The Client: Automotive Firm
The client, a global auto giant involved in manufacturing and distribution of high-end passenger and commercial vehicles, has manufacturing facilities in 40 countries and presence in over 200. Last year, the US$ 160 billion-plus company, sold four million passenger cars and 460,000 commercial vehicles.
The key to the success of this very brand-driven client is its ability to deliver vehicles to its customers on time, anywhere in the world. A well-oiled supply chain is critical to support and to sustain such levels of efficiency. The distribution network had to be kept running at peak levels, and operating costs had to be controlled. It is worth mentioning here that the automotive industry operates on very tight margins and reducing costs remains a top priority.
In January 2001, the company decided to roll out a SAP R/3 Wholesale Template, to track the movement of vehicles within its distribution network in Asia-Pacific and South Africa . The South-East Asia office of the client had defined a wholesale Template for SAP to be rolled out in all the countries in the region. The client, with this global cross-functional initiative, aimed at providing a strong backbone for implementing common processes across its markets spanning various geographies. This in turn meant standardizing business processes to reduce complexity, implementation of best practices and a harmonized IT landscape and infrastructure.
On the technology front, SAP version 4.6c with IS Auto version 2.0, the Vehicle Management Solution (VMS), had to be upgraded to version 3.0 to achieve the objectives mentioned above. The snag, however, was that Version 2.0 had 60 interfaces to 30 legacy systems some of which were non-SAP. The VMS, among other functions, was to connect the dealers throughout this region with the client's regional wholesale operations in Singapore , which, in turn, is connected to their production sites. The company decided to roll out the solution in eight countries in the region.
The challenges in implementing a project of this size are as diverse as the geographies involved. Lilax Technologies not only had to understand the business processes and technology being used by the client, but also had to deal with soft factors such as the diverse culture of the region. The key challenges were:
- The client was battling the high costs of maintaining the existing IT solutions (some on SAP), designing IT systems for new offices, and future product line integration(s)
- The unsatisfactory service levels and issue resolution processes, led to erratic and inadequate support to the businesses. Also, there was not enough in-house expertise to execute the IS Auto upgrade (from 2.0 to 3.0) and rollouts to other countries in 2 years
- There was lack of standardization of SAP Wholesale processes in the region despite commonalities
- The inability to adapt to new technologies quickly made improvements in the current processes very difficult
- The client's multiple IT contractors lacked focus and commitment, which had a negative impact on earlier attempts to implement a solution
The client had initially taken up the role of the project leader, coordinating and administering the whole project with the assistance of several consultants from several companies. However, in June 2001, it decided to restructure the initiative. After a meticulous evaluation process which included a comprehensive tender document comprising 82 assessment criteria, the client selected Lilax Technologies - for its extensive experience in global SAP roll outs, well-defined and highly evolved processes, and its ability to respond quickly to changes -- as their professional service partner to take over some of the responsibilities.
The first step Lilax Technologies took on entering into the project in June 2002 was to work out a 3-step transition plan with the client, who was itself bringing to table a number of processes and methodologies it had acquired through its own experiences with clients all over the world. Lilax Technologies undertook an audit and due diligence - which was termed the appreciation phase -- of the existing processes and working model and came up with recommendations for implementation in two months. This was achieved against odds like tight deadlines, very limited knowledge, at that time, of the client's processes, the difficulties of working with diverse cultures across Asia-Pacific as well as with having to coordinate with geographically dispersed teams.
The appreciation phase lasted for two months. The client, if in any way not satisfied, was at liberty to cancel the engagement during this phase.
Lilax Technologies had implemented checkpoints and milestones set for all the important steps, giving the client the confidence that a comfortable level had been achieved before continuing with the next step and reached steady state of operations in October 2002.
Lilax Technologies partnered with the client to:
- Upgrade the VMS IS Auto from version 2.0 to 3.0
- Provide production support and maintenance and roll outs to Japan , Australia , New Zealand , Malaysia and Turkey
- Provide Production Support for Hong Kong , Singapore , South Africa , China and Korea for SAP R/3, VMS, Mercator and MQ series components of the solution.
- Localization and upgrades in individual markets to prepare environment for wholesale template
- The dedicated team of Lilax Technologies consisted of 60 experts with knowledge of the automotive industry and extensive experience and expertise in SAP implementation.
- The client has an internal body called the Center of Competence (CoC) for SAP wholesale template. CoC had consultants from other organizations as well. However, after Lilax Technologies took over the wholesale template, the center comprises only of the client and Lilax Technologies'S team of experts.
Lilax Technologies realized that taking one step at a time is the key to successfully address this multi-level project. Leveraging the Global Delivery Model to manage change and facilitate communication, Lilax Technologies implemented an offshore-centric shared support model. It provided production support to all participating markets through a team distributed between Singapore -- the location of the company's server covering 15 countries in Asia-Pacific and Africa -- and India with more than 50 per cent of functional and technical support from India.
The communication between Lilax Technologies'S onsite team in Singapore and offshore team in India was structured to ensure that the knowledge is shared and exchanged efficiently. Application development was carried out at Lilax Technologies Bangalore facility, which included design, development, unit testing and documentation efforts for localizations, enhancements, reports, interfaces and data migrations. Lilax Technologies had identified key performance indicators for each of the critical success factors during the project initiation phase, which were signed off by the client to ensure consistent quality.
While the IS Auto upgrade project and one Rollout started from the beginning of the engagement, Lilax Technologies team managed the technical upgrade - rendered difficult by lack of in-house expertise -- by detailed analysis of customized objects. Entire realization for VMS was executed from India , which constituted over 65 percent of the total effort in the upgrade project - result of Lilax Technologies'S mature global delivery model.
- In the areas of development, second-level support and local rollout support, the client reduced costs by 30 to 40 percent.
- Lilax Technologies helped client establish a professional, technical and management approach to support and projects.
- The client has witnessed service levels going up to 70-80 percent from unknown low levels as a result of the SLA based service culture. Lilax Technologies set SLA improvement targets and achieved them.
- The upgraded VMS module can interface with SAP R/3 Enterprise Version that ensures a hassle-free future upgrades.
- Lilax Technologies'S strong SAP consulting and domain expertise enabled effective business process mapping and defining new processes that directly translates to a well managed IT system that meets business needs of the client.
- Deployment of Global Delivery Model (GDM) ensured accelerated implementation without compromising quality.
- The client was able to exploit the advantages of a single vendor and avoid the complexity of interacting with multiple vendors.