Dyana M.

Forescal

BIT005 - Assignment

SAP in the Philippines

Companies implementing their first SAP ERP system

Jollibee #ChickenSad: A costly IT problem

Jollibee is losing millions of pesos a day due to an IT problem that forced some of its
stores to close. Here are the possible causes of the problem and the lessons we can
learn from it. Last week, Jollibee Foods Corporation announced that a major IT system
change it undertook was to blame for the lack of the popular “Chickenjoy” in some of its
stores. The change affected the fast-food giant’s inventory and delivery system, forcing
72 of its stores to close.
The brand has taken a hit: aside from its loyal customers taking their disappointment to
social media, Jollibee has lost 6% of its sales at least for the first 7 days of August due
to the problem. Using Jollibee’s 2013 revenue, that amounts to P92 million. This is on
top of the P500 million ($11.37 million) that the company supposedly shelled out for its
new IT system. (Editor’s note: Other reports say Jollibee stands to lose some P180
million ($4.09 million) in revenues a day)
I asked some of my friends in the industry about what could have caused Jollibee’s
costly IT disaster and the lessons we could learn from it. Here’s a summary of their
insights and mine.

ISSUES

1. System migration

Jollibee had been using a product from software company Oracle to manage its supply
chain, which includes inventory, placing of orders and delivery of supplies to stores.
Insiders said a dispute with Oracle prompted Jollibee to switch to its rival, SAP.

Now, supply-chain software products aren’t out-of-the-box that you can just install and
run. These need to be customized in order to fit a company’s business processes. The
customization usually takes months, if not over a year, and involves programming and
configuration. Jollibee outsourced this project to a large multinational IT service
provider. Jollibee’s Oracle system had been running for years, and most certainly, had
huge amount of complex programming and continuous modifications over time. There
must have been fragile interrelationships between these programs and configurations,
making the migration to SAP a huge and risky move.
2. Staffing and expertise

The migration project was outsourced to a large multinational IT service provider, with
no sizable local team handling SAP, according to members of the Philippine SAP
community I was able to interview. My interviewees have never heard of that vendor
taking on Philippine projects using SAP before, which is why they concluded that the
vendor does not have significant SAP expertise locally.

Also, they said there was a flurry of recruiting for SAP professionals for that vendor. It
was a “red flag” because it seemed the vendor was having trouble filling positions
required for the project. The vendor reportedly brought in people from India and other
countries, but sources said the project remained understaffed.

To assemble a large team of outsiders and have them work on a complicated project
that quickly? It’s troublesome. We can assume the outsiders have not worked under a
common methodology and culture. They don’t have a common understanding of
standards and processes. It takes a while to learn the ropes.

3. Schedule and size

This is a half-a-billion-peso project, but it has an operating schedule of just a little over a
year – from the time the recruitment activity started till the supply chain issue broke out.
Many of the projects I’ve seen costing just 5% of this amount had a two-year timetable.
A project of this size will require 3 to 5 years to properly implement – from inception to
transition. Maybe this was just the first phase, but unfortunately for Jollibee it was
already costly.

4. Testing

Testing to check if the system’s features and processes are working is one of the most
overlooked aspects of IT projects. Unfortunately, most projects do this towards the end.
The later the defects are found, the more expensive they are to fix.
I asked a SAP expert on how testing is done in SAP, and he replied, “You'd be
surprised at what passes for unit / functional / integration testing in Oracle and SAP
projects.” While the practices and tools for testing have matured over the last two
decades, very few of them are properly applied to most ERP projects like Jollibee’s,
according to my source. ERP or Enterprise Resource Planning is the software system
for business processes.

RECOMMENDATIONS

1. Start small
The larger the IT project, the greater the chance of failure. This is because it’s difficult to
accurately predict upfront the requirements, system design, and human interactions
needed in a project. Stakeholders don’t really know what they want until they actually
get to use a system. Engineers can’t validate their designs until they have built
components to test. And the way engineering teams and business units interact during
the course of a project usually has a huge impact on schedules and deliverables.

It’s better to start with a very small project, one that can be done over 6 months, with 5
people or less. The project can be presented quickly to stakeholders and used as input
for succeeding changes or enhancements. Engineers will also be able to test their
designs before any huge construction is done, making changes less costly. It’s
important that the initial team include veterans. The team members can then be seed
members of succeeding larger projects or several small projects done in parallel.

2. Testing should be core and automated

An IT project must employ Test-Driven Development, where testing is central. Basically,

this approach means that tests are defined before each piece of work is started. Testing
is done not just by dedicated “testers,” but by every member of the team. Automated
tests are preferred over manual; rich automated testing tools have emerged over the
last two decades, and many of them are free and open source.

As the system is being built, automated tests should be done on even the smallest units
of the system. Since the tests are automated, they can run multiple times a day, giving
the team instant feedback on defects. This results in high quality work at every step of
the project.

3. Delivery must be continuous

One of the riskiest things I see organizations do time and time again is big migration to
a new system. They have an announcement that says, "System X will go live by (launch
date)!" When that day comes, it’s invariably a mess. People can’t get work done with the
new system and the old system is gone. If they’re lucky, the old system is still around,
while the new system undergoes bug fixing.

Compare this to how Google and Facebook roll out their changes. Notice that your
Gmail and Facebook have new features every few weeks or months. If you don’t like a
feature, there’s a button that allows you to go back to the old way of doing things. This
button is Google’s and Facebook’s way of getting feedback from their users. They roll
out the new feature to a set of users. If the users opt for the old feature, then Facebook
and Google know they still need to improve the new feature. Then they roll it out again
to another set of users. When they reach the point when few users opt for the old
feature, then they know they’ve gotten the new feature right and make it a permanent
part of their systems.
You can apply this to business systems. Don’t roll out your system in a big bang. Roll it
out, feature by feature – every few weeks or months – to a set of users, and then get
their feedback. It will be easier and safer to roll out small changes rather than large
ones. Even the deployment and rollout can be automated. This will certainly be less
costly for your company.

4. be transparent

My final piece of advice: Be transparent to your client. Allow your client to monitor the
progress of a project and catch problems earlier rather than later. Provide concrete
evidence, such as:

 Regular demos. Provide your client with working software, not PowerPoint
presentations. Let them try out the features of the software. Get their feedback.
 Test reports. Automated tests run multiple times a day using centralized
systems called Continuous Integration Servers. These systems give clients
reports on various tests, and whether they’ve succeeded or failed. Some of these
tests, known as Acceptance Tests, can be read by non-technical users so you’ll
see what behaviour is being added to the system, and whether the system
already complies with that behaviour.
 Quality metrics. Aside from test reports, various tools can be added to the
Continuous Integration Server to generate other reports. Among these reports
are metrics on quality. For example, in Java, there are various tools that can
check if a system contains a code that leads to bugs or logic that is too
convoluted, and if a code violates standards.
 Big visible charts. If the team works onsite, various charts can give the rest of
the organization an idea of the progress of the team. Two of the popular charts
are Task Boards and Burndown Charts.

– Rappler.com

Calen Martin Legaspi is the CEO and co-founder of Orange and Bronze Software
Labs, a company that helps other companies improve their IT processes, and builds
custom IT solutions. He is also a member of the Philippine Software Industry
Association board.
AyalaLand migrates 173
companies on time
Real estate and property development firm AyalaLand, based in the Philippines, had to
migrate 173 companies to a new version of SAP ECC, and with some assistance from
BackOffice Associates, managed to solve their data nightmares to complete the
migration on time.

AyalaLand Inc (ALI), one of the Philippines’ largest and most respected real estate and
property development firms, currently operates 173 active companies, caters to the
needs of 100,000+ plus business partners and carries 1000+ properties and buildings,
140,000+ rental objects and more than 4.5 million accounts receivable/payable open
items. To help them manage their multi-faceted business processes, they have been
longtime users of the SAP ERP solution.

In 2012, ALI was in the midst of a major migration from SAP ERP version 4.6C to SAP
ECC 6.0. ALI’s existing SAP solution was specially customised because they chose not
to perform a standard technical upgrade. Moreover, ALI wanted to implement new
functionalities such as Flexible Real Estate Management (RE-FX). During the project,
ALI recognised that they could add considerable value to their investment if they took
the opportunity to migrate the underlying data to conform to the more exacting
requirements of the newer ERP solution.

To help them achieve their goals within a tight timeframe, as well as to guarantee an
upgrade without business interruption, ALI contracted ERP data specialists BackOffice
Associates to manage the data track of the project. BackOffice Associates specialises in
large, complex data migration and governance projects and has developed a proven
methodology, ‘Load Early, Load Often®’, to facilitate the process.

Conversion challenges
At the outset of the system upgrade project, ALI had anticipated performing all of the
data conversion tasks in-house. However, as the project unfolded, they realised that the
data extraction and upload to the target SAP ERP system using traditional methods was
becoming a bottleneck, especially given their huge volumes. The risk of missing the
target go-live date was looming.

“Failure was not an option,” says Annie Alipao, CIO, business information systems and
processing division (BISPD) at ALI. “We had to go-live on the appointed day since the
consequences for the many companies impacted would have been significant.”

Engagement with BackOffice Associates

“We were contacted by the ALI team while their project was already on and just before
the data migration process became critical,” says Alex Hoehl, director of operations and
sales support at BackOffice Associates.

“They were aware of our reputation for delivering successful outcomes on complex data
migration projects and appreciated the fact that we had particular expertise in the real
estate sector.  

BackOffice Associates assigned a team of experts – both onsite and offshore – to

support the project. ALI required a ‘progressive migration’ in which selected data sets
would be migrated in succession as part of delta loads.

“Coming into the project in the midst of the process, our data migration and governance
methodologies were key to getting the project back on track,” says Hoehl.

One of the first tasks was to train key players in the use of BackOffice Associates’ best
practice processes. One of the benefits that BackOffice Associates brings to a project is
that they are strong believers in knowledge transfer and empower their clients to take
ownership of the project and become efficient in the application of the solutions.

“We found the BackOffice Associates’ Data Migration Toolset™ quite intuitive and really
easy-to-use,” says Milton Villafuerte, information systems manager, BISPD. “Once the
business mapping rules were in place, we could effortlessly generate files for our mock
loads and repeat the process during the delta loads and as the migration progressed.
BackOffice Associates also showed us how to extract and migrate complex long text
from our Sales Contracts database. This had been a significant challenge from the
beginning and could have been problematic. However, it was a non-issue.”

Immediate impact
The team from BackOffice Associates had an immediate positive impact. “The Finance
and Logistics Transaction data loading using traditional methods was a nightmare from
the start,” says Dinna Ramos, information systems manager, BISPD. “But once we took
BackOffice Associates’ suggestion of applying their data migration methodology, we
were able to cut the upload duration by almost 80 per cent. This was a huge gain that
helped us achieve our cutover milestones.”
In total, BackOffice Associates’ engagement lasted a little over four months. This
allowed ALI to meet their tight timeframe and transfer all 173 active companies with 340
business entities and more than 4.5 million records to their new SAP ERP platform in a
single ‘big bang’ upgrade. None of this would have been possible without injection of
expertise by BackOffice Associates as the project developed. “The BackOffice
Associates project team integrated with our company’s workforce seamlessly,” says
Alipao. “I am confident that significant manual effort reduction was possible due to
BackOffice Associates being there. This, in turn, was key to the overall success of the
data migration and the upgrade.”

This case study was first published in the Inside SAP Yearbook 2014 and sponsored by
BackOffice Associates.

Globe Telecom Partners with SAP

to Transform Business Processes
 
Digitalization of finance processes to enable real-time decision
making, support agile environment

Globe Telecom recently signed a three-year deal with SAP, a

German-based multinational software corporation, for business
suite platform and service solutions aimed at digitalizing its
finance processes, enabling real-time decision making, and
supporting agile environment.

Through S4/HANA business suite platform, as well as Concur

and Ariba Procure-to-Pay (P2P) service solutions, Globe will be
able to modernize its business processes to keep up with the
fast-changing landscape of the business and market. These
solutions allow Globe to upgrade its Enterprise Resource
Planning (ERP), automating most of the manual processes.

“This initiative will help transform our finance processes into

more agile and real-time decision-making tools. More than
looking at numbers and transactions, we will further
strengthen our capability to add value company-wide by
providing insights crucial to making informed decisions,” said
Globe Chief Finance Officer Rizza Maniego-Eala. “We expect to
improve business productivity and operational efficiencies that
will enable our cross-functional teams to deliver a richer
internal and external customer experience.”

These latest technologies allow Globe to continually adopt

cloud technology, which provides easier scalability and faster
adoption rate for new releases. Globe said S/4HANA is a
significant enabler of its vision to create an agile finance
function, having access to information in real time and turning
data to business action.

Meanwhile, SAP Concur aims to simplify travel and employee

expense process of Globe. It envisions to transform the ERP
employee travel and reimbursement experience as well as the
finance team’s transaction handling. This is being done by
providing capabilities to generate information leading to spend
optimization insights.

For SAP Ariba P2P, the touchless invoice processing solution

is seen to enable better and seamless collaboration between
Globe and the vendor partners from procurement to payment.

Edler Panlilio, Managing Director at SAP Philippines, said: “We

greatly appreciate that a mobile and digital leader like Globe
has chosen SAP to continuously innovate the way they run
their operations. Because the best run SAP, Globe truly
embodies our purpose to run better to empower their teams
which then flow to improving customer experience.”

As the leading Philippine mobile company and leader of the

Filipino digital lifestyle, Globe saw its consolidated service
revenues reaching P68.3 billion as of the first half of 2018,
higher than the P62.9 billion reported in the same period of
2017.

Growth in top line continues to be delivered by different data

revenue streams. Mobile revenues reached P52.6 billion for the
first six months of the year with mobile data still growing at a
steady pace. The company’s mobile subscriber base totalled
65.1 million as of end-June 2018, up 9% from the 59.7 million
subscribers in the same period last year.

About Globe Telecom

Globe Telecom is a leading full service telecommunications

company in the Philippines, serving the needs of consumers
and businesses across an entire suite of products and services
including mobile, fixed, and broadband, data connections,
internet, and managed services. Its principals are Ayala
Corporation and Singtel, which are acknowledged industry
leaders in the country and in the region.

About SAP

As market leader in enterprise application software, SAP

(NYSE: SAP) helps companies of all sizes and industries run
better. From back office to boardroom, warehouse to
storefront, desktop to mobile device, SAP empowers people
and organizations to work together more efficiently and use
business insight more effectively to stay ahead of the
competition. SAP applications and services enable more than
404,000 business and public sector customers to operate
profitably, adapt continuously, and grow sustainably.