In 1998, BOC (British Oxygen) parent company of Afrox, embarked on a major globalisation process, redefining its regional businesses. The technology solution, SAP/R3, was implemented at a cost of R2.9 million by CS Holdings` Integrated Solutions division.
According to Greg Hart, manager of HR services at Afrox, "HR services had to move from a traditional labour intensive transactional mode to a transformational mode of operating. The enterprise resource planning (ERP) software, SAP/R3, played an important role. It freed staff from mundane day-to-day transactions, provided a reliable information source and underpinned our management reporting capabilities."
In 1998, BOC assembled a global HR team. It was given the mandate to develop and implement a plan that would realign HR structures and functions away from the regional model to a lines of business model.
Operating costs had to be reduced by 30%. HR staff to employee ratios must shift to the international benchmark defined by Saratoga ratios. Hart says, "eighty percent of HR staff was dedicated to day-to-day maintenance activities. Strategically, transformational activities needed eighty percent of our efforts. Radical realignment of our activities was called for, without loss of efficiency in the day-to-day activities." Using the TOPIC methodology, factors that would support the new model were identified as:
Three essential enabling technologies were needed. These are a call centre, a knowledge base and a software system to enable HR processes. SAP/R3 was the selected software.
Change from a decentralised model to line manager model. An HR call centre for query support and SAP/R3 to provide efficient process support.
Resource intensive policies and processes to be identified and rationalised. Previous assumptions needed to be questioned such as the reasons for weekly (labour intensive) wages.
Information, in the most user-friendly form had to be supplied on an as needed basis to line managers and HR practitioners. "We had to give the new line managers information at the touch of a button."
Take advantage of the new communications technologies.
"While this was a global project, Afrox also needed a new payroll system and had unique requirements above the global template. Integration with the global system would allow a top down view, but only 20% of the development could be leveraged off the global development", says Annette van der Laan, CEO of CS Holdings. "Labour intensive HR processes waste resources and with more than 9000 employees in the two major product lines, healthcare and industrial business, Afrox needed technology enablement to achieve its strategic goals."
The implementation of SAP/R3 started in July 1999, and went live in March 2000, within budget. "We tried to do minimal customisations to the SAP/R3 system unless absolutely essential, rather optimising and changing our processes", says Hart.
According to Anel Parkin, Business Development Manager: Afrox for CS Integrated Solutions, the benefits are now apparent: "A potential head count saving of R4million a year has been made possible. A complete shift in the staff ratios has been achieved, an example being reduction in staff supporting maintenance processes such as payroll from 26 to 3. HR professionals are empowered through the supporting structure and able to add value through consulting to the lines of business."
The result has been a completely scaleable service concept with the flexibility to shed or add either internal or external clients.
Hart comments, "With the new model, HR Services has service level agreements (SLAs) with the business. This creates a dynamic tension between business drivers and costs, meaning that there is an implied cost justification for requested service. Better use is made of HR services. We now partner other business units on the basis of a common business agenda, ensuring their complete support and strategy alignment."
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