Return On Investment in practice
Citronas: "It was clear from the start where the first benefits could be found"
Citronas, importer and exporter of fruit, is situated in the Port of Rotterdam, near the Rotterdam Fruit Terminal. Citronas has been working with Microsoft DynamicsTM NAV since November 2002. With annual sales of 11 to 12 million cases of fruit and vegetables, SI Foodware® - Lot administration, developed by Schouw Informatisering has become the fulcrum of the company's information system. Schouw Informatisering asked ICT Manager John Triel and Financial Director Carlo Broeren about the way in which Citronas assessed whether or not the investment in Dynamics NAV would be cost-effective.
One of the aspects to base a rough ROI calculation on is the degree to which staff will work with the new system. The more people who use the system and the more frequently they use it, the more positive the ROI will turn out to be. (See the article on the benefits of an IT project, 'Calculate your own ROI.') How did Citronas cope with this?
John Triel: "To ensure that everyone would start to work with the system, we drew the key-users from all departments involved into the project team. In this way we were able to gain insight into the way in which the departments wanted to work with the system. This meant that the project group was quite large, and this also meant that it sometimes took longer to reach a decision. After all, all members of the project team looked at the issues from their own department's point of view. Still, it turned out to be the best solution to guarantee that Dynamics NAV now works well for all our users. One of the most important factors for a successful implementation was creating support throughout our organisation."
What were the most important reasons for Citronas to change over to another system for the company's IT needs?
"Before this Citronas worked with several different programs which were not integrated. This meant that sometimes information had to be entered more than once, and that up-to-date information was not available to everyone and that the ICT department had to be called in to help generate the reports", John Triel explains. "It wasn't long before it was clear to us that by choosing an integrated ERP system, such as Dynamics NAV, a whole load of these disadvantages would disappear."
But not all the disadvantages?
"No, not quite", is John Triel's reaction. "Citronas has specific Fruit & Vegetable characteristics, which are not part of the automated process within standard ERP packages. This has to do with the nature of the product. For example the fruit we trade is not actually ours. We import and sell batches of fruit for growers from all over the world. As batches are sold, we have to book them as sales on account and settlement. But don't forget, fruit is also a natural product, so it can vary in type, variety, brand, size, category and in quality. In addition, fruit is a seasonal product, it is vulnerable and can only be kept for a limited period of time. Being able to register batches and all the accompanying information is the linchpin for Citronas to be able to book sales on account and settlements."
Dynamics NAV does not contain a standard solution for lot administration: how was Schouw Informatisering able to offer a way out here?
John Triel: "Through an extensive preliminary study, in which all processes at Citronas were examined and translated to Dynamics NAV, we were able to create a lot administration system which matched our requirements well."
Has Citronas thought about other advantages the new system could provide?
Carlo Broeren: "What Citronas did not actually do, but this would have been possible, was to work out the difference in the number of hours required for certain tasks before and after the implementation, for example, based on the preliminary study. As the number of hours worked before the implementation were greater than after the implementation, this will have a positive effect on the ROI."
"But it was clear that it would make a big difference", John Triel agrees. "For example: in the past it took me a great deal of time to make reports for all the departments. Now they can do this themselves using the predefined reports. In addition, all members of the project team were asked to indicate on behalf of their department where they were happy with the current software and what they missed. We promised each department that the new system would at least provide the good functionality from the old system and furthermore it should also provide something extra for each department."
What was the reason which made Citronas finally decide to take the plunge and work with Schouw Informatisering and Dynamics NAV?
"Citronas did not calculate ROI or pay back period", explains Carlo Broeren. "In the end we just totted up the advantages and disadvantages of Dynamics NAV including SI Foodware. The deciding advantages of Dynamics NAV, besides the normal advantages of an ERP package, were in the first place, that we could continue to grow without the IT systems forming a bottleneck. And secondly, that we can now get though much more work with the same number of staff." John Triel: "We chose Schouw because when we were working together we quickly noticed that Schouw had a lot of experience in the Fruit & Vegetable sector and also because the consultants could pick up the information quickly and interpret this in Dynamics NAV."
"In the end, the period between signing the contract until we went live was just eight months. During those eight months we developed a close working relationship with Schouw Informatisering and we managed to get through a considerable amount of work together. Looking back, we all agree that it was a successful project which has benefited all of those involved," John Triel sums up.