Focus on growth, business processes helps users stay afloat in the downturn

At Sapphire, SAP users discussed factors that can help drive quicker ROI and the investments that can help prepare companies to emerge successfully when the economy improves.

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ORLANDO -- As companies look to implement new applications in the current economic downturn, some key factors to consider are growth, business processes and the reuse of as many resources as possible, SAP users suggested last week at Sapphire 2009.

Elizabeth Arden Red Door Spas, for one, decided to look at SAP to run its entire business -- with the exception of a point-of-sale and reservation system -- for two main reasons.

"I think we were looking for one platform to have one version of the truth and to really improve our business processes," said Paul Kaczmarek, CIO for Red Door Spas.

In a session titled "Finding Opportunities in Today's Economy", Kaczmarek, along with two other SAP users and Verlin Youd, senior vice president of global trading industries for SAP, discussed how to help drive quicker ROI when making investments in economic downturns, as well as how to be prepared for the economic upturn.

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Kaczmarek said that over the past 10 months, he's learned that always having a Plan B in place is crucial when building a business case for new implementations, but where a Plan B once posed as an alternative option, he said, it now means repairing what's in place.

"You've got to come up with a compelling case every single time," he said. "It's been kind of fun to be able to push those things back that don't make sense -- fun in the sense that this really makes you become better."

The path to SAP

But technology buyers should not let the economy deter them from looking ahead, the panelists warned, as they still need to consider future growth. For arts-and-crafts retailer Hobby Lobby, SAP fit the mold.

"For us, something that we could grow into the future with was really important, but also something that wasn't going to break the bank out of the box," said Jeanne Cotter, CIO and vice president of Hobby Lobby. "SAP was kind of a natural fit. We have kind of a Lego approach to everything we do -- we start with the core foundation and then build on it; and, really, enhancement packs were the deal breaker for us."

She added that in order to grow business, the company needed a platform that could support that growth.

"This economy is kind of a double-edged sword, in that there are real estate opportunities that exist today that didn't exist in the past, from a retail perspective," Cotter said. "So I think, foundationally, knowing that we were going to have to invest back and be able to grow was key for us."

Hobby Lobby had outgrown its previous ERP solution, putting it on the hunt for something larger. But payroll was also causing a large amount of grief, she said.

Meanwhile, Jean Luc Vanderbroek, director of finance at Delhaize Group, which oversees such supermarket companies as Food Lion and Hannaford, said 2005 was a key date for the company -- that was when it decided to revamp its organization by going with SAP's business transformation program.

"We switched from a pull to a push organization," Vanderbroek said. "In other words, from a decentralized to a centralized organization."

Delhaize Group selected SAP to replace its difficult-to-maintain legacy systems and improve the quality of the company's information, he said. It also needed to integrate financial processes within the organization.

Vanderbroek said it was difficult to adapt to change in the economic environment at that time (2005) with the legacy systems, which constantly needed updating.

Making a solid business case

Red Door Spas used a value-engineering study it had originally done with SAP as its benchmark to ensure that SAP would meet expectations.

"We actually used that study to get the project approval from our board of directors," Kaczmarek said. "For the past two years, we've looked back at that study and said, 'Did we actually realize the gains we thought?' So far, in general, we're pretty much ahead of where we thought we'd be from the value-engineering, which is a compelling story for our board of directors."

Bumps in the road

Further, training staff and employees already comfortable around an existing environment to something new can also pose a challenge. But while training staff can be challenging, it may not be impossible, as long as everyone's on board.

"We've not had to eliminate any positions because of SAP, and we made that commitment up front," Kaczmarek said.

Still, he said, Red Door Spas does tend to look for outside help if additional training is needed. The company did have to hire a Basis administrator. Kaczmarek said the company's employees were well aware of the options once the decision was made to go with SAP. "Right up front, we told our staff, 'Either embrace this, and if you embrace it, we'll train you; or if you don't want to, then there's not much we can do about that -- there's a door, use it.'"

But the road was not so smooth for Delhaize. Vanderbroek said that when the company switched several of its legacy systems to ERP, it was "very difficult for people to change, because they have a lot of experience with one screen made by the company, and when you organize the go-live, the job is different. That was the main impact in our project, because it was difficult to maintain."

All other things considered

Despite looking for a point-of-sales and reservation system, Red Door Spas is still learning SAP, and that will continue to be the company's main focus in the coming months, Kaczmarek said. But, he added, down the road the company may look more at "selling more products online and integrating that with our warehouse that's running off SAP, so some of those types of next steps as we learn more about SAP and its capabilities."

"Again, we have a legacy system that's old and unobtainable basically," he said, "and we're looking at some newer technologies there, and then integrating that with SAP as well."

The notion of what's to come hasn't escaped Cotter's mind, either. Hobby Lobby, she said, is looking to gain more ground in the cloud computing arena to make way for the large-file storage needs of the creative artwork done by the company. Also, she said, because Hobby Lobby oversees smaller retail units, the company will look to expand on them in addition to further growth in the rest of the company.

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