Group therapy

Diverse groups of businesses face a tough challenge if they want to manage their business processes through one centralised system, as one of the largest companies in Oman found out. Daniel Stanton spoke to them.

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By  Daniel Stanton Published  June 1, 2006

|~|khabbaz200.jpg|~|Khabbaz: Generating reports used to take 10 days - doing the same thing now takes just three.|~|Al Shanfari Group of Oman has interests in construction, manufacturing and retail businesses, among others, and has plans to expand further, so it is vital that the group's business users have access to critical information across the companies.

Until recently, that was not the case. Different companies and departments used different software and there was no way to get an overall view of what was happening in the business. Systems needed to be standardised across the companies to ensure that all of the parts of the group could communicate and understand each other.

“On a group level, as one unit, we did not have one solution that fitted all,” explains Hani Khabbaz, managing director of Shanfari Information Technology, a consulting division of Al Shanfari Group that also worked as consultants on the project for the whole group. “Just like any of the other companies within this market, IT environments evolved over 10 or 15 years. Each company was working as an independent unit, buying their own systems and developing in-house.”

Shanfari's team undertook a thorough study of the group to identify the business processes that an ERP system would need to incorporate, and judge the suitability of the systems on the market. This, it turned out, was the hardest part of the project. “It was a painful exercise; it took us six good months to identify the business functional requirement and select the proper package,” Khabbaz recalls.

“This ERP implementation and the entire automation project is to replace all of the small applications that existed in each and every company with one suite, so we'll have one flavour across the group: one centralised and integrated solution,” he says.

“It's ERP mainly, but we are planning also to have project management, as well as CRM.”

The group opted to implement Orion 10, an enterprise information system from 3i Infotech, across three of its businesses: Shanfari Holding Company, Shanfari Trading and Contracting, and Shanfari Cement.

“Orion was the best fit,” says Khabbaz. “It had high compliance with our functional requirements and business requirements, and at the same time it was cost-effective compared to others.”

The implementation across these companies began in March 2005 and was completed in October of that year. “We actually completed that phase of the project ahead of schedule,” Khabbaz says.

“We started the systems roll out in December 2005 to the other companies in the group and we're about to finish now.”

The project has gone more smoothly than expected. “Usually with these kinds of projects you find user resistance,” he says. “Users are used to certain technology, they don't understand the concept of consolidation and integration, so usually a project takes longer than planned, but over a year we've had a completely different story, we've finished ahead of time.”

As with any implementation, there have been some problems. Some users took time to get used to the new menus and screens, so Shanfari IT had to give two more sessions of training on the new system. “Certain transactions or procedures were done in a different way, obviously. Previous systems were very flexible, having been developed in-house,” says Khabbaz, “but when you move to ERP there are best practices and business standards that you have to comply with, so we had to reengineer some procedures within some companies so that we have standard processes across the group.”

The system has already produced noticeable results. “One of the major tasks that we used to have is to generate our MIS reports at the beginning of the month,” says Khabbaz. “It used to take 10 days for each company to gather their information from different systems, compile it using Excel or whatever, prepare the final report, submit it to head office where we would consolidate all the information and generate a set of MIS reports on a group level. It was a painful exercise and by the time we were finished we had to do the cycle again.

“Now it takes us less than three days to finish the whole process, so it has definitely saved us time. We have proper information available for us, we are able to capture more data, and hence we know more about the business than before. Obviously we have more control over our systems to avoid any kind of fraud or manipulation within the data.”

Greater transparency and timesavings, plus greater efficiency in communication throughout the three companies, should mean that the project, which will cost around US$400,000 for the whole implementation, pays for itself fairly soon. “The return on investment should take us between 18 and 24 months,” says Khabbaz. “I should say 24 months to be realistic.”

“It's a competitive marketplace and we were able to provide them with a very cost-effective solution,” says Hari Padmanabhan, deputy managing director, 3i Infotech EMEA. “We have built the business processes into the product specifically for, let's say, process manufacturing or contracting, and that saves a lot of time and effort in terms of the consulting that needs to be done. That reduces the cost of implementation significantly, as it does the time it takes to go live.”

Khabbaz is happy with the way Orion has performed so far. “Now we have more access to information much faster and the management has the right information to make any decision. Decision-making has definitely been enhanced,” he says.

However, the project will not end there. “It's only going to give us the results that we are looking at once it's entirely implemented across the group,” says Khabbaz. “Once we have those details also managed through vertical systems, we will have more control, more ability to make crucial decisions in a critical time and be more competitive on our pricing because we know exactly how much our cost is, which will help us eventually serve our customers in a better way.”

Phase two of the implementation will see Orion rolled out to three more companies in the group: Shanfari Furnishing and Trading Co., Shanfari Aluminium Co., and Oman Metal Industries Co. Eventually all of Al Shanfari Group's companies, and all of its 300 employees, will be covered by the system. The group is also looking to implement Orion Automotive in its luxury car retail company soon.||**||

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