Business transformation rarely happens without a little help from technology. The appeal of fast-start, pay-as-you-go, online IT solutions is gathering pace among European manufacturers, but companies still face challenges making software-as-a-service work in the real world.
In early July, general manager Nick Lindhop hopes to unveil a set of tools that will drive an era of unprecedented growth at British specialist chemicals manufacturer Pentagon Chemicals Ltd. He will introduce an entirely new online, on-demand business platform across the €55 million ($85.5 million) company.
Pentagon, which produces base chemicals for the agribusiness and pharmaceutical intermediaries at two sites in the United Kingdom, will become one of the earliest European manufacturers to go live with SAP’s new Business by Design service — delivered almost entirely over the Internet as software-as-a-service (SaaS).
“Building software platforms is not our strength,” Lindhop says. “Our strength is in chemical processes, product development, and manufacturing in a safe way, but we rapidly need a new technology platform that helps us compete with large organisations and Asian companies. We need better information, better visibility, and a better grip on our supply chain. We need it quickly.”
Pentagon is just one of many fast-growth European small and medium-sized manufacturers and established global corporations now trialling the SaaS delivery method as a fast-start option for new IT applications.
The promise of SaaS seems appealing — ready-made business applications on demand, online, with minimal up-front investment, all the hassle of security and updates taken care of by the supplier, and ready to roll in weeks rather than years. Well, that’s the theory.
It isn’t always that simple — especially when you’re trying to run your online SaaS platform across many countries.
“One tip that I would give everybody, and we found this out only in the middle of our rollout, was that the Internet infrastructure in some parts of the world is not as advanced as we thought,” says Ulla Hiekkanen-Mäkelä, assistant vice president of strategic customer management at the world’s fourth-largest lift maker, Kone, in Espoo, Finland. “We had to do a full technical evaluation of our own servers across the world,” she says, “[and] then some corrective action to solve the problem. It’s a prerequisite for this stuff.“
The €4 billion ($6.2 billion) elevator and escalator company has used SaaS-based applications from SaaS pioneer Salesforce.com to support its global CRM activities for over a year. It’s a substantial operation — supporting 2,000 users serving a global customer base with 800 service centers in 43 countries.
Hiekkanen-Mäkelä says the effort has certainly been worthwhile. “Moving from product sales to customer service management has definitely been one of the key benefits that we have seen as a manufacturing company. With the SaaS approach we were able to concentrate on the business change and the process change, rather than running this as an IT project. We could scale the system week by week on rollout, and someone else took care of all the security settings, backup, and duplications, so we were able to focus on the business implementation with only a small IT team,” she says.
Overall, Kone estimates, the move has saved the business five months of IT development and will hit ROI within three years. “SaaS is good if people have a clear process in mind and want to get a very quick start — and they don’t want to develop something from scratch,” she adds.
