Savannah Cement goes real-time in Kenya - an ERP on HANA use case

Profile picture for user jreed By Jon Reed April 1, 2015
Summary:
When I had the chance to learn how Savannah Cement Limited used real-time ERP to improve their position in Kenya's cement industry, I seized it. Here's what I learned about their super-fast ERP on HANA implementation, and why they have an advantage - even against other SAP customers.

Savannah-Cement-ERP-HANA
Two years ago, Savannah Cement Limited faced a serious problem. Their current ERP system (UFIDA) wasn't giving them the real-time operational view they needed (example: attempting to identify fraud after the fact is not a winning approach).

Other legacy systems were also holding them back. The construction economy in Kenya is far too competitive to tolerate outdated processes or sluggish response times. As a 250 employee upstart determined to have regional impact, Savannah Cement prides itself on its lean workforce of rapid technology adopters, who are focused on excelling in the cement industry while developing eco-friendly processes. They needed enterprise software that could keep up with their adjust/improve/expand pace.

Last week, I got the story behind the company from Savannah Cement's Brian Wamwenje. He told me about why they chose ERP on HANA and the results. He also shared a deeper story of construction in Africa, and how Savannah Cement, with 1.5 million tons of annual production capacity and counting, has gained a foothold in such a competitive industry.

Construction in Kenya - active but highly competitive

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The Savannah Cement team

Cement is not my specialty, nor does it sound like an easy business. I asked Wamwenje about the market conditions in Kenya. The good news? There's been several years of steady growth. Kenya is the home base for companies that extend their market into Tanzania, Uganda, and all the way into South Sudan (Savannah Cement is particularly strong in South Sudan with a 98 percent market share).

But winning bids against incumbent cement companies isn't easy. The struggle for political stability creates more uncertainty. Wamwenje:

There was a bit of a slump when we had the civil war following the fall out between the President and the Vice President. As peace resumes in the region, we are seeing a good uptake of our product. In terms of Kenya, Kenya is just now getting into an evolved system where we have two-tiers of government. We are seeing the lower level of government initiating a number of projects within their jurisdiction. The industry is also riding high on that demand.

Competition for these new construction bids is fierce:

We have some big players. We have Lafarge, the world leader who is actually the market leader here as well. We are competing for that space. We are competing with six other companies; each one is becoming more aggressive. All are fighting to stay on top of their market share.

So why does real-time ERP matter?

Let's face it - vendors like SAP have marketed "real-time" business to the point of saturation. But what is the actual impact? To get there, we need to go back in time a few years, when Wamwenje, a ten year ERP veteran with a history in African cement industry, was hired as the Savannah Cement IT Manager.

savannah-cement-sunrise
At the time, Wamwenje's team concluded that they needed a modern ERP platform to solve the business issues in front of them. Between their ERP system and additional third party tools, Wamwenje felt IT was no longer aligned with the business. I asked Wamwenje for an example of how their older systems were failing them:

Most of the time we would identify risks, or we'd attempt to discover fraud after it has happened - at times, even weeks after it happened. One of the problems we had involved a weighbridge, which is a main point of control. We used to manage the weighbridge with two different systems. The integration between them would only run as a batch application every morning at 6:00 a.m,. when we would get the actual information from the weighbridge in terms of materials which have been supplied.

Frequently, suppliers would drop off over-deliveries. Because they didn't know their purchase order was about to be exhausted, they would bring in three times the truck loads they should have. By the time we discovered the over-delivery the following morning, we had already received the material in our yard. You end up paying the supplier an extra amount over and above what was budgeted for in the purchase order. This adds up quickly - a driver could bring in 20 unwanted deliveries before the morning report ran.

ERP on HANA - selection criteria

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Wamwenje's team was tasked with building a modern ERP platform. They arrived at ERP on HANA through several criteria, including pro-active risk management. The underlying goal: increase operational transparency and visibility across the company, while reducing the cost of ownership (and simplifying the licensing). That meant thinking of ERP not as a transactional system, but as a platform. A key part of that platform? Mobile enablement:

In this part of the world, technology is being absorbed at a very high rate - particularly mobile technology. Mobile is changing the way customers interact with companies at a very fast pace. We wanted to be able to keep up with these trends, while ensuring high system reliability.

But it was the real-time capabilities that brought ERP on HANA to the top of the selection list:

What pushed us towards HANA was the fact that we needed a real-time solution. As I said, many times we were caught with our pants down. We needed a real-time solution that would allow us to actually identify such incidences and trends as they occur. We were looking for a data base that would give us agility and speed.

A problematic SMS project reminded Wamwenje's how important speed was to their future:

Some time back, we had an SMS-ing platform on a traditional database. When an order is created, a customer is able to receive an SMS that an order has been created, including the details of the order. On our older database, there could be a delay of a day before the SMS got to the customer, because at times the load would be too much on the database.

HANA addressed this issue, and has helped Savannah Cement excel against the competition - yes, even those running on other SAP systems:

The functionality HANA brought on the table allowed us to have a business advantage of our competition, some of whom are actually using SAP, but on traditional databases.

How to pull off a fast (and successful) ERP on HANA install

go-live cake
Savannah Concrete began their ERP on HANA install in January of 2014. With the help of an SAP advisor and implementation partner EoH Seal, they hit their go-live of May 1, 2014, without exceeding budget (yes, pictured left is the actual go-live celebratory cake).

A fast and successful implementation is still a pretty rare bird in the ERP market. I asked Wamwenje for his team's secrets, which boild down to:

  • Use existing best practice templates.
  • Adapt those templates to your business as needed. (Savannah Concrete was able to adapt SAP's mill business templates to meet about 80 percent of their functional needs)
    Select high-performing team members from both business and IT, even if their participation creates a temporary strain on their existing teams.
  • When selecting team members, take personality into account. Wamwenje: "We chose people who were team players who would jell well together. We formed a very cohesive team that was able to move at one pace."
  • Plan ahead for HANA hardware considerations. In retrospect, Wamwenje would have given more attention to hardware planning given that HANA tech is new to his region. (They did experience a HANA hardware delay, which they were able to overcome by putting in extra hours to hit their deadline).
  • Synchronize the project calendar and the hardware calendar to ensure that your hardware platform is delivered on time and in correct configuration.
  • Focus on knowledge transfer. Wamwenje: "We actually conducted tests on our users -we certified them internally to use the system. Every user was tasked to be competent enough to use the system at an individual level."
  • Executive buy-in is not a one-time thing, but a process of engagement. Savannah Concrete's executive team held weekly meetings dedicated to the ERP on HANA project to assess the progress and make critical decisions. Wamwenje: "This was unlike other environments, where you find the ERP project becomes a small agenda item in the executive meeting."
  • Bring in a third party to do a quality analysis to ensure that standards and quality were not compromised. Wamwenje: "This expert give us the confidence we were set for go-live, and we were able to get the green light."

Wrap - assessing the results

With some distance from go-live, Wamwenje has documented a number of benefits, including:

  • 75 percent reduction of period closure reporting lead time.
  • Improved risk management operational visibility.
  • Reduction of operational meetings from three daily meetings to one kickoff meeting each morning.
  • Higher system availability. Wamwenje credits their high availability HANA approach, with two systems continuously replicating each other: "If we have a downtime or we need to do a patch, we are able to have the second system come. Business is able to continue without losing sight on what is happening on the back end.")

And as for that weightstation over-delivery problem - that's been resolved also:

savannah-cement-workers

We now have a real-time view of that is being supplied. The minute the driver arrives with the first truck, we are able to assess the value against the balance on his PO, and we are able to stop deliveries based on the PO value. This has improved our cash flow, because now we are able to control how we are receiving the material against our production planning.

As expected, Savannah Cement is not waiting for the proverbial concrete to dry; they are looking into predictive HANA use cases that could help them make better decisions on operational costs, such as anticipating fuel price fluctuations. They also want to run "what if" scenarios such as predicting the results of a 10 percent decrease in marketing costs.

These roadmap items have one thing in common: informed decision-making. Wamwenje: "Now, we are able to make decisions based on actual informed business parameters and facts, as opposed to what we used to do in the past, basing decisions on people's intuition."

Reviewing this use case, two things stand out: IT moving out from under system maintenance chores, and the role of ERP not as a back office expense, but as a backbone of a real-time enterprise that flat-out competes better. This is no small shift in how we think about ERP. I'll leave the closing words to Wamwenje:

We looked at HANA as an intelligent database, and it has proven itself to be. It has its self-healing capabilities which has allowed the IT team to focus on other improvements within the business, as opposed to keeping the lights on.

Image credits: All images provided by Savannah Cement Limited and used with their permission - all rights reserved.

Disclosure: SAP is a diginomica premier partner at the time of this writing. The decision to write this article was mine  - when SAP approached me with the chance to talk to this customer, I said yes based on what I felt was an outstanding use case.