Trimester V Jeeshan George (Jeeshan@gmail.

com)

Background Altex Corporation is a world leader in barrier protective solutions, which includes products like gloves, helmets, body suits, etc. Incorporated in 1961, Altex has grown substantially in the recent years with expansions to new markets in Asia and Africa where barrier protection is only finding favor since regulatory frameworks have only made them mandatory now. Prominent customers for Altex are broadly into 2 categories Healthcare customers and Industrial customers, which account to an annual turnover of about 2 billion USD. As part of its global review of IT systems and business processes, Altex decided to do away with certain functions that they considered non-core to their business. Also, they outsourced these functions to specialized companies with which they established long term contracts. One key condition for such an outsourcing arrangement was that the systems Altex uses (SAP) should be able to easily integrate with the vendors system. All the contracts were based on a gain-share model, where each vendors pay is proportional to the success of the system integration between them and Altex, i.e. if the vendors system does not integrate well with Altexs system, the annual payment due to the vendor will be reduced. Based on the agreed upon contracts, they final system landscape that Altex implemented in their organization is shown on the next page.

Business Process Overview

Altex uses a combination of 3 systems to support its entire business process. Seibel System is used by the entire sales force spread across the country. The primary function of this system is to channel all the sample orders that the sales reps request. The reps on the field conduct promotional events from time to time at various places during which they give away free products to prospective users. They request for stock to be available for such events intermittently, as and when a promotion is planned. There is an approval system in-built in the system to make sure the total volume of samples orders are monitored and controlled. Also, the approval process ensures promotions are only conducted where the management finds downstream sales value. Customers send their orders to Altex via email, fax and phone. They have a dedicated Customer service team that handle all the customer orders received through any of these means. Customer orders as well as Sample orders received through Seibel are entered into the SAP system. The customer orders are entered manually by the customer service team of Altex while the sample orders from Seibel is designed to interface directly into SAP based on automated interfaces. The customer service team at Altex validates the orders received and based on stock availability, customer priority and requested dates to decide which order should be BOOKED. Booking an order commits Altex to fulfill the order and is a legally binding decision. On booking, the SAP system automatically emails the customer/sales rep with a copy of the order and the committed date. BOOKED orders are grouped by delivery date and send electronically to FedEx, who is the logistics partner for Altex. The entire warehousing and shipping function has been outsourced to FedEx, who are responsible to maintain inventory, pack products and ship to Altexs customers as per instructions sent to them. A custom designed interface has been created between Altexs SAP system and FedExs IT system called RAMP that interchanges information between them. Upon receipt of order data from SAP, FedEx verifies the provided information and then starts the physical process of picking the right products, packaging it as per requirements and shipping them through their own logistics network. Once an order is physically shipped out via FedEx, they send back an electronic acknowledgement to Altex, which triggers a logical shipment in SAP (to mark the customer order complete).

Altex has a contract with FedEx based on number of shipments processed, transit distance, volume and weight. There is an annualized gain-share component tied to success of the integration achieved with RAMP. Once the order is complete, SAP triggers an invoice that is sent out to the customer which completes the order fulfillment cycle.

Description of key systems and terms

Seibel: Software application that is used widely for CRM functions in large organizations. Owned by Oracle Corporation, its one of the leaders in CRM space. Altex has a user based license agreement with Oracle for use of Seibel software. Support is available from Oracle, but does not include issues related to integration with applications from other vendors. Oracle has also partnered with Altex to implement the Seibel system but is not responsible for the integration. SAP: Altex has bought SAP R/3 license for the entire order-to-cash suite of modules. As a product vendor, SAP is only responsible for bug fixes and product enhancements for which there is an SLA based contract in place. SAP Hosting: The actual hardware that hosts the SAP servers and related infrastructure is contracted with CAP-C corporation. CAP-C is responsible for ensuring the system availability, performance, patching and access support. Altex has made another SLA level based contract with CAP-C which has a gain-share clause built into it. SAP Implementation & Support: Altex has contracted is IM Corporation - for implementation and support of SAP R/3 suite of modules. They are responsible for the design, deployment and support of the SAP based solution that meets Altexs requirements both internally as well as the integration with vendors. RAMP: Software used by FedEx Corporation for managing their warehouses and logistics network. Have contracts with multiple companies for whom they provide warehousing and logistics solutions, but use only RAMP to transact business at their end. All customer data received is interfaced into RAMP and processed using their own logic. The system is capable of integration with most ERP systems and is time tested. Each customer integration is tested to ensure each customer specific requirement is handled and the SLAs for each customer can be honored. Gain-share model: New pricing concept where the vendor agrees to tie his dues to the success of the overall solution of the client. This ensures that the vendor puts in effort to ensure the system deployed is adequately tested and workable. Normally, the variability would be a percentage of total amount due on an annualized basis with clearly defined success criteria. The final amount is usually a negotiated value based on discussion evaluating the success of integration achieved. Project United A: Altexs project team responsible for the design, testing and deployment of this integrated system. Lead my Fran Dalson, this team works with all of Altexs partners to

ensure that at the time of go-live, all these systems integrate perfectly to function as a smooth operational process.
Parties involved

CAP-C: Vendor provided hosting services to Altex. SAP: As a product vendor for SAP suite of modules that Altex has purchased IM Corporation: SAP Implementation partner for Altex FedEx: Warehousing and logistics partner for Altex Fran Dalson: Responsible for the overall success of Project United A which is key to Altexs success. Reports to the CEO directly. Oracle Corporation: As provider of Seibel software, responsible for the success of the CRM part of the implementation.

Task 1

Please read the entire case and gain a good understanding of the situation systems involved, process flow, parties involved and responsibilities, etc. Appreciate that there is a strong interdependency between the systems and parties involved. In a gain-share environment, it is imperative to ensure the parameters you agree to do not work against your interest. Based on your understanding, you have to list out the following for whichever party you are representing 3 quality measures: Specific, measurable metrics that can be used to measure the quality of your own areas of ownership. These are measures on which you are willing to setup the gain-share contract. Exclusions: List out exclusions that you would not want to be responsible for. For each exclusion, mention which party you think should be responsible Dimensions: Specific dimensions that you would be able to measure for your software/service provided.

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