SAP ERP helps supplier cut down risk, disseminate information

Pretoria Portland Cement Company (or PPC) knows it's just as hard to stay on top as it is to get there. That's why the leading supplier of cement across southern Africa acted quickly when it identified a major business risk - a legacy system for enterprise resource planning (ERP), where about 3 000 (sold-to) customers placed up to 8 500 orders weekly. PPC removed that risk - and set the stage for information transparency and further innovation - with the SAP ERP application.

PPC, which is headquartered in Sandton, South Africa, implemented the SAP software at 21 sites on time, within scope, and 30% under budget. It's now running its entire business with the solution, from procure to pay through order to cash. Some 550 people use the software - everyone from general managers through department heads, accountants, sales and production staff, buyers, personal assistants, and secretaries - for operational efficiency and business continuity.

“We didn't have a stable system in the past; now we've mitigated our risk with a reliable platform,” says Herman Coetzee, program leader with the value management office at Pretoria Portland Cement. “We've implemented the basic, core functionality; now we'll embark on the next stage of our journey with SAP ERP - to add value to the PPC bottom line. In phases two and three, we will be using SAP ERP predominantly to optimise sales, manufacturing, supply chain, and logistics processes.”

Optimal efficiency is crucial in cyclical businesses such as those in the mill products industry, which along with building material retailers, form the heart of PPC's market. PPC is also challenged by low-cost imports, which is rather ironic for a company that was founded in 1892 to counter the high cost of cement imported from Europe. “We have to eliminate unnecessary costs and work smarter,” says Coetzee. “Our focus in the next period of time will be to utilise SAP ERP to continue to help us drive down costs and work more efficiently.”

That initiative would be impossible with the 11-year-old Baan ERP system, as support options had dwindled over the years. “We couldn't rely on external support; we had internal people running the system, and many were close to retirement,” Coetzee says. The legacy ERP software had also been heavily customised; Coetzee counted some 1 300 modifications. “It was increasingly difficult to customise it any further, because every time we revamped one area, there was an unintended effect somewhere else.”

PPC knew it had to get rid of the unstable application as soon as possible. The cement maker didn't consider any other solutions before choosing SAP ERP. The application has preconfigured best practices-based functionality that supports core business areas and processes; it also provides a unified view of operations.

Says Coetzee: “SAP software was the easy, obvious choice. It's a proven match for cement manufacturing and the mill products industry. There are a lot of reference companies using SAP solutions in South Africa. And SAP is a blue-chip company, with extensive research and development, a large user group, and plenty of support information available through its portal, conferences, and other venues.”

Choosing to work with partners of the calibre of Britehouse SSD and KPMG reduced risk even further. Britehouse is a SAP partner that specialises in delivering SAP solutions. During the rollout, it focused on business process analysis and selection, solution implementation, and integration with PPC's non-SAP applications for laboratory information management, maintenance, electronic billing, transportation scheduling, and inventory cataloguing.

“Britehouse was very experienced, and the culture fit with PPC was just fantastic,” Coetzee says. “Britehouse was concerned about our success and saw this as a long-term relationship, which is why we still have the company on board for phase two.”

KPMG is a global network of professional firms providing audit, tax, and advisory services. The local office in Johannesburg provided program oversight to ensure the initiative stayed on track. “KPMG provided a lot of expertise,” Coetzee says. “It developed roadmaps, audited progress, and highlighted areas where we could make improvements, offering recommendations.”

Coetzee cites other major success factors. “There was great synergy among the 55 team members - a mix of business and IT people and consultants,” he says. “We branded this as a business project, not an IT endeavour. We stuck to SAP standard functionality wherever possible. We emphasised change management; we involved the user community right from the start.

“As a result, people were more than ready long before the software went live. And the executive team was very supportive.”

Coetzee visited every company site four months after the implementation to gauge users' reactions to the software. “Everyone was very positive; no one wanted to go back to the Baan ERP software,” he says. “They indicated that the biggest benefit was the availability of information. Our people said that with SAP ERP, now information is visible, and we can use it effectively. We're not just putting in data and getting nothing out.”

Coetzee says people also commented on the benefit of SAP software integration. Before, separate databases housed information for each business segment. “You couldn't compare information or see anything outside your silo,” he says. That made it difficult to consolidate data, which is especially crucial for inventory management and financial processes. “We couldn't roll up information to a higher level from different businesses, like our lime or aggregates units, nor could we view general ledger information in another segment,” says Coetzee, who then adds: “Financial and inventory information is more viewable now, and it is more usable.”

Pretoria Portland Cement wants to build on that visibility, which it thinks will be enhanced with an all SAP software landscape. Coetzee says: “We believe there is real value in migrating all applicable systems to SAP software and eliminating third-party solutions. We've branded this process as the PPC SAP journey.”

As an example, PPC relies on Cognos for business intelligence, but going forward it feels it can realise more value with the SAP BusinessObjects solution portfolio. “We would prefer to standardise on SAP reporting software rather than exporting data into third-party systems,” says Coetzee, “because then you cannot fully trust the information. A unified SAP software environment also simplifies use and support. Our view is that we would rather see what's available from SAP software first, before we look at outside systems.”