Alberta electric company standardizes for ROI

TransAlta Corp. received some good news from Gartner Consulting when the research company announced Tuesday they achieved a rate of return of 102 per cent over a

course of 58 months by implementing mySAP HR.

The Calgary-based electric generation company first implemented SAP in 1996 and expanded the implementation of mySAP HR in 2001. Mike Williams, senior vice-president of human resources at TransAlta, said the choice to implement the HR applications was natural, as the company had made the decision to stick with one vendor to streamline integration.

Creating a homogeneous environment was one of the factors that Williams highlighted when discussing the reasons for achieving a successful ROI.

“”We have a clear policy that says we’re going to use one system,”” Williams said. “”A lot of companies run into the trap of multiple systems, letting the latest and greatest flavour of the month creep into the company. We take a different approach to anything we integrate, and SAP is our chosen system. I think it’s an important success factor.””

James Holincheck, a research director at Gartner Consulting in Stamford, Conn. and the analyst who conducted the case study, said that while this strategy works for TransAlta, it’s not necessarily the right choice for every organization.

“”There are some benefits to a single vendor solution in terms of integration, but it is not universally required for success either,”” he said. “”What TransAlta did was leverage the technology appropriately to get significant business benefits from it.””

According to Williams, this was an obvious effort on the part of TransAlta.

“”We wanted more than just an electronic filing cabinet, we wanted something active,”” he said.

In order to make the best use of the applications, Williams admitted that the company changed its processes rather than customizing the system.

“”We used the system as designed. I know a lot of companies do custom work so their processes stay whole, but we looked at the system and thought ‘If it does it this way, why can’t we?'””

Holincheck agreed that this was a sound approach for TransAlta to take.

“”You really have to change your business processes with any software solution unless you want to customize the bejesus out of it. By implementing a packaged solution and not altering what you’re doing to support it, you’re not utilizing the best business practices that are built in,”” he said.

The third factor that Williams considers to be a contributing factor to the success of the system’s integration is that TransAlta took the process one step at a time.

“”We weren’t too ambitious. We started with the basics and then moved onto bigger transactions. We did it one piece at a time rather than reinvent the world at one go,”” Williams said.

The study showed that TransAlta would achieve a 10-year savings of $31-million, taking a 10-year useful life period into consideration. Gartner calculated the ROI by evaluating explicit cost-savings or revenue-enhancing benefits associated with related business processes such as time management and organizational management. Qualitative data was used to examine benefits achieved through mySAP HR, and quantitative data was analyzed for cost and revenue changes achieved after implementing the product.

“”Managers and employees are definitely getting things done faster, and I don’t think that was fully captured in the case study. I would say that 102 per cent is a conservative number,”” Williams said.

David Ludlow, vice-president of product management for human capital management at SAP in Palo Alto, Calif., said that the Gartner study of TransAlta was completed without SAP knowing the numbers in advance.

“”We were pleased with the results. There’s a lot written today about ‘Where’s the ROI?’, and it’s nice to see a positive story like this. They do exist,”” he said.

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