Every company has products – office equipment, tools, computers, and computer accessories – that it bought, but used only briefly or not at all. And retailers warehouse a variety of products like mobile telephone, electronics, or measuring devices that are close to the end of their life cycle. In both cases, storing these products requires space and costs money. And manufacturers no longer actively market end-of-life products. These products are usually sold at some point at a fraction of their original selling price to brokers or traders. Or they are simply thrown away. Both options mean lost business.
The business model behind Vertixx was born in this gap. What would happen, the founders wondered, if we functioned as a sales agent and sold remaindered goods or products at the end of their life cycle on the Internet? Say online and auction platforms like amazon.com, ElectronicScout 24, or eBay? “We wanted to bring the products to the customers, not the other way around,” says Michael Münzer, director of online sales at Vertixx, pointedly. The idea for the business model arose in a business plan competition initiated by Deutsche Telekom in 2004. The name Vertixx is derived from the business model and a colloquial German word for selling.
Start-Up Without Tested Business Processes
Vertixx has been active in the market since April 2005 and belongs to Deutsche Telekom. Current offerings include products from several categories: audio and stereo equipment, computers, cameras and camcorders, mobile telephones, PDAs, TVs, video, electronics, and measuring devices. At the beginning, the company worked with Microsoft Excel workbooks and solutions based on Microsoft Access. “But that approach quickly proved inadequate to realize and operate our business idea successfully,” explains Miguel Bleickert, IT project director at Vertixx. “That’s why we needed software that mapped our processes efficiently and transparently.” And as a start-up, Vertixx did not yet have proven, time-tested business processes. “Our processes could have changed quickly at any time. That’s why we needed software that could immediately be adjusted flexibly when such changes occurred,” says Bleickert about the requirements. For example, Vertixx at first accepted products on commission, but then changed to purchasing inventories. Each of the two approaches required the definition of different information and material flows.
The company also had to be able to integrate software tools easily – like the auction planning and settings tool from ChannelAdvisor. Another sticky point was that the company’s employees had to be able to access the company back-end system easily from various locations. Last, but not least, invoicing and accounting had to be transmitted for processing to the SAP solution at Deutsche Telekom over an interface. “When choosing software, we had to make sure that our choice would integrate with the existing SAP solutions without any problems and that other software tools could be integrated easily,” summarizes Bleickert.
Integration Is the Trump Card
Based on this requirements profile, Vertixx evaluated various solutions, among them SAP Business One, Navision, and myFactory. “We decided on SAP Business One because it best enabled the realization of our business model in terms of software and technology and because the software is a secure investment,” say Bleickert. “And SAP Business One also had the best price-performance when compared with other solutions.” Another consideration that spoke for the SAP software was the opportunity to use Intrexx Xtreme portal software from United Planet as an integrated add-on solution. The product allows the sales staff to access the appropriate functions in SAP Business One over a uniform portal interface, to obtain complete sales reports, and to manage sales activities.
Vertixx entrusted the implementation of SAP Business One to an SAP partner, T-Systems, which, as the general contractor, was responsible for the project technically and financially and which coordinated the work of other service providers that participated in the in project, like Versino, another SAP partner.
T-Systems linked SAP Business One to the Intrexx Xtreme portal – the first time such a link was performed on the market – and successfully hosted both solutions with its Business On(e) Demand procedure. “We’re particularly proud that we successfully integrated the Intrexx Xtreme portal with SAP Business One and that we were able to operate the entire solution in T-Systems’ midsize computer center in Hamburg, Germany with out special hosting procedure,” says Roland Heun, the project manager responsible for the project at T-Systems.
Hardly four full months elapsed from the invitation for bids in September 2005 to the solution’s go-live in mid-December 2005. The add-on solution from United Plant was handled in a subproject and went into operation in November 2005. IT project manger Bleickert praises the “outstanding collaboration with T-Systems” and the company’s services after the start of production. Approximately 25 users currently work with SAP Business One and with Intrexx Xtreme.
Central Access and Centrally Managed Information
Thanks to SAP Business One, the young company now has thin business processes from sales to the delivery of goods to customers. “The SAP software also creates a great deal of transparency into our processes,” reports Bleickert. The typical sales process is a good example. Employees create customer or vendors in Intrexx Xtreme and control delivery management and activities clearly with a uniform portal interface. If sales has a contract for a specific number of items – like computers or camcorders – the items are first created in the add-on from United Planet. They are they transferred to SAP Business One, where they are managed centrally.
In addition to simple maintenance of item descriptions, employees also maintain the information specifically required for online sales: sales texts and pictures. SAP Business One transfers the completed item data to the auction planning and settings tool, where the last auction-specific settings, like one-euro or fixed-price offers, are made. Vertixx the places the item on the appropriate platform and offers it for sale or auction.
At first, the items had to be created and managed in several data sources and documents. This maintenance now occurs centrally. With SAP Business One, Vertixx has not only reduced the effort needed to maintain item data, but has also minimized a source of errors. If additions or corrections are needed, Vertixx employees simply call up the related data record and enter the changes. This approach guarantees current and uniform price information throughout the entire sales process at all times.
SAP Business One has also shortened the process of creating invoices. The required data records are no longer transferred manually; instead, they are handled automatically. “Because we sell items only against advance payment, the related transaction data runs over an interface from SAP Business One to the SAP solution in the central accounting office of Deutsche Telekom,” explains Bleickert. That location also monitors incoming payments. When a customer makes a payment, Vertixx is notified. SAP Business One processes the payment and triggers additional process steps. The invoice is created and the warehouse is told to deliver the products that have been purchased.
“With SAP Business One as the central data and information hub, we can best realize the Vertixx business model,” summarizes Bleickert. “And the SAP software is so flexible and scalable that we can quickly realize any potential changes to and enhancements of the business model.” Such changes include additional automation of warehouse and logistics processes. Vertixx is also considering introducing a logistics solution, Warehouse One from SAP partner Swisslog, as an integrated add-on solution to SAP Business One. “We already have the appropriate licenses” concludes Bleickert.
Additional Information: www.t-systems.de