One of South Africa`s leading video distribution companies Ster-Kinekor Home Entertainment, managed a record-breaking Christmas sales period at the end of 1998, thanks to access to valuable, real-time desktop information through its SAP enterprise business software system.
The new system has also led to improved service levels, tighter control over the business and the ability to decentralise key operations for increased efficiency.
Other benefits include the improved utilisation of warehouse labour, and the ability for remote branch staff to access information directly.
The implementation at Ster-Kinekor Home Entertainment was completed within a record eight months, due to dedicated teamwork, thorough initial planning and SAP`s Accelerated SAP (ASAP) rapid implementation methodology.
"Information is so valuable in this business," says Duncan Bettesworth, Ster-Kinekor Home Entertainment`s financial director. "SAP`s reporting facilities allow monitoring of day-to-day progress in real-time, helping us in the ultimate goal of providing a better service to our customers."
Ster-Kinekor Home Entertainment is part of the Primedia Group. Apart from distributing videos, it supplies Sony Playstation software, and is the sole South African distributor for Sony Playstation hardware.
"Our previous legacy system was patently inadequate for our business, and our service levels were suffering as a result," says Bettesworth. "Critical management information was simply unavailable, or took too long to retrieve.
"We needed an enterprise resource planning (ERP) system and investigated several options, including SAP, which traditionally was used by much larger companies than ourselves."
Before embarking on its SAP R/3 implementation, Ster-Kinekor Home Entertainment undertook a rigorous evaluation of its business processes and set up a re-engineering project.
"This was a critical success factor for us, as we knew exactly what we wanted before we began," says Bettesworth.
It was critical that SAP be implemented rapidly and Ster-Kinekor therefore opted for ASAP (AcceleratedSAP), a methodology designed by SAP to cut the time needed to complete an implementation. At the time, this was only the second such implementation in South Africa.
"ASAP enabled us to implement within eight months, including a Christmas period," says Bettesworth. "This rapid implementation was achieved because we knew exactly what we wanted, having done so much initial planning. In addition, we had absolute management buy-in, unbelievable commitment from our internal team and SAP SA was very professional.
"We used a big bang approach, implementing the materials management, sales and distribution, financial and controlling modules.
"Our experience has shown that with the ASAP methodology, there is still approximately 20 percent of the project to complete when you go live, included total stress testing," he says.
The company is now in Phase Two of the implementation, involving refinements to the system, including the implementation of EDI, EIS, archiving and workflow.
"One of our key objectives during implementation was that SAP skills be transferred to our staff," says Bettesworth. "We had a two-man Ster-Kinekor team per module, chosen for their business - and not computer - acumen."
Bettesworth says availability of reliable information at one`s fingertips is the major advantage of the SAP system.
"I cannot stress enough the value of real information," he says. "It is enabling our people at all levels of the organisation to see what is really happening in the business and to cut, dice and slice the information in ways that make informed decisions possible.
"It has also enabled us to decentralise our sales operation. Because they now have access to real-time information, our regional managers can manage their own data capture, credit control, and customer care. Our people at the coast can see exactly the same information as we can at head office.
"Having reliable, accessible information also enables us to pinpoint and analyse problems, and prevent them from re-occurring. This means that we can focus on improving our service levels. We can also see exactly where things go wrong. People can no longer simply blame the warehouse every time there is a problem!"
The other major benefit for Ster-Kinekor Home Entertainment has been enforced compliance with the system.
"Previously, we would find out someone had `bucked` the system way down the line," says Bettesworth. "Now, the SAP system prevents this from happening at all. For example, it enforces credit limits and purchase orders simply can not be issued without the proper authorisation.
"SAP has also enabled us to improved our credit control and reduce overtime."
Bettesworth cautions other mid-sized companies to be aware that the initial cost estimate for an ERP system is not always the final cost.
"You must expect expenses to come through, and must have a healthy IT budget," he says. "ERP systems are not cheap, and consultants are expensive. Maintenance and upgrade costs are also relatively high compared to the initial investment, while SAP skills are difficult to hold onto to," he says.
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