ROI on tool give 'flushed with success' result

When planning meetings descended into heated debates over which numbers were correct on which manager's spreadsheet, Carter Holt Harvey Tissue started to question its data.

"In the past all the managers came to the boardroom with the same numbers set out differently on a spreadsheet. There were arguments over whose numbers were right rather than what they were going to do with them," said Gerard Guinane, IT manager for Carter Holt Harvey Tissue (CHH), makers of Sorbent, Purex and Handee paper products.

The problem with the data was there was simply too much. For the business manager wading through these rich pools of valuable data, being able to adapt it for managerial decision making was an almost impossible feat. The data's structure was unsatisfactory for planning purposes and it could not meet customer expectations.

The paper products manufacturer concluded it was time to renovate its existing business intelligence tools to get more out of its other IT assets and better arm its business decision makers.

This was not the first BI project the company had undertaken; it had earlier implemented a BI tool, Cognos's Powerplay, in 1998, over a 15-year-old homegrown ERP legacy system.

Guinane had worked with a BI tool in his previous employ within the Mars Group of companies, where he worked as a planning manager in a non-IT role. It was Guinane who led the charge to introduce the original BI tool to the tissue maker to ease the pain at a time of massive change to CHH Tissue's IT environment.

"In 1998 the tissue business had its sales data built out of two legacy systems. We were looking at a way to access data across the business. Our sales systems was inflexible in terms of analysis and layout of reporting," Guinane said.

In the original presentation to request capital for the project, Guinane and his team demonstrated the tool's capability by cutting and dicing the managers' figures in ways they'd never seen before.

"We took the financial data from the general ledger and presented it in a number of different ways that had never been shown before to illustrate the tool's potential. We showed how it was much simpler than trying to do it with complex sales system. That was enough to get [the company] to invest in the project."

The original Cognos BI project cost $300,000 and Guinane said the company saw ROI within the first 18 months.

"This return was primarily driven by decision-making [support] that business was now able to make. We went from a traditional sales model to a sales model matched to demand from our customer's model," he said, adding this streamlined the supply chain.

CHH Tissue installed Cognos Powerplay, which ran alongside a legacy system, in the first half of 1999. However a decision to migrate from a homegrown data warehouse to an SAP business warehouse in July of 2000 led to the smooth-running BI tool hitting a snag.

"When we tried to use Cognos over the top [of SAP's business warehouse environment] we ran into a number of difficulties. We had no problems when we were using [Cognos] with our Microsoft SQL Data Warehouse but were unable to get the required response times from the solution with SAP's business warehouse due to the architecture of the two applications. We had assistance from Cognos but were unable to overcome our difficulties."

"We looked at BI tools to ease the pain involved in moving from legacy to SAP and also being able to get better analysis out of the legacy system data."

"It was a difficult decision to depart from Cognos, as we had a large number of users, but performance was a major issue. We had to deal with the cube and get a lot of data out before it could do anything. There was also an understanding that we could use SAP's Advanced Planner and Optimizer reporting, with demand planning built on the SAP Business Information Warehouse (BIW) infrastructure, but hardly any reports came with it; there was little aggregate reporting and production planning was difficult. Reports could cost thousands of dollars in work-hours and take weeks to produce," he said.

The company had previously conducted a rollout of SAP, and Cognos Powerplay, which was in place from an existing bespoke data warehouse.

Another tender and a re-examination of BI players was in order. After examining international best practice with SAP BIW data warehouses, Carter Holt Harvey Tissue selected Business Objects and completed the rollout in April 2001.

The company, which was by this stage a large-scale SAP BIW user, could now update information on a nightly basis and present it with Business Objects.

Currently the company uses APO for supply chain processing, R/3 for finance, purchasing, sales and distribution maintenance and production execution, and Enterprise Buyer Professional for e-Procurement.

These systems work in conjunction with Microsoft SQL master data and data marts. For reports the systems interface, through SAP BIW data warehousing and Microsoft data marts, with Business 0bjects for data presentation and analysis.

Senior managers could rely on Business Objects reporting as a window into the business, without the need to reformat SAP reports, which freed up the IT department.

Guinane said training end users was minimal from the IT point of view. The IT team was able to train only a small number of people across a large distance of geography while allowing much larger numbers access to the reports. More than 350 people can access information through Business Objects. More than 80 analysts and publishers of information use Business Objects directly, including a small group of "super users".

"Previously, our sales force spent much time getting information into a format they could present to customers, whereas they now use Business Objects rather than rekeyed information," he said.

"The biggest benefit is that we can allow various divisions within the business to see the same data in ways that are meaningful for them. This means they can come up with actionable outcomes from the same set of numbers" he said.

CHH Tissue invested $150,000 on the implementation, which consisted primarily of licensing Business Objects product range and the rewriting of existing reports. The company needed no extra infrastructure.

Guinane said CHH believes it has seen ROI within the first six months in terms of fulfilling the original objective, given that the prime focus was to streamline the supply chain and achieve better decision making.

Within the first 12 months, the company believes the time saved from rekeying data for internal and external presentations alone would recover the costs of Business Objects.

Additionally, setting up a group of "super users" within the company has also significantly freed up the time of the eight-person strong IT team which, in turn, has altered the culture of the department.

"Historically IT was 100 per cent responsible for all the reports, because the ERP system was custom coded. We never got through the list of requests. Reporting was at the bottom of the list for IT. But we had a custom-built ERP system and only three people who understood how it worked," Guinane said.

"Establishing super users removed the IT department bottleneck in reporting," he added. "It is [the users'] data. They understand better than we do. They can take responsibility for its validation within the business, not within IT."

Within the IT department itself, Guinane said, "the world is so different with SAP compared to homegrown ERP systems. It means we are now less technical- and more business-focused. We are able to do work with higher tools than before. Our IT department is more likely to employ ex-business people rather than technocrats."

"[We hire] ex-business people that understand the business and the business processes rather than technical people that have no business knowledge," he said. "Having IT-literate business people is better than business-literate IT people.

"One of the pieces of BI work we did was for CHH Woodproducts, which is an Australia and New Zealand-based division. It had been receiving reports in spreadsheets for some time but had not been able to slice and dice the data. In its first month [after installing the tool], the division added $500,000 to its bottom line by rationalisation of its customers and products."

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