Sappi Forest Products in South Africa has recently completed phase one of its massive, R70million SAP implementation, one of the largest in the country. The project is currently being successfully rolled out throughout the company, with the Ngodwana Mill already enjoying benefits.
The company is installing the full SAP R/3 enterprise suite, excluding only one module. This has involved a rigorous design phase, an enormous training operation and a thorough testing and re-testing process. Today, with the Ngodwana mill fully live, and other mills phasing R/3 in, Sappi is starting to reap the SAP benefits.
Sappi is one of the world`s largest pulp and paper manufacturers, and is the global market leader in its core businesses of coated woodfree paper and dissolving pulp. Following an acquisition trail initiated in the 1990s, it incorporates many of the world`s leading coated paper companies, including S.D. Warren, KNP Leykam and Hannover Papier, all of whom now operate as one global company.
Previously highly divisionalised, Sappi Forest Products is a united company, presenting one face to its customers. This new operating structure necessitated a major change in the company`s IT structure as its legacy systems were not flexible nor stable enough to support a highly integrated company.
"We needed to discard our patchwork of legacy systems which we had developed over many years," says Mike Turner, Sappi Forest Product`s financial director and executive sponsor of the SAP R/3 project. "These had become increasingly complex and difficult to maintain, were no longer providing acceptable levels of access or response, and were not year 2000 compliant.
"To move forward, we needed a stable operating environment, and an integrated business platform. We chose SAP R/3 because we thought it was definitely the best integrated platform available," he says.
"SAP is also enabling us to become more cost competitive. Sappi has a huge investment in plant and equipment - it is the fourth largest company, in terms of assets, listed on the Johannesburg Stock Exchange. SAP provides a platform to improve utilisation of all those assets and achieve substantial cost benefits."
The implementation began two years ago, and should be complete during the first quarter of 1999. During the first phase, Sappi implemented the SAP R/3 FI, CO, MM, PM and PS modules simultaneously at Sappi`s largest mill, the Sappi Kraft Ngodwana Mill in Mpumalanga. As soon as the modules were bedded down, they were rolled out to the next mill.
"One of the major benefits has been a dramatic increase in pro-active work at all levels of our mill," says Mike Constancon, MIS manager, Sappi Kraft Ngodwana. "On the plant maintenance side, we are already seeing far less unplanned maintenance, and the extreme visibility of real-time information in the financial arena is enabling us to be highly proactive."
Ngodwana Mill is now a reference site in terms of plant maintenance in SAP implementations," says Auret Kernick of Spearhead, appointed as Sappi`s implementation partner in late 1996. The company was able to provide competent people for the project, despite the emigration of SAP consultants to the rest of the world.
"Spearhead was able to supply the right calibre and mix of consultants," says Deon van Aarde, Sappi R/3 Project Manager. "The company wanted to be part of the single biggest SAP implementation in the country, and were committed to the long-term nature of the project."
"The complexity of this implementation cannot be underestimated," says Turner. "By the end, we will have more than 3 500 trained users. In addition, the pulp and paper industry involves many extremely complicated and intricate processes."
Van Aarde believes one of the major reasons for the success of the implementation is that it is being run as a business project, not as an IT project.
"The Sappi team, with its business knowledge, worked closely with Spearhead, who have the detailed SAP knowledge," he says. "It was their joint task to deliver a SAP configured system that met the requirements of all the divisions and units within the company.
"We spent an enormous amount of time getting the planning right. We produced a conceptual design document per module. As the module is rolled out we re-confirm its design with the units prior to implementation," he says. "We then enter a user acceptance phase, during which we do detailed user acceptance testing for each module.
"We have upgraded the system since we went live at Ngodwana," says Van Aarde. "We moved successfully from SAP R/3 version 3.0F to 3.1H at the beginning of December in what was a very well planned and executed upgrade."
There are a number of partners involved in the project, apart from Spearhead. Epi-Use was contracted during last year to assist with the implementation of the SAP human resources module, while DA Consulting was chosen to develop on-line training material.
"Sappi also decided to outsource many of the functions of its IT Department," says van Aarde. "and in May last year we awarded the outsourcing contract to IBM Global Services (IGS). IGS will have a team in place to take over the maintenance and ongoing support of R/3 once the implementation is complete. The company is also responsible for the hardware environment and support of Basis (the R/3 language)."
"Sappi is a continuous operation that runs 24 hours a day, seven days a week," says van Aarde. "To ensure minimal downtime, we run a centralised hardware environment, using SP 2 technology, connected through Telkom diginet and IBM frame relay network. We have also invested in satellite back-up through IBM."
He points to some fairly unique problems around the company`s WAN: "From our Tugela Mill, the telephone lines run through sugar cane farms. If our lines are not getting burnt when harvesting the cane, they are being chewed by the cane rats! Back-up is therefore essential."
Training and testing are major critical success factors for the project, and are dealt with rigorously.
"The sheer number of users to be trained is enormous, and called for careful pre-organisation and high levels of discipline from the individual units," says Turner.
Sappi adopted a `train the trainer` approach, and developed training material consisting of participant packs and instructor guides. Its aim was to build capacity and knowledge throughout the business, rather than a concentration of knowledge in head office.
"The training at Ngodwana alone involved close on 700 people and 35 000 man hours, more than 70 per cent of which was focused on previously computer-illiterate people," says Turner.
"It was also vital that we tested, and then re-tested, before unleashing any new module on the operating environment," says Turner.
"Having had a conceptual design formally signed off across a wide range of operating units, we moved onto specific user acceptance tests per module. We then moved on to integrated inter-modular testing, through to parallel operations and then our SAP go-live health checks. We then performed quality assurance tests, using SAP resources on an ad hoc basis, and the IGS maintenance crew for final review.
Sappi has already implemented SAP R/3 in Europe at Sappi Fine Paper Europe, and will implement R/3 at Sappi Fine Paper in North America. The American team has recently visited South Africa to learn from the Sappi project here.
Largely as a result of its work with Sappi, SAP AG has recognised that there are some areas in which the functionality of R/3 is not ideal for the paper and pulp business right now and has initiated a special industry solution for the steel, wood and paper industries..
"We welcome this development, which will strengthen SAP`s position in our industry, and are closely involved, through our European operations with SAP on this industry-specific solution," says Turner.
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