Dmitry Lyakhovets: We implemented SAP seriously and for a long time

TAdviser: What features exist when implementing projects of informatization of large networks of hypermarkets, in your opinion?

Dmitry Lyakhovets: I want to emphasize what "Banana mother" is rather large shop in which very wide range of goods is provided. I understand the list in 30 thousand positions of the most different commodity categories as the wide range. Therefore in a sense features at us are mass if it is possible to be expressed so. So when opening each shop the certain standard approach which is set of the checked methods of the organization of outlet, placement of goods, process automation, etc. is used. And on the one hand this approach is standard, with another - it already considers a set of the features inherent in networks of hypermarkets, and specifically our company. Besides, we, certainly, consider the features inherent in each specific shop in our network, for example, its arrangement, social composition around, etc.

TAdviser: In "Banana mother" the system of SAP is implemented. How the situation with informatization of the company before implementation of this solution was? Other system, custom development, own solution, something else was installed?

Dmitry Lyakhovets: Owners of the company from the very beginning were guided by the SAP solution as products of this developer are used as well in other their businesses. Nevertheless, transition from legacy system nevertheless took place. We started on the solution of 1C company, and already from it passed to development of SAP.

TAdviser: What caused basic transition to SAP? 1C did not arrange for some reason or it is internal policy?

Dmitry Lyakhovets: I think that here a certain complex of the reasons. One of the main - we need to work according to the western standards and to have standard business processes which are clear including to foreign investors. At the same time the SAP solution has rather wide functionality and in it best practices which were successfully integrated into economic and settlement activity of "Banana mother" are organically implemented. The previous software, alas, did not allow to provide it. The accurate controllability and transparency of business processes were very important for us. The advanced business practices and ample integration opportunities put in a system were necessary for ensuring these processes. The SAP solution met these requirements.

TAdviser: Whether other solutions, except SAP were considered?</strong>

Dmitry Lyakhovets: No, no choice between the different systems existed. I once again will note that the choice of the SAP solution was in many respects caused by operating experience of a similar product in other business of owners of "Banana mother". Only the choice of the general contractor was carried out.

TAdviser: What were the main selection terms of the system integrator?

Dmitry Lyakhovets: One of the main criteria for us was rather wide pool of the certified specialists, or employees of competence necessary for us. We enough limited project deadlines, and company management confidence that the system integrator will be able to provide on the project the necessary number of specialists of necessary competence during a limited time frame was required. Other important criterion was financial stability of the general contractor: it was necessary for us that the system integrator could give delay opportunity for payments for consulting services. Also to us experience of the system integrator was very important. And, in spite of the fact that IBS had at that time no implemented large projects in retail, this company met all other criteria. Besides, in staff of IBS there were employees who had necessary competence of retail and they were involved in the project. Plus to it, we actively attracted to the project of staff of SAP to consulting services on specific features of retail SAP products.
<p>TAdviser: Some large retailers in Russia invited for implementation of similar projects of foreign system integrators, relying on their experience. Whether you considered such option?

Dmitry Lyakhovets: No. None of them were attracted, and it was not going to do. Acceptable project cost of automation was important for us. And taking into account the scale of business of "Banana mother", the project anyway turned out solid on the budget. At the same time, the competence of local gurus quite suited us, and financial stability of the general contractor gave confidence in project completion.

TAdviser: For what period it was calculated and going to use the SAP solution?

Dmitry Lyakhovets: I consider that here it is incorrect to speak about some horizon in general. We implemented SAP seriously and for a long time. I think, "Banana mother" all the time of the existence will work for SAP, and I believe that it will be considerable term. Another story - technology infrastructure. Here the expected horizon - about 3 years. We assume that for this period the volume of the processed data and development of the company will demand performance improvement of computing infrastructure. Regarding updating of a program part we are guided by functionality necessary for us, and tough terms on migration on new versions of SAP solutions at us are not established. Strategy is completely adaptive.

TAdviser: What functionality is implemented within project implementation? What part it was implemented within the standard solution what was improved?

Dmitry Lyakhovets: All operational circuit, except for the HCM module was implemented. So we implement the modules FI, MM, SD, Treasury, a circuit of cash flow, sale, purchases, a circuit of planning of money, etc. So all operating activities of the company are automated using the implemented ERP system. In the second half of 2007 deployment of the data warehouse - the module SEM-BW is planned.

As for change of functionality, the volume of completions was less than 10% here. However, this indicator is very conditional owing to uncertainty of its measurement. It is possible to note, for example, that from 220 project solutions used within ERP system implementation somewhere in 10 insignificant completions regarding functionality were required. The range of the existing standard settings was rather wide. In basic cases we finished a necessary part, in the majority - if necessary changed business processes of the company and did not try "invent the bicycle".

TAdviser: Why the HCM module was not implemented?

Dmitry Lyakhovets: We already successfully apply other solution - own development which completely satisfies at the moment to our requirements. At the same time it is closely integrated with a SAP product that allows us to use effectively the data obtained from this system. By the way, at us all legacy systems are integrated from the implemented mySAP ERP that allows us to create a complete picture of activity of the company almost in real time.

TAdviser: Whether many legacy systems are applied in "Banana mother" to this day? How fully the company works only at the SAP solution?

Dmitry Lyakhovets: Actually I do not believe that at least one company can work completely only at one solution even if such large company as SAP. And at us, including, the mass of other systems is used, each of which closes the section of activity. Here it is important that information from these systems was not blocked and was not duplicated. We actively apply special products to the solution of this task - so-called program hubs. As I already spoke, we have own HR system, also specialized trade solution is used, there is a number of the special technology systems, etc. However each of them is rather strictly integrated with SAP. For example, the system of accounting of number of visitors of each shop transfers data to the SAP solution and we always know at the level of key indicators in the system of SAP how many what visitors shop and in what day visited.

TAdviser: Whether there were difficulties with personnel of the company at ERP system implementation? Quite often similar projects, especially in the large companies, are sabotaged by her employees.

Dmitry Lyakhovets: No, at us this problem was successfully solved, and practically was not shown during mySAP ERP implementation project in any way. We understood importance of motivation of personnel therefore from the very beginning of the project different trainings were provided and also actively was trained employees to work with a new system. Besides, the project was supported by top management of the company that is very important factor. This circumstance set the tone in a certain measure for all project within the company. I consider that the problem of sabotage of personnel about which you speak is solved just competent work with employees. It is necessary to work with them, and this factor needs to be considered.

TAdviser: Whether there was some period of trial operation of a system?

Dmitry Lyakhovets: No. For us there came "hour of X" at once - it is on July 1, 2006 when all of us earned within our new system. It was the full start of commercial operation of a system. All old systems which were substituted by the SAP solution this day were disconnected. No opportunities for return existed back. By the way, the last circumstance allowed to master very quickly work with a system and provided accurate acceptance by personnel of a new system. Either so, or in any way. As a result approximately in a month after start of a system, we already came to the same indicators, as before its implementation - i.e. the company started working to the full extent with the huge potential which appeared as a result of ERP system start. All main operational problems and difficulties in connection with transition to a new system were closed in a month. I consider that it is very good result.

After that, we within half a year provided user training. And, it was training not in mechanics of work with a system - it was made much earlier - namely training in understanding of logic of a system, to perception of its separate parts as whole and to understanding by the user of specifically role in life of this system and, respectively, the company. It was, first of all, business training - the report to users of the purposes and problems of their functioning within this information environment of the enterprise.

As for more difficult processes as, for example, automatic formation and the order of goods, these processes started working to the full extent just now. For example, today up to 70% of goods of "Banana mother" it is ordered absolutely in the automatic mode: the system of SAP independently places the necessary order at the supplier and monitors his accomplishment. In the nearest future we are going to increase a share of automatically ordered goods even more. But it is necessary to understand that in spite of the fact that all this was put at a system design stage, and the technological capability of implementation of similar processes was present already then, it started working just now to the full extent. That it happened, the corresponding understanding from users of a system was necessary.

TAdviser: New hypermarkets are started with SAP at once? The same contractor performs works?

Dmitry Lyakhovets: Yes, new shops, certainly, too are automated at once. Concerning the contractor - everything depends on specific shop, on different conditions and degree of equipment of this hypermarket. In the different directions we have different contractors. In total about 50 only technology contractors can participate in start of one new hypermarket. And, of course, generally in each of competences the contractor is usually fixed as it is not just like that the selected companies, and the checked partners selected within tenders and having experience with us.

Besides, I consider that everyone should be engaged in the fact that it at it best of all turns out. And I am not a supporter of unreasonably big increase in IT department in the company. Guarantees of observance of standards and quality are necessary for the large company. Under our conditions it can provide only industrial approach.

TAdviser: Whether you tried to estimate somehow cost efficiency of an implementation project the ERP system? Whether there were attempts to calculate any economic indicators to the project and to verify them with similar after its end?

Dmitry Lyakhovets: No, similar assessment it was not made. From our point of view, calculation of the indicators mentioned by you - very expensive action, and their accounting with attempt of the subsequent correction is too doubtful. For that simple reason that in calculation of similar coefficients it is necessary to consider a huge number of different factors. For me an indicator are not some virtual coefficients, but measurement of the same turnover of goods. And on dynamics of real characteristics in this case of retail business we see efficiency of the implemented ERP system.

In particular, it is possible to provide the following rather indicative data:

• The turnover of trade inventories grew by 50%. According to 12 months of operation of SAP, at decrease in the total cost of a stock in shop revenue remained at the level of the same period of last year.
• Situations of exceeding of the amount of the account over an order amount, i.e., deliveries of goods at the price, above contractual are completely excluded.
• Payment situations to the supplier before the term stipulated by the agreement are completely excluded. Intervention of the manager in formation of requests for payments on commodity deliveries is not allowed.
• Automatic control of exceeding of the amount of the account is implemented (a system is customized with the admission of 0.3%). Suppliers ceased to demand large sums, than made a reservation at the time of the order, motivating it with sudden advance in price. The analysis of six months 2006 (at the time of start of SAP) showed the amount of such overestimated requirements of 40 million rubles.
• Automatic calculation of conditions of the end of the period for receiving different bonuses from suppliers for the goods volume, representation in shops and so forth is implemented. As a result became possible to keep under control and within 1-2 days to calculate and make out suppliers bills for the total amount of $2 million. Earlier this procedure took several weeks.
• The interest rate for external loans decreased by 1% per annum. After SAP implementation the investment attractiveness of the company increased, including, at the expense of a possibility of obtaining the management reporting by investors in the shortest possible time.

TAdviser: Thanks.