February 08, 2004, 8:39 PM — U-Bix Corp., a local office systems and services provider, will go live with its SAP AG enterprise resource planning (ERP) software implementation this week, an event that is not only significant for U-Bix but also for the local subsidiary of the German ERP software provider and its growth prospects in the Philippine market.
U-Bix is SAP Philippines first customer for a program it started mid-last year to aggressively attract small and medium enterprises (SMEs) to invest in a traditionally expensive ERP software. After U-Bix, two other local companies are lined up for the program called M3Lite, an ERP software package designed to cut the usual ERP investments by half using industry accepted templates and letting go of certain customized features in the software system.
For SAP, the U-Bix win signals a successful attempt to break a perception barrier that ERP software is only for large companies.
Although the local SAP subsidiary has been able to sign up smaller companies for ERP implementation in the past, breaking into the SME market has historically been tough for ERP vendors in the country. Two of SAP's local SME clients include Customer Contact Center Inc. (C-Cubed) and Quantum Foods Inc., but smaller companies have been harder to pursue.
A classification ratings chart of the Department of Trade and Industry shows that SMEs comprise 94 percent of all local firms. SAP defines medium-sized companies as those earning from US$99.9 million to $20.1 million in annual revenues while small firms are those earning $20 million or below.
Although U-Bix, a 1 billion peso (US$17 million) annual revenue company, is by no means a small firm, the results of its ERP implementation will be used as a gauge for future M3Lite installations. How a template-driven software system as opposed to the traditional full ERP implementation can be quickly adopted and implemented by a company will most likely become a yardstick for other companies looking into the same software package.
Krishnendu Datta, SAP Philippines managing director, explained during the launch of the M3Lite program last year, that the software package is not a stripped-down, bare-bones version of its full ERP software. Instead, SAP has re-packaged the software and removed some of the modules that a mid- to small-sized company might not need. The company also took away customization services for the software, but put in place industry accepted business processes that client companies are recommended to adhere to.
For some companies, changing their existing processes to adopt a new template might be too much, which is why they would rather go for a full ERP implementation. For U-Bix, however, adopting the new process poses no problem at all, said Loraine Garcia, U-Bix senior assistant vice president for finance. "We had to change our processes anyway. We are on an expansion mode so we really have to change," she added.