The Year of Living

By Larry Barrett  |  Posted 2002-03-18 Print this article Print

What's the use of standardizing on one vendor? Just ask Osram Sylvania, which took a chance on SAP's untried customer relationship management software.


The Year of Living Fretfully

Osram's 13 months of stress began in the fall of 1999, when SAP moved a team of about a dozen managers into Osram's offices. Laghaeian began racing "in a blur" to manage the SAP project managers, developers from SAP in the Americas, and developers back at SAP's headquarters in Germany. Oh, and Laghaeian had to abstract and execute the interests of Osram's business executives, who were nervous about the uncertain outcome of the project, as well as reassure his own technology crew, which had to make sure the software would allow the company to productively interact with its customers online.

Osram was on a tight schedule. SAP wanted to introduce mySAP CRM, of which Internet Sales became a part, at a users' conference in June 2000. Osram hoped to introduce the mySylvania.com portal built on the new SAP software to its customers two months later.

Laghaeian had already been through one intense SAP implementation. In installing R/3 at Osram, he would talk Digital Equipment into getting its latest server running just in time to catch up with the soaring need inside the company to manage data and services.

But Osram did not then work alongside SAP. Laghaeian and the Osram senior technology management would have cordial meetings twice a year with Coote, then president of SAP America, and would present formal status reports on how the R/3 installation was going. "They were interested in our project and they wanted it to be successful," says Laghaeian. "Even then, this was a big account and a big implementation."

This time around was different. With help from Byrne, SAP built a core team of 10 to 12 of its people—project managers and developers—inside Osram. SAP also drew on the expertise of its staff in both the US and Germany.

"There were more people involved in the beginning, but we wanted overkill," says Byrne, who has worked with Osram for four years. "We had to get bodies on-site."

Issues that could not be handled by the SAP team at Osram were escalated to SAP development. Osram, meanwhile, sent a team of its own developers to SAP in Walldorf to learn the software with developers there. Osram was helping SAP add some of the functionality to R/3 that would ultimately support mySAP CRM, so that when Osram received the final product the following May, it would slip into place on top of R/3.

Byrne monitored the SAP team's status meetings and also met separately with Laghaeian. SAP senior management met with Schmidt, Laghaeian and others at Osram every quarter.

Meanwhile, Laghaeian was overseeing another reorganization of Osram's technology department, which ultimately dropped to 90 members from 200 when SAP first arrived. This time, the staff had to learn new Internet technologies and adjust to the demands of overseeing an e-commerce site that had to run 24 hours a day and work inside Osram's existing technology infrastructure. This also meant retraining sales and marketing staffs, and redesigning Osram's business processes to support the sale of lighting products through mySylvania.com.

Osram and SAP created storyboards of the processes and transactions that were going to take place on the portal and then tried to figure out the logic behind them. For example, selling over the Web meant changing the way Osram handled orders. Orders might flow from the customer through mySylvania.com to the distributor, with customers being able to follow the status of their orders along the way. Before, distributors sent orders directly to Sylvania.

Osram and SAP redesigned the appearance of the catalog screen, creating a left-side navigational bar, as is the custom on many U.S. Web sites. There was none before because SAP was accustomed to designing sites for transaction processing.

SAP also allowed Osram to decide how items could get into its catalog and be searched—an issue that Byrne says was nearly as important to Osram as the directory protocol because of the importance of the National Association of Electrical Distributors (NAED) codes that are attached to products.

Over the years, Osram's pricing of its products had grown byzantine—the same lighting products were sold under different names to different types of customers at different prices. Osram as a result developed a unique pricing application that specified how a customer's price quote got approved; that application in turn connected to the pricing data inside SAP's software.

Even though this meant writing custom code, SAP's new software had "user exits"—points where control over a software routine is passed to a programmer, who gives the routine a task, and then passes control back to the main program. This would allow Osram—and future users of the standard SAP customer program—to avoid altering SAP's core code.

In effect, being locked in to SAP and its product direction resulted in negotiations between Osram's business and technology departments over which prices were worth saving and which created more technical issues than they were worth.

"There are pressures from the business side and you have to find a way to accomplish that. They don't ask you to modify, they say, 'I want SAP to do that,' " says Laghaeian. "[But] the problem with all these features and functions is the maintenance."

Laghaeian says Osram "underestimated the whole project," from the business impact of being on the Internet to the product catalog. With just 13 months to get the product online, getting the catalog right took nine months. Osram needed to figure out how to systematically connect all the information associated with its lighting products in Lotus Notes, its computer-assisted design database and other locales.

All this while time was always at a premium. Everything except the relationship with SAP, he says, "was being defined on the fly."

Ultimately Osram received a go-to-market version of the product, known as mySAP CRM 2.0, in May 2000. Laghaeian then had a month to pull together a demonstration of mySylvania.com before SAP intended to introduce its new software with much fanfare at its SAPPHIRE user show in Las Vegas.

The SAPPHIRE show may have marked the end of product development for SAP. But the stress was not over for Osram. Laghaeian by this time was bringing in third-party software to supplement mySylvania.com. Osram found it needed software from FileNet to manage the tens of documents that can be associated with a single lighting product, TeaLeaf Technology software for tracking the customer's experience on mySylvania.com (a product Osram ultimately replaced with its own solution), and Microsoft BizTalk for sending data to customers in the extensible markup language.

Osram decided to postpone the launch date from August for further testing—"why are we killing ourselves?" Laghaeian would ask himself—but in October, the mySylvania.com site did launch, coinciding with the launch of a new Osram fiscal year.

Laghaeian was able to show off the site in Germany, at company headquarters, at that point; and Osram was taken aback to receive orders online from the Philippines. That was a surprise of starting to do business on the World Wide Web it didn't have a distributor in the Philippines. Osram's technology crew had to shut off access to non-North American customers.

MySylvania.com still has hiccups, says E.J. Kenney, SAP's vice president of consumer products—most recently with the shopping cart, which had problems taking orders over a certain size. SAP had supplied a patch that Osram did not apply, because it was focused on expanding the features already in place, rather than changing site architecture. Osram expected to change the architecture with the next release of mySAP CRM, but Laghaeian says the decision "came back to bite us."

"They had to prepare customers for (difficulties with filling the shopping carts) and it was dragging on and on—everybody was disappointed that it was not fixed sooner," Kenney says, but the two sides could work out the problem, because the relationship was strong enough.

Senior Writer
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.

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