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Manufacturer has successful ERP implementation with SAP R/3

American Meter, which has been manufacturing natural gas measuring devices for more than a century, is happy taking baby steps with its IT systems.

HORSHAM, Pa. -- Some companies play it safe.

When Ed Brady stepped into the role of IT director at the American Meter Co., he stepped into a business that has been running relatively smoothly for more than 160 years. Aging business systems needed updating and inefficient business processes needed a few tweaks, but there was no way senior management would invest in cutting-edge technology.

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American Meter, which manufactures natural gas measuring devices and components, chose to implement SAP R/3 4.6c as part of a plan to migrate off of legacy systems and improve customer service. It's happy with its investment. But don't bother mentioning NetWeaver, service-oriented architectures or radio frequency identification technology, Brady said.

"This is a mature industry in a mature market," he said. "We tend to be among the late adopters."

It was quite a change for Brady, who previously served as divisional IT manager for Lockheed Martin Corp., where innovation and cutting-edge technology kept the company competitive. This time he's with a company that is acting conservatively, but thinking competitively.

So when American Meter moved forward with its SAP project in 2003, it adopted its business processes to SAP best practices. Using IDS Scheer as its implementer and the vendor's ARIS platform to streamline its processes and develop a blueprint for future projects, the deployment team moved forward.

"Our philosophy was to keep it simple and not muddle with the code," Brady said. "We wanted to efficiently implement what people could digest."

The company looked briefly at the Oracle E-Business Suite and J.D. Edwards & Co., but American Meter's German ownership, the Elster/AMCO Group, had success with SAP in the past, so the research team moved in that direction. The stability of Oracle's business software was in question and the JDE suite didn't offer enough functionality, according to Brady.


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The project spanned 22 months, beginning with the first of 13 sites in late 2003 and wrapping up in March 2005.

Once the company selected SAP, it put in place a full-scale prototype of SAP R/3 was put in place with 85% of American Meters' processes mocked up in the system, Brady said. A team from IDS Scheer helped lead process engineering to develop an efficient system.

Innovation on a conservative scale

The company, which has 13 plants and does nearly $260 million in sales annually, doesn't need a giant IT team, but when projects are being considered, it has to be evident that a speedy return on investment can be realized, Brady said. The IT team consists of a dozen staff members across all the sites, with three staffers assigned to manage SAP.

Many factors go into whether a company is an innovator or sits on the sidelines. Companies have to weigh very carefully every innovative advantage, because of the costs involved -- the new technology itself, training, adoption and implementation, said Joshua Greenbaum, principal consultant at Berkeley, Calif.-based Enterprise Applications Consulting.

While American Meter may not pour tons of money at IT projects, the firm enlisted IDS Scheer to map out a business process strategy going forward.

"They've got a head start and will move faster than they would have otherwise, Greenbaum said. "When it comes time to jump to NetWeaver, they've got a process map and that's a huge advantage."

Brady is pleased with the results of the SAP project. System availability rose from 98% to 99.9%; process changes, which took months with the legacy systems now only take days or several weeks. The open architecture helped boost customer care by giving noncompetitive partners system access and improved response times by giving decision making tools to the sales team.

The company also got a handle on its inventory and receivables -- data that was sometimes unclear in the old system, Brady said.

With as many as 1,400 employees and about 350 SAP users, getting many of the long-time employees to switch to the new way of conducting business was a challenge, Brady said. Many of the employees made their own business processes using the deep knowledge of the industry they had developed over many years, he said.

Getting down those processes and conducting on site training of the new system helped ease the pain, and once users saw the increase in speed and boost in efficiencies, the climate improved, he said.

Moving forward, American Meter plans to improve its supply chain visibility, give self service tools to employees and improve financial reporting processes.

"We've been successful with what we've done so far," Brady said. "We take change slowly, but that gradual approach works best with our industry, and our industry we know best."

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