A startup can offer IT an opportunity of a clean slate, avoiding the legacy applications that slow progress. But...
this is not always the case.
Versarien was founded in 2010 to make engineering products exploiting porous metal foams, for which it owns intellectual property rights. In June 2013, it bought Total Carbide, a firm with a history, dating back to the 1930s, of making hard-wearing engineering components. It came with the baggage of IT legacy applications from the more recent decades of that history.
Will Battrick, CTO at Versarien, says the challenge was to create an enterprise resource planning (ERP) system for the two groups, while also managing the enterprise resources for 2D-Tech, a graphene specialist Versarien had bought not long before, after it was spun out of Manchester University.
“During the acquisition of Total Carbide, we highlighted that good enterprise software would help the integration into the group. It was a subsidiary of Elektron. It used IFS, group-wide, but it was primarily interested in using it for management information and business intelligence,” he says.
Recognising the need for ERP software
Battrick says Total Carbine was a something of a “black sheep” to its previous owners, and one of only two divisions dedicated to advanced materials manufacturing. Versarien realised the implementation of IFS in Total Carbide was not helping with tactical or operational decision-making.
More on manufacturing ERP
“I highlighted early on that we were going to have to select an ERP system,” he says. "This is a £3.5m turnover business with challenges around material inventory. We process high-value materials and we have long lead times for the manufacturing process. We saw the opportunity to use a good ERP system as a real advantage."
As IFS was not used for enterprise resource planning, it left a void in the Total Carbide business, filled by spreadsheets and individual knowledge. “There was a lot of Excel and a lot of inherent knowledge about how much material needs to be in stock and how much demand flexes over the year. It was ingrained in the people here, but that’s a risk to the business.”
The ERP investment would also support Versarien’s expansion plans, says Battrick: “The CFO wanted to have a good view of where capital was flowing around the business to facilitate growth.”
The move to a new ERP system was also viewed as an opportunity to create new processes, making the business more efficient and closer to industry “best practice”, he says.
Choosing an ERP supplier
But the Versarien team had to work quickly in selecting a new ERP supplier. After completing the acquisition, it had three months to transfer to a new system before links to the parent IFS system were severed.
Battrick considered remaining with IFS, buying a competing commercial product or using open-source software. The firm opted for SAP Business One, an ERP system aimed at small to medium-sized enterprises (SMEs), hosted in the cloud by Asis Solutions.
“SAP offered an opportunity to roll into Total Carbide quickly. It has all the functionality we needed in the short term and also has the option to develop best practice,” he says.
Asis also suggested add-ons, including be.as, which is designed to help SMEs with manufacturing management and cost accounting. Meanwhile, the software was adopted with few customisations – it was more a case of adapting processes to the new system, Battrick says.
As the company taking over Total Carbide, Versarien had to approach change management carefully. It selected a systems and process engineer at Total Carbide to manage the transition. “He has been absolutely pivotal in establishing what needed to be done and highlighting risk," Battrick says.
We saw the opportunity to use a good ERP system as a real advantage
Will Battrick, Versarien
The CTO also met with the Total Carbide team from the beginning of the project to make them feel involved and ensure they did not think new processes were foisted on them. “They had had a couple of ERPs in their lifetime, and a couple of guys didn’t necessarily want to start the process again, but they could see the opportunity for improving,” he says.
Business benefits have not yet been measured, but are expected to be accrued from better visibility of manufacturing work in progress, improved efficiency of procurement approvals and a longer-term view of working capital.
Meanwhile, exploiting cloud technology has helped Versarien avoid capital investment in IT infrastructure and servers, an important advantage for an expanding startup. “We didn’t want to invest our hard-won cash in IT infrastructure when we could use the cash for investing in people and materials that help our business grow,” says Battrick.
The IT team will continue to enhance and refine Versarien’s SAP Business One, giving the senior management team an operational and strategic view of the whole business from wherever they log in to the cloud system.
“The next year will be exciting, not a slog,” says Battrick.