Rakon goes live with SAP system

By ADAM GIFFORD

Crystal oscillator manufacturer Rakon has abandoned attempts to build its own enterprise management software and has gone live with a system from German vendor SAP.

General manager David Grant said some parts of the home-grown system were finished, but there was no end in sight.

"We finally came to the realisation the effort required to complete it was so considerable we were never going to get everything done."

The privately owned Mt Wellington company supplies oscillators used in more than half the world's GPS devices, as well as specialised crystals for cellphone and radio networks.

Grant said there had been enormous growth in the volume of oscillators produced, but because they were a commodity, revenue had grown at a slower rate.

"Our only real competition comes out of Japan. Then there is a long gap to other companies in terms of performance and quality.

"Some of those companies are bigger and economies of scale are a factor, so that is why Rakon wants to grow," he said.

The company initially excluded SAP from its shortlist of potential partners, believing it too costly.

"We were using an internet site for evaluation, and when we put in our business, staff numbers and revenue, it kept coming up with SAP, so late in the evaluation we put it under the microscope.

"It [SAP] was able to address a lot of the complexities of the business without modifications, and the licence meant you buy the whole system even if you don't integrate it immediately," Grant said.

Financial and related modules went live this month after a three-month implementation. Work will start next month on installing the manufacturing modules.

Nick Mulcahy, from system integrator Intelligroup, said Rakon bought SAP All in One, which uses pre-configured templates to control costs and implementation times.

The cost of the 80-seat system is less than $500,000.

"SAP has best practice for high-tech, which is a key advantage in being able to offer a set price. It's not quite plug-and-play but close to it," Mulcahy said.

"Rakon is on a massive growth curve and needed something that would grow with it."

He said Intelligroup had noticed growing interest in SAP solutions.