SAP to power Harvey Norman

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SAP to power Harvey Norman

AustralianIT | Fran Foo | August 31, 2009

HARVEY Norman has embarked on an ambitious plan to install a new global merchandising system based on SAP by early 2012.

Once up and running, more than 200 stores with around 15,000 users will be using SAP, according to Harvey Norman chief operating officer John Slack-Smith.

The SAP project was kept on hold while the economic situation improved.

"The project internally has been approved by the board of directors but we have been on hold over the last six months waiting to see at what point there's going to be a sustainable improvement in the economic situation," Mr Slack-Smith said.

The electronics and white-goods retailer will start laying the groundwork in early 2010, he said.

"We will start building the (SAP) solution in early next year ... it won't be very complex but there will be some customisation."

The platform will support the Harvey Norman, Domayne, Joyce Mayne and Norman Ross brands in Australia, New Zealand and Ireland, and replace a hodgepodge of legacy systems, Mr Slack-Smith said.

Harvey Norman spent approximately $5.2 million on a scoping study in the last financial year.

"We spent the last 12 to 18 months in defining the solution for the new merchandising system," Mr Slack-Smith said.

He declined to reveal the exact cost of the SAP project but said it will be in the "millions of dollars".

The system will give Harvey Norman franchisees immediacy to information and enhance customer service. It will also bring Harvey Norman "closer" to suppliers in both information exchange and cost reduction.

"We have two years worth of work ahead of us from the time we start building, to change management and then the deployment phase ... it's an exciting period for the company," Mr Slack-Smith said.

"It's tough but good and great companies take on these types of things because you get to improve."

He said the system would also allow Harvey Norman to enhance its online presence.

"It will have a positive impact on our online operations. It's going to be the system that will provide a consistent platform that will allow us to be far more flexible and pervasive online," Mr Slack-Smith said.

Harvey Norman spoke with a broad range of tier one and two suppliers but wanted a solution that fit its business strategy over the next years and beyond, he said.

As part of its investigation into a new merchandising platform, a slew of legacy systems were retired in the last calendar year, incurring a $1.4m impairment expense.

Last week Harvey Norman reported a 40.2 per cent fall in full-year net profit to $214.4m.

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