A Chip off the New Block

January 29, 2009 by Christoph Zeidler, SAP AG

Silicon Laboratories

Founded in 1996, Silicon Laboratories (Silicon Labs) is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal integrated circuits.

Samsung, Sony Ericsson, Thomson, LG Electronics – all of these big-name technology companies have one thing in common: They are all customers of chip manufacturer Silicon Labs. “Our chips are the building blocks in the electronic systems of vehicles, cell phones, TVs, modems, and other products you interact with every day,” says Mike Wier, senior information systems manager, Silicon Labs. “Our core expertise is designing semiconductor chips that convert information from the analog world into digital and back again.”

This expertise has enabled the company to stay on an upward growth curve ever since its foundation – a feat in the volatile semiconductor industry. Yet the limitations of the company’s IT system were becoming an increasing threat to its continued growth. The colleague who originally designed the legacy system and maintained it for many years was nearing retirement.

In 2004, this situation prompted Silicon Labs to start looking for an integrated enterprise resource planning (ERP) system to replace its custom legacy systems. “Our systems were built on an aging technology platform and needed to be either reengineered or replaced,” says Wier. “We chose the latter path.”

Silicon Labs began an evaluation process based on extensive specifications and a requirements catalog and eventually decided in favor of SAP. What prompted the decision? “In a nutshell,” says Wier, “the breadth of functions and higher levels of integration.” The ability to seamlessly integrate the SAP Customer Relationship Management (SAP CRM) application into the overall system was an enticing benefit.

Advice from ASUG

The next step was for Silicon Labs to become involved with the Americas’ SAP Users’ Group (ASUG). “We talked to other semiconductor suppliers that run SAP“, says Wier. “We learned a great deal about how they configured SAP software. Now we can return the favor by passing on useful tips and advice to other companies.”

He particularly appreciates the networking opportunities, the exchange of best practices, and the benchmarking activities that the user group offers. “In a lot of ways, ASUG is our contact with the outside world of companies that run SAP.”

Valuable: SAP Solution Manager

SAP Solution Manager proved to be a major help in both the planning and execution phases at Silicon Labs. The project team used its tools and templates to create blueprints, map business processes, manage scope change requests, and record and resolve project issues.

“Originally, we knew of SAP Solution Manager only as a landscape maintenance tool. We took the leap and learned to use it as our primary project management tool, our document repository, and our issue management system,” says Wier.

Complete transformation

SAP Solutions Implemented

  • SAP Customer Relationship Management (SAP CRM 4.0)
  • SAP ERP (SAP ECC 5.0)
  • SAP GRC Access Control
  • SAP NetWeaver Business Intelligence
  • SAP NetWeaver Portal
  • SAP Solution Manager

The project kicked off in July 2005, staffed by 17 Silicon Labs personnel and consultants from implementation partner Bristlecone. “From day one, we had the full backing of the steering committee,which included senior representatives from all key customer organizations,” says Wier. This project would bring substantial process changes to most of Silicon Labs’ operational personnel. Sales, purchasing, manufacturing operations, finance, and planning personnel would all need to relearn their jobs in the new system at the same time.

Things did not always go smoothly. As the project progressed, it became obvious that there were substantial differences between the SAP systems and processes and the legacy processes being replaced. “We wanted to avoid deviating from the standard SAP-supported processes as much as possible, without losing tried and proven business processes that had made this company successful,” explains Wier.

In the end, the company decided to make adjustments in manufacturing execution and quality assurance to meet its high quality standards and the specifications of its business as an original equipment manufacturer. These adjustments put pressure on the project timeline and budget.

The big-bang go-live took place in April 2007. “The month of April was extremely intense. It involved a big effort from the whole organization, and we wouldn’t have made it without the support of our colleagues in the business,” says Wier. His boss and the vice president of IT, Everett Plante, adds, “We can all be proud of what this team and the whole company achieved.” They can also be proud of the ASUG Impact Award, which Silicon Labs received this year in recognition of its successful implementation project.

ASUG Impact Awards 2008

The Americas’ SAP Users’ Group (ASUG) created these awards to recognize the achievements of members that have realized significant business results by running SAP solutions. Submissions are evaluated based on demonstrated success in the following areas: return on investment generated, strategic alignment to goals met, SAP product scope used, best practices developed, service improvements demonstrated, and the degree of innovation reflected in their approach.

ASUG gave out Impact Awards in the following categories: large enterprise, small to midsize enterprise, and public sector. Recent issues of SAP Spectrum have featured the City of Houston, Texas (public sector winner), and wholesale distributor Border States of Fargo, North Dakota (winner in the large enterprise category).

Sights set on an upgrade

Plante and Wier believe that this project has put Silicon Labs in a strong position to face the challenges of the future. The company’s production and sales locations around the globe are linked up in a single instance, and the sales pipeline and supply chain are always up to date.

But both managers express some dissatisfaction with the user interface, which they say is not sufficiently intuitive. At the same time, however, they see major benefits in the connection of sales using the SAP NetWeaver Portal component and SAP CRM and in the integrated financials and reporting functions. Moreover, the consolidated system landscape will make it less difficult to incorporate any future acquisitions. Plante comments that “SAP enables us to react to the needs of business and lays the foundation for further growth.”

To support and drive this growth optimally with IT, the company is already considering an upgrade to SAP ERP 6.0 and SAP CRM 2007. “We’re excited by the opportunities that the service-oriented architecture offers,” says Wier. “Above all, we’re looking forward to sinking our teeth into the enhanced range of functions.”

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