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Australia’s Kogan.com breaks IT silos

E-commerce company used to run separate systems across different business functions, but has implemented an SAP system to streamline operations

Operating in one of the world’s most competitive and highly developed e-commerce markets, Australia’s largest online store, Kogan.com, could no longer afford to have its IT systems working in silos.

Founded in 2006 by Ruslan Kogan, the company sells tens of thousands of products through its online direct-to-customer store, achieving a turnover of more than $200m in 2017.

Kogan.com’s success has been remarkable, given that it has been running disparate systems across different departments for years.

“We didn’t have a single system that the company ran on,” says Daniel Taft, director of operations. “The support and repair team had their own system, the finance team used their own accounting package, while sales and operations used spreadsheets. It reached a point when we couldn’t scale any more.”

The disparate systems – including software-as-a-service (SaaS) and in-house database applications – had also created customer service issues for the company, which Taft said is focused obsessively on giving customers the best deals and service.

“If a customer has a faulty product that needs replacement, the support team, which does not have access to the inventory system, will have to go back and forth to check if stocks are available before generating a replacement, or offering a substitute or upgrade,” he says.

More importantly, in an increasingly data-driven world, Kogan’s disparate systems also made it hard for the management team to have accurate view of how the company was doing at any point in time.

All that changed more than two years ago when Kogan decided to implement SAP Business One, enterprise resource planning (ERP) software that it now uses to power almost all aspects of its business, from sales and purchasing functions to finance.

“Now that everyone has access to the SAP system, customer service is more seamless,” says Taft. “Our customers can now track their orders, look up tracking numbers and know where their parcels are.

“The other big change is the ability for management to get into the current status of things and trends through dashboards and live reports, instead of relying on different teams to compile reports from different sources.”

Data integrity

Taft reveals that although some attempts were made to build connectors between its systems to facilitate data flows, Kogan.com still needed the data integrity that only an ERP system such as SAP Business One could provide.

“We are shipping millions of parcels a year and we need to keep our customers happy,” he says. “To do that, we can’t have ad-hoc systems connected via a range of connectors. We need a central platform to ensure our accounts are correct and all the orders are processed.”

Instead of using the traditional waterfall method of developing and deploying software, Kogan.com chose to roll out SAP Business One in just three months. Taft says that although the deployment was challenging, the IT team was able to tackle issues in an agile manner, rather than take years to get systems up and running.

“We have a very talented development team that collaborates closely with our implementation partners,” he says. “We are also very hands-on in our development work, writing and reviewing code based on our deep understanding of how things are run. We have also avoided a lot of communication issues because we sat together.”

In getting buy-in from its internal stakeholders, Kogan.com identified a product champion in each business team and prioritised requests in an agreed order. It also conducted training sessions for users and worked closely with stakeholders early in the deployment cycle.

Read more about business applications

Although Kogan.com’s ERP system – hosted on Amazon Web Services – is a live project it is working on constantly as the business grows, it is already seeing improvements in areas such as customer service. It used to take more than a day – sometimes days – to respond to customer enquiries, but it can now do so in under an hour.

“We have been able to grow our customer base, sales and portfolio of businesses dramatically without a massive increase in headcount,” says Taft. “We have also integrated customer satisfaction scores into the purchasing process, so if a product is not rated highly by customers, the buying team needs to get approval to reorder it from suppliers.”

To make it easy for suppliers to do business with Kogan.com, the company has integrated its system with that of its suppliers, says Taft. “We have so many suppliers and we don’t expect them to use SAP other than ourselves. It tends to be faster to build the integration rather than train suppliers on our system.”

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