Outsourcing to Australia an earthmoving experience

Komatsu, Japan's $39 billion heavy equipment maker, is basing its worldwide business transformation program in Sydney, putting the spotlight on Australia as a preferred IT outsourcing destination.

Known as "One Komatsu", the global program currently has 90 people working on it across IT development, services and support and will eventually see the self-proclaimed builder of big yellow metal machines change current business processes from a pure-play heavy equipment manufacturer to the heavy machinery industry's version of a fully integrated channel model.

Komatsu's Australian CIO Malcolm Barnes told Computerworld the project will initially be rolled out over the Australian business, followed by Africa and Chile after operations here have been stabilized.

"We are setting up a core competency group here to build run, integrate and support the program. The change encompasses strategy, structure, culture, processes and systems," Barnes said, adding his organization is acutely aware it had to do "more than sell bulldozers" to remain successful.

The project will initially see most of Komatsu's applications and ERP systems in Australia consolidated under a SAP software umbrella, specifically the Enterprise Core Components System (ECCS), built on the NetWeaver platform.

Declining to name specific costs or projected savings, Barnes says once the local operation is bedded down and "runs are on the board", the global rollout for the project - which took just a "few years to sell to the board" - will follow in due course, led and ultimately managed and supported from Australia.

"We are 12 months into the program and 46 days away from going live with the first significant chunk of SAP. That's all the finance, HR, payroll, sales, distribution, CRM, BW (business warehouse)...and a whole lot of other SAP acronyms ... the spread is profound.

"We will be successful in the next 46 days. And we have no option not to be successful because the challenges ahead of us are even more profound," Barnes said.

Despite the heavy SAP platform and applications slant, Barnes insists the project is business-rather than IT-led, adding frankly that "we don't have a SAP dogma".

With Komatsu's local operations employing some 1300 people and turning over around $1 billion a year, Barnes says he is somewhat perplexed why local IT and business transformation projects are headed offshore.

"The most interesting part of the project I find is that when we read a lot of stories about the outsourcing of ICT in Australia to low cost centres, a Japanese multinational has outsourced its most important IT project to an Australian organization. The One Komatsu project was conceived and grown here in Australia."

He added that a large part of the decision to base the project here was the ready availability of highly skilled IT and project management talent, coupled with what he describes as Australia's "multicultural and multilingual" advantages in dealing with other countries.

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