To manage the supply of the 15,000 different products it sells to landscapers who spruce up some of the plushest...
homes in Southern California, Bamboo Pipeline found that it needed more than a green thumb.
The company, founded in 2000, had been using Infor ERP FACTS for six years to manage its unique landscape supply business -- and liked it. But after a few years, Bamboo found that the ERP system lacked the scalability to accommodate its growing business, according to executive vice president Mike Cornell.
The Camarillo, Calif.-based company implemented SAP Business One, the vendor's flagship ERP software for smaller businesses, in 2006. By 2007, the small plant distributor with 80 employees had grown its annual revenue by 43%, while operating expenses grew by only 13%. Bamboo Pipeline is now the broadest distributor of green goods in the United States -- with $16 million in revenue annually. It sells 5,000 units a day.
"We have a room full of people who do nothing but buy and sell plants all day long, not unlike a trader buy[ing and selling] stocks on Wall Street," Cornell said. "And in front of them is Business One."
Not all SMBs have been able to take this approach. In the fall, an inability to get financing caused some small and medium-sized businesses (SMBs) to abruptly pull out of SAP deals.The situation forced the software giant to cut operational expenses and lay off 3,000 workers. SAP has built a large part of its growth strategy on sales to SMBs.
But Bamboo Pipeline -- which bought approximately 25 seats of the software -- credits SAP Business One for helping it through this recession. The company grew revenue by 2% and cut expenses by 6%, Cornell said, while many of its competitors saw their business shrink between 30% and 40%.
"We could on the fly do Web promotions; we could see what the gross margin performance was from a single customer," he said. "All these things allow us to be more flexible."
Also, Cornell said, having a flexible and configurable system will enable Bamboo to launch a new business in the direct consumer market that basically uses the same technology.
"Because of the flexibility, we'll be able to launch an entirely new business to a different customer base at almost no cost," he said. "It's a real, tremendous benefit of SAP Business One."
Why Bamboo Pipeline chose SAP as its ERP for small business
Bamboo Pipeline looked to SAP after a review of similar vendors of tier 2 ERP for small business, including Infor, Epicor and Prophet21. Bamboo settled on SAP because -- contrary to the vendor's reputation -- it found SAP's ERP software very easy to use.
It took weeks of training to get Bamboo Pipeline workers up to speed on the Infor ERP FACTS system. Learning SAP Business One, on the other hand, took just days for most of the company's young, new hires. Bamboo Pipeline could now focus on recruiting qualified horticulture students without having to worry about their IT skills, Cornell said.
"Our training time was reduced dramatically," he said, "and the necessity to find someone very strong in computers and plants sort of went away."
Pitfalls to watch out for during the ERP implementation process
The ERP implementation included a complete e-commerce website, where customers can place orders by looking at the 15,000 different products. Selling plants online is very difficult, Cornell said, because the Latin names of the plants sometimes differ only very slightly. If the nomenclature is wrong, the wrong plant could be shipped to a customer.
More than a third of all orders now originate on the Web, Cornell said.
Some parts of the SAP Business One package, such as the general ledger, were used out-of-the-box. But Bamboo Pipeline also did a lot of customization, writing three or four of its own application programming interfaces (APIs) that allow SAP Business One to function in a trading floor-type environment, Cornell said. The company can present buyers with important data -- where the plants are grown, for instance, and at what price and at what level of quality.
To manage the ERP software, Bamboo Pipeline hired a consultant who comes in 20 hours a week, as well as a part-time in-house IT employee to manage the desktops.
"You can choose to use the base package -- but it's also highly configurable using add-on software developed internally or by others," Cornell said.
Bamboo Pipeline's one gripe was that the ERP implementation process took twice as long as the 90 days SAP told them to expect.
The one big problem that slowed things down tremendously was that the data conversion tool at the time wasn't fantastic, and the company had some problems entering its data, Cornell said.
Also, the ERP implementation process took up a lot of management's time, and he blames that process in part for a slower growth rate in 2006 -- the year of the implementation.
Don't underestimate the difficulty of implementing ERP, Cornell advised other small businesses looking at such a project.
"These things are very hard to do," he said. "Thinking that it's going to be easy just sets you up for disappointments."