CA Betting the Farm on SAP
These days, however, the stock is holding its own around the $25 dollar mark and the company is in the midst of an ambitious end-to-end SAP rollout that is intended to transform the organization.
This marks a significant step toward fulfilling a milestone in the company's deferred prosecution agreement with the Department of Justice, said Kevin Kern, CIO of Islandia, NY-based CA. mySAP Enterprise Resource Planning (ERP) will allow CA to achieve unprecedented levels of financial transparency, while enabling us to operate more efficiently, provide better service to customers and implement the necessary infrastructure to support our growth initiatives.
The deployment of SAP is one of the key initiatives that support what is known as the "CA Transformation." Its underlying vision is to transform the way the world manages information technology, while helping the company change the way it conducts business.
To do this, CA is about to go live on what is probably the most functionally rich and extensive SAP implementation anywhere on the planetand one the company is betting its future on, said Kern.
SAP understands that we are betting the company on this project so they have offered us a high-level of access to the important lessons they have learned, said Kern.
The company has installed the latest mySAP versions for ERP, HR, CRM, Financials, supply chain, sales force automation and a host of other business applications. This operates as one fully integrated suite. Kern says he can count the number of modifications required on one hand. And these, he said, were minor.
Nobody has ever had the opportunity to do a truly end-to-end rollout like this, says Kern. This will be the most functionally rich implementation in existence using all the latest SAP applications.
Kern has been involved in SAP implementations since the early 1990s and even spent a couple of years with SAP later in that decade. He regards this project as one of the foundational pillars necessary to really grow the company globally.
Practicing its Preaching
And, if CA plans to change the way the world manages IT then it has to practice what it preaches and that required a major retooling of its technology framework.
After two decades of steady acquisition, CA found its IT infrastructure riddled with legacy applications. As well as the heavy cost of maintaining them, these were largely homegrown point-applications. As a result, it was difficult to know the state of affairs across the entire company.
Financials were far from transparent and IT found itself involved in manual processes; putting out fires rather than taking preventive measures and having automated controls.
Moving to SAP is all about optimizing our IT investments, said Kern. We needed to simplify things, create a stable platform for growth and unify our infrastructure and application suite. The goal is to create a scalable solution that offered a single source of truth based on consistent and reliable data.
He feels the company has achieved this. World class financials controls and transparency are the words he uses to describe the impact of building business intelligence (BI) deep into the fabric of the ERP system. This enables IT to have a more reliable look at real-time data.
Building a Team
While CA relied upon the expertise of SAP and Accenture during this project, Kern points out that it couldnt have happened without the assembly of a top-notch internal team.
When he was hired 18 months ago, he was the only SAP expert in the building. Now, the company boasts 105 people skilled in SAP35 were hired, 45 existing employees were retrained and another group of 25 CA employees in India were also given SAP know how.
Kern feels that such a talent pool represents the necessary order of magnitude in a SOX world. He carefully assembled and mobilized the best talent available on the market in order to maximize the chances of project success.
Some companies try to cut costs by assembling C-class players rather than bringing in the A team, said Kern. Thats a big mistake as they take two to three times longer and run the budget way up.
With CA now having such a focused SAP skill set aboard, it is in an excellent position to implement best practices. As part of the deal, Kern managed to secure complete access to SAPs internal best practice personnel. This gives CA an inside look at how SAP leverages its own software to run its own company and run most of the Fortune 500 too.
To date, CA has spent over 15 months on its transformation program. And Kern believes that timing is an essential element of such a massive task. Becuase of this, he suggests, in general, that go-lives should be avoided late in the third quarter and throughout the entirety of the fourth quarter due to the heavy demands on the financial side.
CA also fully evaluated its implementation risks in advance. This included an investigation of the existing architecture that uncovered a significant barrier in terms of data formatting. With so many home-grown applications in use, the company had 15 years of customer contracts and bills of material (BOM) to convert to one SAP-friendly format.
It was a real bear to get all our contracts into SAP, said Kern. Beware of the data conversions on a major project like this and realize that SOX imposes even more challenges on the data side of the equation.
From the experience gained to date, Kern has plenty of tips to pass on to other CIOs.
You have to go into something of this scope with your eyes wide open, he said. You are never going to play to par on such a vast implementation, but we are running only a little under par.
He is measuring success with a focus on return on investment (ROI). Metrics are in place that record what has been spent and the resulting payback. mySAP CRM, for example, has already added measurable value by providing one source of truth for CA globally. But the degree of success, he adds, probably wont be known for another couple of quarters as the deployment continues to roll out.
Perhaps his biggest piece of advice concerns support. As a CIO, he stresses that it would have been impossible to engage in this task without the CEO, CFO and COO not only backing the project but driving the change within the corporate culture.
When you are involved in very difficult changes you need strong top management support. This has to go way beyond lip-service and manifest as rock solid backing.