kremzar, 2001, p.36). Preferably, as also stated by Prof. Brown and Vessey
(2003, p.67), the training should happen throughout the implementation process
because, finally, the employees will operate the ERP system and should be
involved in the process as early as possible.
It takes time and effort in order to change employees from their daily work habits
to a completely new way of operations (Wallance and Kremzar, 2001, pp.24-36).
Another disadvantage of the SAP EWM application is the necessity of SAP
consultants' support, which contributes to the maintaining costs. […] the
entire project – from specification, development, and customizing through
integration tests – was processed in cooperation with highly competent experts
from SAP. The project team received maximum attention from company
management and was able to rely on first-class support from Daimler and SAP
(SAP, 2010).
2. ERP Upgrade Costs
30% of ERP users indicate the problem that an ERP system is too costly to
upgrade.
As written by Mrs Sumner in 2005 “Limited customization makes it simpler to
upgrade the ERP software as new versions and add-ons emerge over time.”
(Sumner, M., 2005, p.3). It becomes obvious that the less customised and

18. standardised the ERP application the less problems occur when upgrading it. On
the other hand this explains the high costs occurrence when upgrading the SAP
system.
3. ERP Systems are Expensive to Change
20% of the ERP users replied have indicated that it is expensive to change the
ERP system, which is already established. That is why one of the major reasons
for a company to stick to one ERP system is the already established ERP
system. Also in case of EvoBus it becomes obvious as the Daimler group have
already a SAP ERP system established. In order maintain the compatibility and
save costs the management has decided to proceed with further SAP integration
(SAP, 2010).
4. Change of Business Processes for SAP Adjustment
12% of ERP users are indicating the problem that business processes have to
change in order to fit to the software. SAP EWM application was an extension of
already established SAP ERP system in the EvoBus’ warehouse center. That
means that all the processes were already adjusted to the SAP ERP process and
SAP EWM enabled to add more functions to SAP system. Finally, the EvoBus'
management made the right decision and avoided to change the business
processes.
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19. 8. Conclusion
In course of the research it becomes clear that EvoBus GmbH truly benefits from
the implementation of SAP project. Amongst the competition SAP ERP systems
turned out to be the best in regards of implementation duration and payback
period.
The SAP EWM application enables full integration with the already established
SAP ERP used in the warehouse centre operations and control with the
inventory management and delivery processes. SAP EWM includes mobile
device integration, end-to-end infrastructure control, wireless network support for
all manual logistics processes, greater flexibility, efficiency and maximum
security. All those functions help EvoBus GmbH to improve the warehouse
centre processes.
The disadvantages of SAP implementation such as expensive upgrade and
maintenance costs are true, but on the contrary, Evobus GmbH, a subsidiary of
Daimler Group, is a financially stable company with a revenue of €118 billions, it
can allow itself such large investments of €47 millions and slight risks for
SAP implementation. Moreover, Daimler corporation as a whole has based its
enterprise system on SAP, it was a smart move to align the IT strategy to SAP
solution and allow further SAP integration.
Throughout the SAP EWM application implementation process in the Evobus'
new warehouse centre was a clear line of actions worked out by the Evobus'
management. EvoBus’ management has gathered an excellent team of experts,
professionals and consultants who have worked together to create a user-friendly
SAP system for Evobus’ employees avoiding the key problem factors in SAP
implementation process.
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20. 19
9. Reference List
Brown C.V. and Vessey, I. (2003). Managing the next wave of enterprise
systems: Leveraging Lessons from ERP. MIS Quarterly Executive. 2(1), 65-77.
Daimler (2013). Company: Total Revenues. Retrieved 2014
from http://www.daimler.com/dccom/0-5-7145-1-1242702-0-0-0-0-0-0-0-0-0-0-0-
0-0-0-0.html
Daimler (2014). EvoBus GmbH: Facts and Figures. Retrieved 2014
from http://www.daimler.com/dccom/0-5-1369817-1-1341727-1-0-0-0-0-0-0-0-0-
0-0-0-0-0-0.html
EvoBus GmbH (2014). Facts and Figures. Retrieved 2014
from http://www.daimler.com/dccom/0-5-1369817-49-1341727-1-0-0-0-0-0-9506-
0-0-0-0-0-0-0-0.html
EvoBus GmbH (2014). Company. Retrieved 2014
from http://www.evobus.de/inter-evobus/0-674-399762-1-399881-1-0-0-0-0-1-0-
399762-0-0-0-0-0-0-0.html
Forbes (2013). 2013 ERP Market Share Update: SAP Solidifies Market
Leadership. Retrieved 5.12.2013
from http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-
update-sap-solidifies-market-leadership/
Panorama Consulting Solutions (2012). Clash of the Titans - An independent
Comparison of SAP, Oracle and Microsoft Dynamics. Panorama Consulting
Solutions, p. 1-18. Retrieved 27.01.2013 from

21. http://www.slideshare.net/msproject/sap-oracle-ms-dynamics-market-share-and-kpis
SAP (2002). SAP Signs DaimlerChrysler AG to Global mySAP.com®
Agreement. Retrieved 05.09.2002 from http://global.sap.com/corporate-en/
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news.epx?pressID=1408
SAP (2008). SAP Supports Daimler in Global IT Harmonization. Retrieved
19.05.2008 from http://global.sap.com/press.epx?pressid=9526
SAP (2010). EVOBUS Premium Bus and Coach Construction Gains First-
Class Spare Parts Logistics with SAP® EWM. Retrieved n.d.
from https://rapid.sap.com/se/expert#!/e2e/i_autom/lob-default-redirect,e2e-i_
autom-168
SAP (2011). SAP helps Service Parts Management Run Better. Retrieved
29.09.2011 from https://www.youtube.com/watch?v=qdvN4CeeOcQ
SAP (2012). SAP Named Worldwide Market Share Leader for Enterprise
Resource Planning. Retrieved 05/05/12 from http://global.sap.com/corporate-en/
news.epx?PressID=18813
SAP (2014). About SAP: Helping the world run better. Retrieved
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Sumner, M. (2005). Enterprise Resource Planning. New Jersey: Prentice Hall
Wallance F. T. and Kremzar H. M. (2001). In ERP: Making it Happen. The
Implementers’ Guide to Success with Enterprise Resource Planning. New York:
John Wiley & Sons, Inc.

22. Weisinger, D. (2011). Enterprise Software: Top 10 ERP System Problems.
Retrieved 21.12.2011 from http://formtek.com/blog/enterprise-software-top-10-
erp-system-problems/
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