Good Contracts Build Trust

Feature Article | December 12, 2005 by admin

With over 5,500 employees, Nordsee is Europe’s largest seafood catering chain. About five years ago, the catering company split from the Logistics division, which was responsible for the Deutsche See wholesale company, to concentrate on consumer business. At that time, the two companies were closely interlinked in many respects, including with regard to their IT systems. The move meant Nordsee needed to find an independent and future-oriented solution, reason enough to look for an outsourcing partner to take over the running of the SAP R/3 components Finance (FI), Controlling (CO), Project System (PS), Investment Management (IM), Material Management (MM), Real Estate (RE), the component for human-resources, and the company-developed Management Information System (MIS). Michael Beckmannshagen, IT manager at Nordsee, says, “We decided to outsource because we wanted a high degree of standardization in order to improve the economic effectiveness of the IT services and bring transparency to costs and services. We also aimed to achieve higher security and availability, as well as more flexibility. We wanted to take advantage of the whole range of services offered by a professional IT service provider.”
The catering company chose BTC AG, with headquarters in Oldenburg, Germany. The costs and availability of SAP solutions, in particular, can be managed particularly well through outsourcing. Since 2003, certified SAP service and SAP hosting partner BTC has been responsible for basis and system management for Nordsee, as well as for all the computer center services associated with these applications.

Five tips for successful outsourcing

The experiences gained by Nordsee and BTC in such a sensitive area as outsourcing can also benefit other customers who are considering outsourcing similar services, as well as other outsourcing service providers. The two companies recommend five pillars for outsourcing projects: a preliminary cost check, a forward-looking formulation of the contract, regular review meetings, and the involvement of customers in the technology changeover. Finally, a long-term partnership enables both parties to exploit additional synergies.

1. Preliminary outsourcing check

To simplify the decision to outsource IT services, BTC offers new customers a free outsourcing check, during which the IT consulting firm assesses the company’s hardware, software, databases, and infrastructure and provides a cost estimate for running the SAP infrastructure. BTC then evaluates this information together with the customer. As a result of the check, which takes approximately two person days, the service provider gives the prospective customer an individual outsourcing offer. “On the basis of the check, we recommended that Nordsee switch from Unix to Windows 2000, for example,” states Lars Austermann, Key Account Manager at BTC. This thorough analysis of the IT infrastructure was an important plus point that helped Nordsee choose its service provider.

2. Contracts with a view to the future

When formulating the contract for the service level agreements (SLA), both parties should take the time to consider as many eventualities in possible, including those relating to future goals. “Not every technical problem can be foreseen,” warns Austermann. Before concluding the contract, both parties therefore invested a great deal of time in defining clear agreements for problem, escalation, and change management. The service level and specific procedures for providing proof of the service are defined in the contract. Every quarter, BTC provides verification of services performed and thus helps the customer achieve its quality targets. For example, Nordsee and BTC defined maximum downtime and availability, as well as performance for each SAP transaction. The response time must be less than two seconds, for example. All important processes are monitored by BTC around the clock, with predefined remote monitoring of all servers. At the start of 2005, the Human Resources (HR) and FI/CO components were migrated from SAP R/3 4.6 to SAP R/3 Enterprise. This was also part of the original contract.

3. Regular review meetings

To keep Nordsee up to date, a team consisting of BTC representatives and Nordsee IT specialists meets every three months for regular review meetings. In these meetings, the partners discuss the service provider’s new technical developments and the customer’s service requests, and also take a look at the agreed service levels. For this, BTC provides the service level report, a detailed report containing the hard facts, namely an overview of the average availability of systems and services as well as the response times. Of course, the customer is also interested in the maximum downtimes and the reasons for these. The meetings enable misunderstandings to be eliminated quickly and measures to be implemented to prevent unwanted developments.

4. Involvement of customers in technology changes

The growth of the IT systems and manufacturer-driven release updates mean that earlier or later, IT customers will have to change their technology. Future-oriented outsourcing partners must involve their customers in these changes at an early stage. Nordsee has experienced greater expansion over the last three years, and the catering chain expects an ever higher degree of flexibility and ability to react. To help its customers overcome these greater challenges, BTC implemented SAP Solution Manager in the summer of 2005. This tool helps the outsourcing provider now manage more complex SAP environments, such as that used by Nordsee, from a single point. The advantage for customers of central monitoring is that sources of error can be pinpointed even more quickly and eliminated across all systems.

5. Long-term partnership creates synergies

Partnership in several projects offers synergies in further project planning for provider and customer alike. After the positive experiences gained in the outsourcing of its SAP applications, Nordsee commissioned the SAP hosting partner for other SAP projects too. For example, at the start of 2005, BTC set up the ELSTER procedure for electronic preliminary sales tax returns. The tools used for this are SAP Business Connector, an interface between the tax offices and the SAP systems, and SAP Cryptolib for the encryption of sensitive HR data.
In the most recent project, electronic invoice processing, under way since May 2005, Nordsee has also been closely involving BTC in issues relating to internal enterprise organization. To map the whole invoicing run, the SER electronic archive and Lotus Notes workflow needed to be integrated in the SAP infrastructure. Invoices, which were previously processed and archived as hard copies, are now scanned in the inbox and entered in Accounting. They then enter the approval workflow and return to Accounting, where they are stored and the invoice amount is assigned. The necessary modifications to the infrastructure ran smoothly, the number of errors was reduced, and the test phases needed before go live were extremely short.

Now, a good two years on, Nordsee has achieved its outsourcing goals in all respects. IT manager Beckmannshagen would make the same decision again in an instant. “The pressure on the IT budget has been reduced, and costs for running SAP almost cut in half. All agreed service levels have been more than achieved.” He has even announced an extension of the cooperation in future in the form of a strategic partnership. Austermann offers a though-provoking summary: “Outsourcing is not really a difficult business. Differences of opinion can always arise during projects, but communication at eye level, faultless quality, and consistent service have provided a healthy basis for trust, enabling us to establish a real partnership with Nordsee.”

Angelika  Eckert

Angelika Eckert

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