When Sellagence, the sole distributor of Gillette and Ferrero products in New Zealand, began automating and connecting business processes over an e-business platform three years ago, it likened it to having heart and lung transplant. “It was both shock and big decision for small company,” says Kerry Gleeson, executive chairman for Sellagence.
Sellagence was formed following Gillette’s departure from New Zealand. After securing Gillette distribution rights, Sellagence added Ferrero, US$7 billion confectionery company.
But while Sellagence’s annual turnover is climbing and targeting $200 million, it is, says Gleeson, in dangerous space. “Distribution is competitive industry with small margins.”
Sellagence saw end-to-end e-management as way to develop competitive edge, but needed best of breed software tools to make it work. “We thought if we replaced our [legacy] enterprise resource planning [ERP] system with class one e-management tools, we would win in the medium to long term,” says Gleeson.
Sellagence integrated financials, supply chain, marketing, HR and communications business processes using Oracle e-management products which are usually the fodder of large corporates and government organisations.
“We bought it with some stress and strain, but to be fair Oracle is attempting to move [pricing] down to meet the market,” says Gleeson. (Small businesses are often positioned to benefit most from e-management – see ‘Benefits at Glance’.)
Despite its (small) size and associated nervousness, Sellagence decided “whole of business” system was the only way forward.
“It breaks down departmentalism and gets everyone interacting with the system. We envisaged an end-to-end system capable of automating the entire supply chain,” says Gleeson.
e-Governing
Such visions are common to corporate and government organisations but take longer to realise.
Geoff Foster, chief financial officer for Manukau City Council (MCC), says the council has been systematically replacing legacy business process software with integrated e-management PeopleSoft products for several years.
“So far we have integrated financials, HR, customer relationship management and communication processes with local government processes like rates billing. It’s whole new philosophy and it has been major project for us.”
MCC wanted holistic view of each interaction with the council, according to Andy Batchelor, New Zealand country manager for PeopleSoft. “So you have one number and they have one view.”
MCC can now dispatch electronic messages rather than fax suppliers and contractors and these messages arrive on web browsing devices or as texts to mobile phones. “There is job escalation; if an issue is not resolved within certain time frame, the Council knows whether or not the Service Level Agreement [SLA] they have with that contractor is being met,” says Batchelor.
Shared health service organisation Health Alliance has also spent the past few years consolidating and centralising the financial, HR and procurement systems of the Waitemata and Counties Manukau District Health Boards (DHBs). These efforts recently piqued the interest of the Otago and Southland DHBs, which last month launched their own shared health service, Southern Alliance.
The e-management focus has been on integrating financials, procurement, communications, parts of HR and shared patient management system, says Health Alliance business solutions manager Kathy Frame. “It has been big effort. We are being pressured to integrate other business processes in the same way but we have to do this well first. It’s very complex,” she adds.
The Accident Compensation Corporation (ACC) understands complexity. It processes more than 1.5 million claims annually. ACC has, says chief financial officer, Phil Burt, “endured considerable systems update” to integrate its financial, CRM and call centre business processes across an IP platform. It is now evaluating the integration of an advanced collection module.
But, he says, end-to-end management takes time and the “e” component can be elusive. “We have quite lot of e-interaction, but the concept of ‘e’ can be little theoretic in an organisation of this size and complexity.”
The dynamism of technology works against the time larger organisations need to investigate new systems. “When you get to the end of that process you find the technology you were initially looking at is already out of vogue,” says Burt.
ACC’s e-management project was 12-18 month process, and replaced former debt collection and call centre system.
“Call centre agents now have all the notes from levy perspective and can see if debt has been passed to [a collection agency.] We can also use multiple addresses for call centre and marketing functions. If, for example, an accountant pays the bill we can send the invoice to the accountant and the injury prevention material directly to the individual.”
Change management
Most organisations seem to identify change management as the principal barrier to end-to-end e-management success.
Frame thinks there are two ways to approach change management: get it happening in the organisation, then bring the systems together, or bring the systems together, and then get it happening. The Health Alliance chose path and went with it, bringing two standalone procurement systems together, and then built organisational changes and culture around it.
Change management isn’t something public sector organisations do particularly well, according to Frame, and if she had to do the exercise again she would employ change manager and project manager. “They are very different skills and there is never enough focus on change management,” she explains.
Sellagence used consultants to tackle the technological challenges but handled the change management process itself. “We set up team of the best people and then got contractors in to do their jobs while the team became [champions] of the new system,” says Gleeson.
The tactic worked and 18 months after implementation Gleeson says people became more confident and Sellagence started to get “super users”.
Launching an end-to-end e-management system is not for the faint hearted, but organisations should not avoid it. “The business process goes into some shock, but the organisation will get through this if the e-management is going somewhere,” says Gleeson.
Decisions must be made quickly and some will be wrong.
“If I had to do it again I would put more business owners into the [project] team to have more people thinking from different levels.”
Looking forward
Sellagence expects 40 percent cost saving from harnessing the Oracle e-Business Suite that will allow supermarkets and chemist customers to order online. “We can use end-to-end e-management to figure out how much money we make out of each product and channel and will add procurement in the second or third phase of the process,” says Gleeson.
And the move to end-to-end e-management has helped win customers. “An important factor in winning the Ferrero business was showing that we had the systems in place to fit within their reporting framework. We can now add third, fourth or fifth distributed brand,” he adds.
MCC’s Foster has produced number of reports to set out what his council is trying to achieve with end-to-end e-management.
According to Frame e-management will deliver more efficiencies for the Health Alliance’s DHBs in HR, which accounts for 70 percent of costs for Waitemata and Counties Manukau DHB, and in patient management systems.
“We want system where people don’t need to keep providing the same information,” says Frame.
ACC conducts regular strategy meetings to decide how to best leverage its e-management investment. “We have huge electronic interface with all our providers. We talk together, internally and with Government, about the things we could do. We want highly automated and integrated business,” says Burt.
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