Software switch to boost business

By ADAM GIFFORD

Redeal Logistics, which bought Telecom New Zealand's component and product supply business, has gone with SAP's new-generation mySAP.com software to give it electronic commerce capability.

The company supplies cables, switches, connectors, duct pipe, fibre optics and other equipment to Telecom, Clear, Telstra Saturn and their contractors. It is a $30 million a year business.

General manager Brian Kerr said upgrading from SAP R/3 to mySAP.com is expected to result in a 20 per cent reduction in inventory costs and a 10 per cent cut in the cost of order processing and fulfilment.

"The system will be a major strategic platform for business growth in New Zealand, and will also serve as a development pilot for our parent company in overseas markets," said Mr Kerr.

The company is a division of Redeal Limited, which is the New Zealand arm of the world's largest distributor of data, electrical and communications products - the Rexel Group, based in Paris.

Business development manager Darrin Hughes said that when Redeal bought the Telecom business last October, it bought licences for the existing SAP R/3 system and copied over the Telecom configuration.

The existing system was "Telecomised - tweaked for the needs of their business."

Redeal weighed up whether it should get a third party e-commerce product to integrate with its SAP back end, or invest further in its existing system.

"Upgrading to mySAP.com gives us the e-commerce capability we want and offers customer relationship management and supply chain planning and management," said Mr Hughes.

By upgrading to R/3 version 4.6C and switching to a mySAP.com licence, Redeal is able to get a less-customised, standardised version which needs lower-maintenance while adding business-to-business e-commerce capability.

Phase one will involve web enabling existing business by Christmas. Phase two is integrating with suppliers.

Mr Hughes said the upgrade would cost "in the low hundreds of thousands" as the amount Redeal paid for its R/3 licences was discounted against the new system.

He said integration was a key factor in the decision.

"MySAP.com offered us a suite of middleware we would otherwise have to buy independently." Because it was all SAP owned and integrated, a huge range of tools would not be needed when they upgraded. "Redeal is wall-to-wall SAP."

He said SAP was used by a significant number of Redeal's existing customers, including Telecom and Telstra Saturn, which would support the next step in the business.

The CRM module of mySAP.com will be used to turn the multiple channels between Redeal and its customers into a single environment which can be accessed directly online, through a call centre or by a field representative.

Its business-to-business software will be used for setting up online catalogues.

Redeal's customers and partners will be able to bolt on their own e-commerce systems, including those from Ariba, Commerce One or Oracle.

SAP's business warehouse module will capture and analyse data such as customer spending patterns.

Redeal will use SAP's APO (Advanced Planning and Optimisation) supply chain software for demand forecasting, which can help to improve stock management and delivery times.

Mr Hughes said Redeal wanted to reduce its turnaround time for orders from 24 hours to four anywhere in the country. That means allowing suppliers electronic access to its inventory systems, and having similar visibility of customer needs.

SAP's New Zealand manager, Viv Gurrey, said Redeal had a clear vision of where it was going as a company.

"SAP has been seen in the marketplace as a large system for large companies. This sale indicates where e-business is taking software and industry. It's levelling the playing field."

Under the mySAP.com pricing strategy, customers pay a licence fee to use almost all SAP's software, instead of paying separately for each module, as well as a per user charge.