SAP is the ERP solution of choice for large companies and the leading product in the ERP market, so to find it in a company with just 10 users is unusual, perhaps unique. It is all the more remarkable given that the company concerned is no longer manufacturing.
Not surprisingly, the adoption of SAP by Heckler & Koch GB is historical as the company was spun out of a much larger entity, BAE SYSTEMS, which uses SAP. What it nonetheless demonstrates is that an ERP system like SAP can work just as well for SMEs as for much larger organisations.
In this article we outline the separation of the two SAP systems and the benefits for Heckler & Koch GB in sticking with SAP.
In 2003 Heckler & Koch GB, a distributor of weapon systems technologies including machine guns and small firearms, projected a £5m turnover but actually turned over £10m, without having to add any staff. “There can be no better demonstration of the power of SAP,” commented Director & General Manager, Mike Thornton. “A company our size might be expected to have a much smaller management system and if we did I doubt it would have coped with what happened last year. The scalability of SAP is exactly what we needed.”
It is not the only benefit that Thornton has realised following his decision to stick with SAP when his operation was sold off in 2002.
As part of Royal Ordnance, Thornton had used the group’s SAP system. Beyond the sale the link with Royal Ordnance would be severed and Thornton was required to go it alone.
Thornton was able to keep his costs down in continuing with SAP as Heckler & Koch GB licences were included in the parent company’s contract with SAP. “We were also able to substantially reduce support costs by moving from Royal Ordnance’s providers, CSC, to a UK company, Absoft,” said Thornton. “CSC were very good, but they are a large company and we were paying a disproportionate share of their contract with Royal Ordnance.”
Thornton makes a good point for any SME considering a tier one ERP system like SAP – don’t assume you have to use a tier one provider as well.
Other drivers for Thornton were the continuity provided by maintaining SAP and the retention of historic and operating data, although the practicalities of separating from Royal Ordnance were anything but simple.
Absoft used its in-depth experience of SAP implementation and data migration to come up with a solution to meet the needs of Heckler & Koch GB and Royal Ordnance. The company’s subsequent project required the procurement and installation of new infrastructure, data extraction, software implementation, training and post-go-live support.
Absoft assigned a project team of seven to Heckler & Koch GB: a project manager, one full-time lead SAP technical consultant, three infrastructure specialists and two SAP functional consultants to cover the financials and logistics areas. The team built a completely new infrastructure architecture for Heckler & Koch GB, based on Oracle and Windows 2000.
Other infrastructure-related project tasks included:
· integration of an existing NT file server
· upgrade of existing Windows NT 4 workstation environments
· implementation of Exchange e-mail
· creation of disaster recovery plans
· implementation and configuration of a firewall
Absoft installed SAP release 4.6B on Heckler & Koch GB's server and a copy of BAE SYSTEMS’ configuration was implemented, setting up FI, CO, MM and SD modules. This step meant that the new solution was configured in exactly the same way as the previous SAP system and the foundations were laid for Heckler & Koch GB's data to be imported.
A comprehensive consultation phase involving both Heckler & Koch GB and Royal Ordnance determined which data was to be extracted from the parent system and how it was to be handled. Absoft's lead technical consultant was tasked with the data manipulation, taking responsibility for developing bespoke ABAP programs to locate and export the relevant data on the parent system and then upload it to the new system.
The new system underwent significant testing by key Heckler & Koch GB users during implementation, to validate the configuration copy and data import. This testing period enabled Absoft to work closely with each employee to highlight potential enhancements to the system. Several opportunities to streamline business processes were identified and configuration changes made accordingly.
These changes included:
· removal of unused fields in sales orders
· streamlining of sales and purchase order processes by removal of unnecessary screens
· alteration to company SAPScript print-outs to include fields only relevant to Heckler & Koch GB
· modification of MRP profiles to reflect the change in supplier processes
· period end change to allow for the new owner's accounting standards
As with all Absoft implementations, knowledge transfer was a strong theme throughout the project. Each user was trained in the features of the new system in order to maximise buy-in and ensure familiarisation with new functionality.
Absoft took just 11 weeks to complete the project and Heckler & Koch GB's new system went live successfully, on time and on budget. Heckler & Koch GB now holds a support contract with Absoft for remote support which includes weekly and monthly system monitoring checks and comprehensive technical and functional support.
Heckler & Koch GB maintained continuity of its business throughout the implementation process and is able to get more from its new system. More streamlined processes have resulted in greater productivity and when Heckler & Koch GB encounters problems with its SAP system, staff know that assistance is just one telephone call away.
“Absoft played a critical role in easing the transition of Heckler & Koch GB to new ownership by solving our system issues and allowing us to continue to use a world-class business system,” commented Thornton. “Even though we have a user base of just 10, Absoft has delivered a SAP solution ideal for our needs, that will provide robust support for the business into the future.”
Since the implementation, Heckler & Koch GB has had an upgrade to Version 4.6c and is considering some further improvements. However, Thornton is confident that the basic model is ideal for supporting the SME’s growth.
At one time Heckler & Koch GB was a manufacturing unit employing 60 staff and Thornton sees many of the same benefits from SAP now that the company is smaller and involved in sales, distribution, procurement and the provision of training and demonstrations.
“Not only did we double our projected turnover last year, but we hold £3m worth of stock,” explained Thornton. “We have to know where every weapon and every part is at any point in time. Using SAP to record every action forces staff to be disciplined in the management of our stock.
This demonstrates another feature of an SME utilising an ERP system. The size of the company is less important than what it does and how it operates. The suitability of an ERP system may depend on this more than the size of the operation.
The stability of SAP is also a benefit regardless of size. “We have such a stable system, it’s fantastic,” exclaims Thornton. “No one ever talks about IT problems here.”
And although Heckler & Koch GB is not linked to its parent in Germany, there are benefits from both companies operating the same ERP system. “We use the same identity numbers as in Germany and at year end when they have any queries we are able to find the information they require with ease,” said Thornton. “We can also learn from their use of SAP and apply the lessons from Germany here.”
On reflection and looking forward, Thornton is very happy with his decision. “Whilst our adoption of SAP was heavily influenced by historical factors should we be starting with a clean sheet tomorrow I would still consider SAP.”
For further information please contact Grant White, Acumen, Tel: 00 44 131 624 1155 or firstname.lastname@example.org
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