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Ace Hardware picks SAP Financials over Oracle for order processing

When Ace Hardware went looking for a way to integrate its financials and order processing systems, it decided going with Oracle was too risky.

Oracle’s complicated ERP roadmap convinced a major retailer to dump JD Edwards for SAP and it hasn’t looked ba...

ck.

Ace Hardware Corp. -- which now runs SAP ERP for its financials and order processing -- chose SAP Financials over Oracle because of concerns about Oracle’s technical direction, according to the company’s IT business relationship director.

“[It was not long after Oracle’s] JD Edwards and PeopleSoft acquisition, and it wasn’t clear to us how those three different companies, and those three separate products, were [ultimately] going to mesh together,” said Rick Williams, Ace Hardware’s IT business relationship director. “It was kind of an awkward time for Oracle from our vantage point, anyways.”  

The Oak Brook, Ill.-based Ace now runs SAP ERP ECC 6.0 for retail to oversee its 14 distribution centers and 4,400 locally-owned stores nationwide. That includes using SAP for its financial and credit management operations as well for the entire spectrum of order processing, including sales and distribution and materials management. Ace Hardware is currently considering SAP CRM and SAP Price Optimization later this year.

Rethinking the project midway through

Although Ace Hardware’s deployment grew to include SAP Financials, it didn’t start out that way. When the project began, Ace Hardware was running JD Edwards for its financials and a network of custom applications for its sales and distribution operations.

The project called for deploying JDA software for demand forecasting and replenishment planning, using SAP for sales and distribution, materials management and order processing, but keeping its JD Edwards financial software in place.

Williams said Ace had been attracted to SAP because of the NetWeaver platform, believing that the ABAP-based software would be easier to maintain and customize. “We also talked to plenty of customers from SAP and liked the configuration and the flexibility that SAP offered, the integration, the strong controls,” he said.

The project began in 2007 but didn’t end until 2010 because the company also used the deployment as an opportunity to rethink all of its business processes. It took another turn when the company hired a new chief financial officer, Williams said. The company had planned to tackle the issue of deploying new financial software down the road, but the new CFO suggested doing everything all at once.

Ace Hardware took a step back: It looked at both continuing with the Oracle-owned JD Edwards and moving to SAP Financials but opted for the latter.

“We sort of made an ‘audible’ and decided to restructure the project,” he said.

The company has been live for over a year and plans to conduct a more exhaustive review of the system, but Williams said that the decision to go with SAP has proven to be a good one. The controls are significantly better, and the software has been relatively easy to customize when it has needed to make changes.

“Once you roll your sleeves up and get in there into the code, it’s not as intimidating as it is when you’re on the outside,” Williams said. “Customization isn’t something we want to do a lot of, but we’ve become relatively proficient at it after a period of time.” 

Lessons learned about SAP Financials
During the ERP implementation, Ace focused making sure their old legacy systems processes played a limited role with the new system, Williams said.  That turned out to be a mistake, in part.  

“We intentionally did not want to duplicate our old systems, and all the uniqueness about them, in an effort to standardize our business processes. As a direct result of that, we didn’t really look at our old system and its quirks,” he said. “When we went live, there were some surprises in terms of, well, that old functionality was there for a reason.”

Williams explained that Ace had to go back and introduce some of the more unique processes the business model required, especially in how Ace’s  stores get billed and how they pay for those orders within the system.

“From a project point of view, it was the right thing to do to focus on those [new] business processes, but we probably should have had a different balance, like 80% looking at the future, 20% looking at how things used to be,” Williams said.

“It was a bit of a fire drill”

One of the major benefits of implementing SAP has been that Ace Hardware is now able to tightly integrate its core ERP order processing with its financial system, according to Williams. The JD Edwards system the company had been using for its financials, and a handful of custom legacy applications for order processing needed a great deal of attention and maintenance, Williams said.

“[The ERP integration] has significantly reduced the number of issues we had to get resolved from an IT perspective and I think the finance department would tell you they’ve gained a lot of efficiencies,” Williams said. That’s especially true when it comes to credit management, he added.

“It’s like night and day in terms of their ability to chase down whether or not someone’s got a credit issue, to be able to dig into the source of the issue, or the ease of the period close, or the year close, compared with how it used to be,” Williams said. “Having that tight integration with our financials and our accounts receivable system is a big win for us.”

And having credit management integrated with order processing cuts down on the amount of human interaction that’s required, according to Williams.

“A very high percent of the orders go through a credit checking process without any human involvement. When [orders] do get hung up because of credit challenges or something to that effect … we have the information at [our] fingertips, in terms of tendering orders, existing invoices, all of our notes, past analysis that has been done,” Williams said.

In the past, he added, if a credit-challenged retailer needed an order filled immediately, employees had to rush around, pulling information from disparate systems. “It was a bit of a fire drill.”  

Closing books is also much faster, he said. “We spend about half as much time and half as much money doing our fiscal close, compared with how we did it in the past.”

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