Korea is home to around 30,000 small and midsize businesses (SMBs). Together with large conglomerates, SMBs are the engine that drives the Korean economy. A closer look at these companies reveals that the majority of them are small, family-run enterprises that favor simple procedures, such as accounting with Microsoft Excel. Most activities are performed manually without the aid of dedicated IT systems.
Many of these companies, however, collaborate with global players that use SAP solutions and an IT system would facilitate collaboration with them enormously. There is a plentiful supply of computers and networks in Korea, but implementing an effective IT landscape does not seem to be a priority for Korean SMBs. Why is this? And why is it different in Europe?
Five Korean journalists set out to investigate how things are done in SMBs in Europe. They took their experiences back with them to Korea and reported on them in leading publications there, offering local business a fresh perspective and some thought-provoking new ideas.
Kick-off in Germany
The tour started at SAP headquarters in Walldorf. Hans-Jürgen Uhink, senior vice president in charge of SMB Field, outlined SAP’s overall strategy for SMBs. Jesper Lindhardt focused in more detail on mySAP All-in-One, and Jürgen Kleinsteuber introduced SAP Business One. The highlight of the day was an interview with SAP CEO Henning Kagermann.
By the time the journalists were ready to board their coach to Bielefeld, Germany, it was already late afternoon. That very night they burned the midnight oil to send their first reports home to Korea.
The next day began with a visit to itelligence. itelligence is a world leader in end-to-end IT services for SAP solutions, in particular services solutions for SMBs. As such, the company is an important partner for SAP strategy. itelligence implements and supports mySAP All-in-One solutions and also resells SAP Business One. Only 8 percent of the company’s business is generated by software developed in-house (principally for itelligence’s own industry solutions). The lion’s share of the company’s business (92 percent) relates to SAP solutions.
For example, one itelligence customer, pipework system manufacturer Jacob Söhne GmbH & Co., has its headquarters in Porta Westfalica, not far from the itelligence site. Jacob has been using SAP solutions since 1997 and is one of itelligence’s customers. The proximity of the two locations presented an ideal opportunity for the journalists to spend an afternoon at a customer site, have a look round and ask the customer directly about their experiences with the SAP software. The press tour participants were particularly eager to see the SAP solution in action. “We would like to see how these products are used in the real world,” said Song-Hun Joe from The Digital Times. So, when a clerk demonstrated how she enters orders in the SAP system and the subsequent processing steps, she suddenly found herself surrounded by cameras and at the center of a flurry of activity.
The question everyone wanted answered was: What did the SAP solution replace and what benefits have been realized? Lothar Schueler at Jacob prefaced his answer as follows: “We realize that computers hold the key to our future. We encourage our executives to get to grips with computers.” Twenty years ago, the company installed the Siemens COMET system, which is based on the UNIX operating system, to handle its entire resources management. Although the term enterprise resource planning did not exist back then, it was a forerunner to the ERP systems we know today. Around 1997, the need for real-time data processing grew, and their old system became outdated, so the company adopted software from SAP. “Since we began using the new system, we have been able to cut corporate management costs by 12 percent. In 1998, we went global and opened offices in Italy, France, England, and the United States. This would not have been possible without a real-time ERP system.”
Winning them over in Spain
To ensure the journalists did not go home with a one-sided impression of European business from Germany only, the itinerary included a second European country, Spain. The group took a short flight from Hanover, Germany to Barcelona.
In Barcelona, the press tour visited the SAP partner Grupo Seidor. “When the homecoming queen asks you to dance, you’d be a fool to refuse,” explained Alejandro Daniel, when asked why Seidor entered into a partnership with SAP. As in Korea, the majority of SMBs in Spain are family-run. Owners decide how profit is reinvested, and they are often torn between a number of desirable investments, with a state-of-the-art IT solution just one of many. It takes a lot of persuading to win an SMB over to implementing an SAP solution. But once a small company has taken the plunge, the relationship with SAP is usually a loyal one. “It’s like a marriage,” quipped Alejandro Daniel. “You choose once and you stay – otherwise it costs you money.”
Grupo Colomer, a leather manufacturer founded in 1972, is a Seidor customer that has taken that plunge. The company has been using SAP software for two years now and is very satisfied. It was more than happy to open its doors to the Korean journalists. Colomer started out as a small artisan operation and today boasts seven factories in four countries. Each year, the company receives approximately 11 million animal hides direct from the abattoirs, which are turned into leather and then sold.
In 1999, Colomer decided to implement ERP software. SAP offered the product most capable of meeting the company’s complex requirements, with the most complete and suitable functionality for its needs. Once Colomer had decided on SAP software, the next step was to find the right consulting partner. This was quickly identified as Seidor, who provided able assistance during the implementation and continues to be responsible for the entire service and support of Colomer’s SAP software.
“Before we installed ERP, all the factory systems were managed independently at their respective locations, so an integrated administration of main office, branch office, and overseas factory was not possible,” said an officer from the company. “For small and midsize businesses to be successful and grow, they must venture into overseas markets and forge partnerships with bigger companies, and we believe the ERP system has played a vital role in this regard by maximizing management efficiency.”
After assimilating the mass of information gathered over the previous three days, the journalists finally unwound with a flamenco show and sightseeing tour of Barcelona the next day, before heading back to Korea.
The journalists declared the tour a huge success. Dae-Young Lee of Sisa Information Technology thanked the organizers with these words: “This was a great opportunity to see what kind of strategy SAP deploys on the market, how ERP benefits European SMBs and what lessons SMBs in Korea must learn.”