SAP right fit for General Pants

Retailer General Pants Group has overcome early fears that SAP implementations are only for the top end of town, and has the numbers to back up its investment. The company last year moved to mySAP version 5.
Written by Steven Deare, Contributor
Retailer General Pants Group has overcome early fears that SAP implementations are only for the top end of town, and has the numbers to back up its investment.

The company last year moved to mySAP version 5.0 after deciding its apparel-industry point of sale (POS) system had come to its end of life.

"We got to the point where we couldn't go any further [with the POS] and we decided that we needed a new system," said Mark McRae, the company's financial controller who later also managed the SAP project.

General Pants was in a growth phase and wanted a system that would deliver better financial forecasting.

The company went to the market and fielded pitches from a number of vendors, one of which was SAP.

At the time, General Pants operated about 50 stores and employed about 1,500 staff, plenty of which were part-time.

"It was generally considered at that time in our organisation we were too small for a system like SAP," said McRae.

While he'd used SAP before, it had been in larger organisations.

"I knew it could do a lot for us. My concern was were we big enough for the price tag that might come along with it?"

"We didn't want to go with a solution where in three or four years, we'd be knocking on the door of the boardroom saying 'please, we need more money'.... So it was very important to have a solution that would grow with us," he said.

Realising it needed help, the company engaged consultants to produce a scoping document on the business and the system needed to power it.

Once issued to vendors, SAP still won out over the competition, including Microsoft's Great Plains suite.

The company had considered Great Plains, according to McRae, as it is used extensively by General Pants' parent company, the Victor Smorgon Group, and would have been a good organisational fit.

However apparel retail systems need to deal with colour, size and fit business rules. "Great Plains can't do that," said McRae.

General Pants does run Microsoft's SQL database, however.

SAP was chosen, but the company wasn't blind to what could go wrong with such a major rollout.

"We didn't have a track record of implementing a system like this," said McRae.

"There was also another retailer at the time that was implementing SAP, they were implementing the lot, we were hearing some stories about change management issues they were having."

The project also faced scrutiny pre-rollout from the company board.

"Some of the things we had to cover off there was why we needed a new system, why SAP, why we were actually big enough ... we also had to cover off why not some other system."

"There was also the horror stories of an SAP implementation ... why that wouldn't happen to us and what plans we'd put in place."

With no prior experience in major system deployments, General Pants decided on a gradual implementation of mySAP over four months, starting with SAP Financials.

While there were some interface issues migrating data from the old system to SAP, McRae said the project was a success.

"If you're not putting in the whole lot, and you're having to integrate with other systems, you just can't be complacent about it," he said.

"And it's more than just delivering the solution, you have to look at living with that interface on a day to day basis."

Fifteen users in General Pants' finance department use the system. In the first month after implementation, they cut the reporting timeframe from 15 days to four in the first month. This has since been shortened to two to three, said McRae.

In total, the project cost around AU$370,000, but had been well worth it, according to McRae.

The system was particularly helping in the financial planning of new stores, which at the time, "wasn't being managed well at all," according to McRae.

"It was getting to the point where it was costing us so much for a fit out, that just the way we were building the stores, that we weren't getting any decent ROI."

Geraldine McBride, SAP

"We also put in the SAP front end management module and we manage our stores using that. Now all of a sudden we're able to track our costs and be able to see how our overruns work.

"The result of that is now we're developing this model for these stores which is a lot cheaper than what it was two years ago to roll out a store."

The cost of rolling out a new store had dropped from AU$750,000 to around AU$400,000 since the SAP rollout, according to McRae.

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