There is no joke as good about SAP as the one they used to make about IBM – that no one ever got fired for buying IBM kit.
If there was an equivalent 21st-century SAP gag, it might get some rueful grins if its theme was something about having a tool that can do almost anything, but one that needs incredible patience to calibrate.
After all, SAP and the ERP revolution on which it has capitalised so well, has often proven to be the one of the most challenging of all IT implementations. Getting SAP right is something of a skill, to put it mildly.
A January survey of 100 pan-European companies by PMP Research suggested a mere five per cent of respondents were using their ERP suites to the full, with 41 per cent admitting there were some parts of these software frameworks that they had never even touched.
A legitimate question surely might be, is SAP worth the trouble? The key has to be project management and best practice levels within a project implementation. This is the view not only of SAP customers MIS UK spoke to but the supplier itself, which has produced guidelines to the effect that if certain key questions do not get answered properly, the project as a whole can crash and burn.
These include making sure common goals have been agreed. Ensuring that internal business executives and the IT department are both communicating in the same language. Clarifying to what extent the IT department and the business share a common understanding of what the new technology will do and guaranteeing that a support structure is in place ‘in the highest levels of the organisation on down’ to make people aware of the impact of the new software.
"We have brought it in to fine tune our core internal business functions"
Paul Martin, CIO, Rexam
Much of the above is a ‘motherhood’ statement that should apply to all the best IT projects anyway. But SAP projects are maybe in a different league. We tested this theory – that SAP works best with the right project management approach – by talking to three customers who say they have all made SAP ‘work’ for their organisations.
Carpetright is a UK and Irish carpet floor coverings organisation also operating on the continent that says it is on track to strip £1 million out of operating costs by implementing SAP’s retail package. Savings are anticipated by a combination of server consolidation (off a variety of hardware on to HP Itanium servers with a storage area network) and more efficient internal systems, such as end to manual invoice processing and other efficiencies.
"We have brought it in to fine tune our core internal business functions"
John Ellis, director of corporate services, PITO
Ian Woosey, IT director at the organisation, says that a move to SAP has meant a successful shift of some 12 existing legacy systems that had grown “difficult to maintain and expensive to upgrade”. So seriously did he consider the project management side of his planned move that he and his implementation partner spent no less than a year with 20 staff working out the details. “This is a big project for us, replacing most of our central systems, and we are very pleased we managed it in just 15 months,” he says.
“It was a big learning curve, especially in project management methodology. We made very extensive use of the SAP quality approach to help us deliver on schedule. Like most big ERP implementations we did have a small dip in performance as we came on stream but it was very small in this case. This now means we have stable systems that give us a real basis for future growth and expansion.”
Quality – a word much abused over the years by the IT industry – does seem to have been a genuine watchword, and the Carpetright implementation has won an SAP internal award for just such a facet of the project process.
“Quality was more than a ‘methodology’ for us − it became an integral part of all our project activities. Quality management is similar to risk management; it is part of the project but needs to be monitored formally and has some unique reporting requirements and subsequent activities. With risk management we only avoid the errors we can see. A focus on quality adds a further dimension where we drive delivery towards high standards, and thus control success,” he says.
John Ellis is director of corporate services at the Police Information Technology Organisation (PITO), which works to provide English and Welsh police forces and criminal justice organisations with IT and communication systems. He told MIS UK how the organisation had benefited from SAP to the extent of saving £400,000 annually, due to increased internal operating efficiencies. It is a figure he arrives at by combining £200,000 saved by more efficient inputting of information, less need for manual intervention and £200,000 staff redeployment costs.
“We have brought it in to fine-tune our core internal business functions of HR, finance, purchasing and project reporting,” says Ellis. “We had existing applications that we wanted to bring together in one place to run more efficiently.”
Getting there has not been a weekend’s work, of course. “We bought the system in 2004 and this is the first major phase of using it. That was a timescale for implementation that was extremely challenging but we are proud we made it.”
Again, implementation designed around a commitment to quality seems to have been key to achieving project management success. “This was a complex scenario, but I think we can say that quality standard procedures do work to make SAP deliverable.” A sentiment Rexam CIO Paul Martin agrees with. His company is a £3 billion FTSE quoted organisation that operates in 100 sites across 22 countries globally. It is nothing less than the world’s fifth largest consumer packaging supplier, working with beauty product companies, pharmaceutical, food and beverage companies including Coca-Cola.
In the can
Producing some 50 billion cans, the company is just the sort of multinational organisation always seen as the primary market for systems like SAP’s, especially around the Y2K period. But while Rexam had some limited use of SAP in finance it was not until 2001 that a decision was made to roll the system out across the company, starting in the Americas, says Martin.
“We did that to get a really world-class supply chain solution,” he continues. “We needed to streamline our approach, integrate where we could and find new ways of connecting generally. This re-engineering could only happen with the right kind of applications platform to support it.”
By 2003, he says, the company, using what evolved into the NetWeaver SAP software, had gone from no electronic integration with its customers – apart from a little EDI – to a scenario where almost 90 per cent of all cans are ordered via its portals. Order handling and accounts receivable have all seen major improvements in performance, as well as reduced inventory levels.
SAP has enjoyed astonishing ongoing business success, weathering the IT downturn much better than many of its ERP rivals − many succumbed to takeover and consolidation pressures. In January it reported a 14 per cent rise in profit for its fourth quarter and predicted a 17 per cent growth in software licence sales this year. By 2010 it wants to increase its customer base from 32,000 to 100,000, fuelled by products like a new business-process platform it plans for a 2006 launch, which represents an investment of 1.3bn euros over the last three years.
Delivering this level of SAP use had to be done in 18 months, not the three years he might have preferred, he says. “It worked because this was never an IT project, it was always a business project, it was always a business change project.”
Martin’s CEO, attended every single meeting over two years of the project steering committee, while projects in Rexam in general always feature co-directorship by one IT and one business owner participants.
“Here it was both me as CIO and the CFO as main sponsors. If you do not do this and think through what is needed you will end up with a solid SAP platform supporting broken business processes,” he warns.
What these three case studies show us is that when handled right with business objectives set and adhered to, even something as complex as SAP software can deliver. In Martin’s words, “Implementing SAP is not about technology, it’s about the right level of support from your executives.”
Perhaps our putative SAP joke, to reflect today’s market reality, should have that message – not that SAP is just too scary to work with?