Peering across the abyss: Clothing and shoe companies cross the ERP chasm: Page 3

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How SAP's Apparel/Footwear Solution works

AFS is an add-on component to its R/3 enterprise resource planning software. The add-on has the following features:

It allows manufacturers, wholesalers, and distributors to use a product grid to track shoes and clothing by variables such as material number, style, size, color, and quantity.
It allows users to prioritize and schedule orders.
It enables users to process orders received via telephone, fax, EDI, or the Internet.
Companies that outsource manufacturing can track vendors based on priorities such as cost, quality, and reliability.
It can be integrated with standard R/3 modules such as financials, logistics, and human resources.

One reason for the problems with the consortium and AFS in general was the industry's hunger for the product and its enthusiastic jump to AFS once word spread of the add-on's existence. "That caught SAP by surprise," claims Burrows. "There are other packages out there, but they're not as complete and they're not global. I think SAP underestimated how desperate the industry was for a good solution."

Indeed, SAP's readiness to enter an industry doesn't always signal the industry's preparedness for SAP. "We constantly counsel customers in industries that SAP is trying to penetrate that the concept of best practices is not as well understood in these markets," says Gartner Group's Mirchandani.

Tropical Sportswear is confident it bought AFS for the right reasons, though. The clothing maker says it received the core functionality it needed in AFS. But after wading through the crowds at SAP's annual SAPphire conference in September 1998 in Los Angeles, CIO Pulsipher has no illusions about where the $400 million company falls within the R/3 family: "If you go to SAPphire, you realize you're a gnat on the elephant. So you go where the elephant goes."

"Although SAP had a product, it wasn't evident to us that it was available," says Harry Kubetz, senior VP of operations at Kenneth Cole Productions.
"We tell people who are signing with SAP--and for that matter with PeopleSoft and Oracle--that you're joining a club," Mirchandani adds. "You may think you're hot stuff in your industry, but when you join, your leverage drops the day you sign the contract." SAP's vast roster of R/3 clients is crowded with billion-dollar businesses that have to jostle for SAP's attention. "With 14,000 customers, even Exxon is a blip," says Mirchandani of R/3's sprawling client base.

Kenneth Cole Productions evaluated AFS but chose AS/400-based software from JBA International--the same software AeroGroup is reportedly planning to use. "Although SAP had a product, it wasn't evident to us that it was available," says Harry Kubetz, senior vice president of operations for the $225 million New York City fashion company. He prefers the JBA approach--direct contact with JBA on the project--to the SAP approach, which requires that customers rely on consultants and systems integrators for implementation. And the project's $2 million tab, including hardware, software, and consulting, is $3 million less than Kubetz calculates he would have paid for the SAP product. It's also 50% less than the much smaller AeroGroup (with projected 1998 revenue of $150 million) planned to spend on its AFS implementation.

If the shoe doesn't fit, squeak

Even AFS customers that are going live in January 1999 say it has been a rough experience. Did companies at times feel like guinea pigs? "You can say that again," says Bruno Magli USA president Peter Grueterich. With revenues of $60 million, Bruno Magli is one of the smaller companies to adopt AFS. Its implementation is six months late and 15% over budget. The company expected to go live in January 1999. Grueterich dismisses the delay as necessary while the company geared up for the busy fall and holiday selling season. He adds that the lapse was fortunate: While Bruno Magli put the project on hold, SAP released version 1.0C of AFS, considered by many customers to be far superior to 1.0B.

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