GM-AVTOVAZ: Maximum use of SAP abilities is a half the success of implemented system

2006-12-18, Portal of Machine Building

The project of corporate informational system implementation at joint Russian American venture “GM AVTOVAZ” may be considered as unique. The SAP informational system implementation came about the same time with the establishment of the joint venture itself. CJSC “GM AVTOVAZ” Finance Director” Ms. Pamela Smith told to machine building portal about peculiarities of this project.

- What is your assessment of CJSC “GM-AVTOVAZ” business process informatization level as of today?

- I consider that our company may be called leader from the point of manufacturing processes as well as from the point of their automation. The functionality of SAP informational system which we have today exceeds the planned. The basis achievements of our project are the implementation of 7 basic SAP system modules within 9 months, special solution SAP IS-A for automobile industry as well as dealers portal which is used already by more than 100 of our dealers.

- How far should the Finance Directors of car assembly enterprise know the industrial particularities?

- In our company the finance director has a big influence upon all business processes. Actually, he is responsible for all processes taking place in the company. The volume of his knowledge and experience should be enough to understand the actual state of things which take place at his own company as well as at the market in general. My career was formed from its beginning in automobile branch. I have been working in General Motors for 27 years already that is why I do not have problems due to the fact that I am not familiar with any of the processes taking place in this industry.

- The expenses of Russian automobile companies for informational technology according to expert assessments is from 0,5 to 1% from their turnover. What are the peculiarities of IT budget formation at CJSC «GM AVTOVAZ»?

-In spite of the fact, that we consider our enterprise to be the advanced one from the point of Informational Technologies, our IT budget is lower than those numbers, which you indicate. The most part of the investments was made at the beginning of system implementation. All our IT processes are maintained by the internal recourses, which allow us to keep the expenses at the relatively low level.

- According to what criterions was made the selection of corporate informational system?

- With the beginning of plant construction in august of 2001 we had to select informational system which was able to cover all our needs.

Due to the fact that our shareholders (General Motors, OAO”AVTOVAZ” and European Bank for Reconstruction and Development) provided clear requirements to the transparency of our business processes and to our finance reporting, we needed the system which allowed us to perform reporting in parallel mode according to Russian as well as to international GAAP standards. Apart from that we had to observe the hard requirements of General Motors on financial reporting closing within 3 days. The SAP Informational System selected by us met all the abovementioned requirements and allowed to arrange the integrated solution. The maximum usage of standard functionalities, which did not demand development, allowed us to perform system implementation with relatively low expenses, which was very important for me as for finance director.

-What difficulties did you come across in the process of system implementation?

-Due to the fact that the informational system we started to implement before CJSC”GM AVTOVAZ” main production was put into operation, we did not have specialists knowing the processes and how they should be automated. The processes itself did not exist at that moment. That is why the main problem was to train the employees, which were to use in their work all implemented functional modules of system. From the other side, such circumstances allowed us to avoid the situation when people working at the company for some time objected to implementation of new technologies. For us it was a good opportunity to lay the best foundation of our business processes.

-Is the implementation of the project completed at the present moment? What kind of business tasks is it planned to solve with the help of additional modules?

-At the current moment CJSC “GM AVTOVAZ” implemented 7 basic modules of SAP system. The following business processes are integrated to each other: finance management and fixed assets, sales management, material flow management, production planning management, engineering changes management, quality management and human recourse management. And APO system is used for production planning and planning of spare parts sales.

Due to the fact that the standard support of SAP R/3 system for current version 4.6c is being completed, in summer of 2007 at the moment of planned plant shutdown the system up-grade will be performed, after that we plan to implement the functionality, which will allow us to control the budget expenses in automatic mode. Up to that moment we do not plan to implement the additional modules and to expand the functionality.

- Sometimes the Companies implementing the informational systems face certain problems: if the project is realized correctly; if the expected effect meets the received result. To give the responses to such questions, to detect the existing failures and to develop the ways of their elimination is possible by means of project implementation audit. Did you perform such audit at the enterprise? Do you consider it is necessary to perform such audit?

-Despite of our assurance in our forces we decided to stop and to look at the performed job from the side. Upon the completion of the project second stage we ordered the audit on SAP basic solution and on some additional solutions such as APO and Dealer’s Portal. Though the system audit of such level immediately after its two phases implementation is rather expensive action, it was very important stage for understanding the correctness of our movement in the selected direction.

By Grigory Sokov