mySAP helps ABB increase employee productivity

Engineering giant ABB India was losing control over its expenses as its in-house legacy applications were inefficient and did not provide real-time data. Akhtar Pasha finds that implementing mySAP R/3 ERP and later mySAP (HR) have helped the company streamline its business processes and increase employee productivity

ABB India is doing better than ever today. Under the leadership of Ravi Uppal, the firm has grown from Rs 800 crore to Rs 1,200 crore in 18 months, with profit jumping 44 percent to Rs 123 crore, and with an order book that’s in far better shape than before. The Indian arm of the Swedish giant has a strong focus on developing, manufacturing and assembling electrical equipment, drive and automation technology such as drives and motors, low voltage instruments and automotive products. Today, the company has 3,200 employees working across its eight manufacturing units, 25 marketing offices, four service centres and three training centres. The company is growing at a pace of 15 percent annually and it has to depend on its financial systems for quick decision making while maintaining quality control standards across its manufacturing units. With an ERP system in place, ABB India has been able to increase its bottom line and improve overall efficiency.

SAP's expertise in project management, finance, localisation of products and a strong India presence met ABB’s resource planning vendor requirements perfectly, says P V kanagalekar

In-house legacy systems

But the past wasn’t all that great. ABB India had developed a legacy application in-house to meet its financial, logistics and HR requirements. For example, the company was using Online Financial Accounting (OLFA), Production, Planning and Control Module (PPCM) for logistics and HR in a Box (HRIB) for payroll. All these applications ran on top of an Oracle database. The trouble with the legacy systems was that real-time financial data wasn’t available for decision making, as the legacy applications required manual entry and checking. It was difficult to carry out a yearly audit. Additionally, a lot of paper work was needed for supply management, order handling and HR. P C Rajiv, vice president for human resources at ABB India says, "After the annual meeting we had to prepare around 1,400 letters for employee compensation relief. All the emoluments had to be checked manually. This used to take six days and another four days to print that many letters and dispatch them to the respective offices." Another problem with the legacy system was that it was difficult to keep track of stock availability.

In October 1997, ABB decided that it needed a robust financial accounting and project management system. A team of six people was assembled, the team surveyed the company’s requirements and it was decided collectively that ABB needed an ERP system.

Evaluation

During the evaluation period ABB found that Baan and SAP were the only vendors that had products that could fulfil its requirements. P V Kanagalekar, chief information officer at ABB India says, "Baan had strong expertise in operations and manufacturing but was lagging in finance and project management, which was essential for our business. The requirement gap was fulfilled precisely by SAP India. SAP also has expertise in localising products and a strong market presence in India." The decision to implement SAP was supported by ABB’s headquarters in Zurich. In January 1998, the final approval was given to implement mySAP R/3 3.1H. In February, ABB formed an implementation team that included 12 business managers and another three from the Information Systems (IS) department.

Pilot first

Nashik was chosen as the pilot site for implementing mySAP. It was decided that modules such as financial control management, asset management, sales and distribution, project systems, material management and production planning would be implemented initially. After getting trained on SAP, ABB’s implementation team partnered with IBM Global Services India (IGSI) to implement mySAP. Before zeroing in on IBM, ABB evaluated other implementation partners, including PwC, Ernst & Young and HP. The project was kicked off on May 10, 1998 and went live on January 10, 1999 as per plan. The Nashik unit had 80 SAP users. During the implementation, the IGSI team transferred know-how to the ABB team, which then prepared itself to manage roll-outs for the next 17 sites on its own.

Big bang approach

ABB took a big bang approach to roll out mySAP in 17 additional locations. The first was at Kalkaji in New Delhi with 70 users who went live in April 1998. This was followed with the largest location of ABB India in Maneja, Vadodara that covers 10 businesses of ABB with 250 SAP users. The project was started in May 1999 and went live in January 2000. This was a landmark achievement for the ABB team and it acted as a confidence booster for them. The team geared up to run multiple parallel projects and completed the rest of the implementation in six months. Two teams worked in parallel at the Chennai and Mahesthala, Kolkata locations. This was followed by six locations, one at the corporate office in Bangalore and five at ABB regional offices, all of which simultaneously went live on SAP in August 2000. Soon after the completion of the company’s financial audit for 2000, the team was asked to roll-out mySAP at two more locations—ABB’s factories in Andheri, Mumbai and Faridabad. Both these projects started in parallel in February 2001 and went live in July 2001.

Having successfully rolled out to other locations, ABB took up the roll-out of mySAP at its Peenya manufacturing unit at Bangalore, the toughest one of all because of the size of the unit. The project went live in five sites at the Peenya unit in April 2002. ABB India has a common IT platform on SAP R/3 version 3.1H, that runs all its business systems at its 18 sites. The project was completed in four years and today ABB India has around 1,300 SAP users.

While the rollout was taking place, ABB wanted to get rid of HRIB, a payroll package developed in-house. HRIB addressed only one aspect of HR at ABB, that being workflow requirements such as leave letters. SAP did not have a product to replace HRIB till November 1999. SAP Labs and ABB worked together to jointly develop products based upon ABB’s requirement. In January 2000, SAP developed a payroll package for the Indian market called ‘India Payroll’. It is interesting to note that ABB became SAP’s first customer to use its India Payroll product in India. ABB’s Bangalore unit was chosen for the pilot run of India Payroll in February 2000 and it went live in April 2000. It took twelve weeks to implement India Payroll and there was no external consultant hired to execute the project.

According to P C Rajiv, ABB can do a complete personnel expenses analysis on a daily basis, location-wise and category-wise

Phase I of HR

ABB formed a team of four HR professionals based in Bangalore to implement HR modules such as organisational management, personal management, personnel administration, compensation, personal cost analysis and time management (partially up and running) in August 2000 (SAP R/3 4.6C version) and it went live on December 2000. Rajiv says, "ABB India has 28 different payroll areas to be computed across the country. No vendor has specialised skills to deploy a HR package. This was the reason for not hiring separate consultants to implement HR modules. The entire HR implementation was done by a team of four people from our HR department."

Phase II of HR

In February 2003, ABB went live with new modules of HR such as training and event management, a competence module, succession and career planning, performance and appraisal. The objective of adding these modules was to allow the HR department to automate all HR processes and give the department more time for doing strategic HR work such as performance management, competence development of employees and succession planning. Rajiv explains, "For every key position we have three people as backup. The succession planning helps us identify gaps and train people to suit a particular position."

ABB India has also launched a pilot project called Employee Self Service (ESS). This is an employee portal that is currently available to white-collar employees in its Bangalore unit. ESS extends the power and functionality of mySAP.com to every employee in ABB, helping them view, create, and maintain information related to their jobs. Employees can update their addresses directly in the SAP system. It provides a one-stop source of information for compensation, salary statements and gratuity.

Rajiv says that employees used to spend long hours in tasks such as getting salary certificates and applications for bank loans. With ESS, employees can get the same on their PCs in just 10 minutes and it does not require authentication because all employee data is generated from the SAP system that cannot go wrong at any point of time. ABB plans to roll-out ESS in Vadodara by the end of this month. The subsequent roll-out is expected in Nashik, Faridabad, Mumbai and the remaining locations by the end of 2003.

Payoffs

K Rajagopal, chief financial officer, ABB India says, "Implement-ing SAP has helped ABB India network and integrate all its business units to seamlessly integrate functions such as finance, supply management, order handling, sales and HR. This integration has helped us improve throughput, reduce the time taken from order to delivery, enhance the ability to track spares and has improved our ability to service orders." It also helped in providing a real-time MIS across all operations and locations and helped in tracking inventories, receivables, expenses and profitability statements.

mySAP has also helped ABB consolidate its financials across the country, minimising manual effort and eliminating considerable administrative work. This consolidation has also helped the audit process; monthly audits can now be carried out centrally instead of being physically conducted across multiple locations.

From the HR perspective, the benefits are paying off. ABB now issues employee compensation relief letters after the annual meeting in just a few hours, as compared to 10 days earlier. Payroll updates are instantaneous. Rajiv adds, "We can do a complete personnel expenses analysis on a daily basis, location-wise and category-wise. We can control our expenses and track details every moment. ABB does not use any paper-based request from employees."

The mySAP implementation has helped ABB India to increase employee productivity. The company’s revenue per employee has gone up from Rs 18.9 lakh in 1998 to Rs 37 lakh in 2002.

IT infrastructure

A Compaq ProLiant 8500 server with eight processors runs mySAP R/3 3.1H. Another Compaq ProLiant 8500 server runs the mySAP R/3 version 4.6C HR application. Both the ProLiant servers run Microsoft Windows 2000. There are six additional Compaq ProLiant 6000R (four CPU-based) application servers. ERP and HR
are synchronised through Application Link Enabling (ALE) middleware that helps SAP R/3 applications exchange business data. These servers are located in Bangalore and all the offices and manufacturing plants are connected using the WAN consisting of 50 terrestrial lines and seven VSATs.

Future plans

ABB India plans to upgrade from mySAP R/3 3.1H to version 4.6C by the end of 2003. Similarly it will move the HR application from version 4.6C to the enterprise version by September 2003.

Snapshot of benefits

Seamless integration of data from financial, supply chain, sales and HR. Real-time MIS reports can be generated to check inventories, receivables, expenses and profitability statements across all departments and location-wise. Employees can maintain their own records. Automation of HR has helped ABB to get rid of paper trails in HR. Financial audit can be done on a daily or monthly basis, helping ABB check productivity and revenue per employee on a regular basis.

Quick view of SAP deployment at ABB India

SAP solution mySAP R/3 version 3.1H and R/3 4.6C for HR Hardware Two Compaq ProLiant 8500 servers run 3.1H (ERP) and 4.6C (HR). Another six Compaq ProLiant 6000R servers are used as application servers. Operating System Microsoft Windows 2000 Database Oracle 8i No of SAP user licenses 500