InformationWeek

November 17, 1997

GM Picks SAP For Financial Apps

Decision is first part of �common platform strategy' aimed at cost cuts

By Ma rianne Kolbasuk McGee and Tom Stein

eneral Motors last week named SAP as its corporate standard for financial applications. For both companies, the deal is significant beyond the terms of the agreement.

For GM, the decision is among the first in the automaker's evolving "common platform strategy." That's a program to reduce costs and complexity by standardizing GM's many businesses on several core IT products. "SAP's robust platform can support the complexity of our many operations," says Cherri Musser, GM's business services information officer. "With common processes and systems, GM will be able to quickly realign operations and resources as business requirements change, without incurring major retraining and IT expense."

SAP, meanwhile, sees the deal as a foot in the door. GM has yet t o pick a supplier for manufacturing and human resources apps to replace its homegrown systems. SAP also views the automotive industry as a critical vertical market.

"Automotive is the one industry that leads manufacturing, and SAP wants to be a leader there," says Peter Zencke, an SAP executive board member. SAP also wants to be a key player in industries that do high-volume business and where supply-chain integration is critical, Zencke adds.

SAP disclosed last week that Motorola, Hewlett-Packard, and Colgate Palmolive are among the beta customers testing its new supply-chain-management system, called Scope. That system is scheduled for general release next summer.

SAP's deal with GM is limited to financial apps. Although SAP's human resources modules are now running at GM's Opel facilities in Germany, the automaker hasn't decided on a corporate HR apps standard. Unfortunately for SAP, sources close to GM indicate that the company is leaning toward PeopleSoft. A decision is expected soon.

As for manufacturing applications, GM plans to continue using its homegrown customized software for procurement and material planning "for the next couple of years," Musser says. But GM will likely have to pick standardized modules for other manufacturing activities within a year as it opens new plants, says Ron Sorrells, GM's general director of business services.

GM plans to implement the financial apps in a phased rollout, beginning with its automotive assembly and components operations in Europe and the Asia-Pacific region. GM's goal is for full deployment by 2002. Financial terms weren't disclosed.

GM will take the lead in managing the R/3 rollout, while A.T. Kearney, EDS, and other firms will provide implementation and consulting support.

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