SAP AG has landed one of its meatiest and possibly toughest contracts ever -- literally speaking.
Earlier this month at its international Sapphire customer event in New Orleans, the German business software vendor announced a major deal with Tyson Foods Inc., the world's largest producer of chicken, beef and pork, to move its multiple back-end systems, many of them homegrown, to a unified SAP backbone.
Under the deal, Tyson will deploy mySAP Business Suite as the backbone technology, based on SAP's NetWeaver integration and application platform. In addition, the Springdale, Arkansas, meat producer will collaborate with SAP to introduce a "catch-weight" management application to handle multiple units of measurement, such as cases and pounds of meat.
These agreements are significant. The US$25 billion-sales company is now one of SAP's first big customers to swallow its new service-oriented architecture lock, stock and barrel. It's also the first to demand catch weight, a function that will require sweeping code changes across many SAP products.
The decision to deploy mySAP Business Suite -- SAP's premier product that adds CRM (customer relationship management), PLM (product lifecycle management) and SCM (supply chain management) modules to the core ERP (enterprise resource planning) platform -- follows the successful deployment of the Walldorf, Germany, vendor's human resources software to manage payroll and other functions for Tyson's 110,000-strong payroll.
The move to a common platform has been driven in large part by Tyson's business expansion, particularly its acquisition of meatpacking conglomerate IBP Inc. in 2001, according to Tyson CIO (Chief Information Officer) Jeri Dunn.
"Our acquisitions have forced us to look at a uniform platform," Dunn said. "We've decided to put just about everything on SAP."
Included in that list of core processes are inventory, supply relations management, material management, manufacturing and tax payable. One of the few exceptions, for now, is SCM software, which Manugistics Group Inc. is delivering for the group's chicken business, according to Dunn.
"All of these processes need to be re-engineered within the company," she said. "This will result in a pretty significant change in the way we work."
But introducing catch weight to SAP systems, according to Dunn, is an even bigger challenge. "This is a mammoth undertaking because this function is pervasive in just about everything we do," she said.
It's also a development that will determine how quickly Tyson will be able to implement mySAP Business Suite. "We are dependent on SAP delivering catch-weight-enabled software before we can take advantage of all the other modules," Dunn said.
The delivery date, according to the agreement, is June 2005. But Dunn isn't waiting until then to test the goods.
"We're taking an approach -- a complex approach -- that will have us start configuring (mySAP Business Suite) without catch weight between August 2004 and June 2005," Dunn said. "I'm taking a bit of a known risk in that I'm going to start this development work now, knowing that later we will have to do upgrade and regression testing of everything we've done. But, quite frankly, if I receive the product in June 2005 and haven't done any configuration, I'd be 18 months out before I could go live with the project."
Dunn decided against using an existing version of catch-weight-enabled software from SAP, claiming that it "breaks other functions, such as plant maintenance."
Numerous other companies with variable-weight processes will be interested in SAP's new catch-weight-enabled software, she said.
Asked about SAP's pledge to provide greater flexibility in its products and services, the CIO said flexibility is a double-edge sword. "With flexibility comes complexity, and that has a price tag," she said. "We have chosen the price tag because we need the software to work for us."
Dunn lauded SAP's decision, announced at Sapphire, to more tightly embrace rival and partner Microsoft Corp.'s .Net technology platform, allowing both companies' products to work more easily together. "I expect my partners to play well together," she said. "They're not doing me any favors if they're not working together. In fact, they're just making life hard for me. That's not very customer-centric."
Cooperation of the type pursued by SAP and Microsoft, Dunn said, "has to be the wave of the future."
Even if SAP scores high in Dunn's performance rating, the company still has room for improvement. One area is configuration and release management. "They need to focus on a disciplined approach to configuration and maintenance management," she said. "The bigger they get, the more important this service will be."
Now that SAP has won Tyson as a key account, Dunn wonders how the relationship between the two companies will evolve moving forward. "I met (SAP Chairman and Chief Executive Officer) Henning Kagermann and found him to be extremely responsive to customer needs," Dunn said. "My concern now is whether he will remain so responsive. He was courting me last year; now we're married. Will I get the same attention as I did when I was being wooed?"
That, ultimately, will depend on SAP's fulfillment of the catch-weight requirement. If this software development proves to be a huge manpower-consuming challenge, Kagermann may be less thrilled about the marriage.