How Amcor Achieved IT Business Transformation by Standardizing Processes in 10 Countries Using SAP and a Local Provider | Article
You are a global company with a common problem: each country handles its BPO processes differently. Executives at corporate have difficulty calculating costs and running analytics since they can’t get an accurate overall picture because they have to compare apples with oranges.
One solution: harmonize and standardize global processes using one ERP system. How do you do this efficiently and cost effectively?
For Amcor, the answer was outsourcing to a local provider.
The need for one platform for 10 Latin American countries
Amcor Rigid Plastics, a packaging company, is a division of Amcor Ltd., an Australian corporation. Amcor, which has 35,000 employees in 43 countries, divides its workforce into three regions. The Latin America business unit works with 10 Latin American countries from its headquarters in Buenos Aires, Argentina.
In 2006 it outsourced SAP implementation and support to Grupo ASSA, which is headquartered in Argentina. Roberto Wagmaister, President and CEO of GrupoASSA, says “our job is to help business process executives shape the way they work with their IT systems.” The company, which is about to celebrate its 20th birthday, was one of Latin America’s first application service providers (ASPs. Remember them?)
Its largest assignment to date was integrating 70 different countries into a single entity. The Amcor assignment was only 10.
Before outsourcing, Amcor used proprietary software, according to Cielo Hernandez, director of operations, finance for Amcor. Each unit behaving independently “jeopardized our financial template,” she explains. “We needed to be on a single platform so we could benchmark across countries. One platform meant we could look across the region in a controlled process,” adds Hernandez, who is also director of IT for the region.
Standardization was also more cost and time effective, she adds, because it meant Amcor had to do only one IT development instead of 10 for each country. Amcor also saved money because it had different providers in each country, many of whom charged higher rates than Grupo ASSA, which now handles the entire region. “Because our IT is less expensive, our prices to our customers are lower. That makes them and us more competitive in our marketplace,” Hernandez continues.
To date, the savings are in the millions, according to Guillermo Perez, regional IT manager, Latin America for Amcor.
Outsourcing’s other benefits
Outsourcing SAP support also sped up IT development, Hernandez reports. Today Amcor receives “better information. That allows our business to make better decisions,” she notes.
Amcor is a company always on the hunt for merger possibilities. (Amcor has completed two in the last first years.) When Amcor buys another company, the consolidation process is faster because Grupo ASSA implements SAP, Hernandez continues.
The service provider has helped Amcor implement best practices, which it shares across all 10 Latin American countries.
One of the trickiest parts of the SAP implementation is business process management. As the head of finance, Hernandez is responsible for financial compliance and Sarbanes-Oxley implementation. “We had to document all these processes,” she explains. Grupo Assa has a tool that is already integrated into SAP to produce the requisite narratives and flow charts for each finance job. An added benefit: the partners used these charts to implement the processes whenever they rolled out SAP in a new country.
Finally, there is just one throat to choke. “We have a direct point of contact when SAP is broken. Now I don’t have everyone calling me to ask, “Who is going to help me? Outsourcing is easier to manage when you have just one provider,” says the Amcor executive.
Why Amcor wanted a Latin American-based provider
The company, which was using multiple service providers, invited three to bid for the entire region. “We wanted someone with Latin American experience, someone who understood Latin American culture,” says Hernandez. Wagmaister says many of its Latin American clients select his company “because we are closer to home.”
Typically the buyer selects one country as a pilot. After the first implementation, Grupo ASSA makes adjustments to the model and then rolls out the new-and-improved version to all the other countries. Grupo ASSA always keeps a small group of people on site.
The importance of merger and acquisition experience
The new provider also had to have merger and acquisition experience, especially in Brazil, where Amcor’s past two acquisitions occurred. “Grupo ASSA is helping us grow our business,” says Perez. He includes Grupo ASSA executives in early discussions every time Amcor is considering an acquisition.
Grupo ASSA did such a good job in Brazil, Amcor decided to use the company to do the SAP implementation when Amcor bought Ball Plastics Packaging Americas in Broomfield, Colorado. “We had a tight integration time: just 90 days,” says Hernandez. “This integration was a huge priority for our company.”
However, there was one hitch: Amcor and Grupo ASSA had already agreed to implement SAP in both Ecuador and Peru during that exact same 90-day period. “This was just as important,” she says. (The partners found that if they do two Latin American countries at the same time, it saves both time and money.)
The three-part assignment in three different countries required great coordination, the Amcor executive recalls. The two partners decided to test all development work before they put it into production. “Everything had to work the way it did before the SAP implementation,” she explains.
IT people at both companies “worked night and day all through the Christmas holidays,” Hernandez recalls. “Grupo ASSA was committed to delivering everything on time and on budget. And they did.”
About Grupo Assa
The service provider specializes in what it calls “mission critical business transformation” using SAP or Oracle to replace legacy applications. “We hold round tables with executives to address the needs of their business processes and then work with their IT departments to support those results,” explains Wagmaister. He says business transformation success only happens when “IT executives understand the soft infrastructure—creating a rewarding user experience—as well as they understand the technological infrastructure. We realize we manage people not just IT systems.”