|  | Measuring ROI
An IFS customer story
Since implementing IFS Applications, Hertel has seen its business become more efficient. With the elimination of paperbased transactions, purchasing and invoicing processes have become more streamlined. Better access to accurate information also means that accounting has improved and productivity has increased
The Hertel Group is a leading European provider of maintenance service support for
industrial, commercial and manufacturing industries. The UK business is growing at around
10% per annum and with annual sales of £120 million, it accounts for nearly half of the group's total business.
Hertel (UK) Limited operates through a network of over 60 customer site offices and 11 regional centers. Activities range from project surveys and reports, to total solutions for rectification and ongoing monitoring. The extensive customer base includes nuclear decommissioning, petrochemical processing plants, public sector utilities and municipal authorities.
Payroll routines were unwieldy
Hertel's workforce is fairly transient, and within regions personnel can be moved between sites as projects progress. Better HR facilities were needed for maintaining employee
records. Other requirements included a more efficient means for accruing costs against customer accounts. An initial business process review had shown that as the company was growing, so were its problems in purchasing administration and purchase ledger.
Payroll was taking too long and tying up excessive administrative resources. Hertel's IT Manager, David Redpath, explains: "Being a service-orientated business, a large proportion of our costs stem from direct labor. Our time sheets are based on Excel spreadsheets, which previously were printed and faxed to the head office, where the data
were keyed into another computer database. This unnecessary effort has been eliminated. Data files are emailed to the head office and imported directly into IFS Applications. All that is required is a simple check for any anomalies. Significant savings have been made as a result of this improvement."
Both the HR and payroll components were among the first to be implemented together with purchasing and finance and the IT support center. The monthly payroll, which involves around 300 people, went live in December 2004. Weekly payroll followed in June 2005 with over 2,000 employees now being paid correctly by bank transfer.
"Hertel UK has grown its business by over 25% without increasing the level of support staff
since implementing IFS." Hertel's IT Manager, David Redpath.
While monthly payments tend to be fairly uniform, the weekly payroll presented a number of challenges to the project team because of the complexity of Hertel's hourly rates payment structure.
Delegating purchase orders
The initial implementation phase also included the introduction of IFS/Purchasing. In a similar way to the payroll component, this has also resulted in a huge improvement in
business efficiency by eliminating the use of paper-based documentation.
Purchase orders can now be raised locally from a computer screen, using information drawn from the company's central database. Each of Hertel's site operations acts as an autonomous unit with an onsite manager, project numbers, and performance bonuses.
"The main thrust of our strategy was to increase the autonomy of the regional centers while retaining central control on what items or services they are allowed to purchase. This is governed by a corporate database listing recognized products and approved suppliers," says David Redpath.
Should a service engineer require any materials while on site, all he needs to do is call his local office. An order can be raised instantly through IFS and sent over to the supplier before the engineer arrives to collect the part. Previously the company had a head
office purchasing function serving multiple site locations as well as the regional centers, each submitting handwritten purchase requisitions for orders to be raised centrally.
Matching invoices
"As well as streamlining the ordering process, the new system instills better discipline for accruing customer account costs. Information is more readily available, and since supplier invoices can be matched easily to the purchase orders, they can be paid promptly without further query or delay."
"The paperwork we save on that is unbelievable. Instead of sending out copies, which would very often go astray, the invoice can now be authorized automatically if it matches the purchase order. Any exceptions can be presented on the site computer screen and authorized at the press of a button."
Weaknesses in the previous system would often cause supply difficulties. Delays caused by an invoice mislaid and overdue for payment resulted in stops being imposed, which would also impact other parts of Hertel's national network. The new system provides better visibility, allowing suppliers to be advised of payment status.
Invoicing faster and more accurate
Savings have also been realized by making the operational sites responsible for their own invoicing. All the information is readily available within IFS. Site managers can now get 90 percent of guaranteed costs straight away; a target which David Redpath believes can be improved.
"We work to a 10-day rule as often we have to make allowance for obtaining information we require from the customer. We are now down to six or seven working days to get costs into the system, and we want to get that down to five days."
In all these areas, payroll, purchasing and customer invoicing, Hertel Services is now achieving better productivity performance with a smaller head office team, even though the business has grown.
Future and other developments
The initial IFS Applications implementation has expanded to centralize all of Hertel's information and intelligence. IFS CRM, quickly implemented in March 2005, provides a company-wide tender tracking solution and makes the sales pipeline visible. Each sales area now updates its own records and prospects, which provides the sales director and business development managers with accurate, up-to-date information. This solution has been so successful that Hertel is planning to roll it out to its Middle East office.
IFS Risk Assessment went live in July 2006 providing field technicians with digitized pen upload into IFS. The subsequent processing through IFS results in output to the end customer in a fraction of the time and provides Hertel with a competitive advantage and significant efficiency gains. The solution is now being considered for other site activities such as Health and Safety reporting.
IFS Service Management went live in late October 2006 to provide facilities management control and tracking for periodical jobs, using the full integration into the existing IFS
solution for finance, HR, payroll and purchasing. |
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