Customer Solution Case Study
/ / Process Engineering Company Strengthens Market Position with Integrated Business Management System
Overview
Country: Denmark
Industry: Manufacturing
Customer Profile
GEA Group’s Danish-based Process Engineering Division specialises in engineering process plants for food, chemical, and pharmaceutical industries, designing and engineering factories worldwide.
Business Situation
GEA’s Process Engineering Division was held back by an aging business management system, which did not support business processes, integrate information, or provide a complete view of the business.
Solution
Helped by Microsoft® Gold Certified Partner Watermark Europe, GEA’s Process Engineering Division implemented a new business management system using Microsoft Business Solutions–Axapta®.
Benefits
n Better project management
n Increased collaboration
n Easier and reduced reporting
n Improved total cost of ownership
n More satisfied customers / “Microsoft Business Solutions–Axapta most closely met our requirements. Its ability to provide a global, integrated solution that scales to our smallest operation was vital.”
Christian Bentzen, Vice President and Chief Information Officer, GEA Process Engineering Division
GEA Group AG, formed after the merger of the German companies MG Technologies and GEA AG, operates more than 250 companies in 75 countries, with a turnover of around €5 billion (U.S.$5.9 billion). Its Process Engineering Division headquartered by Niro A/S in Denmark had many aging technology systems in its various locations, which was failing to meet the needs of the business. It wanted a business management solution to integrate its divisions and support key business processes worldwide. Despite competitive pressure from GEA Group’s head office to choose SAP, GEA P-Division selected Microsoft® Business Solutions-Axapta® to integrate its business information systems. A co-ordinated roll out encompassing more than 2,500 users across many locations is currently being implemented. With help from Watermark Europe, P-Division is now expecting to increase its efficiency, cut costs, reduce risks, and strengthen its market position.
Situation
Process Engineering Division (P-Division) is one of the nine major divisions within the GEA Group, which develops, designs, and engineers process plants for food, chemical, and pharmaceutical industries internationally. It comprises several companies acquired over the years, with ambitious plans to acquire more. Throughout its 52 subsidiaries located in all parts of the world, it currently uses more than 30 different business management systems.
GEA P-Division decided its aging business management systems were no longer supporting the business adequately. Without a common enterprise resource planning (ERP) system, the division was incapable of integrating information and automating business functions to give an overview of the business.
Reporting was a cumbersome process with considerable manual work required to co-ordinate information from the various systems to produce management reports. There was also no inter-company connection between systems across the group. Key project-management tasks, such as monitoring performance against targets, were difficult to perform as information on budgets and timelines was difficult to extract. When support stopped for the old system, the situation became intolerable.
Christian Bentzen, Vice President and Chief Information Officer, GEA P-Division, says, “We needed to change the way we worked and we knew that an effective information strategy was at the heart of the solution. Our business is to engineer customised designs for plants, project managing the entire process from design and development through to testing, delivery, and service.
“We need to know exactly what is happening with these huge, global projects as they progress, and our current systems couldn’t meet these demands. The right integrated business management system would strengthen our market position, while saving money through improving efficiencies. It would also help us to reduce our business risks through better project management.”
Solution
Knowing that an integrated solution was the answer, P-Division devised strict selection criteria. P-Division’s operations vary in size across the world, down to just five users, so scalability was vital for success. Without a network infrastructure in place for one system, local support was also critical, as was having adequate support for many different languages.
Another consideration was using standard technology to ensure it integrated effectively. Naturally, return on investment (ROI) and a low total cost of ownership (TCO) were also important.
Bentzen says, “Microsoft® Business Solutions–Axapta® most closely met our requirements. Its ability to provide a global, integrated solution that scales to our smallest operation was vital. We looked at the alternatives, but Oracle and SAP solutions were too big, inflexible, and would involve too much training. Microsoft Axapta could adapt and be customised to meet our needs now and into the future.”
Bentzen adds, “The financial benefits of using Microsoft Axapta were also considerable, with a rapid ROI and a low TCO. Our calculations showed that with an investment of €2,500 (U.S.$2,990) per user, there would be a direct saving to alternative solutions of at least €2.8 million (U.S.$3.34 million). It was a simple choice.”
The system was initially designed for the 250 users at the GEA P-Division head office, with an upgrade to Microsoft Axapta 3.0 as its standard business management system. However, ambitious plans included a co-ordinated roll out to encompass more than 2,500 users across many locations. For a successful and smooth global implementation, GEA P-Division preferred a single Microsoft partner across the division.
Bentzen says, “Watermark Europe had a strong track record with Microsoft Axapta implementations and considerable experience in our vertical markets. Combined with the international presence, we needed to manage large and complex projects; Watermark Europe was the right partner.”
The first job for Watermark Europe was to develop a customised kernel solution, a pre-defined system using Axapta to meet the international needs of GEA P-Division.
Supporting P-Division’s decentralised model for its 52 subsidiaries is an important goal, and the hub-and-spoke implementation model was implemented─with SAP in the GEA Group headquarters in Germany acting as the hub, and Microsoft Axapta in the subsidiaries of three divisions as the spokes. Besides the GEA P-Division, Microsoft Axapta is also implemented in the Refrigeration Division (headquartered in The Netherlands) and the Air Treatment Division (headquartered in Germany).
Belinda de Ridder, Vice President International Sales, Watermark Europe, says, “We customised Microsoft Axapta to provide specific additional functionality for the vertical sector requirements. GEA P-Division uses specialised product configuration tools for part of its process management, so interfaces were developed to ensure the different products work together seamlessly. There are also various local requirements in each country to be considered.”
Designed as a two-year project, the first phase to develop and implement the kernel solution in Denmark started in July 2004 and has resulted in the company using Microsoft Axapta as its business management solution for over a year. The second phase of the project focuses on upgrading users to Microsoft Axapta 3.0 as the environment for the international project, and this software roll out was scheduled for September 2005. The next phase is then the international project, whereby Axapta will be rolled out into the P-Division subsidiaries worldwide.
Benefits
With 250 users currently running Microsoft Axapta technology at head office, GEA P-Division has ambitious expectations for the international project, based on a substantial evaluation of the system.
Enhanced Project Management
For GEA P-Division, ensuring it can track progress in a project is vital. With the Microsoft Axapta system, all aspects of the project are held on a central database, making it easier to access real-time, up-to-date data quickly. Better management and control of projects brings numerous benefits.
The first is a reduction in the risk of project overruns. Having an accurate estimation of what is happening, GEA P-Division can predict possible problem areas and free up staff quickly when projects complete early. With enhanced collaboration, it is possible to have faster project completion with lower engineering costs. It also allows for lower inventories, releasing cash within the business.
Bentzen says, “Project management is at the heart of our business. Enhancements to this have a knock-on effect throughout the division. Microsoft Axapta provides access to information when it is needed, giving us better control of projects.
“With projects running more efficiently and effectively, management time is freed up to look at other business opportunities. When compared to other systems, we predict that reduced overruns on projects alone will bring savings of €2 million (U.S.$ 2.39 million) by 2007.”
Increased Opportunities for Collaboration
Integrating information and increasing collaboration across the division was a fundamental element of the project. Microsoft Axapta integrates all aspects of the business from finance through to warehouse management. By automating key business processes, it provides uniformity to the business.
Bentzen says, “To achieve our business goals, a major step had to be increased collaboration. With Microsoft Axapta, the ability to pull data together from different areas provides an integrated overview of the business.
“With the legacy system, it was difficult and time consuming to extract consistent and relevant data. With access to up-to-date information, the new system helps us to be more accurate in our business forecasts.
“Opportunities for collaboration are spotted more easily and people have time for co-operation now. The benefits are apparent, such as better buying power, which helps to keep control of costs.”
Easier Reporting to Management
Reporting was particularly tedious with the previous system. The process was manually intensive, with information held on different ledgers, making reconciliation difficult.
Bentzen says, “The lack of a centralised system meant that all P-Division project partners were treated as separate suppliers. This increased the administrative burden for reporting. It would take a couple of weeks to produce the reports needed within the division, by which time the information was often out-of-date.
“With Microsoft Axapta, this process is simplified. Information is input into the system and consolidated, resulting in significant administrative time savings. We are confident that the reporting process will soon reduce to a couple of days. In fact, we predict a saving of €1 million (U.S.$1.19 million) in reduced administrative burden from management reporting by 2007, when compared to alternative solutions.”
Supporting Local Operations
The use of the hub–and-spoke model within P-Division enabled the company to have visibility over local operations. Microsoft Axapta can scale to the smallest operation, allowing for local control and accountability. Applications can be smaller and simpler, making local implementation of Microsoft Axapta easier and quicker.
The hub-and-spoke framework also brings other benefits. Although administration and control can be carried out locally, information can be collected and consolidated centrally. This reduces management reporting burden locally. It also realises P-Division’s headquarters’ goals of having visibility of the global operation.
Lower Total Cost of Ownership
With a co-ordinated rollout of the system globally, in contrast to individual implementations, GEA P-Division is aiming for considerably lower costs than with other systems.
Bentzen, says, “The business case we put together for Microsoft Axapta includes specific financial benefits, with expected annual benefits of €14 million (U.S.$16.75 million) by 2007 when compared to alternative solutions. This is made up from a number of key areas, such as improved reporting, faster project completion, and better buying power from collaboration.
“To say we’re excited about the project is an understatement. Customers are looking for projects to be completed on time [and] within budget. Through these business improvements, we will be able to pass on significant benefits to our customers, increasing our market position. We’re quietly confident about our growth plans as a result.”
Microsoft Business Solutions
Microsoft Business Solutions offer integrated business applications and services that allow small and midsize organizations and divisions of large enterprises to connect employees, customers, and suppliers for improved efficiency. The financial management, customer relationship management, supply chain management, and analytics applications work with other Microsoft software, including the Microsoft Office System and the Windows® operating system, to streamline processes across an entire organization. This gives businesses insight to respond rapidly, plan strategically, and execute quickly. Microsoft Business Solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to a company’s needs.
For more information about Microsoft Business Solutions, go to:
www.microsoft.com/businesssolutions