In a first for SA - in a deal worth R13.6 million - the South African food manufacturer involved in products as diverse as breakfast cereals, dried fruit, table eggs and packaging material, Pioneer Foods, has converted its licences for the SAP R/3 enterprise resource planning (ERP) solution to the new services architecture-based mySAP ERP version.
mySAP ERP operates on SAP's new integration tool, NetWeaver, that automatically creates the coherence of data, people and platforms that organisations have been trying to achieve at great cost through third-party vendors. mySAP ERP therefore brings to market entirely new technology that enhances customer organisations' operational flexibility.
Says Pioneer group manager information systems, Jannie Steyn: "The full upgrade of our core systems from R/3 to mySAP ERP will be phased in over five years. However, by converting our licences now we can already access some of mySAP ERP's advanced functionality - thereby enabling us to benefit from operational improvements well in advance of the completion of the upgrade.
"For instance, under our old R/3 licence, only 250 of our employees could use SAP Business Warehouse. On the basis of mySAP's component licensing system, our whole user base of 2 350 can access it. The same applies to the portal and the Strategic Enterprise Management module."
Globally, several mySAP ERP conversions are already under way, with the first version being released this quarter and many international companies working with SAP on debugging it as part of their upgrade. But, even though it is an early adopter, Pioneer Foods will take a more structured, circumspect approach to its upgrade.
"Our organisation is just too big and our production cycles too critical for us to risk pioneering with the first version," Steyn says. "So we'll move to R/3 version 4.7 by May 2005, as a bridging exercise, and then in time to mySAP ERP.
"We're committed to mySAP ERP because we've been SAP customers since the mid-1990s and we have confidence in both the organisation and its products. Also, Pioneer Foods believes that effective business systems and information are cornerstones of a successful business. Pioneer Foods will always evaluate new software offerings to ensure timeous utilisation of applicable enhancements for our business."
SAP business development manager, Steve Berry, points out that the SAP NetWeaver platform makes it possible for organisations to deploy new applications and functionality easily and quickly, keeping down the cost of implementation and total cost of ownership while exponentially expanding business capability.
"Pioneer Foods understood very quickly that while there is, naturally, a cost involved in converting to mySAP ERP and NetWeaver, the additional support and agility they give your operations more than pay for your investment in them. In fact, it's actually more cost-effective to convert to mySAP ERP than to keep going with R/3."
Steyn comments: "Apart from the fact that the move to mySAP ERP is strategically motivated, definite savings are also expected to be realised. Overall control of information technology spend is a focus in the group and we are confident that our total information technology spend is better than industry norms."
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