Leveraging The ERP Backbone

In 1995 Dow Corning Corp. started its journey to integrate its global business processes and improve its business-intelligence capabilities with a decision to begin implementation of a basic ERP backbone. Step one was R/3, the enterprise resource planning solution from SAP AG. By replacing a multiplicity of legacy systems running on mainframes, Dow Corning began the process of meeting a variety of phase-one objectives. "Not only did we hope to gain efficiency in our transactional processes by being able to perform better, faster, and more cheaply, we also had global integration problems that we wanted to solve," says Cynthia A. Hartz, Dow Corning's manager of the SAP business-information framework in Midland, Mich. In addition to more fully automating and integrating business processes, the company wanted to share common data and practices across the entire global enterprise. The company, a manufacturer of chemicals, produces more than 5,000 products in 32 manufacturing facilities. In 1997 it generated $2.6 billion in sales with more than 60% of its business originating outside the U.S. In September 1996 three manufacturing sites in the UK were the first to come on line. Implementations at the other sites completed phase one by the end of 1998. Phase two, Dow Corning's business-intelligence strategy, takes advantage of SAP's announcement last September of its Business Information Warehouse (BW). SAP's intent is to offer the ability to consolidate internal and external information and to make it possible to take advantage of its Strategic Enterprise Management tools and processes. "It is a follow-up to a direction we started almost 20 years ago when we said our business customers needed integrated systems," says Michael Klemen, SAP's corporate director of sales and marketing, Waldorf, Germany. Last fall Dow Corning became a beta site for SAP's BW and began the evaluation process with other early adopters such as Colgate-Palmolive Co., Intel Corp., and Bay Networks Inc. "We met with them and SAP on a regular basis, sharing our visions for business intelligence," says Hartz. "We performed data modeling and walked through typical business-case scenarios." Components of SAP's solution include the BW Server; automatic-extraction capability; InfoCubes for multidimensional reporting; Business Explorer, a new front-end reporting and online-analytical-processing solution; the Administrator Workbench; and Business Applications Programming Interfaces. Hartz plans to launch a product-costing activity as the first production application for the SAP BW. In addition to pulling in data from R/3, Hartz is evaluating the data warehouse's potential for using data from other sources. Some of her examples include data from plant-floor data-collection software, patent information, and external benchmarking. Hartz says Dow Corning hopes to be able to leverage some of the skills and technology developed in connection with the R/3 implementation to facilitate the rapid scale-up of the data-warehouse capability. "We'll have over 4,000 users associated with the SAP ERP, and the same look and feel can be applied to the data warehouse." She says that an important lesson learned was the value of going into the software-evaluation phase with all the details decided about the specific business reports that would need to be created. She also values the chance for technology exploration the software-evaluation process afforded. "We had this wonderful opportunity to draw on the wisdom of the entire development team. . . . That helped us visualize future potential for business intelligence in the post-ERP implementation phase," Hartz adds. From the SAP perspective, the data warehouse is seen as vital business-intelligence infrastructure. "It is an enabling step that can help businesses bridge the gap between operations and strategy," says SAP's Klemen.