SAP Africa has completed a significant project at Transnet, involving the implementation of the first instance on the African continent of the SAP Contract Lifecycle Management (CLM) solution.
Aside from being the first such installation in the region, it also challenges conventional thinking and operational practices as it relies on a mixture of on-premises implementation, Cloud Computing and Software as a Service models.
“This is a groundbreaking project for us because it combines the integration of local instances of SAP ERP software with the SaaS component delivered out of the US,” says Simon Carpenter, SAP Africa's Director of Strategic Initiatives. “It is a great example of how SaaS and on-premises software can be blended using the principles of Service-Oriented Architecture.
“The project started as an investigation into standardizing the contract creation process across the Transnet Group. An assessment of the contract environment revealed that there was no central repository for contracts, and no integration with SAP ERP systems, with master files updated from other sources. Despite Transnet’s six divisions all running SAP, the systems weren't integrated and had their own unique needs, which added some complexity to the project.”
The SAP CLM solution allows Transnet to manage its in- and outbound contracts more efficiently and effectively, from strategy and creation to execution and monitoring. An all-important aspect of the project is that the organisation's six divisions now manage all their contracts centrally, which will result in direct cost saving and efficiency benefits.
“The project was a big step forward for Transnet because it is not only about the new solution, but the standardisation of its contracting business process across the group,” says Christine Britz, SAP Project Manager responsible for the implementation. “While the new system is expected to result in a 30% reduction in administration costs, the standardisation of the processes will deliver additional savings.”
Although it is still too early to measure the full impact of the system as the project has only recently been completed, the original business case predicted a 50% improvement in Transnet's turn-around times and a 7% reduction in materials management.
“Having standardised our contract templates, the solution allows us to pull up a standard document relevant to the type of contract being entered into, enter the line items and submit it,” says Gregory Nsofu Chola, Transnet's ICT Enablement Programme Manager. “The risk from contracting now becomes very manageable as controls are embedded in the process and we now have standard contract templates clauses and sections vetted by Group Legal.”
This is particularly true of the legal approval, which could be circumvented under the previous contracting regime. “It now becomes mandatory to get final approval, which gives us a high level of comfort that at any one point in time we will know our legal exposure in an acceptable timeframe without going through a length report compiling exercise,” he explains.
The same applies to the Transnet group's ability to control spending as all purchase requisitions are now linked directly to contracts, with SAP CLM able to compare such requisitions against the contract value.
Nsofu Chola adds that that revenue collection and contract management will be tremendously streamlined as all contracts are now visible across the corporation, allowing management to be able to tell with a high degree of certainty which contracts and payments are due.
“We now know three to four months in advance which contract is coming to an end, and can start the renewal process well in advance,” he says.