ERP, a key success factor in IT implementation

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.