ERP for SMEs
- SAP for 10 User Company
by
Grant
White
- Edinburgh
SAP is
the ERP solution of choice for large companies
and the leading product in the ERP market, so to
find it in a company with just 10 users is
unusual, perhaps unique. It is all the more
remarkable given that the company concerned is
no longer manufacturing.
Not
surprisingly, the adoption of SAP by Heckler
& Koch GB is historical as the company was
spun out of a much larger entity, BAE SYSTEMS,
which uses SAP. What it nonetheless demonstrates
is that an ERP system like SAP can work just as
well for SMEs as for much larger
organisations.
In this
article we outline the separation of the two SAP
systems and the benefits for Heckler & Koch
GB in sticking with SAP.
In 2003
Heckler & Koch GB, a distributor of weapon
systems technologies including machine guns and
small firearms, projected a £5m turnover
but actually turned over £10m, without
having to add any staff. "There can be no better
demonstration of the power of SAP," commented
Director & General Manager, Mike Thornton.
"A company our size might be expected to have a
much smaller management system and if we did I
doubt it would have coped with what happened
last year. The scalability of SAP is exactly
what we needed."
It is not the
only benefit that Thornton has realised
following his decision to stick with SAP when
his operation was sold off in 2002.
As part of
Royal Ordnance, Thornton had used the group's
SAP system. Beyond the sale the link with Royal
Ordnance would be severed and Thornton was
required to go it alone.
Thornton was
able to keep his costs down in continuing with
SAP as Heckler & Koch GB licences were
included in the parent company's contract with
SAP. "We were also able to substantially reduce
support costs by moving from Royal Ordnance's
providers, CSC, to a UK company, Absoft," said
Thornton. "CSC were very good, but they are a
large company and we were paying a
disproportionate share of their contract with
Royal Ordnance."
Thornton makes
a good point for any SME considering a tier one
ERP system like SAP - don't assume you have to
use a tier one provider as well.
Other drivers
for Thornton were the continuity provided by
maintaining SAP and the retention of historic
and operating data, although the practicalities
of separating from Royal Ordnance were anything
but simple.
Absoft used
its in-depth experience of SAP implementation
and data migration to come up with a solution to
meet the needs of Heckler & Koch GB and
Royal Ordnance. The company's subsequent project
required the procurement and installation of new
infrastructure, data extraction, software
implementation, training and post-go-live
support.
Implementation
Absoft
assigned a project team of seven to Heckler
& Koch GB: a project manager, one full-time
lead SAP technical consultant, three
infrastructure specialists and two SAP
functional consultants to cover the financials
and logistics areas. The team built a completely
new infrastructure architecture for Heckler
& Koch GB, based on Oracle and Windows 2000.
Other
infrastructure-related project tasks included:
- integration
of an existing NT file server
- upgrade of
existing Windows NT 4 workstation
environments
- implementation
of Exchange e-mail
- creation
of disaster recovery plans
- implementation
and configuration of a firewall
Absoft
installed SAP release 4.6B on Heckler & Koch
GB's server and a copy of BAE SYSTEMS'
configuration was implemented, setting up FI,
CO, MM and SD modules. This step meant that the
new solution was configured in exactly the same
way as the previous SAP system and the
foundations were laid for Heckler & Koch
GB's data to be imported.
A
comprehensive consultation phase involving both
Heckler & Koch GB and Royal Ordnance
determined which data was to be extracted from
the parent system and how it was to be handled.
Absoft's lead technical consultant was tasked
with the data manipulation, taking
responsibility for developing bespoke ABAP
programs to locate and export the relevant data
on the parent system and then upload it to the
new system.
The new system
underwent significant testing by key Heckler
& Koch GB users during implementation, to
validate the configuration copy and data import.
This testing period enabled Absoft to work
closely with each employee to highlight
potential enhancements to the system. Several
opportunities to streamline business processes
were identified and configuration changes made
accordingly.
These changes
included:
- removal of
unused fields in sales orders
- streamlining
of sales and purchase order processes by
removal of unnecessary screens
- alteration
to company SAPScript print-outs to include
fields only relevant to Heckler & Koch
GB
- modification
of MRP profiles to reflect the change in
supplier processes
- period end
change to allow for the new owner's
accounting standards
As with all
Absoft implementations, knowledge transfer was a
strong theme throughout the project. Each user
was trained in the features of the new system in
order to maximise buy-in and ensure
familiarisation with new
functionality.
Absoft took
just 11 weeks to complete the project and
Heckler & Koch GB's new system went live
successfully, on time and on budget. Heckler
& Koch GB now holds a support contract with
Absoft for remote support which includes weekly
and monthly system monitoring checks and
comprehensive technical and functional support.
Benefits
Heckler &
Koch GB maintained continuity of its business
throughout the implementation process and is
able to get more from its new system. More
streamlined processes have resulted in greater
productivity and when Heckler & Koch GB
encounters problems with its SAP system, staff
know that assistance is just one telephone call
away.
"Absoft played
a critical role in easing the transition of
Heckler & Koch GB to new ownership by
solving our system issues and allowing us to
continue to use a world-class business system,"
commented Thornton. "Even though we have a user
base of just 10, Absoft has delivered a SAP
solution ideal for our needs, that will provide
robust support for the business into the
future."
Since the
implementation, Heckler & Koch GB has had an
upgrade to Version 4.6c and is considering some
further improvements. However, Thornton is
confident that the basic model is ideal for
supporting the SME's growth.
At one time
Heckler & Koch GB was a manufacturing unit
employing 60 staff and Thornton sees many of the
same benefits from SAP now that the company is
smaller and involved in sales, distribution,
procurement and the provision of training and
demonstrations.
"Not only did
we double our projected turnover last year, but
we hold £3m worth of stock," explained
Thornton. "We have to know where every weapon
and every part is at any point in time. Using
SAP to record every action forces staff to be
disciplined in the management of our stock.
This
demonstrates another feature of an SME utilising
an ERP system. The size of the company is less
important than what it does and how it operates.
The suitability of an ERP system may depend on
this more than the size of the operation.
The stability
of SAP is also a benefit regardless of size. "We
have such a stable system, it's fantastic,"
exclaims Thornton. "No one ever talks about IT
problems here."
And although
Heckler & Koch GB is not linked to its
parent in Germany, there are benefits from both
companies operating the same ERP system. "We use
the same identity numbers as in Germany and at
year end when they have any queries we are able
to find the information they require with ease,"
said Thornton. "We can also learn from their use
of SAP and apply the lessons from Germany here."
On reflection
and looking forward, Thornton is very happy with
his decision. "Whilst our adoption of SAP was
heavily influenced by historical factors should
we be starting with a clean sheet tomorrow I
would still consider SAP."
Absoft
Limited
Davidson House,
Campus 1 Aberdeen Science & Technology
Park
Bridge of Don
Aberdeen
AB22 8GT
Scotland
Tel: +44 (0)1224 707088
Fax: +44 (0)1224 707099
Email:
info@absoft.co.uk
Click
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www.edringtongroup.com
www.absoft.co.uk
