WHITE PAPER

The information ripple effectThis white paper discusses how the initial acquisition of imperfect
information creates an immediate and dramatic enterprise-widedisruption. It will also address how a digital platform can eliminate
or minimize the negative business outcomes resulting from theinformation ripple effect.

Contents

The information ripple effectExecutive summary

3

Daily disruptions

4

Understanding the ripples

5

Manufacturing and Chemical

6

Finance

7

Retail and CPG

9Pharmaceuticals

9Services

9Summary

102/10Executive summary
Every business process requires information. Recent innovations focus primarilyon the processing of information and not the quality of the information processed.
Too often, the perception is that information only involves a relatively small focus
group. The reality is that, in a connected business enterprise, imperfect information
creates a significant, wide-reaching ripple effect.
The origin of the ripple begins with the initial acquisition of information. It is widelyassumed that information acquisition is electronic, but information acquisition
remains predominately non-electronic. This non-electronic channel is primarily
paper or images attached to emails. Any non-electronic information acquisitionrequires a human touch point to enter into the corporate system of record. For thispaper, it is assumed that the system of record is SAP®.
“I don’t know” is a statement that can cause panic in the enterprise. Due to thespeed of the economy and the geographic dispersion of employees, businesssuccess requires immediate access to information that is accurate, timely, relevantand secure. The vast amount of information generated throughout a businessprocess has elevated the task of “knowing” to new levels of difficulty. This lackof knowledge often results in employees providing imperfect information into
the business process flow. Detection, evaluation and resolution of the imperfect
information disprupts an otherwise stable process, resulting in ripples throughout
the enterprise.
The SAP intelligent enterprise framework operates at an optimal postive outcome
when the informatation flow is not disrupted. Without disruption, the information
flow is calm and, when always in motion, the enterprise runs smoothly. When thesteady stream of information is not perfect, the information disruption begins andthe information ripple effect becomes pronounced and, in some cases, extremelydispruptive.
This white paper will discuss how the initial acquisition of imperfect information
immediately and dramatically drives enterprise-wide disruption. It will also address
how a digital plaform can eliminate or mimimize the negative business outcomes
resulting from the information ripple effect.

The information ripple effect

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Daily disruptions
Most employees begin each day collecting the information needed to complete theirwork. This information acquisition continues throughout the day as they research,evaluate, make decisions and take action. SAP does not include pre-populatedbusiness information, therefore the information acquired must be either enteredinto the SAP business process or stored to support the business transaction. Think
about the startof a work day. How much time is spent organizing and researching non-electronicsources for information needed for the day? How often are you interrupted tocorrect problems resulting from imperfect information entered on prior days? Whoentered the information, you or someone else that created the problem?
Software solutions, such as networks or EDI, have been successful in thedigitalization of business processes, but the fact remains that as much as 80
percent of information is entered into SAP by manual, error-prone data entry. Inaddition, the storage of supporting documentation for the information entered into
SAP is still stored in paper format. Make no mistake, the off-site storage of nonelectronic information is still a big business. To compound the problems related tothe management of non-electronic information, the “need” to make copies is still
rampant and often these copies are also used and storedin various formats across the enterprise.

The information ripple effect

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Imperfect information canUnderstanding the ripples

be defined as, but is notIn a modern business environment, it is critical that all units of the enterprise beconnected and consistent in the use of information. At all levels throughout theenterprise, it is imperative that each process participant understand that theuse and dissemination of information affects others throughout the connected
enterprise. Information quality and its utilization will determine if the information
ripple effect results in a positive or negative outcome.

limited to:• Error in entry, such as transpositionor spelling.
• Error in the source document,such as an incorrect address.
• Incomplete information, such as
an omission of order date.
• Information irrelevant to thebusiness process.
• Out of date information.
• Lack of information enhancement.
• Non-compliant information.

The information ripple effect

The digital capture of information frees individuals from manual entry, thereby
increasing profitability. Possibly even more impactful is the elimination of imperfect
information. If imperfect information is detected and corrected as part of the input
to SAP, the ripple is kept to a minimum. The further into the process the error goes
undetected, the ripples grow more destructive to a favorable outcome. In addition,
the time and effort to correct imperfections detracts from proactive, value adding
tasks.

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Manufacturing and Chemical
Order to Cash
If the information from a purchase order is imperfect, negative revenue outcome
might include:• Loss of a sale and/or future business with a customer.
• Last minute changes in operations, which drive inefficiency.
• Degradation of trust between internal departments, resulting in “work arounds”
and inefficiency.
• High cost of materials due to the limited time to source and the expenseof expedited logistics.
Procure to Pay
Imperfect information related to an invoice, delivery note or quality checks
may harm profitability, resulting in:• Duplicate payments.
• Excessive inventory.
• Lost sales due to inability to provide materials on time.
• Fraud.
• A negative relationship with trading partners, as late payments will affect cashflow.
Operations
This industry is especially sensitive to imperfect information. Production,maintenance and logistics schedules are driven by information from across theenterprise. Since many companies rely on contract personnel, imperfect HR
information is also a potential for disruptive ripples.

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Finance
The impact here can be both direct and indirect. Most information entered andsubsequently generated will have an impact on finance. Since financial postings
are typically an end of process step, imperfect information will require financialcorrections. If these corrections are late or sizeable, the outcome will be a less thandesired view by auditors and investors. Sometimes these problems even becomenews, lowering the value of a publicly traded company. In a worst case scenario,
imperfect information may generate significant fines and penalties due to lackof compliance. It will typically affect the cost of goods sold, inventories and tax
determination.
Example scenario:• A vendor sends an invoice for manufacturing equipment to the customer as a PDF
attached to an email.
• The equipment in question was ordered with a PO and requires a goods receipt.
• The customer’s maintenance crew has a scheduled shutdown that requires theequipment to be installed over the weekend.
• The customer has a make to order production run scheduled for the machinery on
Monday to fulfil a large make to order shipment to the customer.
Problem description:• The invoice is received the same day as the vendor ships the partfor expedited delivery.
• When the maintenance crew looks for the equipment to install during theshutdown,
it is discovered the vendor has not delivered the equipment.
The enterprise disruption resulting from the information ripple will rapidly grow as
the ripples flow out, making one person’s problem someone else’s. Eventually, theintelligent enterprise does not look as intelligent as once assumed.
Further examination of the ripple exposes gaps in the connected enterprise. This
ripple began when the part was delivered late on Friday afternoon, but the goods
receipt was not entered in SAP and the part was pushed back into the corner of thewarehouse for entry on Monday. The ripple begins.
The imperfect information here is the goods receipt into SAP for the required
equipment part. In this case, the information is incomplete. The part has beendelivered, but only the warehouse person has that information. Others in theenterprise need this intelligence to complete their assignment but they do not havethe information.
Without the necessary information about the equipment, the maintenance crew is
working overtime to complete the shutdown but is unable to repair the machinery.
The vendor is contacted over the weekend to discuss why the part has not beendelivered. After explaining that it has been delivered, it is agreed that the vendor
will expedite the shipment of another part over the weekend so they can complete
the shutdown. The shutdown is finally complete, but it is now behind schedule.
Operations cannot complete the scheduled production on Monday since themachinery cannot be started on time.
While this ripple is not as predictable, in some situations, maintenance may nothave time to review all required environment, health and safety guidelines and may
inadvertently skip required steps in the shutdown. This non-compliance can resultin future ripples related to safety or lower profitability due to fines.
The information ripple effect

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Negative business outcomes continue to evolve with every ripple. The first ripple ofincomplete information affects profitability due to excessive maintenance labor. The
outcome of the next ripple is that the relationship with the vendor is adversely affected.
Profitability is further decreased since the customer now has two pieces of the sameequipment. This will result in additional expense if it is sent back or the organization
incurs inventory costs. As the ripple continues to flow across the enterprise, theoutcome of the next ripple is internal trust. Maintenance does not know if it can trust
the warehouse group to provide quality information when working on maintenancescheduling. The ripple now has reached operations as they are unable to fulfill theproduction run requested by sales. While this lost sale becomes a significant outcomeof the information ripple, it is compounded by the fact that the customer may lose
confidence in the organization’s ability to fulfill make to order requirements and could
potentially take their business to a competitor.
Enterprises can calm the information ripple effect with a digital capture solution.
A digital capture solution transforms and enhances the Intelligent and ConnectedEnterprise. Information is available immediately, is complete, accurate and visible to all
appropriate individuals across the entire enterprise.
As mentioned, imperfect information often starts the ripple disruption with a humantouch point to acquire the information. Elimination of the unnecessary human touchpoint by digitizing non-electronic information ensures a favorable business outcome,including increased profitability, user trust and improved relationships with all trading
partners.

In the example related to the manual ingestion of invoice
information, a solution should be used to digitally capture nonelectronic information. OpenText™ Information Extraction Servicefor SAP® Solutions will ensure accuracy and completeness of
information from the invoice and delivery note, and information willautomatically be recorded in the proper SAP business transaction.
OpenText™ Vendor Invoice Management for SAP® Solutions will also
assure timely and accurate payment to the vendor. For captureof information outside of procure to pay processing, OpenText™
Business Center for SAP® Solutions provides the latest digital
capture technology. The use of OpenText™ Extended ECM forSAP® Solutions ensures the delivery of the right information, to theright people, at the right time. The maintenance crew would have
immediate access to required shutdown steps, all communication
with the vendor, crew scheduling and more. Through Extended
ECM for SAP Solutions, sales would have total visibility into
progress and, if required, can proactively communicate with thecustomer related to the sales order. Those in the warehouse would
also have the complete documented history of inventory issues toensure the proper parts are available.

The information ripple effect

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It should be noted that the information ripple effect can be a positive. With OpenText,
the impact of perfect information can drive favorable outcomes, including an increasein profits, strong compliance and better relationships with trading partners. In addition,
the carbon footprint improvement, derived from the reduction of paper use, copying
and storing will position any corporation as a leader in social awareness.

Retail and CPG
Since these vertical organizations are typically customer facing, imperfect information
will not only disrupt the current profitability, but most likely future revenue as well.
For example, imperfect information related to providing goods for sale may resultin not being able to deliver goods related to an annual marketing campaign.

Pharmaceuticals
In this business vertical, imperfect information can quickly result in fines, as well as theloss of public confidence. Given the ultimate consequence of imperfect information may
be the loss of human life, it is imperative that all ripples are eliminated.

Services
In this industry, the ripple effect is more sensitive due the injection of service
information rather than goods. Information related to goods is typically static,
where service information is more dynamic. The entering of imperfect service
information may result in ripples that are more difficult to calm as several trading
partners could be involved.

The information ripple effect9/10

Summary
There will always be information ripples, even in the most Intelligent and ConnectedEnterprises. The challenge is to reduce them to a minimum. When ripples do occur,
tools must be in place to detect them early in the process flow to minimize impact
and ensure a smooth business process flow. Whether the imperfect information ismaster data, information from trading partners or internal information, the impact
will be process disruption resulting in lower profit.
OpenText and SAP have invested more than 20 years co-developing solutions thateliminate the imperfect ingestion of information while optimizing the digital process
flow that uses it. When ripples do occur, the OpenText solutions provide early
detection, full visibility of the process flow and all supporting documentation in adigital format. Access to information by the right people at the right time ensures
immediate resolution to prevent outgoing ripples. Exchange of information withtrading partners is up to date and relevant. Potential negative business outcomes
are turned into positive business outcomes with OpenText solutions.
Resources• OpenText Information Extraction Service for SAP Solutions• Information Extraction Service—An innovative approach to capture• 5 key learnings from the Gartner Data and Analytics Summit 2019

About OpenText
OpenText, The Information Company, enables organizations to gain insight throughmarket leading information management solutions, on-premises or in the cloud. For
more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit: opentext.com.

Connect with us:• OpenText CEO Mark Barrenechea’s blog
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For more information, visit: https://www.opentext.com/about/copyright-information • 03.22 | 20074EN

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