Ilec's acquisition prompts ERP system switch

With enterprise resource planning (ERP) packages reaching high penetration in the local market, vendors are starting to find more business in back-selling applications to existing customers than from attracting new customers.

But Geac, not renowned as a major force in the ERP market, has managed to buck that trend, winning a deal worth more than a quarter of a million dollars at manufacturer Ilec Appliances.

The ERP implementation was imposed on Ilec after its $25 million acquisition last year of Southcorp Australia's heater and air conditioning manufacturing business located at Salisbury, South Australia.

Under the terms of the acquisition agreement, the new business was given six months to replace the integrated SAP system Southcorp was using.

Malcolm Russell, who moved from Southcorp to Ilec Appliances to manage its IT needs, said the organisation had few complaints regarding the SAP system but was forced to switch systems as a result of the acquisition.

However, after conducting a post-acquisition selection process where several systems including SAP, Baan and Geac were evaluated, Ilec opted to move to Geac's Unix-based TIMS system in a $320,000 deal.

Geac's integrated TIMS financials, manufacturing, customer service and logistics and payroll modules were installed, running on a Sun platform, Russell said.

"It was in the right cost area. It is a good functional system which looked simple to implement," Russell said.

"TIMs is designed for a business our size, SAP was good when we were part of a bigger business but we aren't any longer," he said.

Implemented by Russell and additional staff, TIMS was installed across 40 concurrent users over an eight-week period coinciding with the implementation of new wide area network (WAN)-linked sites.

Both TIMS and the WAN went live on November 1, he said.

Since switching to the system, Russell said the Salisbury site has saved 80 per cent on order entry costs and has improved stock turn control by as much as 50 per cent. Application transfer speeds and response times have also improved, he said.

Russell said the new system will also allow future developments such as a Web site, business-to-business e-commerce functionality and freight management.

Is the ERP market dead?

Neil McMurchy, research director at Garter Group, said there is "relatively low growth" in the ERP market at the moment.

He said penetration in Australia has reached close to 75 per cent and most ERP vendors are finding more business back-selling applications to existing customers.

McMurchy also said that whilst vendors such as SAP, Oracle and PeopleSoft continue to dominate the market, having a large footprint in certain regions could prove beneficial for vendors.

"[Vendors] need quite a large installed base into which they can back sell.

"They have got to question whether their customers are viable opportunities in the long term, because [they] cannot expect significant growth [from new customers]."

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