SAP looks seriously to manufacturing SMEs – again

Heard it all before? Well yes, but the brand and sheer scope do have a certain cachet, and SAP’s extended infrastructure of systems and partner resellers does seem to be serious about what is a very big, if difficult market. Ciaran Rafferty, latest in a line of execs selected to run SAP’s push into the UK SME market, makes the point that SMEs have similar challenges to their much larger counterparts but less time and less resources. And it’s those facts, he says, that have been driving SAP’s recent approaches and, he argues, some SME uptake. He also points to SAP’s appointment of a new senior man – Hans-Peter Klaey – to steer its SME endeavours globally as further evidence of just how seriously the company views what has been an elusive prize. It’s clear that appointment will provide at least management clout in directing technical and business development for SMEs. So where’s the proof of emergent success? In fact it goes back getting on for a decade – with pharmaceuticals dispensers manufacturer Bespak, for example, an early SME adopting SAP R/3 as it was, using the then ASAP (accelerated SAP) methodology. But that wasn’t SAP’s choice for the re-launch of its SME campaign. Instead SAP chose an eclectic group of new to very new users: prepared foods manufacturer The Authentic Food Company, CRM and contact centre outsourcer Indigo Lighthouse, new cricket and golf equipment brand distributor Woodworm and high growth global metals trading firm LN Metals. Both The Authentic Food Company and Woodworm went for Business One – the former two years ago, the latter live in the last few weeks. But Indigo Lighthouse went for full mySAP (R/3), while LN Metals went for SAP’s All-In-One specialist implementation – neither of which is automatically associated with SMEs. Why did they choose SAP? The Authentic Food Company was the only manufacturer there so the most useful. Turnover is £25 million, growth is 20% per annum, it has 400 SKUs, employs 200 and has two manufacturing sites and one warehouse, although there are also production sites in Thailand and Belgium. The firm also supplies retailers and restaurant and pub chains in eight countries, so it’s very international and certainly playing with the big boys. Its energetic business controller Parminder Basran (above) says that two years ago he had been working with an unnamed food industry competitor but getting nowhere. “As soon as we found SAP we stopped… It’s the power of the brand and the scope for growing our company. And it’s the comfort of knowing that SAP has created its processes over implementing hundreds of other businesses. Initially we wanted mySAP, but the reality is Business One is enough for us.” And it’s working: his is a success story with, for example, service levels up from 75% just 18 months ago to 99.5% now. “The SAP system has definitely helped us achieve that,” he says. And he indicates significant improvements in everything from HR to CRM, stock control, production management and supply chain interactions. “All our customers are big companies so we’ve moved 80% of our transactions now to EDI, and the next phase will be integrating logistics partners and our suppliers,” he says. At the other end of the scale, Indigo Lighthouse’s operations manager Albert King says his company chose mySAP because of the scale and immediacy of its services to business – running contact centres, logistics, vendor managed inventory and distribution. “It was the breadth of the system that attracted us,” says King. “We bring solutions to our clients and we needed, for example, to be able to bring CRM to the Internet to improve our contact centre operations. Also, we needed a sound operational platform that would be flexible and scaleable enough to add products, services and customers as the business developed. “The value of a system like SAP is in integrating and maintaining all the data. It wasn’t the cheapest and it wasn’t the most expensive either, but there was value in replacing our old non-integrated systems, it could power many more transactions and we could come back to it for more functionality. If you’re looking for common denominators, these are high growth companies with global aspirations, all of which felt they needed systems capable of presenting them – and running them – as big league players. What’s particularly interesting is that SAP is indeed helping them to succeed here, and in sensible timeframes with sensible budgets and resources that these SMEs at any rate are comfortable with. Finally, were the Business One users put off by the migration effort they will inevitably face if their growth plans materialise? Apparently not: Parminder says simply that he can see the system performing well enough for his company for many years to come, effectively putting an SME in the big league. And that’s worth a lot. Is it wise? SAP’s Rafferty insists that Business One’s Netweaver technology compliance means that migrating up the systems is not that big a deal. He is however unsurprisingly coy about precisely what’s involved, and the costs and timescales – and certainly recommends using accredited partners for the task! But there is a view that given enough years good service, should you worry about that anyway?