Most companies can only dream of growth rates of 25 percent, but that’s the reality for Solutions Products Visions AG (SPV) in Munich. The IT service provider made a name for itself managing SAP projects and special supplemental solutions for midsize and large companies. Its list of clients includes Siemens, Bosch, and Osram. In fiscal year 2007, SPV will increase its sales by 25 percent to over 20 million Euros.
The company wants to continue growing at that rate. It plans to increase the number of consultants it employs from the current 65 to 150 and the number of freelancers it uses from 110 to 150.
Growing beyond legacy IT
SPV’s IT systems have not kept pace with its rapid growth. For eight years, SPV used SAP R/3 software and special supplemental programs for project management, but found itself at the limits of what its IT systems could support. The increase in business meant that SPV had limited internal resources and no time to modify its existing environment. “We outgrew our own supplemental development for SAP R/3,” says Wolfgang Braun, SPV chairman of the board.
Legacy applications could handle only simple projects that settled services according to the effort expended. But the company’s growth had added new types of projects to the business: fixed-price projects, projects with milestones, and partial services. The new types of projects make it easier to keep within budget and to synchronize the budget with degrees of completion. SPV often links invoicing to the achievement of partial goals. Some project services are not billed separately, but are paid for with a flat fee as part of a service agreement. The legacy systems only partly supported maintenance contracts and service-level agreements, which created extra management and accounting work.
Releasing the brakes
To avoid putting the brakes on its growth, SPV looked for new business software. It chose a qualified SAP Business All-in-One industry solution, All for Service, from Mobile Consulting & Services, a sales partner of All for One Midmarket Solutions & Services GmbH, which specializes in SAP solutions for midsize companies. “With the new solution, we primarily wanted to support our expansion without adding more personnel for management and internal development. At the same time, we wanted to avoid media breaks and eliminate redundant data storage. We also wanted to optimize operating processes and implement comprehensive and integrated development,” says Braun, listing the most important goals of the project.
SPV wanted to provide comprehensive support for purchasing, order and project management, activity recording, invoicing, and controlling. Optimization of business processes included the automation of manual processes, such as orders from freelancers and the alignment of vendor and customer invoices. SPV also wanted an invoice preview that would display the invoiced items and amounts along with the funds disbursed to service providers at the touch of a button at the end of a month.
Shortened throughput times were also a goal: all invoice-relevant information needed to be available on the third day of the following month, rather than the middle of month as had often been the case. SPV wanted to produce invoices ten days earlier than in the past so that it could accelerate incoming payments. And SPV also required rapid availability of pretax information.
A new heart
The project team consisted of six young SPV consultants, who had been trained and supported by Mobile Consulting & Services. Chairman Braun and board member Ludwig Hüfner originally kept their distance from the project, but they soon became more involved. Looking back, both say that it would have been better to have been more involved from the beginning. After all, the new software would be the heart of their company.
The team implemented SPV’s requirements in the qualified SAP Business All-in-One partner solution based on the SAP ERP 6.0 application within the available budget. For the most part, the team adhered to the schedule. Implementation was delayed by only one day. “At the beginning, we gave ourselves extra time. Looking back, the implementation could have taken only four months,” says Hüfner, the board member responsible for marketing, sales, and product development.
Cutting costs right away
The industry solution went into production in June 2007 and was available to all users with a Web client. The list of advantages provided by the new software is long. The board can quickly call up information for various forecasts and the project pipeline and immediately see where the company stands in terms of sales, costs, and revenues. And that means that executives can also forecast how things will develop in the future.
The new solution has enabled the service provider to significantly cut costs right away. SPV now submits its sales tax summary report on time to the tax authority. Because it no longer has to ask for extensions, it saves the special advance payment – up to 11 percent of the previous year’s sales – that the tax authority demands when a company applies for an extension. “We can do that only because of complete integration. I don’t know of any other solution that does all that,” says Hüfner.
ROI in less than one year
The new solution reduces administrative effort and saves the company from having to add employees in that area. If it had stayed with the legacy system, the company would have needed more IT employees. Instead, SPV saves one or two annual salaries and additional costs. Faster invoice creation has added other cost and interest advantages. Invoices are now created ten days earlier than before, which has accelerated incoming payments.
The new solution also creates more transparency. All services that have been provided are visible at a glance and can be settled right away. That ability is an indirect plus for sales. In the past, failure to enter times and missing transparency meant that the services of external employees could be referenced, but not billed to customers. And when a project demanded more effort than planned, the missing revenue placed even more of a burden on the margin. All for Service now enables a seamless overview that makes these kinds of discrepancies among projects and consultants quickly apparent. Project managers can then easily and reliably settle the services provided among customers and consultants.
SPV assumes that cost savings and advantageous interest will enable it to amortize its investment in All for Service in less than one year. For Braun, one thing is clear. “With the new SAP Business All-in-One solution, we are fit for the future and for further growth.”