Faced with the need for a massive IT reorganization and consolidation after a merger, Vancouver’s NorskeCanada is saving as much as $2.5 million a year by standardizing on Microsoft products.
When Norske Skog Canada
merged with Pacifica Papers in 2001 to create NorskeCanada it inherited a mixed IT environment with multiple legacy hardware platforms and operating systems, including two SAP systems with Oracle Financial and Advantis, multiple outsourcing agreements and three different helpdesks.
“We totaled up the applications and there was probably 110 different applications across the two companies,” said Keith Siebold, NorskeCanada’s director of IT operations. “Each company had its own issues, and brought together there was double the issues and lots of redundancy.”
In addition to the redundancies, Siebold said both companies also weren’t providing a good level of IT services. Post-merger surveys showed strong dissatisfaction with the quality of IT services.
The decision was made to both improve service and bring costs down, by reconciling applications where it made sense. Some integration was done initially, moving to one SAP system across the new company to keep things going, but they also decided to move to Microsoft software running on Dell hardware.
Siebold said the cost of maintaining the older Oracle and Unix systems were horrendous. It was ageing proprietary technology and the maintenance costs were through the roof.
“We significantly brought the cost down putting it on more commodity hardware instead of a proprietary system,” said Siebold. “Now everything runs on SQL Server with Microsoft Windows and we have a nice common skill base to support those systems and a single ERP solution around SAP.”
Working with Realtech AG, a company specializing in Oracle and Unix to Microsoft migrations, the technology transition took just 10 months to complete. Siebold said with lower support, maintenance and licensing fees, he estimated NorskeCanada is realizing net savings of up to $2.5 million annually thanks to the new IT systems.
With the new systems up and running and the bugs worked out, last year NorskeCanada took the next step and put in a business intelligence solution, based on Microsoft SQL Server Analysis Services and Microsoft Office.
NorskeCanada manufactures different grades of paper at its mills, and the BI solution is collecting grade information at each mill. Siebold said there are hundreds of variables that go into making paper, and they need to understand the true costs of producing each grade of paper on each machine in each mill.
“We’ve built BI models in Microsoft Analysis Services that give us the ability to splice and dice different views so we have a very good understanding of grade costs,” said Siebold.
Previously, these calculations were done manually using a virtual model to get a rough idea of their costs, but Siebold said now they have standardized true costs across all of their manufacturing divisions.
“We can now decide based on the true cost of any particular grade of paper whether or not we should be making it, whether we’ll be able to sell it at a profit,” said Siebold. “We may want to exit a particular grade of paper completely, or make more of it.”
NorskeCanada turned to Aculix Inc. to design and install the BI solution. Aculix president and CEO Scott Orth says the decision was made early to go with Microsoft’s Analysis services, to leverage NorskeCanada’s existing Microsoft environment and skill base.
He said the five-month implementation was a challenge though, as NorskeCanada didn’t have an existing BI capability.
“We were basically starting from scratch with them,” said Orth.
There didn’t need to be much training for staff as they’re still using Microsoft Excel at the front-end, but it’s the data the backend is feeding into Excel that has changed, giving them better visibility into their cost structure because.
“It was a design and development effort that was on time and under budget, and met the targets,” said Orth. “There was little or no risk involved because we used best practices throughout the effort. It was a big win for both us and them.”