The standard SAP ERP implementation includes a tool that can take the headaches out of account billing and receivables for companies with complex distribution models. So why is hardly anyone using it?
Agency Business, the little-known application embedded deep within SAP ERP, was created about 15 years ago as a way to serve the needs of cooperatives and franchise-model corporations in which billing, invoicing and purchasing is handled by a centralized corporation on behalf of its members. Approximately 100 European companies use the application, but it’s never been used in the U.S. – until now.
Network Services, a Schaumburg, Illinois-based corporation that handles account billing and receivables for about 75 paper and cleaning products distributors, learned about Agency Business almost on a whim.
“We just got lucky, quite frankly,” said Paul Roche, CIO of Network Services. “We just had an SAP [representative who said], ‘You know what? I’ve heard about this agency solution. Here’s kind of a solution brief on it, is this close?’ We were like ‘Oh my God, that’s it.’”
In fact, the deployment of Agency Business – part of a larger project that included consolidating three legacy ERP systems into a new SAP ERP – was so successful it has earned Network Services an ASUG Impact Award, which will be presented at the upcoming Sapphire Now conference in Orlando.
Agency Business as an SAP ERP application
SAP contends that Agency Business has the potential for widespread use among U.S. franchises such as Ace Hardware and fast-food companies, as well as agricultural cooperatives. In those scenarios, the corporation headquarters handles much of the invoicing and billing for its members.
With most distribution models, the customer sends a purchasing order to the supplier, who then sends the customer the requested goods along with a bill. Payment is then sent directly to the supplier. The Network Services distribution model is different in that the cooperative -- Network Services -- acts as the payables and receivables "agent" for its members. SAP Agency Business is helping the organization get the job done.
Just why Agency Business isn’t being used in the U.S. comes down to a lack of marketing in the region, according to Magnus Meier, industry solution manager for wholesale distribution at SAP. “We’re trying to change that,” he said.
That lack of adoption among U.S. companies includes those that have subsidiaries in parts of the world that are using the software, Meier said. For example, Coca-Cola’s German operation uses Agency Business, but the American headquarters do not, he said.
Roche said he thinks SAP's marketing efforts are highly focused on organizations that use direct-distribution business models.
“That what they market towards,” he said. “Between the consultants in the world, especially the non-SAP consultants in the world, if you haven’t worked with this before, you just don’t know what this is.”
While he wouldn’t provide any specifics, Meier said that SAP was working with a number of companies who are interested in deploying Agency Business.
“That’s the plan,” he said, “to start marketing it now.”
Agency Business beats out Infor
Third-party billing services procedures constitute the bulk of what Network Services needs its ERP to do, Roche said. The problem was that its entire system was showing some serious wear.
Its customized billing software just couldn’t keep up, Roche said, and the company needed to implement new services for its customers, such as online credit card transactions. It also needed a better sales tax engine.
“The old system handled our transactions okay. It just couldn’t ever grow," Roche said. "If we ever wanted to do anything new to it, it was a huge undertaking.”
As they started out, Roche said he and his colleagues assumed they’d have to create another customized billing application, but decided to go through the motions anyway.
“We actually talked to a number of other groups like us. And most of them had written custom software to do it,” he said. Oracle didn’t have what they were looking for, he added. The same goes for for Activant, another vendor they approached.
Infor had something closer to what they wanted, he said, but it was a customized version of an older ERP that only a handful of customers were using.
“They had done a professional services offering, where they had taken the base package and written software to do what we do, but there were only like five or six of their customers on it. It was more of a consulting offering, it wasn’t packaged software,” Roche said.
Still wanting to find something off the shelf, Network Services found that SAP had what the company was looking for, although they were apprehensive upon learning that they’d be the first American company to use it.
After numerous discussions with SAP officials in the U.S., Network Services wanted to see a company actually using Agency Business. So company representatives flew to SAP headquarters in Germany, where they also met with representatives from the Rewe Group, a retail company that operates on a similar “co-op” model.
3 ERPs in 13 months
The next phase was rolling up those three legacy ERP systems, which the company had accumulated through acquisitions, and deploy Agency Business. The company was able to do both in 13 months with help from Irving, Texas-based Optimal Solutions Inc, Roche said.
Network Services is also working towards deploying Crystal Reports and BusinessObjects in the fall, Roche said, which will allow customers to access reports via their NetWeaver Portal once it’s up and running. Right now, customers can only access a small number of web pages displaying a few pre-formatted reports on the company’s website.
“There’s no analytics at all,” Roche said. “It’s really just reporting.”
Above all, Network Services is able to run its hefty billing operations through one ERP without having to stitch together custom applications. If only they had known about Agency Business earlier, Roche said. “We basically lived with sub-par software, because the core had to be custom in our mind. We were pleasantly surprised to find something that did what we do.”