484
CASE STUDY III-6
BAT Taiwan: Implementing SAP
for a Strategic Transition
We needed a new system to support the new business
model. A/P and A/R had never been done in Taiwan
before, and the timeline was very short. We told them
SAP is not new to Asia, and if it works in operating
companies similar to ours (like Singapore) there is no
reason why it should not work for us. Furthermore,
the integrated information derived from the SAP sys-
tem is going to help make our jobs more efficient and
meaningful. There was a huge buy-in.
— Mr. Ma, BAT Taiwan Country Manager
Very few of our people had any experience in actually
using an ERP system; they didn’t have an integrated
system view of things. So we depended a lot on the
proven template. As a team we said there should be
minimal, minimal changes to the template. We don’t
want to change the system and get away from those
embedded best practices.
— Mr. Lee, Project Co-Lead, BAT Taiwan
The Asia Pacific Regional IT Manager, Mr. Ponce,
was reflecting on the recent SAP implementation in
Taiwan. The project marked an important business transi-
tion for the Taiwan market, and it also represented a big
victory for insourcing an SAP implementation at BAT.
What were the important lessons from the implementation
approach and management of this project? How could they
be amplified as best practices to other parts of the Asia
Pacific region and BAT as a whole?
Company Background
British American Tobacco (BAT) is a 99-year-old company
in the tobacco industry that has grown to be one of the top
three global players through organic growth and acquisitions.
Formerly B.A.T. Industries, it spun off its financial services
business in 1998 and merged with the global cigarette compa-
ny Rothmans International in 1999. BAT’s local and interna-
tional brands are sold in six world regions: Africa, America
Pacific, Asia Pacific, Europe, Latin America, and Mesca
(Middle East and Central Asia). A seventh division, STC
(Smoking Tobacco and Cigars), is a global division operating
in more than 100 countries. Corporate headquarters for BAT
is based at Globe House in London.
The profit centers are end markets, typically at the
country level. Small- to medium-sized end- markets typically
report into an area cluster, a self-sufficient management unit
led by an area director. An end market is headed by a country
manager who reports to an area director, and each area
director reports to a regional director.
For example, the Asia Pacific region has five manage-
ment units: Asia Pacific North (APN), Asia Pacific South
(APS), Malaysia, Australasia, and Indonesia. BAT Taiwan is
part of the APN management unit, which also includes
Hong Kong, The People’s Republic of China, and Macau.
The country manager for Taiwan has a report line to the
managing director for APN, who is also the country man-
ager for China. The APN offices are based in Hong Kong.BAT Taiwan
BAT Taiwan is a branch office of BAT Services, Ltd., UK
(BATUKE), with responsibilities for trade and brand mar-
keting. After the tobacco market in Taiwan was liberalized
in 1987, imported cigarettes were allowed to be sold via
local agents. Initially, BAT brands were sold in Taiwan by
Brown & Williamson and BATUKE through different dis-
tributors. Beginning in 1992, all Brown & Williamson’s
brands were sold through the BATUKE network world-
wide. As a result of this global initiative, the importation
and distribution of all BAT brands in Taiwan was consoli-
dated, with China Merchants, Ltd., being appointed as the
sole importer/distributor for Taiwan. In 1999, the BAT-
Rothmans merger resulted in another realignment.
Rothmans used a local agent, Taiwan International TobaccoCopyright © 2003 by C.V. Brown and I. Vessey. This case was
prepared for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation. Personal names have
been camouflaged at the request of British American Tobacco manage-
ment. The authors are grateful to all of the BAT managers who were
interviewed by the authors for this study.