SAP Business One supports growth for East African steel merchant

NairobiNairobi – [September 2008] – Experiencing a sustained growth in its turnover together with increasing operational complexity, successful Kenyan steel company Tononoka Steels selected the SAP Business One enterprise resource planning solution to support its expansion. As a first time user of an ERP system, the company has subsequently benefited from improved information availability, reduced stock holding and more efficient business processes across its operations.

Headquartered in Kenya’s capital city of Nairobi, Tononoka Steels Ltd manufactures and trades in a range of steel products for the construction and related industries, handling up to 30 000 tons of the material every year. As the East African country’s first SAP Business One site, the company successfully deployed and commissioned the enterprise resource planning software in early January 2006. Since then the US$28-million per annum concern is benefiting from an integrated system which delivers critical business information to decision makers with a high degree of precision and without delay.

Tononoka Steels CEO Mr. Sathyamoorthy confirms that the primarily motivation for considering an ERP solution related to the growth of the business. “An expanding company brings with it problems relating to effective management,” says Sathyamoorthy. “In particular, as the business grows, it is essential that directors have access to accurate information at the right time.”

Prior to its search for an appropriate ERP package, Sathyamoorthy says the business relied on a simple accounting package. “This had reached its limits; we sought better tools to manage information which would provide for the sustained and controlled growth of the company, without losing management control or compromising customer service. Our research confirmed that an ERP package would meet this need.”

Partner selection

The company had conducted a diligent and thorough assessment of available options before engaging with solutions provider Infinium Technologies. “As a manufacturing concern, it came down to two choices: a package from an Indian company, which was strong on the manufacturing area, and SAP Business One. As the strengths of SAP Business One lie in information exchange and while it was the more costly of the two, we opted for the solution which best supports management information.”

Infinium Technologies managing director Mr. Manian says when his company first engaged with Tononoka Steels, it found a company which had already conducted extensive research into available options. “The directors were clear on what was required from an ERP system,” he says.

This is something of a rarity in a company considering ERP for the first time, Manian adds. “Tononoka had already mapped its business processes and showed what it wanted from the ERP system in terms of approvals and workflows. This was a critical step that contributed to overall project success; clearly, the company directors had conducted their research and fully appreciated the scale of the deployment,” Manian continues.

He says the evaluation showed that SAP Business One provided the closest fit. “We went through a complete demonstration and found that SAP Business One provided complete authorisation and approval processes and workflows while the CRM module was very well perceived. This added to the general functionality of easy document exchange,” Manian explains.

Noting that no business project of any consequence is without its challenges, Sathyamoorthy says the major obstacle was the import and cleansing of the company’s data from previous business systems. “As a smaller company which had not had any prior experience with ERP, our approach was a cautious and considered one. As a result, the implementation process did take longer and we ran our old systems in conjunction with the new for some time, but the risk to our business was effectively mitigated,” he explains.

Cultural fit

He says the Infinium implementation team also initially had some difficulty relating to Tononoka Steels’ inexperience with ERP. “It was a hard time initially, but once the team accepted that we needed guidance, it was willing and able to provide the support and help our people to get to grips with what needed to be done to get things moving faster.”

As a result, Sathyamoorthy advises other companies moving to ERP for the first time to select their implementation partner with the same care as they apply to the choice of the ERP package. “It is important to be prepared for the changes in processes and actions which will be performed by staff. Together with Infinium, we played the necessary roles and managed to cross the bridges to achieve a successful deployment.”

Preparation, Sathyamoorthy stresses, is of critical importance for a successful SAP project – as is the commitment of the executive team. “We still have some minor issues which are being ironed out by SAP and Infinium; both organisations have demonstrated their commitment to ensuring that we achieve optimal value from SAP Business One.”

One of these issues relates to the cost of licenses, which is the same whether the user is purchasing clerk or a ‘power user’. Manian says the concern has been addressed by SAP in its latest license offering. “Providing value is a prime concern for SAP, hence the willingness to respond flexibly to customer requirements,” he says.

Manian adds that, driven by executive involvement, Tononoka Steels involved its finance and technology staff for the execution of what is essentially a business-oriented endeavour. “There was a high level of cooperation between the teams which supported the successful configuration and implementation of the solution,” he confirms.

A better run business

Noting that as a first-time ERP user, Tononoka Steels’ directors opted for a meticulous implementation rather than a hurried job, Manian says the existing systems were run in tandem for 6 months before switching over to the new system. “This is a very sensible approach which the directors opted for as they did not want to put the company at risk by upsetting operations.
“That said, the company’s users were very quick to understand the functionality; particularly at the executive level where the need for reports and information was highest,” Manian says.

The patience and attention to detail in the planning and implementation of its business software has paid dividends for Tononoka Steels. “Generally, we have seen an improvement in that business processes are executed better and faster, with a particular benefit in that information availability – such as stock levels, order status, sales figures – is really good. Our sales force, for example, is really happy with the system as we are able to execute orders from the minute they are signed, while the reports they receive are very helpful,” says Sathyamoorthy. In addition, he says the sales force appreciates the ready availability of detailed information on the customers, which helps them to provide service excellence to the company’s 400-plus clients.

In addition, the company is benefiting from tighter inventory control and has full visibility of its procurement processes. “Approvals and alerts are built into the systems and take place in real time; with our previous system, we would only know if there was a problem after the fact,” says Sathyamoorthy. “The system enforces our business rules; in short, it has transformed our operation and leaves us ready to continue growing our business while serving our customers well.”

About SAP

SAP is the world’s leading provider of business software (*), offering applications and services that enable companies of all sizes and in more than 25 industries to become best-run businesses. With more than 47,800 customers (excludes customers from the acquisition of Business Objects) in over 120 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol “SAP.” (For more information, visit www.sap.com)

(*) SAP defines business software as comprising enterprise resource planning and related applications.

For more information, press only:
Faye Epstein, Ogilvy Public Relations, faye.epstein@ogilvypr.co.za +27 11 709 9609, +27 82 461 1442