In its first application service provider (ASP) contract, IT services specialists CS Holdings has been appointed application hosting partner for Foskor in a deal worth over R14 million. The service will run on the JD Edwards OneWorld enterprise software, and will be controlled from a Hewlett-Packard data centre.
The deal follows the contracting of CS Systems Integration, a division of CS Holdings, to design a strategic IS architecture for Foskor.
The Foskor Group has business units in Phalaborwa, Northern Province (Foskor Limited), and in Richards Bay, KwaZulu-Natal (previously called Indian Ocean Fertilisers).
Foskor`s core business is the beneficiation of phosphate rock for the production of phosphoric acid and phosphate based fertilizers. Three million tons of phosphate rock is produced per annum in Phalaborwa of which the bulk is railed to Richards Bay for production of phosphoric acid. The Richards Bay business unit is the largest producer of phosphoric acid in the Southern Hemisphere, and more than 90% of the phosphoric acid is destined for direct export to Indian and Brazilian markets. Foskor Richards Bay also manufactures Sulphuric acid which is a raw material in phosphoric acid production, as well as a range of granular fertilisers.
"The fact that Foskor was re-engineering their business vision and strategy, necessitated a substantial change in their business processes," says Dave Vink, MD of CS Systems Integration, the CS Holdings division responsible for the contract. "As both the Phalaborwa and Richards Bay sites are remotely situated, far from the major centres in Durban, Johannesburg and Pretoria, they have limited access to high-level IT skills. Consequently, we found that the ASP model best suited their circumstances, and would facilitate the establishment and maintenance of a world-class IT infrastructure for the Foskor Group.
"While several other leading ASP solutions were considered, we found that the JD Edwards solution best suited the Foskor environment," Vink continues. "Additionally, IOF were running the JD Edwards Financial suite at Richards Bay, which meant that the staff were already familiar with the system."
The overall solution is a true "sensor-to-boardroom" application incorporating and interfacing to other products such as ARIS (BPR), Wonderware Factory Suite (MES and SCADA), Yokogawa (DCS) and Wonderware INSQL (data historians). According to Vink, the ASP solution costs will result in excess of a 20% saving in discounted cash flow for Foskor over the term of the contract relative to the costs for a once-off enterprise implementation.
"Foskor sees the ASP solution as the strategic option for gaining continuous access to the latest technology we need to run the business without the risks, costs, and administrative responsibilities associated with developing and maintaining the required IT infrastructure," says Chris Kheswa, Group Financial Manager - Special Projects at Foskor. "With the implementation of JD Edwards OneWorld across the whole organisation, the ASP will enable Foskor to achieve faster implementation with reduced risk to our existing system environment and bottom line," he continues.
According to a BMI survey (October 2000), the ASP market is set to grow by 26% by 2005, and will be driven by the increasing demand for e-business and e-commerce applications. "End-users see speedy implementation as the single most important reasons for using ASP," the report states. "The shortage of IT skilled staff and high retention costs, as well as guaranteed service delivery are also major drivers for the outsourcing market."
"In line with this market trend, we are positioning CS Holdings as a comprehensive, single point of responsibility IT services company and this, our first ASP contract, marks a significant step in achieving that objective," says CS Holdings CEO Annette van der Laan. "The fact that all our applications are thoroughly integrated, from manufacturing through to ERP, provided us with a good understanding of Foskor`s business. Consequently, we were able to participate with them in the conversion of their business processes, and fully understood what it would take to incorporate the manufacturing processes, production, and logistics into the back office, using the ASP model.
"This solution meets all of Foskor`s current and future business needs and establishes the correct foundation for them to move successfully into the next business phase - which is e-commerce," Van der Laan concludes.
"We are delighted that Foskor has joined JD Edwards` long list of mining customers," says Mike Evans, managing director of JD Edwards South Africa. "The fact that such a large company as Foskor has decided on the ASP route further justifies our view that ASP solutions are suitable for all sizes of organisations. The key issue is the value that the ASP solution delivers. JD Edwards chose CS Holdings as one of its ASP partners because of their expertise and breadth of solutions in our chosen vertical markets."
"JD Edwards` ASP programme continues to gain momentum worldwide because of the clear value it offers to customers," said Dee Kellogg, director of ASP Solutions at JD Edwards. "Companies clearly benefit from using our applications in a hosted environment. This way, they take advantage of the flexibility and rich features of our products while minimising their total cost of ownership."
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