Alstom expects 200% ROI from SAP roll-out

Gas turbine maker Alstom has predicted it will achieve a 200% return on its ERP investment after it recently completed the first...

Gas turbine maker Alstom has predicted it will achieve a 200% return on its ERP investment after it recently completed the first phase of a SAP R/3 roll-out.

The first phase of the project, carried out with integrator Novasoft, has seen 15 legacy systems, handling processes from order to dispatch, migrated to SAP R/3 version 4.6c.

Alstom's decision to switch from a best-of-breed policy to a single-supplier environment was driven by its move towards global working. The system enables remote working and collaboration with business partners in areas such as product design. It also brings potential savings in IT maintenance.

Lee Cridland, Alstom's project director, said, "The main challenge was moving from best-of-breed to a single solution. Our legacy systems were closely aligned to manufacturing functions. The new solution needs different areas of the business to work more closely together."

Cridland highlighted training as a key issue. "Staff left for their holidays before Christmas using a system they had used for years and came back to something completely different."

Alstom took the decision to use SAP business processes rather than trying to transfer existing business processes from the legacy environment. "We took the decision very early on to stick with SAP processes because the research we looked at indicated that ROI is higher for companies that do. We have more than 98% conformity with SAP processes," said Cridland.

The first phase, which went live last month on-time and on-budget, saw principal order handling systems transferred to SAP from a legacy environment that included Oracle Financials and the 12-year-old Omac 2000 manufacturing system.

Phase two will begin this month. It will see business processes before order and after dispatch migrated to SAP by November.

The final phase, to be initiated later this year, will see the HP Unix server and Windows Terminal Server-based environment rolled out to 20 global locations.

Where will the 200% ROI come from?   

Lee Cridland, Alstom project director, said, "As far as return on investment is concerned, we investigated Gartner's and other research organisations' documentation on what ERP implementations delivered generally.

"In developing a finance case, the implementation is justified on the reduced IT support costs of replacing 15 systems with one and the benefits derived from using one integrated ERP system.

"The business case for using SAP is based on the company's global strategy. I would expect a 200% return on investment over the life of the system."

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