ERP, a key success factor in IT implementation

Zatni Arbi, Columnist, Brisbane, Australia, zatni@cbn.net.id

A story has been going around that some Garuda Indonesia passengers got extremely enraged recently when they arrived late at one of the airline's airport check-in counters, to find that their plane had taken off exactly on schedule.

They said they would take legal action against the airline, which is Indonesia's flag-carrier, since the missed flight had caused them losses worth billions of rupiah in project contracts. While such claims may have been ridiculously exaggerated, the story shows how bad Garuda's track record had become in adhering to its flight schedules.

The track record has obviously changed for the better, along with the rebound of the company's bottom line. Not only its on- time performance rate in 2000 rose to 89.3 percent, as reported in the Sept 20, 2001 edition of e-business weekly magazine Warta Ekonomi, but it also turned itself into a profitable state-owned enterprise. Although it still has a long way to go, this is no small feat, given the notoriety of its corruption, collusion and nepotism not so long ago.

Garuda's management unanimously attributed the accomplishment of the seemingly impossible mission to the improvement of operations in its IT implementation, in addition to a slew of other measures in business process reengineering. Not surprisingly, for the last year or so, Garuda Indonesia has been one of SAP's greatest success stories in Indonesia, as it was this German software company's enterprise resource planning (ERP) system that helped make it all happen. Garuda is just one of around 75 customers that SAP currently has in Indonesia, most of which are large companies in the telecommunications, manufacturing, banking, oil and gas and retail sectors.

SAP AG has undeniably been the all-time leader in the ERP software market. Its R3 ERP system, to be updated next year into R3 Enterprise, has been on top of the wish list of companies trying to integrate all the systems across their enterprise, including finance, accounting, procurement, human resources, supply chain, distribution, sales, etc.

For the last three years, SAP has placed more emphasis on its mySAP.com solutions, which are geared toward providing an enterprise e-business platform. MySAP.com is an open-standard- based infrastructure with the technology capable of integrating disparate systems across the entire enterprise, including its portals, Web services and exchanges. SAP's industry solutions running on this platform include Enterprise Portals, Supply Chain Management (SCM), Customer Relationship Management (CRM), E- Procurement, Product Lifecycle Management (PLM), Business Intelligence (BI) and Financial and Human Resources.

There are certainly other software companies that have been fighting with SAP for a bigger share of the ERP pie. Chief among these are Oracle, JD Edwards, Baan, Siebel Systems and PeopleSoft. Smaller vendors that target the ERP mid-market include Microsoft Great Plains and IFS, for example. SAP is one of the IT companies that seems to have defied the global downturn within IT markets. As announced by Henning Kagerman, the company's co-chairman and CEO, SAP AG had a 23 percent worldwide growth in the third quarter of 2001.

Every year, SAP holds a series of events called SAPPHIRE in various regions of the world, in which customers and partners who help implement the systems can learn new features and technologies that this 29-year-old software company has to offer. I was lucky enough to be invited, along with two other IT journalists from Indonesia, to this year's Asia Pacific SAPPHIRE, which was held in the charming city of Brisbane, Australia, from Nov. 19 to Nov. 21.

Attended by over 2000 people, including 62 from Indonesia, the event featured keynote speeches, exhibitions, tutorials and, of course, a Gala Dinner. To me, there was one important announcement made during the media conferences. Indonesia, it turned out, has been doing better than the rest of the regional market, despite the economic slump. With a total revenue exceeding US$ 20 million this year, the Indonesia market has become SAP's fifth-largest in the Asia Pacific region, up from sixth last year.

"The reality in Indonesia is not what you see on CNN," said Krishnendu Datta, SAP's managing director for Indonesia, in a news conference that followed the keynote speeches. His comment certainly helped spread a far more positive image of Indonesia to the region, where the general picture is of a country plagued with political uncertainty, violent demonstrations, widespread instability and a sluggish economy that is stuck in neutral.

As the cases of Garuda Indonesia and many other companies around the world have shown, a total commitment to change is the key success factor in ensuring that IT investment, not least of which, ERP deployment, will bring the expected results.

Companies that do not seriously implement their ERP are usually those that do not really want to turn themselves into efficient organizations. Not surprisingly, we have some of these in Indonesia.

For example, one of our state-owned enterprises seems to be taking an incredible amount of time just to decide which hardware company it should go with, despite the fact that it signed a contract with SAP some time ago. The delay in making such a relatively simple decision inevitably leads one to suspect that this company is actually trying to postpone the closing of the window of inefficiency before the new system patches most of the leaks, once and for all.

An enterprise solution -- whether it is mySAP.com or a solution from another ERP vendor -- will not work unless the organization as a whole is completely ready to adopt transparency, good corporate governance and efficiency.

"What will you do if, halfway along the line, you find out that the organization is not truly willing to abandon its less- than-scrupulous practices?" I asked the soft-spoken and very friendly Henning Kagerman during a group interview. "We simply withdraw," he said. His answer said it all.