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SAP CRM integration gives clear orders to medical device maker

A new SAP CRM software module straightens out the sales design, configuration, and order process, and brings benefits far down the production line.

After giving up on a patchwork of Oracle legacy software, medical equipment maker Omnicell Inc. tightly integrated SAP customer relationship management (CRM) with SAP manufacturing and financial systems to achieve near-perfect order and shipment accuracy while overhauling its opportunity-to-revenue process.

A manufacturer of automated systems for dispensing supplies and medications in hospitals, the Mountain View, Calif.-based company has $213 million in annual revenues and 750 employees in five facilities in the U.S. and India. It installed SAP’s ECC 6.0 ERP software in January 2009, replacing a seven-year-old, highly customized JD Edwards system.

At the time, Omnicell implemented several SAP modules to run its core business, among them Finance and Control (FI/CO), human resources (HR) and SAP manufacturing software modules that include materials management (MM), production planning (PP) and quality management (QM).

But not until it went live with SAP CRM software on April 10 of this year was Omnicell able to fully integrate its opportunity-to-revenue process. That’s the workflow that starts when field workers identify sales opportunities and configure systems that go through production, shipping, installation and service and ends when revenue is recognized in FI/CO.

With the old Siebel 2000 CRM system, the process had been anything but airtight. “They had a bit of a challenge with how a salesperson goes out, talks to a customer and gets approvals,” said Paul Bresnahan, industry vice president for manufacturing at Fujitsu America Inc., the consulting firm hired in mid-2009 to help with the SAP implementation after Seal Consulting Inc.’s contract was not renewed. “They were working offline on Siebel and moving data between systems, and there were some manual transactions involved.”

Omnicell wanted the SAP CRM project to improve the integration among departments that were working from differing versions of product and customer data, said Kamal Tharani, Fujitsu America’s account representative, in a presentation at SAP’s SAPPHIRE conference.

Field workers often resorted to contacting other departments for customer and quote data, and they could only configure products offline in Cincom’s Socrates graphical design tool. Oracle had stopped supporting the Siebel 2000 sales, marketing and customer service software, and Omnicell’s IT department had to import each customized system’s configuration data into SAP’s Variant Configuration (VC) module. Upgrading Siebel would have required expensive SAP integrations, Tharani said.

Omnicell sought integration from the SAP architecture despite Oracle’s promise to integrate its legacy applications. Following its acquisition of Siebel, PeopleSoft, JD Edwards and a multitude of other application vendors, Oracle promised to unite the myriad applications under one stack that it calls Fusion Applications. The first of these applications is scheduled to be revealed at the end of the year.

“I know all about ‘Fusion,’ which has been part of the roadmap since they purchased PeopleSoft,” said Sue Pranes, Omnicell’s senior director of IT.  “But try getting support on an older version. Mostly you will get a recommendation to upgrade.”

With a single, SAP-based platform, Omnicell could get away from JD Edwards’ integration problems and the service hassles of Siebel 2000, which had customized revenue features, she said.

How Omnicell learned to quit worrying and love the BOM 

Workflow efficiency hinged on software that the sales staff used to design and place orders for Omnicell’s highly customizable devices. “Our products are unique to each customer,” said Pranes. If manufacturing could get an accurate depiction of the device and its bill of materials (BOM), it could avoid errors and build what the customer wanted. “The goal is to save time and effort as far as reworking it once it gets to the customer site,” she said.

In JD Edwards, BOMs were often incomplete. As a result of poor integration between the sales and manufacturing systems, “every order had to be touched,” Pranes said. Shop floor workers looked at a parts list and a picture of the product to figure out what to build. “It was actually pretty manual,” she said.

Master data management (MDM) proved to be the project’s biggest challenge. “Taking the time to clean it up and make it more accurate was key,” said Pranes, adding that more work was needed to connect SAP CRM to ECC 6.0 and configure it.

Now, salespeople use a custom front end developed by Cincom to sit down with customers and configure products, as prices recalculate on screen. “Cincom provides a graphical, drag-and-drop front end that we integrated [using SAP’s] standard tool set,” Pranes said. “The two systems talk back and forth with each other. We consider it to be a competitive advantage [to be able to] show the final product during the selling process.”

The software also shows order status, “win/loss” data and a workflow for emailing discount and final approval requests to managers.

The new visibility helps managers by providing accurate margins, sales forecasts and an integrated view into the opportunity-to-revenue process, Tharani said. Sharing real-time information across the organization has also helped eliminate duplication.

SAP Variant Configuration continues in its key role on the manufacturing side, taking input from Cincom’s configuration rules engine and passing it to the production, inventory and shipping software. “It allows us to build rules showing  ‘if I do this, what do I need?’” Pranes said -- a capability that has boosted inventory accuracy.

Benefits of CRM integration

Omnicell has reaped measurable benefits from its investment in SAP CRM, which did not come free with ECC 6.0, according to Pranes. Order accuracy has reached 99%, and Omnicell can now track the on-time delivery rate of its third-partly logistics (3PL) provider. Shipping errors have been eliminated. Manufacturing can release new products to sales on demand, rather than quarterly. Support incidents are down 67%.

“We’re pretty comfortable now with the number of support tickets,” Pranes said. “The users are more self-sufficient than they were before.”

As Omnicell continues rolling out SAP CRM to its sales territories, Pranes hopes to use Microsoft SharePoint Server 2010 to deploy new business intelligence (BI) reports that combine third-party market data with information from SAP CRM and Business Warehouse. She also plans to use the joint SAP/Microsoft tool, Duet, to make SAP CRM reports viewable in Microsoft Office. The company’s manufacturing and engineering departments will continue using Oracle’s Agile product lifecycle management (PLM), despite its lack of integration with SAP.  Pranes wants to compare Agile with SAP PLM before deciding whether to replace it.

She said the project taught her the importance of making it clear to business leaders how a new system will change the way work is done. Cross-functional workshops can help. “It really was a cultural experience,” Pranes said. “You had to really rely on your coworkers and make sure everyone was all working together.”

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