Harrods moves ahead with SAP

Luxury department store retailer Harrods has completed the final stage of a strategic migration to SAP enterprise resource planning (ERP) 2005.

The migration has enabled the company to standardise and streamline its IT infrastructure, providing the platform for technology to play a greater role in optimising business performance.

Harrods IT director, David Llamas told IT PRO the company is now building on the completion of its migration to SAP version 4.6C, a project which started in 2002 when he first joined the retailer. "At that time we were running version 4.0B and had completed our initial upgrade to 4.6C so that some areas of the business, like general merchandising for instance, were running on SAP," he said.

"But different departments such as furniture, which is often made to order or food and beverage, which has a lot of fast-moving products and so has different KPIs [key performance indicators], each also ran their own legacy systems developed to meet their own specific requirements."

Llamas brought in the requirement to standardise business and data management processes and so move the entire company's operations onto the SAP backbone. "We did the re-engineering of our processes in SAP and standardised them as much as we could, in areas like goods receipt procedure and invoice matching, for example," he said. "Once we had build the core system business model we migrated the rest of the legacy systems onto SAP."

Since completing the migration last October, the company now has a "single version of the truth," according to Llamas, although each department retains the special requirements needed to have meaningful visibility of their sales and product data. Harrods now has one product catalogue to manage its 1.4 million product items or stock keeping units (SKUs), which has helped improved the granularity of reporting.

Shrinkage has been reduced to 0.7 per cent largely due to better tracking of stock from the warehouse to point of sale, while invoice matching referenced by Llamas as manually intensive and with a relatively low success rate, is now 80 per cent with the help of supplier portals and electronic data integration (EDI) with SAP.

"Now we have completed the back office consolidation, IT running costs have dropped to 0.7 per cent of sales - its lowest level since 1999," said Llamas. "The quality of the data has also improved and, from my point of view, that's a prerequisite for data mining and analytics in decision-making processes, or business intelligence (BI)."

The migration has also underpinned major IT infrastructure refresh of its paper-based warehouse systems, electronic point-of-sale (EPOS) systems, data centre and online presence to name just a few areas. Llamas added: "Using EAI [enterprise application integration] tools from Sun [formerly SeeBeyond] we've also been able to integrate new people management systems, including time and attendance - which we didn't have before - as well as HR and payroll."