OrotonGroup: Fashioning New Trends in Business Operations with SAP ERP

OrotonGroup Ltd. Industry Retail Products and Services Fashion, leather goods, and accessories Web Site www.orotongroup.com SAP s SAP ERP application Partner Ciber Inc. www.ciber.com.au Performance, support, and usability issues were hampering upmarket fashion retailer OrotonGroup Ltd. and restricting it from utilizing SAP software to its full potential. With the company already using the SAP ERP application for enterprise resource planning, OrotonGroup conducted an exhaustive review of alternative solutions. The result was a renewed and continued commitment to SAP technology through upgrading to the latest version of the SAP ERP application, while outsourcing IT support. 2 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

Crafting classic handbags with timeless elegance OrotonGroup Ltd. is an Australia-based retail company operating the upmarket fashion brand Oroton. Originally founded in Sydney in 1938, OrotonGroup began as a textile design company importing fabrics from Europe and Japan. In 1952 it created a sensation when introducing the Oroton gold metallic mesh compact or powder puff for women, which became a must-have fashion accessory. Diversifying into luxury leather goods, the company won attention across the world for innovative design, high quality, and a beautiful finish. OrotonGroup today has 500 employees and operates more than 65 stores across Australia, New Zealand, Singapore, and Malaysia. The Oroton brand extends across a wide range of products for men and women, including handbags, satchels and wallets, small leather accessories, jewellery, and apparel. The company operates a diverse range of retail properties, which include full-price stores, factory outlets, concession stores within department stores, wholesale, and an Oroton e-commerce Web site. 3 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

Coveting more return on investment from new collections OrotonGroup originally implemented the SAP ERP application as its business backbone in 2004. At that time the company also owned a number of upscale Australian retail fashion brands, including Marcs, Morrissey, and Aldo Shoes. However, in 2006 the company made the decision to divest those brands and focus on the core business of Oroton and Ralph Lauren. With the restructure complete, OrotonGroup realized it needed to rationalize its business software landscape and cut maintenance and support costs. In the face of performance, support, and usability issues, OrotonGroup s newly appointed IT manager was given a mandate to review the company s software landscape. He and his team had to determine whether the organization should continue to run SAP software or use an entirely different system and assess opportunities for outsourcing support and maintenance. So, in August 2007 the luxury fashion retailer put its business software requirements out to tender. As a first step, the IT team evaluated a number of well-known and niche enterprise resource planning (ERP) solutions against their key criteria. They also spoke with retailers about their experience with other ERP systems and SAP ERP software upgrades. We needed to improve our return on investment, increase the value SAP software was providing to the organization, and at the same time enhance levels of user satisfaction. Larry Neimann, IT Manager, OrotonGroup Ltd. 4 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

Protecting investment and reducing risk Having completed the tender process and software review, OrotonGroup made the decision to continue to invest in SAP software. The reality was, as much as we wanted to look at some of the smaller providers, even as a $100 million turnover business we were too diverse. As a multichannel business with international ambitions selling an extensive range of merchandise styles, colors, and sizes our requirements were too broad for some of those other systems, and they weren t going to work for us, explains Larry Neimann, IT manager at OrotonGroup. With some of the second-tier systems, costs would be considerable. There was a whole lot of risk in putting in a brand-new system and no guarantee that it would be more successful than what we had done already. For OrotonGroup, upgrading existing SAP ERP software to the latest version was a far more logical business decision. It made sense to protect our original investment. Most of our SAP software landscape was actually working quite well, and we would benefit from the upgrade, continues Neimann. However, we also made a commitment to decrease IT costs within the business. 5 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

A great upgrade to the new version of SAP ERP The SAP ERP software upgrade was completed by SAP GDC India as a technical upgrade with no new functionality. OrotonGroup also upgraded its database and entire SAP hardware environment, some of which was virtualized. The project was managed from Sydney, while the technical upgrade work was done offshore. We drove the GDC project team pretty hard and spoke to them every day, sometimes multiple times each day. We really needed to keep the upgrade on track and meet the deadlines we had set, says Neimann. The result was great we went live on time and on budget in October 2008. The date was critical as well, because as a retailer you certainly don t want to upgrade in November and December. Most importantly, the day we went live, the original performance issues disappeared. While only a small internal team worked on the upgrade, Neimann involved almost everyone in the company to test the new system. OrotonGroup undertook multiple rounds of testing including sandpit, development, quality assurance, and production. One of the keys to the success of the project was having a steering committee comprising representatives from SAP, Ciber, and OrotonGroup, comments Neimann. The project management and testing was also extremely well done. With the upgrade complete, OrotonGroup turned its attention to reducing support and maintenance costs, and it made the decision to outsource the SAP environment to IT consulting firm Ciber Inc. The SAP ERP software upgrade enabled the results we wanted, and that gave us the foundation to move forward with SAP. Larry Neimann, IT Manager, OrotonGroup Ltd. 6 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

Handling software changes in a more streamlined fashion Ciber set up a help-desk system to process dayto-day IT issues through a ticketing process to increase visibility and productivity for all business requests. That s been really beneficial to drive down IT costs, says Neimann. The ticketing process also marked the beginning of a change in the way the company managed its SAP software landscape. Minor changes are now made directly via the Ciber help desk, while midsize projects, such as enhancing OrotonGroup s system for stock replenishment, are undertaken by Ciber s functional consultants. OrotonGroup runs more complex IT projects using a typical project methodology that includes a project sponsor from within the business; a project charter outlining project scope, budget, and expected value; and a detailed blueprint reviewed by all team members. There is also a project steering committee, which includes Neimann, the project sponsor, a project manager, a key member of the team at Ciber, and a representative from SAP. Budget is key, says Neimann. There is no question that to control expenses during an SAP integration project, you need to make sure you do the right things at the right time for the business. Having SAP represented on the steering committee brings a level of oversight that has been very successful, allowing us to remove nonessential requirements from the blueprint to complete the project on budget. IT projects run with a clear focus and full buy-in from the business. As an example, when Oroton- Group opened a distribution center in Hong Kong, Ciber configured the warehouse management system to interface with the third party logistics provider s system and completed the project within just three months. 7 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

Head-turning cost savings drive regional expansion In upgrading to the latest version of SAP ERP software, OrotonGroup now benefits from a stable and scalable platform that is also the backbone of the company s IT systems. Performance and support issues are now a thing of the past. The upgrade has allowed the luxury fashion retailer to be confident that it has the right platform for growth. The company s expansion into Asia, which started with setting up its distribution center in Hong Kong, now extends to stores in Singapore and Malaysia. OrotonGroup has leveraged standard SAP functionality wherever possible. We are making the best use of SAP software while we grow our business, says Neimann. The functionality of SAP software is very good, so it made sense for us to align our business processes and the way we do business here and overseas with the standard SAP ERP functionality. This lends itself to a more efficient and costeffective way of doing business. Most importantly, the company has been able to control IT costs, even as it continues to grow. While revenue and profits have been increasing, real IT costs have been stable, comments Neimann. We now focus only on projects that will deliver real commercial value and deliver a return on investment for the business, says Neimann. Projects such as the three-month development to integrate the new logistics provider for our outsourced distribution center are delivering demonstrable value to OrotonGroup. In addition, as more projects undertaken by Ciber are completed successfully, OrotonGroup is able to leverage more business value from the SAP investment. 8 / 9 2013 SAP AG or an SAP affiliate company. All rights reserved.

OrotonGroup Fashioning new markets overseas OrotonGroup continues to rely on SAP software to support its international expansion. Having a world-class enterprise resource planning system to underpin our expansion into new markets allows us to be more adaptable, says Neimann. This is a real competitive advantage in the branded luxury retail business, where we deal with multichannel retailing and where we need to be adaptable to new trends. We are also set up to handle taxes, duties, and the other complexities of international trade another great feature that allows us to focus on running the business, not on the systems, which is critical in today s tough retailing environment. CMP20029 (13/03) 2013 SAP AG or an SAP affiliate company. All rights reserved. 9 / 9

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