SAC – an SAP case study
In 1997, faced with a DOS based IT/Finance system that was not Y2K compliant and the need for an enterprise wide system that delivered business information, SAC brought in consultants Ernst & Young (E&Y) to identify an alternative. There began a saga that demonstrated the benefits of forward planning and tested the resolve of the SAC management, but at the same time created an in-house SAP resource without rival and, ultimately, a business system beyond their expectations that is the equal of any other UK educational institution's system.
SAC is a knowledge-based organisation that supports the development of land-based industries and communities through the provision of education and training, advisory and consultancy, and research and development services. Its work is wide ranging, but mainly focuses on agriculture and related sciences, rural business development and management, food chain quality and safety, and rural resource and environmental management.
Through its Scotland-wide network of three main campuses, twenty three local advisory offices, eight veterinary centres and five research farms, SAC provides a unique mechanism for the transfer of knowledge. It supplies services either directly or through its associate company, SAC Commercial Ltd. The Scottish Executive Environment and Rural Affairs Department assist with the provision of SAC's services in Scotland through its grant-in-aid programme.
The SAC has a turnover of approximately £46m, with projects ranging in value from £20k to £5m. It employs 900 people.
The 1997 E&Y analysis of SAC's IT systems looked at all issues and requirements in terms of people, processes and technology. It was based upon a series of meetings and workshops facilitated by E&Y and attended by key individuals at SAC.
In addition to the existing system being not fully Y2K compliant it was discovered that many of the accounts-related processes were inefficient, primarily because they involved relatively high levels of manual effort. Financial information was analysed in numerous stand-alone systems across SAC.
The existing finance system supplier had suggested a new solution but E&Y determined that this would not allow for efficient project management at SAC. Therefore, many of the future people requirements would have to be met by third party project management systems being integrated to the main application.
This would put additional pressure on SAC's Finance function, as it was likely that staff would have to continue to re-key data between systems, as well as providing additional accounting support to the project managers.
The requirements of marketing, payroll, personnel, and administration would also have to be met by third party systems. Therefore staff in these different departments would not be able to easily share information, which would cause additional processing inefficiencies.
For the future, SAC required a single, integrated information system. This would meet the needs of all business areas as well as finance and administration. The people, processes and software modules for the system were to revolve around projects that are closely integrated with all other functions at SAC.
During the key user workshops that were undertaken as part of the evaluation, SAC concluded that many of its Consultancy, Advisory, Research and Education managers would need to act as project managers. This would give SAC greater control over its activities and financial responsibilities.
E&Y concluded that SAC should start afresh. So began a structured method for selecting a system and evaluating a number of potential suppliers for a meaningful comparison of software functionality and costs.
In implementing a new business application across the institution, SAC identified a number of organisation-wide benefits that the system would be required to deliver.
Top of the list was the need to access all management information across the SAC group from one integrated business application. This would have available all the necessary modules to service SAC's business functions.
The team contemplated future business developments. Therefore, the system needed to be a highly scaleable, flexible solution with the ability to add large numbers of users without major change, facilitating a merger between SAC and other establishments.
There were several practical requirements, notably an increase in functionality to allow activities such as optical document archiving.
Cost reduction was an important feature, with SAC wanting a robust, reliable platform and reduced hardware, support, and training costs. It was expected that the replacement of legacy systems would provide significant savings in terms of support and maintenance costs.
The system would also need to deliver reductions in stationery, postage, and hard copy documentation costs.
An evaluation team from SAC and E&Y was formed, with input from SAC's main sponsor, the Scottish Executive Environment & Rural Affairs Department.
Five providers were considered using these requirements as a measure and this led to the identification of the SAP solution as likely to offer more system functionality than other potential mid-range systems.
The FI, CO and SD modules of SAP were to be implemented first and a project team was formed led by the recommended SAP consultancy provider and a mixture of technical and management staff from within SAC.
"We quickly realised that some of the consultants were also new to SAP and were learning on the job," said Cath Mitchell, Business Systems Analyst at SAC.
However, the main problem turned out to be insufficient forward planning.
"With the benefit of hindsight, we moved too quickly to the implementation stage," commented Janet Swadling, Corporate Affairs Director. "What is now being realised is that it is important to build your business processes first and then fit the ERP solution, in our case SAP, around this, so that it serves the objective of delivering that new structure."
A good example of the problems faced by SAC was the existence of different finance management systems on the various campuses. "We tried to have SAP deal with these different systems when it would have been sensible to streamline our accounting practices first," said Swadling.
"In our defence, SAC was the first higher educational institution in the UK to implement SAP and we had no reference sites, although Newcastle University was implementing SAP at the same time."
Just several weeks before implementation, it was discovered that the internal orders system used by SAC was not compatible with SAP and so the Project System module was added to provide the necessary functionality.
With great boldness, SAC launched SAP into a live environment in July 1998. "We shut down the old system, however it was immediately obvious that the SAP system was struggling," said Mitchell.
By the end of 1998 it was clear that the SAP system was not delivering the hoped for reliability of information and improvements in reporting. The internal team behind the solution was fighting a losing battle to get people within SAC to accept it.
A number of key personnel within the SAP implementation team, including the project manager left SAC very soon after go-live. Documentation of the implementation was sparse and the remaining members of the team were left to pick up the pieces.
A SAP support team was formed with the original three SAP implementation staff from SAC and one new permanent member. Another member of staff became the part-time SAP trainer and the SAP team carried out all in-house user training, and training of new SAP team staff.
A recovery plan was devised and about 170 enhancements were carried out, but it was 2001 before the system was stable. As part of the plan, 50,000 records were reduced to 20,000 as the system was cleaned up.
In November 2000 the system was upgraded from 3.1h to 4.6b and this was carried out by another SAP consultancy.
"In March 2001, SAP committed itself to a sizeable evaluation exercise of SAC's business system and the lack of clear business processes was the overall finding," said Parvase Majeed, Management Accountant & Business Systems Manager at SAC.
"It is hardly surprising that senior management within SAC considered replacing the system, despite the enormous investment in it."
However, in the summer of 2001 a new Finance Director was appointed and a little later the acting Chief Executive was appointed permanently to the post. They very quickly aligned themselves to making SAP work and by this stage the internal team dealing with SAP had become enormously experienced.
Also in 2001, SAC parted company with the original implementation consultancy and established a relationship with the specialist SAP consultancy, Absoft. The system, at last, had the leadership and support required to make it work.
Up until mid-2001 the SAP Support Team was constantly fire fighting the many business-processing issues, and was unable to focus clearly on the direction of a future forward development strategy, which would result in an effective and efficient business system.
More recently, a new IS Group Manager was appointed in 2003 and this has given the development of the system further impetus. SAC has commenced the process of implementing an up-to-date IS infrastructure with SAP at the core across the organisation.
The relationship with Absoft has been instrumental in turning around the SAP system.
"One of the many things we have learned from this experience is what we should demand of a partner. Our knowledge of SAP means we were able to choose one from a position of strength," explained Majeed. "Absoft met all our criteria. They have a collaborative approach, flexible and able to provide knowledge transfer. Absoft was quick to understand our business, and at the same time, recognising the internal team's breadth of knowledge. The internal team welcomed this recognition which had not previously been experienced."
SAC initially selected Absoft to carry out some small-scale SAP development projects to enhance the system's functionality and usability. It then contracted Absoft to provide a full remote support service for their SAP system.
Absoft's service operates as a second line of support to SAC's own team of Business System Support Analysts (BSST). The BSST deals with day-to-day queries from the users, and more serious problems are passed on to Absoft for resolution. The contract gives SAC access to Absoft's dedicated SAP Support Centre and an agreed number of support hours per month.
"The relationship between Absoft's consultants and SAC's staff is based on sharing knowledge, which means that Absoft is able to deliver far more than just problem resolution and development services as a back-up to the internal team," explained Susie Davison, Consultancy Director for Absoft. "SAC's technical staff gain extra skills from working with Absoft's SAP specialists, and this enhances their ability to deal with issues themselves and communicate successfully with their users."
A useful feature of the support contract with Absoft is the ability to carry forward unused support hours and offset them against system projects. SAC has already benefited from this by using accumulated support hours to reduce the cost of an upgrade in September 2002 carried out by Absoft, taking them from release 4.6B to 4.6C.
SAC has reached the stage where it is confidently adding new modules, such as HR in late 2003 and Payroll in April 2004.
Absoft has developed a variety of reports for SAC and is currently helping to streamline its purchasing processes by assisting in the implementation of Materials Management.
This project involves the implementation of functionality within the Materials Management (MM) module of SAP to replace the current paper-based manual system. Absoft has undertaken the required configuration in SAC's test system and demonstrated the functionality to the organisation's internal team, who will take responsibility for completing the work with live data in the development system, with guidance from Absoft as required.
When the project is complete, SAC will benefit from a streamlined purchasing process and more rapid authorisation of payments, with purchase orders, goods received notes and invoices all being linked within SAP. This will result in substantial productivity gains and ultimately, potential cost savings for SAC.
Associated infrastructure is also being addressed. Absoft's knowledge of system platform and architecture issues was put to good use in determining the strategy to replace the ageing hardware platform. "We were experiencing reliability and performance problems due primarily to the age of the servers running the SAP system," explained Majeed.
SAC undertook a comprehensive review of the SAP landscape and produced a specification for new servers. Absoft worked with the SAC BSST to produce a project plan to take the organisation from NT4 / SQL Server 7 to Windows 2000 / SQL Server 2000. The goal was to deliver a new system that would not only meet immediate objectives relating to planned projects, but also enhance performance and reliability, and provide a flexible platform for future system development.
SAC selected a third party to supply and install the new hardware, and Absoft provided the technical expertise to install the new software and implement the SAP landscape migration. A by-product of the project was the reduction in SAC's original nine servers to seven.
In April 2003 Absoft was awarded a support contract for three years that includes all Basis work. Basis had been an in-house function until that point.
BenefitsThe SAP system has been a substantial investment for SAC and its implementation was anything but smooth.
However, as an organisation it is now convinced of the benefits of the system as an effective business support tool for both SAC the academic, research and advisory institution and SAC the commercial operation.
One of the benefits of the 'approach' taken by SAC is that an enormous resource of knowledge exists within the organisation, one that is being shared with others.
SAP solutions are now also running in the Universities at Newcastle, Leeds, and Warwick and through the Higher Education Resource User Group and the Public Sector User Group. SAC staff are sharing their experiences and collaborating with their counterparts in the other institutes to the mutual benefit of the user groups.