Case Study III-6 • BAT Taiwan: Implementing SAP for a Strategic Transition 487expected that SAP would become the solution for all end
markets over time, if it could be implemented at a reason-
able cost.
When reviewing the APSS model for implementing
SAP, we found that the difference in total cost of
ownership between CS3 and SAP became insignifi-
cant if we use the common configuration approach.
Rather than taking an interim solution for cost rea-
son, it’s more effective for us to commit a marginally
higher investment and advance directly to the
endgame solution— which is SAP.
— Head of IT, APN
In July 2000, a two day study of the SAP project for
Taiwan was conducted by the APSS Applications Manager
for SAP with a team that had representatives from APN, BAT
Australia, BAT Singapore, and APSS. The outcome was a
high-level system specification document for implementing
SAP R/3. The recommendation was that R/3 modules for
sales and distribution (SD), materials management (MM—
purchasing and inventory management), financials (FI includ-
ing fixed assets), and controlling (CO including profitability
analysis) be implemented in two phases. Phase 1 would
support direct importing and distribution to one customer
(a former distributor) and would be operational by January 1,
- Phase 2 would support direct sales and distribution to
key accounts and be operational within six months later.
Selecting an IT Partner
Although APN IT could provide project management
expertise as well as PC desktop and LAN support, it had no
SAP R/3 expertise. An implementation partner with func-
tional and technical SAP experience was therefore needed.
Further, Taiwan needed a contract for IT services with a
BAT global data center to host the SAP application as well
as a contract for ongoing application maintenance: IT
resources would need to be contracted for periodic system
requests such as new reports, as well as for the periodic
software upgrades provided by SAP.
Following the high-level study, both the European and
the Asia Pacific shared services organizations were invited
to submit proposals for Taiwan’s R/3 implementation as
well as ongoing operations and support. Taiwan would then
select the best proposal based on the R/3 template and other
considerations.
The European shared services groups already pro-
vided computer support for BAT Taiwan as a user of SAP
financials for the BAT U.K. operations. Because Taiwan
had experienced the European data center’s high-quality
operational support firsthand, continuing to work with this
data center was a clear option. In addition, the SAP Center
of Excellence in Europe was a viable partner for the R/3
implementation project.
The SAP application services group that was part of
APSS was a newer group, but had played a part in the other
SAP implementations in the AP region. APSS had also
been running SAP applications for Australia, Malaysia,
and Singapore for more than 16 months at the time of the
Taiwan proposal, so APSS also had a proven track record
as a regional data center for SAP.
Although Andersen Consulting (now Accenture) had
been the implementation partner on a number of BAT R/3
implementations for the AP region, such as those in
Australia and Singapore, R/3 project costs using an exter-
nal implementation partner had been quite expensive. For a
new, still small, Taiwan end market, project costs were a
very important consideration, so the decision was made to
not request a bid from an external consulting firm. In
addition, a regional BAT partner would be more knowl-
edgeable about BAT business processes and existing BAT
templates for SAP implementations.
Proposals were received from the shared services or-
ganizations in Europe (EDC and EcoE) and the Asia
Pacific (APSS). The decision was made to go with APSS
for the R/3 implementation, as well as for SAP hosting and
ongoing support, for a number of reasons.
First, the proposals from both Europe (EcoE) and
APSS were quite similar with respect to implementing
R/3. Although the European shared services group had
more extensive SAP implementation experience, APSS
had recently used a template (code-named “Symphony”)
for an SAP implementation with a similar business
model in BAT Singapore. Thus, there was high confi-
dence in the SAP functional and technical expertise in
the AP region.
Second, for the ongoing operations and maintenance
roles, APSS had two major advantages over the EDC:
lower personnel costs in the AP region compared to
Europe and the same time zone. By mid-2000, the annual
operational costs at APSS for hosting an SAP R/3 user
were U.S.$3,500, and were expected to drop further in- BAT Taiwan would not have to purchase the SAP
software licenses, which would be held by APSS.
BAT Taiwan saves a lot of time and effort by let-
ting APSS purchase and own the licenses and we
only pay a monthly fee. We don’t have to track the
licenses as assets, manage maintenance contracts
and payments, process procurement and track
global pricing policies and terms. We also do not
have to worry about selling excess licenses when
the number of users comes down.
— Head of IT, APN