004: The High Cost of Inexperience w/ Hau Ngo

In this episode of “Asks the Experts”, my good friend Anthony English an ERP Installation and Data Migration Expert from Sydney, Australia hosts a “Reverse Interview”.

Anthony was intrigued by a case study that I had published, so we got to talking about how a medical devices company saved $54,000 dollars a year in maintenance costs with a 1-hour diagnostic and why I am not charging $54,000 for my Blueprinting Workshop.

We had a lot of fun on this talk and we hope you enjoy it.

Resources Mentioned

Case Study: How To Save $54,000 In Maintenance Costs With One Diagnostic

Expert Review of Your Business: The Blueprint Workshop

Connect with Hau

LinkedIn https://www.linkedin.com/in/haungo

Twitter https://twitter.com/hau_ngo

Facebook https://www.facebook.com/summerlinanalytics/

Transcript

Anthony English:	How are you?
Hau Ngo:	Hi Anthony.
Anthony English:	How are you doing there, Hau?
Hau Ngo:	I’m good.
Anthony English:	Yeah, well, I think we’re going to end up interviewing each other. Yeah. Anyway, it’s all kind of very meta but, anyway, that’s great. Hau, I was so fascinated when I read your story, that article about SAP. A huge, huge win that you had in SAP. Just to put everyone in context first, could you just tell us a little bit about yourself? What is that you do?
Hau Ngo:	Oh sure.
Anthony English:	Yeah?
Hau Ngo:	Yes, sure, no problem. My name is Hau Ngo and I’m a data architect working in the SAP business warehouse on HANA platform.
Anthony English:	Wow, you’ve already lost me. You’ve already lost me.
Hau Ngo:	Exactly, exactly.
Anthony English:	[crosstalk inaudible 00:02:35]
Hau Ngo:	You know, that’s a bit of a mouthful and I’ve always had problems when describing what I do to folks who don’t work in SAP. First of all because most people don’t know what SAP is. I like to joke around and say I’m the guy from office space who writes reports. If I don’t get the report right I have eight bosses who yell at me. They seem to understand that a little bit better.
Anthony English:	That’s a great positioning statement.
Hau Ngo:	Exactly.
Anthony English:	Can you just give it to me, again, that positioning statement? I loved it
Hau Ngo:	Oh no, that’s more a joke than anything else.
Anthony English:	That’s really [crosstalk 00:03:18]. You write reports?
Hau Ngo:	Yeah, I write reports. The customers I help are primarily SAP customers who use the SAP NetWeaver application. Specifically, I like to help folks who work in the supply chain department. Anyone who has to touch a purchase order, anyone who has to source or procure materials from external vendors, those are the folks I like to work with. Just because my brain happens to be in line with the challenges that they go through.
Anthony English:	Okay.
Hau Ngo:	The reports I write tend to be favored in that line of business.
Anthony English:	Okay, so that means that you are working in, probably, larger companies, right? You’re working with larger companies. This is not like a mom and dad shop that you’re working with, right?
Hau Ngo:	Exactly, exactly. I think with SAP, with most ERP systems, the licensing cost is so high that a mid-range company is $500 million in revenue a year. Where typically most of the customers I work with are in the two to five billion revenue a year.
Anthony English:	Five billion dollars?
Hau Ngo:	Yes.
Anthony English:	How much [inaudible 00:04:29]?
Hau Ngo:	Yes. I would be happy with pennies on that, Anthony. Unfortunately I don’t get that.
Anthony English:	Okay, so it’s not the suburban dry cleaner, okay. I understand that. You must get to see some pretty interesting stuff with those sized companies. Are there any particular industries that you work in?
Hau Ngo:	Not particular industries. I would say anyone with a finished material that is made from raw material. Some of my past clients have been makers of sunglasses and eyewear, athletic apparel, medical devices, lawn mower equipment, GPS and observation equipment. Anything that has a physical good, I work with.
Anthony English:	Yes, okay, okay. All right, I’m sort of getting my head around that. Okay, that’s good. All right, those are the sized companies that you … Now, you mentioned something about reporting analytics. What does all that mean? What sort of reports? What are you talking about here?
Hau Ngo:	Sure. Most of these companies, they’re multinational. They move so much product, they have so much, in terms of, I would say, warehousing or a shipment or an inventory need that they have trouble, I would say, visualizing where everything is at one point in time. What I do is I package their data into a report or a dashboard that makes it easier for them to see here’s what my financial standing looks like today. If I were to zone into one material, here’s the amount of material I have in each warehouse, or distribution center, here’s the financial impact of having all these goods on hand, and here’s what it means when we can’t move these items for six months or longer.
Anthony English:	Ooh, okay, that’s really interesting. You’re talking about stock. For people who are outside of the game, we’re kind of thinking that they’ve got a huge warehouse with lots of material, lots of stock, lots of expensive stock. A bit like going to a big store, right? A big Walmart.
Hau Ngo:	Exactly.
Anthony English:	That must be very expensive, having all of that stock just sitting there and not being sold. Right?
Hau Ngo:	Exactly. A lot of these companies, because they handle so much stock, so much material, and they have so many different warehouses, if you imagine a big shop, like a large electronics store at your local mall, they have so much inventory it’s hard to say which ones are moving slow, which ones have been on the shelf for too long. Especially if you have a very large warehouse. With the default systems there’s not an easy way of saying this one particular material has been sitting on the shelf for over two years.
Anthony English:	Two years, if I hold a supplier’s, some medical device or something, for two years then, yeah, that’s going to be very expensive. I suppose I have to pay the supplier or the supplier is going without. I don’t know how it works. That would be valuable information.
Hau Ngo:	Exactly. Or you would have spent that money and it’s just stuck in your warehouse. It’s physically stuck until that piece of equipment is sold. With most systems it’ll tell you how much of it you have on hand, possibly. That’s an easy report to put together. It’s hard to put a report together that accurately tracks material in a first in, first out basis. When you get into the fine details of it, it gets a little bit harder to track.
Anthony English:	Right. Okay. That is, as I say, very valuable information for the bean counters. Yeah?
Hau Ngo:	Exactly. You don’t have to do, I would say, improve their numbers much, in terms of percentage-wise. If you were to move the needle 5% that’s a huge financial impact to them.
Anthony English:	You know, I heard a story, I think it was from James Clear, a story about the British cycling team, the Olympic cycling team. They hadn’t won a medal in years. I wish I remembered the statistics. They improved all of these odd things by just 1%. They did the normal things of checking the seats and checking the stages of the bikes and their training regime, and all of that, and their diet. They did some really odd things, like they did some A, B testing to test which gel on their legs, on the massage, is going to give them the better performance. Or teaching them how to wash their hands properly so they wouldn’t get sick.
	They just figured that if they just improved a whole lot of peripheral things by 1% it would have great results. That’s exactly what happened. I wish I could remember the statistic. You are doing exactly that for your clients, right?
Hau Ngo:	Exactly. Actually, I’m actually working on a client today and I know the blueprints were a year ago so I don’t have the slides memorized. I think the numbers were in the cases of just a few percentages. They could track their Maverick spend. Maverick spend is a term where you purchase a material from a vendor outside of pre-negotiated rates, or the best terms.
Anthony English:	Right.
Hau Ngo:	If you do that you’re not paying the best price for the material or the best terms for that material. They looked at it and they guessed that if they were to save a few percentage points that would come out to be about $70 million.
Anthony English:	$70 million?
Hau Ngo:	Seven zero.
Anthony English:	You know what question I’m going to ask. Can I have a piece of that pie? You saved $70 million? They would save $70 million just by a few percentage of that maverick spend?
Hau Ngo:	Yep.
Anthony English:	In terms of somebody who’s not in that game, like me, I’m kind of thinking like an emergency shopping. If I do an emergency shopping expedition for my family, it’s going to be more expensive. I’m going to go to a more expensive store on a weekend, and that’s maverick spend. It’s not going at the normal prices that I would usually be paying, where I buy in bulk.
Hau Ngo:	Exactly. Exactly, and that’s right. It’s not something you plan for, it’s not something you budgeted for. You didn’t put time into finding the best prices. It’s something you had to do at that moment. With a lot of the folks I work with, it’s not that they don’t know that this is the best price. With large ERP software, SEP is notorious for this, it’s complex. A lot of the best terms are actually hidden, either at the master data level or at the transaction level. There’s different layers where terms are set in the system that it’s harder for someone to say this is the best term in this situation.
Anthony English:	I’m really fascinated as contractor, a freelancer, who works in the infrastructure space. I’m really interested because because I’m working on the back end I can’t really translate that into savings, into new revenue for the company. You can do that very, very easily. Let’s say that you came and spoke to me. I’m the … what position am I in who’s going to be getting you in to do this work? What kind of position am I in the company? Am I the CFO, the Chief Financial Officer?
Hau Ngo:	I wouldn’t even need to go to that level, I don’t think. The folks I would talk to would be the commodity manager or the supply chain director. Those are the folks who actually devote a lot of time into working with the vendor to negotiate the best deals and they want to see the results of their efforts.
Anthony English:	Instead of doing the negotiation with the supply chain vendor, that’s obviously a big part of their job, you’re also identifying, very easily for them, they can simply see that we have ordered in these hospital beds, or I’m not sure, Nike shoes, whatever it is, these lawnmowers, and they’re just sitting on the shelf. They’re simply not moving. If we had a faster turnaround time we wouldn’t have to have these in stock and we can save this much money. There’s stock, there’s warehouse space, there’s so much other stock.
	I know, actually, a dry cleaner. He’s got a small shop, a small suburban shop, here in Sydney. He tells me that the reason that he’s not able to advertise, he’s not able to build up that business in that very, very small shop is that people don’t pick up their dry cleaning. There’s nowhere for him to stack your clothes, your suit. That’s an expensive problem for him, is that he is not able to move the stock out.
Hau Ngo:	I see.
Anthony English:	He’s done the dry cleaning and he says … I’m sorry?
Hau Ngo:	I was going to say he’s incurring the cost of holding onto his customer’s inventory.
Anthony English:	Exactly. They should really be paying rent for wardrobe space. He said that most of the ones that are sitting there on the shelves were brought in urgent. We’ve got a funeral to go to in two days’ time, this is an urgent one. Those are the ones that don’t get picked up. Some of them are very expensive shirts, like $250 shirts. You place a call, you estimate. This is an expensive problem, this is translating it from the dry cleaning. I can just see that in that tiny, tiny, small business of a local dry cleaner and multiply that 1,000 times into a huge warehouse.
Hau Ngo:	Oh definitely. It’s the same problem, if you think about it. We’re talking about excess cash that could be used. In your dry cleaner’s space it’s excess space that he could use for additional services.
Anthony English:	You’ve got a very powerful value proposition here, is that you don’t come in and say, “I do analytics.” Is that what you do, again? I forgot. SAP analytics.
Hau Ngo:	Yes. Yep, yep, exactly.
Anthony English:	Yeah, so what would you say? How would you present yourself when you come in? If I were to give you the elevator pitch, or if I were to meet you for five or 10 minutes, and you happened to know that I work in supply chain, or I’m very close to somebody who is, what would you say?
Hau Ngo:	Mmm, that’s a very tough question, just because in my space we’re so used to identifying ourselves as a role, in terms of what we do. If I were to give an elevator pitch I wouldn’t say what I would do. I would almost make a statement. “You’re supply chain is leaking working capital. Would you like for me to show you where you’re having maverick spend, or irregular spend?
Anthony English:	You have just written the perfect landing page. No, that’s great. Just tell me that again. Your supply chain is leaking capital.
Hau Ngo:	Mm-hmm (affirmative), is leaking working capital.
Anthony English:	Leaking working capital.
Hau Ngo:	That’s right.
Anthony English:	You don’t have to [crosstalk 00:17:19] people. You don’t have to go and even negotiate new rates for your suppliers. All you do is you identify the top five items that your system is hemorrhaging money.
Hau Ngo:	Yes.
Anthony English:	Wow.
Hau Ngo:	Exactly. If I can offer an aside …
Anthony English:	Did you like the little medical supplies, hemorrhaging?
Hau Ngo:	I actually missed that one but that’s actually pretty good. Good play on words.
Anthony English:	I should just let you in on a secret. How I actually have an SAP guy here from Brazil who’s with me here in Sydney. He’s listening in so you may hear him laughing.
Hau Ngo:	Oh, yes, yes.
Anthony English:	He’s not on the microphone.
Hau Ngo:	Welcome.
Anthony English:	Okay, that’s really got my attention. Does that mean I have to, what, engage you for a six month contract? How does it work?
Hau Ngo:	No, actually I’m actually moving away from, I would say, daily hands on the keyboard type consulting. What I’ve found out is most customers, they share a lot of the same problems.
Anthony English:	Yeah.
Hau Ngo:	Anyone who’s been on SAP for less than 10 years, definitely for the new customers who’ve been using SAP for the last five years or so, it’s such a complicated piece of software. Even though the market is run simple SAP is nothing simple when you apply it to a large company, a large multinational corporation. I would say the best value is having a blueprint workshop. It’s just as simple as me coming in with another expert in this space. We look at your business. We figure out what you’re doing. Based on our expertise, we help you identify where the leakage may be happening.
Anthony English:	It’s a blueprint workshop and precisely about this leakage. How long is that going to take? I know hat’s a big question because that can be a very long report, very complex. Right?
Hau Ngo:	Yes, yes. I’m actually not delivering the report. I would say the first discussion is more a getting to know you process of trying to figure out how large your company is. It could be a two day workshop, it could be a week long workshop. We go in, we identify what you’re doing, the process that you’ve had in place, or should have in place, to have a streamlined supply chain process. At the end of the day, or at the end of the week, we give you a short report that says here’s where we think the problems are and here’s what we think you should do.
Anthony English:	Is that going to lead to a huge engagement then? How simple is that solution? That’s a bit of [crosstalk 00:20:33] question, I suppose.
Hau Ngo:	Yeah. In terms of engagement, it really depends on what the client wants to do. It could lead to a very short engagement where they say, “Okay, we understand that we have areas that we need to improve.” In that instance we could give them one of our pre-built reports where we would say based on your particular need, I would say, here’s a top 10 materials or top 10 areas that you could have the biggest improvement, or the biggest bang for your buck. That would be the easiest next step. Or, if they want to work closely with me and my very small team, we could go in and we could help them turn everything around. That would be more of a three to six month process.
Anthony English:	Now, you’ve identified, was it $90 million or $70 million? What’s the difference? I can’t remember, how much was it again, that you identified?
Hau Ngo:	I believe it was 70 million, from what I remember, over the course of …
Anthony English:	Oh, it was 70 million. [crosstalk 00:21:32] the other 20.
Hau Ngo:	Yep.
Anthony English:	If you were to come in and identify that for me, I don’t really care what your daily rate. That’s so totally irrelevant.
Hau Ngo:	Yeah, the idea is to make it a no-brainer. At least for the blueprint workshop.
Anthony English:	Yeah.
Hau Ngo:	The idea is we could come in, we could give value and deliver value within two days to five days.
Anthony English:	Right. In terms of doing that, is that going to, because I mentioned that supply train manager’s role in a big company, whoever it is, man or lady, is going to be very busy. That report, you want that to be really very, very sharp. Right?
Hau Ngo:	Exactly, exactly.
Anthony English:	[crosstalk 00:22:24] report, they have to read through it. There’s a ton of work for them to do.
Hau Ngo:	No, no. I would say the output of the blueprint workshop is a very high level executive summary.
Anthony English:	Yeah.
Hau Ngo:	With a few more pages, a few bullet points here and there, that says possibly it’s these 10 materials, maybe the 10 materials that have the biggest impact in your financial standing. The idea is we can provide reports regardless of your, I would say, system. If you have the core SAP ECC system we have a report for that. If you happen to use my specialty, which is Business Warehouse, we have reports for that also.
Anthony English:	[crosstalk 00:23:11] as well because my specialty, just in case anybody’s listening, my specialty is IBM Power System so they’re in the mid range systems. If you’re running IBM’s proprietary operating system called AIX. I have installed SAP BW environments before so I’m familiar with that Business Warehouse. It’s like the Data Warehouse, right?
Hau Ngo:	Exactly. It’s an analytical plus data warehousing platform. In classic BW it was designed to sit on top of any source system or any database so a lot of people are familiar with it.
Anthony English:	Yeah, I’ve used that typically with Oracle and with DB2.
Hau Ngo:	Yes.
Anthony English:	I’ve seen it with others. I think those are the two, that would be the two big ones that I tend to work with. Hau, I really want to hear, I want to hear that story that you shared, that article, about the 15 hours. What was your biggest win? Maybe not your biggest but it was a great story. I’d really like to hear it.
Hau Ngo:	Oh yes, yes, the case study for the metals device company.
Anthony English:	Right.
Hau Ngo:	This was a multi-billion dollar company. I think their annual revenue was 5.6 billion. They were having trouble closing their financial books every month because their inventory valuation was reliant on a report that took, at best, 15 hours and, at worst, 30 hours every month to write.
Anthony English:	The inventory report, which is, what, basically just a list of all of the stuff that they have. That was taking 15 or even 30 hours per month to write?
Hau Ngo:	Exactly. There’s actually two components to it. One was the inventory stock quantity of all the materials in all the plants across the world coupled with the inventory valuation, that’s the dollars associated with those quantities.
Anthony English:	Can I just ask, was that like a cut and paste? In my ignorance, do you actually email all of the people all around the world and you say send us your figures? Is that how it works? Or is it all in one central database? How does it work?
Hau Ngo:	It should be in one central database, and that’s what they implemented SAP for, but they couldn’t get the reporting out of it in a timely manner. Every month what they had to do was start from the very first day they installed SAP and start counting up all their receipts of the inventory and subtracting all the issues of the inventory. This counting happens every month from the beginning of time.
Anthony English:	As the database grows, if they’re not archiving off all data as the database grows, especially [crosstalk 00:26:07] new or does very well in sales the longer the report takes each month. Yeah?
Hau Ngo:	Exactly. I think you’re hitting something I didn’t mention, Anthony, and that’s exactly it. As their data grows, the report takes longer.
Anthony English:	Yeah.
Hau Ngo:	What was 15 hours may take 17 hours or 19 hours.
Anthony English:	Yeah, and I have seen that, as I say, in the infrastructure space. Where you just have to approach things totally differently because you just don’t have the windows. I remember we had a database, we had to do a dump and load of a database and re-index it. Sorry to get too technical. Anyway, we had to basically turn off the backups. This was for a bank. We had to turn them off and fix this stupid database thing, it wasn’t SAP, and then get it all up again.
Hau Ngo:	Yeah.
Anthony English:	We couldn’t do it because we did a test run on a test database about the same size and we realized it was going to take us 36 hours, which means the bank is going to lose two nightly backups.
Hau Ngo:	Yep.
Anthony English:	The managers were not really, really happy with that plan so we had to think of it totally differently. The way we did it was we actually made a copy of the database and we put it onto a different system. We used a little bit of magic and we ran the whole thing in 20 minutes instead of 36 hours.
Hau Ngo:	Are you describing a mirror? Is that what you did?
Anthony English:	No, no, no, it was a different way. I won’t go into the details.
Hau Ngo:	Okay, it’s fascinating.
Anthony English:	What we did, the important thing was that we thought about it a totally different way. A totally different approach. Instead of saying how can we do this faster, we said how about we try a completely different attack. It worked really well.
Hau Ngo:	I think solving these complex problems and engaging your mind in a creative fashion, I think that’s where, I’m speaking maybe just for myself but that’s what gets me going. That’s what wakes me up. I like thinking about problems that no one has solved before, at least no one that I’ve known has solved before.
Anthony English:	The other thing is that you’re bringing in so much experience from multiple other failures that you’ve seen. Alternative solutions.
Hau Ngo:	Yep.
Anthony English:	I remember I was in a war room a few months ago where it was costing us, I can’t remember, $15, $20 million a month if we didn’t get this data center migration done.
Hau Ngo:	Wow.
Anthony English:	I can’t remember what the figure was but it was a lot of money, in my books. We put together a war room, and there were maybe four or five of us in the room, just brainstorming what can we do to improve this. It was down to the last … we had half an hour or something to go. The meeting was going to go another $15, $20 million for that month.
Hau Ngo:	Oh wow.
Anthony English:	Even though you may not have worked on this particular problem before, you bring a whole lot of experience and a whole lot of, “I never thought of doing it that way.” From having someone else come in and bringing that experience in is really, really valuable.
Hau Ngo:	Yeah.
Anthony English:	What happened with the [crosstalk 00:29:47] hours? Did you cut that down to like seven hours or something? What did you do?
Hau Ngo:	It’s along the lines of what you mentioned, Anthony. It wasn’t completely different thinking, it was just not that way. The idea of recalculating everything from the beginning of time every month didn’t make sense. I actually eliminated that window completely by loading a little bit every night, keeping track of the new records, and then periodically archiving information so that the report runs quickly and there is no down time.
Anthony English:	[crosstalk 00:30:30] because that down time was not just the delay of the report. You also had, what, people not logging in, you had somebody who had to troubleshoot it if it didn’t work.
Hau Ngo:	Yes, exactly. The idea was the process, if it ran well, the report would have been ready on a Monday. Worst case scenario, it would be ready on a Wednesday. The scenario that actually found me, I was tapped on the shoulder on a Friday afternoon of saying, “Hey, we’ve been having this problem for a long time. Do you think you can help out?” That’s when I was engaged, on a Friday afternoon. It’s a bit of a selfish reason but I really wanted to get out of work early on Friday. I called up the financial analyst and I said, “I think I know what you’re getting at and I think I can solve your problem. In the meantime, how about I give you a really close approximation of what you need?”
	He said, yes, that’s all he needed. We got [inaudible 00:31:32], very small win, and I turned that very small win into a three month process where I rebuilt, from the ground up, what they’re trying to do. A lot of that work, actually, was just migrating the old reports to a new model. The bulk of that was just regression testing and making sure the numbers tied out.
Anthony English:	That is a powerful story. The actual report in the end, you could now run it during the month as well as at the end of month?
Hau Ngo:	Exactly, you can run it any time. The data is refreshed every night and it takes less than five seconds.
Anthony English:	Less than five seconds, from 30 hours.
Hau Ngo:	Yep.
Anthony English:	I hope you didn’t charge per second for your time. Did you?
Hau Ngo:	I may charge per second on the next engagement.
Anthony English:	Next time. Per nanosecond, per nanosecond. That’s a very impressive story. Are you available? I’m sure that people listening to this podcast are going to be thinking, wow, maybe it’s worth getting this kind of road mapping blueprint session happening. It would be worth [crosstalk 00:32:41].
Hau Ngo:	Yeah, of course. Yep, for a long-term engagement I can be reached at Summerlin Analytics dot com.
Anthony English:	We’ll include that in the show.
Hau Ngo:	Oh, definitely. Summerlin Analytics dot com. For the blueprinting workshop all it takes is a phone call or an email. You can email me at Hau, H-A-U, at Summerlin Analytics dot com. If we have an initial 20 minute discussion to see if I can help you out, and if we’re a good fit, then we start the blueprint workshop the next week.
Anthony English:	Wow, that’s amazing. Hau, it’s been an absolute delight speaking to you and learning about your wins with the supply chain. I wish I could get a little piece of the $70 million that you’ve made for the company this morning.
Hau Ngo:	Yes, me too.
Anthony English:	Yeah. It’s just been wonderful. That was Summerlin Analytics. That’s S-U double M-E-R-L-I-N Analytics dot com. Is that right?
Hau Ngo:	That’s correct.
Anthony English:	Yeah, once again, that’s in the show notes. I’m Anthony English and this is Hau Ngo I’ve been interviewing, who’s an SAP analytics specialist. We’ll continue this podcast, we would love to hear what stories you’d like to hear because I’m sure we’ve got some pretty interesting ones that we could share.
Hau Ngo:	Awesome. Thank you, Anthony, for the reverse interview. It’s great talking to you every time. I love getting another technical expert’s viewpoint on some of my problems and things. I look forward to the next discussion.
Anthony English:	Thank you very much, Hau.
Hau Ngo:	Great, thank you.