Issue date: 2 September 1999
 Article source: Computer Weekly News 
 Bang & Olufsen sounds a discordant note with SAP 
 As the Danish hi-fi company breaks the unwritten rule about keeping the
 lid on, Cliff Saran takes a look at the public falling out 

 The public criticism of the SAP enterprise package from Danish hi-fi
 manufacturer, Bang & Olufsen, has opened up the debate over whether it is wise
 to allow business to rely on ERP. 

 To combat potential problems with its existing Y2K system, Bang & Olufsen
 embarked on the fraught SAP project in 1997. The DKK30m (£2.7m) move had
 three main goals: to protect the company against Y2K problems; to replace the
 existing IT system, and to enhance working procedures. 

 However, the project has encountered problems and is running late. Moreover,
 SAP has been blamed for damaging Bang & Olufsen's supply chain, resulting in a
 lower cash flow. 

 Poor supply 

 In its 1998/99 financial statement published on August 17, Bang and Olufsen said
 failures in the SAP implementation included, "a total stop on deliveries lasting
 eight days." It also reported an unsatisfactory supply situation. 

 Significantly, Bang & Olufsen is one of SAP's references in Denmark. It even
 gave a presentation of its implementation during the May Sapphire SAP
 conference in Nice. 

 When Computer Weekly quizzed SAP Denmark, the ERP company denied it had
 previous knowledge of the problems Bang & Olufsen were experiencing. 

 In fact, Birger Bieum, a marketing manager at SAP Denmark said the first he
 heard of the problems was when the news broke. 

 Following implementation of the new system in February 1999, Bang & Olufsen
 said it had primarily focused on getting the production and logistics modules up
 and running in order to ensure full control of productivity and economy. 

 But to quote the financial statement, "Although improvements continue, the
 system is neither sufficiently robust nor efficient." 

 Along with logistics and production modules, the hi-fi manufacturer has also
 implemented human resources and a module which handles time registration
 during production. 

 It said further work is necessary to increase the speed of the system and
 facilitate integration with other company IT systems. 

 Nigel Wood, a research director at the Gartner Group said that one of the most
 important decisions a user must make when implementing SAP is choosing the
 right systems integrator. SAP relies heavily on such integrators to implement the
 package. 

 With customisation being a costly way of building a SAP system, users have to
 weigh up the benefits of large scale customisation with the work that will be
 required if the modifications needs to be altered. 

 "The best systems integrators push the limit of how you use the system while an
 average system integrator may never achieve the full potential of the package -
 which can be critical to a project's success," Wood explained. 

 Another area of contention for companies is with the internal team used to put
 SAP in place. "You need to extract the best IT and business people from the
 organisation," Wood noted. The company then needs a strategy for filling these
 vacancies so that those who remain are not over-worked. 

 Put on hold 

 Wood said that on one SAP implementation he was aware of, the project had to
 be put on hold for two weeks while the top business mangers who were on the
 project team, went back to their normal jobs to draw up business plans for the
 following year - such was the calibre of the business managers working on the
 project. 

 What makes Bang & Olufsen's problems particularly important is that problems
 with SAP or other implementations of enterprise packages, are often never made
 public. 

 To blame the SAP R/3 application for what it describes as "a lack of overview" in
 its financial affairs is a brave move for a user organisation, given the hush-hush
 nature of such implementations. 

 SAP has asked to see the senior management at Bang & Olufsen. It was due to
 meet the company's production director last week. 

 Only time will tell whether this very public denouncement of the R/3 applications
 will lead SAP, the implementation partners, and the user community, to develop a
 better method of implementing this complex package. 

 Modest implementation - or just bad advice? 

 Looking at the facts as they stand, Ovum analyst Duncan Chapple said, "It looks
 to me like Bang & Olufsen has given itself quite an ambitious time table for
 implementing SAP." 

 Chapple pointed out that electronics giant Philips has a three-year SAP project
 with on-going development, and it is adding more and more SAP modules during
 this time. 

 He added that even the AcceleratedSAP programme, which is aimed at reducing
 implementation time, can take a year to complete. AcceleratedSAP offers users
 off-the-shelf templates. 

 While these can help reduce implementation times, Chapple noted that such
 templates can cause end-user companies problems if they do not match the way
 businesses operate. 

 Chapple added, "Either Bang & Olufsen's implementation was modest or it got
 bad advice." 

 Among the issues Ovum sees users facing with SAP implementations is that the
 software is vast and very hard to implement. Another factor is the proprietary
 nature with which the software handles workflow. 

 SAP provides Bapis - or business APIs - which enable users to program into
 the SAP system. But, as Chapple notes, "The Bapis are relatively limited." 

 This can cause problems, particularly in integrating supply chain applications
 which tend to require a lot of expertise. 

 Chapple said users need a way for their distributors and third party suppliers to
 place information into the SAP system - but the only way in is through the
 Bapis. 

 Best practices for implementing enterprise packages 

     Pick the right package - one that does not require a vast amount of
     customisation to work within your organisation 

     Use the most appropriate systems integrator to implement the software
     - an average systems integrator will never achieve the full potential of
     the package 

     Extract the best people from the business to work on the project -
     people are taken out of the business full time, so vacancies need to be
     filled 

     Data migration and integration with legacy code is considerably
     important - with inconsistent data the SAP processes will not flow
     properly 

     The hardware and software platform must be scalable - under-sizing
     the machine is an absolute killer

        Source: Nigel Wood, research director at the Gartner Group