WHITE PAPER

SAP In The Mid-Sized Enterprise: Lessons Learned In

Europe and Africa
Sponsored by: SAP AG
Bo Lykkegaard

Jozef Gemela

January 2009

IDC OPINION
Mid-sized enterprises are under pressure many sides. Despite growth, they often find
it hard to reap global economies of scale because local systems and business
procedures inhibit coordination, automation, and visibility. Legacy systems,
furthermore, often provide little or no support for business intelligence, international
expansion, corporate compliance, and internet-based business models.

Omgade 8 P.O.Box 2609 2100 Copenhagen, Denmark

P.45.39.16.2222

IDC interviewed eight companies in Europe that have chosen to implement SAP
Business All-in-One to help overcome these challenges. Based on these interviews,
IDC concludes:
Five of the eight cases completed their implementation on both time and on
budget. Two cases experienced slight overruns (less than 5 consulting days),
and one case experienced an certain time and budget overrun due to unforeseen
implementation issues. Interestingly, all of the companies purchased
implementation services delivered under fixed price and fixed scope contracts.
SAP Business All-in-One implementations appear to have a length between four
and 12 months per site. The study found a clear pattern between number of
users and implementation time suggesting roughly one implementation month for
every ten users of the initial rollout. Although the implementations were
considered successful, the interviewees mentioned challenging aspects in the
implementations, including a time burden on line-of-business employees and
how to train end-users.
Overall, IDC found that the implementation of SAP Business All-in-One had
diverse and often profound effects on the eight companies. Six of the eight cases
were able to dramatically improve or change their business as a result of the
SAP implementation. The remaining two cases achieved significant business
benefits that were of more incremental nature.
Several companies used SAP to transform themselves into global companies.
The benefits of global visibility and coordination were dramatic and provided
lasting competitive differentiation. A U.K. distributor started a new, internet-based
business model after implementing SAP, and achieved sustainable competitive
advantage. Other companies leveraged SAP to automate processes and saw
business volumes significantly outgrow the associated administration costs.

METHODOLOGY
This IDC White Paper summarizes the findings of eight case studies of multinational
companies across Europe and Africa. The interviewees were high-level decision
makers in Atos Medical (Sweden), Hess (Germany), Mark Two (United Kingdom),
Mascot (Denmark), Modis (Russia), Sappel (France), Tiger Coatings (Austria), and
Wellness Warehouse (South Africa). SAP provided access to a decision maker within
each company, and they were interviewed over the phone. Furthermore, IDC
interviewed SAP business partners serving several of these companies. The
interviews took place over the summer and fall of 2008.

This IDC White Paper

summarizes the
findings of eight case
studies of
multinational
companies across
Europe and Africa

Appendix 1 provides further details on each case company.

IN THIS WHITE PAPER

Mid-sized enterprises are under pressure many sides. Despite growth, they often find
it hard to reap global economies of scale because local systems and business
procedures inhibit coordination, automation, and visibility. Compliance with
regulations and industry standards often require capabilities beyond those of custombuilt legacy systems. Mid-sized companies also often find that data quality issues and
outdated architectures of legacy applications inhibit new, internet-enabled business
models such as customer and supplier self-service. Furthermore, silo-based systems
and applications impede automation of core business processes and therefore block
profitable growth. Finally, fast-growing enterprises in emerging economies do not
have the skills nor funds for a traditional, green grass ERP implementation, yet they
need an adequate ERP platform and best practices for their industry.

Mid-sized enterprises
are under pressure
many sides

This White Paper analyzes the experience of eight mid-sized enterprises in Europe
and Africa that have chosen to implement an ERP solution from SAP to manage
business challenges. Considering that an ERP implementation is often considered
costly and complex, IDC set out to examine the following key questions:
What business challenges led these companies to implement an ERP solution?
How much effort does it take for a mid-sized organization to implement an ERP
solution from SAP?
What are some of the lessons learned from these implementations?
What has been the concrete business outcome as a result of the ERP
implementations?

BUSINESS CHALLENGES
Mid-sized enterprises in Europe face a number of common business challenges.
Based on the eight cases in this White Paper, we discuss five key issues in detail that
were mentioned by the interviewed companies.

Lack of Global Visibility and Coordination

As small companies grow over time and turn into mid-sized companies, foreign
subsidiaries are often established by a local manager, who acquires the needed

2009 IDC

infrastructure to start operations, survive, and hope hopefully thrive. As the number of
subsidiaries and global coverage grow, these initial choices of local business
applications and infrastructure become more and more problematic. In other words,
the mid-sized business becomes the victim of its own success.
Atos Medical, Sappel/Diehl, and Tiger Coatings all struggled with lack of visibility into
subsidiaries. As subsidiaries are not coordinated, the corporation typically carry
significantly more inventory, takes longer to produce and deliver goods, and spends
significant efforts to forecast sales and close books, compared to companies with one
single ERP backbone.

Lack of subsidiary
coordination and
visibility often leads to
inefficiency and long
cycle times compared
companies on a
single ERP instance

This lack of transparency is not a trivial issue, as CIO in Tiger Coatings, Heinrich
Steier explained: "Before SAP, it was so complex to exchange information inside our
group and there we could not react to requests or deliver fast enough. We lost a lot of
business on that account."

Silo-Based Systems No End-to-End

Automation
If accounting postings is done in one system and sales orders are added in a different
system and inventory is managed in a third system, a great amount of double entry
and manual work is likely to be involved. The ERP movement, which accelerated
during the 1990'ies, was all about solving that problem by keeping back office
processes in one integrated system. However, mid-sized companies still struggle with
silo-based applications that do not support end-to-end automation of business
processes.

Mid-sized companies
still struggle with silobased applications
that do not support
end-to-end
automation of
business processes

Mark Two felt the pain of having separate systems for accounting, orders, and
inventory. One issue was the cost related to manual entry, control, and error
correction of order data. Another issue was related to the lack of audit trail. If an error
had occurred, it was very hard to trace it back and find the reason for the error and
the employee who made the error. Finally, lack of real-time data prohibited new
initiatives such as web-based self-service and e-commerce.
Mascot found that the lack of integration around the legacy application caused
inefficiencies in inventory and supply chain management. Another significant issue of
the silo-based approach is the lack of holistic business intelligence. Mascot wanted to
measure contribution margins across many categories as well as supplier
performance and found that an end-to-end data foundation was called for.

Inability to Move Business to the Internet

The omnipresence of the internet is critical source of cost savings for companies as
they move business to the web. Customers can enter and monitor orders directly in
the supplier's ERP system via a web-based self-service interface, and similar services
are available to suppliers, and channel partners. However, such an internet enabling
requires high quality transaction and master data as well as an open architecture of
the ERP application. Older legacy applications common in many mid-sized
companies rarely meet the conditions required for internet-based services.

Older legacy
applications common
in many mid-sized
companies often do
not meet the
conditions required for
internet-based
services

Doing business on the web is seldom a primary motive for investing in ERP.
Companies does not feel the lack of web-presence as a strong pain. However, when
the new ERP platform is in place, web-based initiatives often with significant costsaving potential typically follow soon after.

2009 IDC

Danish clothing manufacturer, Mascot, was able to increase electronic order

reception to over 50% of total order volume. Mark Two launched a new, web-based
business model and achieved significant and long-lasting competitive advantage.
Atos Medical has automated an e-mail based procurement process. Finally, Hess is
currently looking into customer and suppler self-service enabled by the SAP platform.

Access to ERP Platform and Industry Best

Practices for Newcomers
In the emerging economies in Eastern Europe, Middle East and Africa, small
companies can grow into mid-sized companies at an incredible pace. The Russian
retailer Modis grew into a chain of 32 large stores nationwide in just two years.
Another example in this study is the South African retailer Wellness Warehouse,
which opened its first store in the fall of 2007 and already has plans of more than 17
stores over the next four years.
Such explosive growth creates a difficult problem for the emerging enterprise: It wants
a full-blown ERP system to support the rapidly evolving automation needs and it want
fast access to the embedded industry best practices in such as system. Yet, a limited
cash flow drained by expansion makes a traditional, wall-to-wall ERP implementation
unaffordable. Another issue for the high growth start-up is the lack of in-house IT
skills and experience needed to drive an ERP implementation.

A cash-intensive
expansion strategy
makes a traditional,
wall-to-wall ERP
implementation
unaffordable for the
high-growth
enterprise

Costly Legal and Industry Compliance

All companies are affected by regulation one way or another. Certain industries, such
as life sciences and food & beverage, have exhaustive and stringent requirements for
documentation in procurement, production, and distribution processes. The reasons
behind these requirements are obvious as faulty production outcomes can have
devastating effects on human lives.
A small enterprise in such regulated sectors can often comply using manual
processes without incurring excessive costs. However, as such an enterprise grow
and business volumes expand, the costs and complexity related to corporate
compliance often increase exponentially and in reality impose a "growth ceiling" for
the ambitious enterprise.

As business volumes
expand, the costs and
complexity related to
corporate compliance
often increase
exponentially

Atos Medical found that providing full traceability for all sold products and complying
with the required quality controls required very significant manual resources and the
complexity prevented further growth.

2009 IDC

IMPLEMENTATION EXPERIENCES
The eight companies interviewed for this White Paper implemented SAP between 4
and 12 months. Five of the eight cases in this study completed their implementation
on both time and on budget. Two cases experienced slight overruns (less than 5
consulting days), and one case experienced an certain time and budget overrun due
to unforeseen implementation issues. Interestingly, all of the companies purchased
implementation services delivered under fixed price and fixed scope type contracts.

The eight companies

interviewed for this
White Paper
implemented SAP
between 4 and 12
months

Based on the eight cases, the implementation of SAP Business All-in-One appears to
take between four and 12 months per site. Figure 1 below shows the relationship
between the number of months to implement SAP Business All-in-One and the initial
number of users. A strong correlation between number of users and implementation
time is evident suggesting a relationship of roughly one implementation month for
every ten users of the initial rollout.

Evidence of roughly
one implementation
month for every ten
users of the initial
rollout

FIGURE 1
SAP Business All-in-One: Implementation Time

250

200

Modis (RU)

150
Tiger Coatings (A)
Mascot (DK)

100

Hess (G)
Mark Two (UK)

Sappel (F)

Atos Medical (S)

50

Wellness
Warehouse (SA)

0
0

10

12

14

Months

Source: IDC, 2008

2009 IDC

One case company, Modis, broke the pattern and implemented a 200-user ERP
system in nine months. Several factors helped shorten implementation time. First,
Modis leveraged packaged industry solutions (the retail industry solution, SAP For
Retail, along with the it-trade solution from itelligence to manage warehouse and
distribution) to maximize the out-of-the-box industry content available. Second, Modis
kept customization of core business processes to a minimum by adopting the best
practices inherent in the software.
An additional key factor in the actual implementation time is the breadth of the
solution scope. All companies implemented financial accounting and distribution
processes, and five of eight also implemented production planning and execution
modules. Some also implemented modules to manage projects, quality control, and
human resources.

Implementation Challenges
Despite the relatively smooth implementation experiences, most interviewees could
mention one or several factors that proved more difficult than expected. These
challenges varied significantly from case to case.

Most interviewees
could mention one or
several factors that
proved more difficult
than expected

The most important challenge appeared to be how to educate users to use and
understand a new business application. CIO Stephan Schlichting from Hess found
that "it was new for everybody and hard to understand what possibilities SAP could
offer." CIO, Steve Yates from Mark Two agreed: "70-80% of our post implementation
problems had to do with lack of end-user training and understanding. We did not have
enough time to train them enough and that was a big mistake on our side." In
Wellness Warehouse and Modis, the lack of end-user experience with modern,
transactional systems proved challenging as well.
A related challenge is how to meet very diverse needs across an organization. At
Hess and Wellness Warehouse, a small implementation team were met with very
diverse requirements from different stakeholders. Both companies focused to the core
business processes and standard functionality and not all requirements were met.
Mark Two and Tiger Coatings found it hard to format external business
documents in SAP to meet requirements. Heinrich Steier from Tiger Coatings said:
"Adapting printouts of business documents proved difficult and time consuming. We
learned how to keep documents simple and dropping nice-to-have features and
gimmicks."
Mascot found it difficult to keep master data synchronized after the initial
implementation in 2001. The issues around master data management were solved
later.
Atos Medical found it difficult to integrate data between two external systems and
SAP. One system was an invoice scanning solution and the other was a third-party
warehouse management system.
Sappel found it hard to meet local requirements while respecting corporate
guidelines. Sogeti consultant, Angel Bratanic, explained: "It was hard to execute a
local project in a organization, which is part of a larger group with lots of standards
and policies. Many of which simply did not apply in a local context. We solved this
dilemma but it was not easy." Sappel also found a challenge in how to involve key
business users while at the same time also taking care of the daily business.

2009 IDC

Both Modis and Wellness Warehouse found it difficult to find and recruit a team
with the experience need to manage a complex implementation. In their
countries, Russia and South Africa respectively, both companies were at the forefront
in terms of deploying packaged, advanced business software and were faced with
limited local skills availability.
Modis saw a key challenge in implementing a system to meet rapidly evolving
needs. The Russian retail chain were establishing and determining key business
standards at the same time that SAP was implemented. That lead to a postimplementation process review and fine-tuning of the application. Another challenge
for Modis was the rapid development of the business, which caused key project
stakeholder to change during the implementation. New stakeholders looked at the
project with new eyes and required changes, which posed a challenge for the
implementation team.
Finally, Atos Medical found it difficult to ensure a transparent financial
consolidation of distinct local subsidiaries in the company. This issue by the
distinct legal and business-related local requirements, which if not managed upfront
from a top-down perspective can quickly turn financial consolidation into an
extremely complex exercise.

BUSINESS OUTCOMES
Overall, IDC found that the implementation of SAP Business All-in-One had diverse
and often profound effects on the eight companies interviewed in this White Paper.
Six of the eight cases were able to dramatically improve or change their business as
a result of the SAP implementation. The remaining two cases achieved significant
business benefits that were of more incremental nature.

Local to Global Business Model

Two of the eight companies, namely Atos Medical and Tiger Coatings, leveraged SAP
Business All-in-One to transform themselves from a group of local offices into global
corporations. This transformation had a dramatic impact on both companies and
affected processes from order reception and confirmation, to production and inventory
over delivery and customer service.
Atos Medical reduced its average order handling time by 50%. Previously, local
orders were entered first locally and then centrally. Today, local order are entered
directly in the central system and fulfilled in one single process. VP of Operations at
Atos Medical, Tommy Svensson, explained: "What we have done is to automate all
inter-company procurement, warehousing, and invoicing processes."

Atos Medical reduced

its average order
handling time by 50%

Tiger Coatings also moved from a local to a global model. CIO of Tiger Coatings,
Heinrich Steier elaborated on the importance of that change: "We used to spend so
much time exchanging information inside the group. Today, we do things once, only,
because we have global visibility into inventory, production, and recipes. Prior to SAP,
the development of a new product variant in a local plant could take up to six weeks.
Today, such development takes approximately 5 days."

Development of new
product variants in
local plants have
gone from up to six
weeks to
approximately 5 days

2009 IDC

New, Internet-Based Business Models

Self service based offerings requires an open and modern business application with
high quality transaction and master data. After implementing SAP, several case
companies were suddenly able to open up systems for customers, partners or
suppliers to service themselves. Interestingly, many self service offerings if crafted
right are seen as extra service by customers rather than cost saving mechanisms.

After implementing
SAP, several case
companies were
suddenly able to open
up systems for
customers, partners
or suppliers to service
themselves

Mark Two distributed bathroom, kitchen and sanitary products to retailers around the
United Kingdom using a traditional distribution model: the reseller sells a kitchen and
subsequently orders it from the distributor. Its implementation of SAP in 2000 enabled
a new business model. Mark Two would embed its e-commerce website inside the
websites of customers and deliver order directly to the consumer. IT Manager at Mark
Two, Steve Yates, explained: "The DIY retailers want to sell bathrooms, however,
they don't really want to have stock, manage home deliveries and build complex web
sites such as a bathroom configurator. The fact that we manage those processes on
their behalf has been a massive competitive differentiator for us."
After implementing SAP, Mascot now receive in excess of 50% of all orders
electronically. Large customers upload orders directly into SAP and can check order
status at their convenience.

After implementing
SAP, Mascot now
receive in excess of
50% of all orders
electronically

Automation of Business Processes

Mid market companies looking for growth opportunities often find themselves hitting a
glass ceiling, because the cost of manual processes escalates with growth. The
inability to grow profitably is a key reason why many companies stay at a certain size.
Profitable growth requires automation of business processes in order to dramatically
reduce the cost of additional business volumes.
Mark Two, Atos Medical, Tiger Coatings, Mascot, and Sappel were able to automate
business processes using SAP. The ultimate proof of business automation is the
ability to grow business volume with limited or no growth in administrative costs. Mark
Two nearly doubled revenues while seeing limited growth in the teams doing
invoicing, pricing, IT, and purchasing.

The ultimate proof of

business automation
is the ability to grow
business volume with
limited or no growth in
administrative costs

Atos Medical operates in a highly regulated pharmaceutical sector and processes

related to legal compliance represents a significant cost burden. Using SAP, the
company automated processes around production documentation and quality
reporting. Tommy Svensson explained: "We do our entire quality control with less
people and higher volume than two years ago. What we did was to automate complex
quality sampling and reporting processes."

"We do our entire

quality control with
less people and
higher volume than
two years ago"

Mascot grew revenues five-fold since implementing SAP but kept the growth of back
office staff significantly lower.

Fact-Based Decision Making

Several case companies were used to have transactional legacy systems, which
provided limited or no support for decision making. Fact-based decision making was
impeded when data could not be exported and even more importantly when data
quality was low. These barriers to business intelligence and visibility were mentioned

2009 IDC

by several of the case companies, including Hess, Mascot, Tiger Coatings, Atos
Medical, and Sappel, when discussing their legacy ERP solution.
Stephan Schlichting from Hess replaced an outdated legacy system with SAP. He
commented: "We used to make business decisions based on gut-feel, because we
did not have the data. Now we have the business data and it is of good quality, so we
can make fact-based decisions."

"Now we have the

business data and it is
of good quality, so we
can make fact-based
decisions"

Managing Director and Owner of Mascot, Michael Grosbl, explained how the SAP
solution has enabled a new business visibility: "We have a strong focus on financial
analysis. Such analysis is so much better with SAP because its data is precise and it
provides so many data points. Today, we are continuously monitoring EBIT per sales
person, margin by country by product, as well as other types of margin analysis. We
also analyze inventories and warehouses carefully and we have boosted our
efficiency in these areas significantly."

"Such analysis is so
much better with SAP
because its data is
precise and it
provides so many
data points"

Tommy Svensson from Atos Medical provided a different example of business

intelligence: "We have all the data needed for a supplier evaluation in SAP. A
procurement professional can just tab into SAP to get a complete supplier overview
with no need to look for external Excel sheets and other files."

Cost-Effective, Rapid Expansion

Modis and Wellness Warehouse had very aggressive expansion plans.
Russia-based retailer Modis was looking to expand 10 stores into 32 in less than one
year. It needed to industrialize the opening and ramp-up of each new store and inject
a blueprint of retail best practices fast. Modis used SAP to achieve all that. The CIO
of Modis, Alexey Prilepskiy elaborated: "Despite all of the challenges related to
business development and the implementation of a new ERP system at the same
time, the project was completed on time and within the budget as we employed the
best practices defined by SAP's industry-specific solution. Our ERP system has been
supporting business operation from day one and monthly generates about one million
transactions."

Russia-based retailer
Modis was looking to
expand 10 stores into
32 in less than one
year. It needed to
industrialize the
opening and ramp-up
of each new store

South African retailer Wellness Warehouse is looking to open 20 shops nationwide

within the next five years. Central Merchandise Manager, Shawn Whiffler explained:
"We were looking for a system with a proven track record. We wanted to minimize our
risk both at the operational and technological level. We achieved our goals of having
a robust system, that is flexible enough to manage our diverse product sets and that
is easy to use."

"We achieved our

goals of having a
robust system, that is
flexible enough to
manage our diverse
product sets and that
is easy to use"

LESSONS LEARNED
The interviewees were able to draw many interesting conclusions regarding their SAP
Business All-in-One implementation projects with the benefit of hindsight.
Firstly, several interviewees highlighted how an SAP implementation is a
transformational project for a mid-sized enterprise and must be treated as such.
The interviewees found that companies must embrace themselves for a
transformational change and not treat an implementation as an IT project. The
interviewees gave various examples in how to prepare and manage change: "Ensure
the presence of a very strong and experience project manager at such a project"

2009 IDC

The interviewees
were able to draw
many interesting
conclusions regarding
their SAP Business
All-in-One
implementation
projects with the
benefit of hindsight

(Sappel), "Identify, document, and validate all core business processes before
starting with SAP" (Mascot, Atos Medical), "Take a business oriented approach to the
project in which business goals and needs drive the efforts and planning" (Mascot),
and "Recruit a person with SAP experience upfront in order to have the knowledge inhouse and set aside enough budget to achieve the goals you want" (Hess).
A second lesson was related to the early involvement and training of line-ofbusiness personnel. This is a careful balance because the key personnel you want
on your SAP project is the same people who keeps the regular business running.
Several interviewees argued for extensive end-user involvement. According to Steve
Yates from Mark Two: "Our single most important lesson learned is the importance of
end-user training. The amount and quality of that training will determine the success
of the implementation." Angel Bratanic from Sogeti added: "Your key success factor
to meet goals is to get the upfront commitment from key line-of-business users. We
involved business users from the very beginning including requirements, scoping,
validation, and testing. We also conducted a very intensive three week training
program." Finally, Jrgen Aronsson from Implema said: "In general, ERP
implementations are about motivating people to embrace change. Atos Medical
managed this excellently, because they involved the relevant business departments
right from the beginning."
A third lesson learned was pre-packaged content, pre-packaged integration, and
templates actually matter. Atos Medical implemented an SAP template for
manufacturers developed by Implema and this accelerated the implementation.
Mascot implemented the SAP Apparel and Footwear Solution (AFS) to manage
industry-specific issues such as product variables, categories, and seasonality. Modis
and Wellness Warehouse implemented the SAP for Retail solution, and Modis even
selected a special template for the fashion industry. Both Modis and Wellness
Warehouse found the pre-packaged industry content vital to achieving fast and
successful implementations. In the words of Shawn Whiffler of Wellness Warehouse:
""We were looking for a system with a proven track record. It had to come
preconfigured for the retail industry with standard functionality addressing the majority
of our requirements."

FUTURE PLANS
Most of the companies have ambitious plans to evolve their ERP solution. After
streamlining the first set of back office processes, many of the interviewees were
eyeing new opportunities for automation and expansion.
Several of the organizations, including Mark Two, Modis, Mascot, Wellness
Warehouse, and Sappel, were moving into business intelligence. The companies
finished implementing the transactional applications to automate business processes
and were now ready to analyze and optimize the automated business process. Most
were looking at business intelligence tools from SAP, while some looked for a more
packaged and focused offering. Wellness Warehouse wanted to do pricing
management and optimization, while Mascot wanted to implement the balanced
scorecard application from SAP.

Several of the
organizations were
moving into business
intelligence

Hess and Tiger Coatings were focused on rolling out SAP to new foreign locations.
Atos Medical and Hess were planning implementation a packaged customer
relationship management solution.

10

2009 IDC

Several companies were planning supply chain initiatives. Mark Two wanted to
implement warehouse management. Mascot was looking to implement SAP
Advanced Planner and Optimizer (APO) as well as SAP Manufacturing Integration
and Intelligence in its Vietnam plants.

Several companies
were planning supply
chain initiatives

Finally, Hess wanted to introduce a document management system to manage all

business documentation, and Atos Medical were seeking to introduce electronic
signatures advance compliance automation as well as complete its implementation of
a solution for product lifecycle management.

2009 IDC

11

APPENDIX
Case studies
COMPANY: ATOS MEDICAL (Sweden)
Atos Medical, founded in 1986, is a multinational pharmaceutical company focusing
on treatment of illnesses related to ear, nose and throat. Its 200 employees generated
a turnover of roughly 35M during 2007. The turnover has risen by between 20-40%
every year over the last ten years. The company has subsidiaries in the U.K., USA,
Germany, the Netherlands, Spain and Belgium as well as a global network of
exclusive distributors in approximately 55 countries.
INTERVIEWEES
VP Operations, Atos Medical, Tommy Svensson
Managing Director, Implema, Jrgen Aronsson
CHALLENGES
The legacy ERP system was nearing its end-of-life and the company was forced to
upgrade to a new version or migrate to a new ERP system. Both options were
considered complex.
The production process of Atos Medical is subject to strong legal regulation and
complying with the documentation requirements was a manual, cumbersome and
time-consuming process.
The company wanted to improve its ability to trace faulty products by lot numbers into
the retail chains. The legacy ERP systems did not fully support new traceability
requirements.
The company lacked visibility into the performance of subsidiaries because each
subsidiary had its own ERP installation and database. Consolidation was complex
and required a third-party software solution. Also, the local ERP approach prevented
economies of scale in procurement and material management.
SOLUTION
Atos Medical currently has 130 users running SAP ERP 6.0 in an implementation
spanning financials, inventory, production, distribution, and business intelligence.
Initially, Atos Medical went live in May 2007 with 60 users after a six-month
implementation process. The project made use of templates developed by Implema
for manufacturers. Four subsidiaries run on the central SAP instance using Citrix
SAP ERP 6.0 is integrated to a PLM solution, an IBM-based automated warehouse
solution, and to external logistics providers, such as UPS and Fedex.
RESULTS
Order handling time has been cut in half. Because the subsidiaries run on the same
system, new orders are registered directly in the central system and inter-company

12

2009 IDC

procurement and invoicing is automated.

Paper work in production has decreased dramatically. When a production order is
settled, SAP collects the legally required documentation automatically.
Quality control is done at a higher volume with less people, because processes have
been automated. Inspectors frequently need to document compliance to Acceptable
Quality Level and they now use SAP in a simple and fast process, which allows to
correct sample sizes and other parameters.
Procurement is significantly simplified. When a purchase order is submitted, SAP
automatically retrieves the correct CAD drawing and submits along with the order.
Furthermore, procurement personnel can perform a supplier evaluation in SAP with
no need to create Excel sheet or retrieve files.
COMPANY: HESS (Germany)
Hess AG, headquartered in Villingen-Schwenningen, Germany, designs and
manufactures high-end products for outdoor lighting and street furnishings. Hess's
products are exported and sold to customers in over 40 countries worldwide.
Hess operates a manufacturing plant in Saxony, Germany, and has since 1997 been
active in the USA through a subsidiary with production plant. Hess has approximately
300 employees globally, of which 40 are located in the US subsidiary.
INTERVIEWEE
SAP System Manager, Hess AG, Stephan Schlichting
CHALLENGES
Hess was running its business on a custom-built systems based on IBM iSeries. The
system, which was built and maintained by one individual, had a very restrictive, textbased user interface, which was cumbersome to use. Furthermore, the system cound
not be expended to support the growth plans of the company.
To make matters worse, the programmer wanted to retire, and Hess was forced to
look at alternative ERP systems fast.
SOLUTION
Hess currently has 130 users running SAP ERP 6.0. The company went live with 100
users in January 2007 after a 12-month implementation process. The implementation
was done using services from Steeb and covered financials, inventory, procurement,
production, distribution, and HR. The solution is hosted externally by a company
called Hosting Solutions.
SAP ERP 6.0 is integrated to a PLM solution from SolidWorks as well as to a
warehouse management solution, called HighRack. These interfaces to SAP were
provided and implemented to the third-party software vendors themselves.
RESULTS
Hess replaced a deficient and risk-prone legacy system with a modern, standardsbased ERP platform and the users feel more productive with the new system.

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Business decisions are based on data from SAP as opposed to gut feelings about the
business. The information quality in SAP is significantly higher than in the previous
system.
The modern business platform has caused Hess to consider new initiatives, such as
customer self-service and access, supplier self-services and access, and customer
relationship management.
COMPANY: MARK TWO (United Kingdom)
Mark Two was founded in the Bolton, United Kingdom in 1985 and supplies
bathroom, kitchen and sanitary products to national chains such as Wickes, MFI,
Next, Tesco and Focus, as well to independent retailers around the country. It has
two distribution warehouses and six depots in the U.K. The 400 employees made an
average of 1,000 home deliveries daily and a turnover of 1.5 billion during 2007.
INTERVIEWEES
IT Manager, Mark Two, Steve Yates
Consultant, Chelford Group, Justin Brading
CHALLENGES
Financial and inventory was managed by siloed, legacy system, which did not support
modern IT standards. Furthermore, the legacy systems were not certified for year
2000.
Mark Two had concerns related to the reliability and possible outages of the existing
systems as well as the lack of audit trails related to key documents, such as sales
orders.
Financials and inventory and order management were managed in separate systems,
which made it cumbersome to enter an existing order into the general ledger. It was
also complex to match orders to inventory and commit to a delivery time.
SOLUTION
Mark Two currently has 80 users running SAP ERP 6.0. The company went live in
August 2000 after an 8-month implementation process, a failed go-live process, and a
subsequent reimplementation process of four weeks. The solution covered financials,
inventory, and distribution and feature advanced reports to match special
requirements from Mark Two.
Furthermore, Mark Two developed a order entry front-end in Microsoft Visual Basic to
allow for fast order entry. Finally, the system was integrated to mobile, handheld
scanners, to a payment processing provider, and to the payroll bureau, ADP.
RESULTS
SAP enabled Mark Two to create powerful web front-ends branding to match the web
sites of the major DYI retailers that are customers of Mark Two. Customers can
configure a kitchen using the web, retrieve an exact price, but also receive an exact
direct delivery time and date. Or they can enter a direct delivery date/time, when they

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will be at their home.

The ability of Mark Two to offer its customers, the DYI retailers, a full function web
site is a major competitive differentiator. The visiting DYI consumer never knows that
he or she is not doing business directly DYI chain. In reality, Mark Two manages the
entire sale from procurement, over inventory, to web sale, payment processing and
delivery.
Mark Two have used SAP to achieve another competitive advantage in the
transparency it offer to consumers in terms of delivery tracking. Customers can follow
their delivery over the web down to the last minute and are alerted proactively in case
of any deviation from the agreed delivery time.
Back office functions such as invoicing, pricing, and purchasing, saw significant
benefits to do automation of processes in SAP. Since the implementation, Mark Two
has nearly double revenues but its back office teams have grown at much lower
rates. Despite the aggressive growth plans, Mark Two have been able to maintain
profit margins.
COMPANY: MASCOT INTERNATIONAL A/S (Denmark)
Mascot International A/S (Mascot) is an international, family-owned company, which
is headquartered in Silkeborg, Denmark. Mascot designs, manufactures, and sells
workwear and security footwear to craftsmen and production personnel. For several
years, the company has experienced rapid growth in turnover and staff. During 2007,
Mascot had a staff of 300 employees in Europe as well as 3,000 workers in sewing
factories in the Far East. Mascot works with distributors across Europe to sell its
products.
INTERVIEWEE
Managing Director and Owner, Mascot, Michael Grosbl
CHALLENGES
Mascot was using an ERP system, which was about to reach its end-of-life and would
not be supported by the vendor anymore. Mascot was therefore forced to either
implement the new product from the same vendor or consider ERP alternatives.
Mascot wanted to improve its ability to manage production and the related supply
chain in order to improve its delivery accuracy and reduce working capital and
inventories.
The company was also looking to improve management of its product portfolio in
order to boost products in demand and decommission products with low demand.
This objective also required the company to improve its collaboration with customers
and its demand forecasting abilities.
SOLUTION
Mascot currently has 100 users running SAP ERP 6.0. The company went live in
October 2001 after a ten-month implementation process, which covered financials,
inventory, logistics, and production, including a special textile solution (AFS)
developed by SAP.

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SAP was integrated to a sales forecasting application, A3, and to an automated

warehouse management solution. Mascot has also deployed a web-based order
management module so customers to upload orders directly into SAP.
RESULTS
SAP has supported five-fold increase in revenues for Mascot. During the same
period, Mascot only had to increase its order entry staff to 50%, due to electronic
order reception (more than 50% of order volume) in SAP.
The inventory management has been vastly improved because of the visibility
provided by SAP. The system also allows for rapid intervention in case of exceptions.
For example, an inventory hand scanner which is inactive in more than 15 minutes
creates an alert in SAP.
Management visibility into the business is much better with SAP. Today, the entire
company is very dependent on analyses inside SAP, for example margin per sales
person, gross profit per product category per country market and other types of
margin analysis. Business intelligence is also more used due to the fact that the
transaction data in SAP is perceived to be very precise.
Finally, SAP has supported the international expansion of Mascot both in terms of
manufacturing in the Far East and sales across Europe.
COMPANY: MODIS (Russia)
Modis is a Russian retail brand company that offers clothes for the whole family at
reasonable prices. The company started its operations in Russia in 2007 with 10
stores and at the moment has 32 outlets in 25 cities across the country. The
company's business model is a large shop floor (hypermarket) with more than 2,000
items at budget prices accompanied by friendly service and convenient shopping
facilities such as a sufficient number of changing rooms and cash registers. The
company's motto is "Good mood shopping." Clothes are designed locally while the
production process takes place outside Russia (in China), which makes business
highly dependable on logistics.
INTERVIEWEES
CIO, Modis, Alexey Prilepskiy
Consultant, itelligence, Irina Zainchkovska
CHALLENGES
Modis started the implementation of SAP for Retail from the very start of its operation
in Russia.
The business processes of the new enterprise were designed as the company
developed its business. This created a real challenge for the implementation team.
When a new business process was in place, additional review of the process and
fine-tuning was required.
Furthermore, during the implementation, there were changes in the project
stakeholders and consequently alterations in the implementation plan. However,
since the client chose the solution with best practices and used only the standard

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functionality embedded in the SAP Retail for Fashion vertical solution, the project's
timeframe and budget were not affected.
On the end-user side, major challenges were posed by the limited awareness of ERP
systems and the lack of experience in working with such systems. People who were
in charge of major business processes knew very little about the capabilities of an
ERP system. Modis employees required extensive training but the limited timeframe
of the project did not allowed for this.
SOLUTION
Modis implemented SAP Retail for Fashion and the best practices defined by the
it.trade product, a vertical solution based on SAP All-in-One and developed by
itelligence, the company which also carried out the implementation. The system went
live in July 2007 for 200 users after the nine-month implementation process.
SAP Retail for Fashion is integrated with a payroll system developed by local
company 1C as well as with the warehouse management system Manhattan installed
at warehouses managed by third parties.
RESULTS
At the very beginning, the end-user company was able to start its business in line with
the best practices developed and defined specifically for the retail industry in the SAP
for Retail product and in the vertical solution it.trade. The adopted solution was
created with a minimal customization of core processes. This helped keep the
project's budget and implementation time unchanged.
The SAP Retail for Fashion solution includes a merchandise and assortment planning
functionality that is crucial for Modis' business operation. The availability of this
functionality helped the company avoid a painful integration process with any
standalone merchandize planning solution.
The business model of Modis was completely new for the Russian retail industry and
there was a definite risk involved in developing business according to this model. The
implementation of SAP for Retail minimized operational risks as the SAP solution
provides for typical scenarios faced by a retail company.
COMPANY: SAPPEL (France)
Sappel was founded in 1906 and is headquartered in Saint-Louis, France. It is owned
by the German industrial conglomerate, Diehl Group, which has more than 11,500
employees and a turnover of 2.3 billion. Sappel manufactures and markets water,
industrial, and heat meters, as well as remote reading systems. It has 200
employees, including a subsidiary in Poland, Mirometr, and a manufacturing
subsidiary in Brazil.
INTERVIEWEES
CIO, Sappel, Agnes Foltzer
SAP Project Manager, Sogeti, Angel Bratanic
CHALLENGES

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Diehl Group wanted improved visibility and control in production and sales across
daughter companies and international subsidiaries. In order to achieve this visibility,
the corporation wanted to major group companies to have integrated ERP
applications.
The legacy ERP application of Sappel was heavily customized and difficult to change.
Furthermore, the company was looking to improve data quality and accuracy and
increase the level of automation of back office processes.
SOLUTION
Sappel currently has 111 users running SAP ERP 6.0. Sappel went live in April 2008
with 80 users after a nine-month implementation process. The implementation was
managed fairly autonomously by a local team assisted by services provider, Sogeti,
and included financials, inventory, production, distribution, and projects.
RESULTS
Sappel managed to implement a local solution, which is integrated to and harmonized
with the central systems of the Diehl corporation. The implementation was on-time
and on-budget.
Sappel has improved the accuracy and quality of its Material Requirements Planning
(MRP) in production.
On the distribution side, the company has improved its ability to commit to deliveries
significantly. This is the result of improved demand planning and improved production
planning and forecast.
COMPANY: TIGER COATINGS (Austria)
Tiger Coatings is headquartered in Wels, Austria, and manufactures and sells
powder-based paint and coating products worldwide. It sells direct in 39 countries and
well as through channel partners in 34 additional countries. Its 1,000 employees
generated a turnover of approximately 150M during 2007.
INTERVIEWEE
CIO, Tiger Coatings, Heinrich Steier
CHALLENGES
Managing the network of international subsidiaries was increasingly difficult because
each subsidiary had a local ERP platform. It was difficult to get a overview of
business and to get synergies across the group. Five or even ten locations could be
developing the same product with each site "reinventing the wheel."
The lack of global inventory visibility made it harder and more time consuming for
Tiger Coating to fulfill orders one subsidiary would produce what another subsidiary
had on stock.
The company found it increasingly difficult to support customers, which were
becoming global, changing locations at a fast pace and entering new markets. The
local systems if the company did not allow for a global customer service approach.

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SOLUTION
Tiger Coatings currently has 250 users running SAP ERP 6.0. Tiger Coatings went
live in April 2006 with 120 users after a 12-month implementation process, which
covered Austria and Germany. The implementation included financials, inventory,
distribution, logistics, production, quality, asset management, product development,
after-sales services, projects, HR, and payroll. A subsequent international rollout has
since covered the U.S., China, Canada, Czech Republic, Slovakia, France, Hungary,
and Italy, and is scheduled to end with Mexico in early 2009.
RESULTS
All local manufacturing plants and sales offices of Tiger Coating is now on the same
system. Local units act as logical entities in SAP (companies and plants) and
subsidiaries connect to SAP using fast remote connections.
This global approach has enabled the company to make dramatic improvements to its
offerings and it has seen a significant increase in order volume as a result. Tiger
Coatings can guarantee delivery of the exact same product, in the same quality,
under the same commercial conditions no matter from where the world the customer
decides to place the order.
Today, the company can deliver faster than before, including 24 hour standard
delivery time and 48 rush order delivery. The company is also able to offer services to
differentiate from the competition, including packaging, bar codes or SKU numbers
that are specific to the individual customer.
The efficiency at the plant level has improved dramatically. Prior to SAP, the
development of a new product variant in a local plant could take up to six weeks.
Today, such development takes approximately 5 days.
COMPANY: WELLNESS WAREHOUSE (South Africa)
Wellness Warehouse is an entirely new, world first retail concept. Its comprehensive
offering includes mainstream convenience products and an extensive range of
wellness products and services, all under one roof. The Wellness Warehouse is a
privately owned business successfully launched in South Africa with the first store,
which opened in Cape Towns Kloof street on 30 August 2007. Another 17-22
national stores are planned to open in the next 5 years (with the exception of the
Cavendish and Heathway stores which opened in November 2007). Their vision is for
Wellness Warehouse to be the countrys foremost provider and preferred shopping
destination for all Wellness requirements. In providing a complete and integrated
service Wellness Warehouse will become the leading South African retailer of
Wellness.
INTERVIEWEE
Central Merchandise Manager, Wellness Warehouse, Shawn Whiffler
CHALLENGES
New start up business, with no pre-existing infrastructure, which meant there were no
IT systems or applications to benchmark against.
Management and employees lacked experience, in particular related to ICT

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requirements, procurement and use of a transactional system.

The diversity of the shop products and services a one of a kind store with more than
20 different departments.
Ambitious growth plans looking to open 20 shops nationwide within the next 5
years.
SOLUTION
Wellness Warehouse currently has about 55 employees using the system. The
company went live in June 2007 after a four-month implementation process.
SAP All-in-One is integrated with a point-of-sale product from CK. The solution is
based on best practices providing them with a business process blueprint on which
they structured their organization for optimal operations.
RESULTS
Achieved the goal of having a robust system that is flexible and robust enough to
manage their diverse product sets and is easy to use.
The company expects to start seeing a return-on-investment within 4 years when the
business has been expanded by adding new stores.
Going forward they will be making use of the SAP All-in-One extra functionality,
specifically, its competitive pricing (pricing conditions).

Customer Quotes
VP Operations, Atos Medical, Tommy Svensson
"We've grown in excess of 20% annually for many years, so we were looking for
a very scalable platform. SAP offered that and we also liked the fact that they
offered a complete solution without third-party bolt-ons."
"Implema helped us to keep the total project duration down to six months. Before
the project, we made a complete process map of the company and that helped
us a lot during the project."
"In general, we have used SAP to reduce the number of work hours per core
process. This will enable us to grow without expanding our back office teams. We
also have specific goals, such as reducing the cost of goods sold by 2%, and we
are on plan to achieve these goals."
"A manual, paper-based approach in our highly regulated industry is simply not
feasible. The SAP system has been critical to automate compliance processes
and offer customers full traceability of products. The automation has brought
down the cost of compliance very significantly."
Managing Director, Implema, Jrgen Aronsson

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"We're a 75 person consulting company, which is focused on SAP and on

Swedish mid-sized companies in the manufacturing and wholesale sector. We
believe that our focus brings value to our customers."
"In the case of Atos Medical, 80-90% of the final solution was pre-configured and
the rest was specific the customer. This is a fairly typical ratio for our SAP
projects in the SMB sector."
"The quality assurance requirements in life sciences are very complex and
difficult. We had to assign six weeks for testing instead of the usual three and
that went very well. It actually worked very well, and we are now applying a six
week testing period to all new projects."
SAP System Manager, Hess AG, Stephan Schlichting
"This is a strategic project for us. We wanted a modern and future-proof
infrastructure, and we got that with SAP."
"Because SAP is a commonly used ERP system, our providers of CAD/CAM
solution and warehouse management system were able to integrate their
systems to SAP themselves."
"Steeb offered us a fixed-price, fixed-scope project and they kept the budget. We
have also been pleased with Hosting Solutions, who hosts SAP for us. We've
seen good response time and minimal down time."
IT Manager, Mark Two, Steve Yates
"We have used SAP to support a new business model, in which we run web sites
for customers. We embed our site and system into the sites of our large
customers. That, and our ability to do direct deliveries with high level of flexibility
and accuracy from the point of view of the customers, has put us ahead of
competition."
"We have learned to always train users, always be on the latest release, and
manage SAP in a very business-oriented, pragmatic fashion. We have invested
in in-house SAP skills to get the agility and independence to we can react fast
and develop quickly."
Consultant, Chelford Group, Justin Brading
"The most impressive thing with Mark Two is their use of NetWeaver and the
entire SAP solution, because it demonstrates the power of SAP: The complete
integration from the back office, over warehouses, to the front office and web
store."
"They have used the SAP tools to build a web store with a bathroom configurator
for consumers and the large retailers love it it is a true competitive differentiator
for Mark Two."
CIO, Modis, Alexey Prilepskiy
"The adoption of the SAP for Retail solution at the very start of the company's
operation supported not only its challenging business model but also rapid
business expansion from 10 to 32 stores in less than one year."

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"Despite all of the challenges related to business development and the

implementation of a new ERP system at the same time, the project was
completed on time and within the budget as we employed the best practices
defined by SAP's industry-specific solution."
"Our ERP system has been supporting business operation from day one and
monthly generates about one million transactions. We are ready and looking
forward to implementing a business analytical solution from SAP to leverage this
data and to continue building a modern, dynamic, and transparent company that
can sustain its business on the Russian market."
Consultant, itelligence, Irina Zainchkovska
"From the product perspective, the end-user company received currently the best
localized solution available on the Russian market for the fashion industry. With
previous experience in the retail industry and familiarity with industry specifics,
the client made the right first choice of SAP product for the fashion industry and
adopted it with a minimum of customization. The client therefore gained an
advantage not only in terms of adopting best practices but also in terms of a
timely start and reasonable budget. This fortunate choice helped the company
progress significantly and at a fast pace. Furthermore, the future roadmap of the
product looks good."
"SAP also facilitated the implementation of the project by creating favorable
conditions for licensing. The client was given the opportunity to make tranche
payments and the initial investment in licenses did not stall the project. Such
opportunities are favorable to companies from the SME sector that want to adopt
SAP solutions."
CIO, Sappel, Agnes Foltzer
"The project was part of a group decision to harmonize systems. Therefore, we
have not tracked and measured improvements as such. However, with SAP we
do have more information, more tools, a more user-friendly application, and more
efficient processes."
SAP Project Manager, Sogeti, Angel Bratanic
"Of the nine month implementation project, we spent the two first months learning
about corporate rules and preparing the project. I think it was critical to the
success that we struck a very careful balance between the corporate guidelines
and the local needs."
"A critical factor behind the successful implementation was the commitment from
key line-of-business users. Almost half of the employees of Sappel went through
a three week training course, spending half of their time on SAP training during
this period. Key users were also deeply involved throughout the project, from
scoping and requirements gathering to validation and testing."
CIO, Tiger Coatings, Heinrich Steier
"We are measuring the Return on Investment (ROI) of the SAP implementation
carefully for each facility. We have been surprised in the sense that the postimplementation ROI has been much better than what we expected."

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"SAP has enabled us to become a truly global provider. Our global customers
can now get exactly the same product from the same supplier in the same quality
on the same commercial terms no matter where they buy from."
"We have seen a significant increase in incoming orders as a result of our global
capabilities. Our large customers are looking to reduce the number of local
suppliers and this is where our global approach is a huge advantage to us."
"We have one instance of SAP with global visibility into local production and
inventories. That has enabled us to commit to standard deliveries in 24 hours
and we can do rush orders in 48 hours."
Central Merchandise Manager, Wellness Warehouse, Shawn Whiffler
"We were looking for a system with a proven track record. It had to come
preconfigured for the retail industry with standard functionality addressing the
majority of our requirements. We needed a reporting tool that could be easily
integrated with our point-of-sale system and dispensary. In essence we were
after a system that was flexible enough to incorporate our diverse set of products
ranging from pharmaceuticals, to clothes, books, food and even flowers."
"We achieved our goals of having a robust system, that is flexible enough to
manage our diverse product sets and that is easy to use."
"Through their more-than-capable partner we were able to implement within the
limited time period given for the project."
"By setting up SAP All-in-One before we opened our doors, weve given
ourselves the best possible start in terms of running the business in the right way
to achieve the outcomes we want. And, weve minimized our risk, at both an
operational and a technological level."

Glossary
CRM Customer Relationship Management. CRM applications automate the
customer-facing business processes within an organization irrespective of industry
specificity (i.e., sales, marketing, customer support, and contact center).
Collectively, these applications serve to manage the entire life cycle of a customer
including the conversion of a prospect to a customer and help an organization build
and maintain successful relationships.
ERP Enterprise Resource Planning. ERP products are integrated business
applications that could, in theory, automate an entire enterprise. ERP applications
include at least a mix of accounting, inventory management and/or
purchase/sales order processing, and industry-specific product planning and
execution, services-related operations management, or other product-related
operations-management modules.

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Copyright Notice
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Copyright 2009 IDC. Reproduction without written permission is completely forbidden.

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