SAP and IBS-STL UK: A Timeline and Some Reflections

Given that the collapse of IBS-STL UK has largely been attributed to its failed SAP implementation, the following timeline (which undoubtedly has a few gaps) may prove helpful in formulating the questions that should now be asked in order to ensure that a disaster like this doesn’t happen again. The fact that SAP was intended to be a global roll out but stopped here in the UK also raises questions: I reflect briefly upon some of these at the end.

October 2007: Groupsoft announces the start of SAP implementation in the UK, the first phase of a proposed “multi-country” roll out:

Groupsoft starts IBS-STL SAP Retail Project in UK

IBS-STL is one of the largest Bible and Christian literature ministries in the world – they translate the Bible into world languages that have 1 million or more speakes and distribute the Bible—and evangelism and discipleship literature—to people who might never learn about Christ any other way.

Groupsoft is implementing SAP Retail ECC 6.0 – across their multi-country distribution systems – in US, UK, South Africa, India and China.

23 October 2008: STL UK website and order processing suspended for SAP installation.

28 October 2008: SAP goes live.

3 November 2008: STL Blog: Apologies are offered as problems rapidly become evident. Delays in order despatch and tracking are acknowledged:

As planned the system went live last Tuesday and we were able to despatch some orders. Orders continued to be despatched everyday last week, although it wasn’t until Friday that we experienced a relatively trouble free day and were operating at anything near full capacity. We do continue to experience some issues which may cause some inconvenience, e.g. the interface with Fed Ex is not yet operational and we are unable to advise you exactly where your order is once it has left our Warehouse.

5 November 2008: STL Blog: “some technical difficulties with a small number of orders” acknowledged. Problems with carriage charges on backorders noted.

6 November 2008: I report briefly on the situation from a retailer’s perspective: STL: Back Online but not Back Up to Speed

7 November – 11 November – 12th November 2008: STL Blog: “problems in moving stock from bulk to live racking” blamed for delays in order processing.

14 November 2008: Timing isn’t the issue – Mark Hurley: Decision to ‘Go Live’ with SAP in the run up to Christmas 2008 is defended as having been taken “at the highest level”. Trade customers express dismay as orders remain unfulfilled.

19 November 2008: Steve Mitchell presents SAP Go Live to the Booksellers Association Christian Booksellers Group (BACBG). In an open letter to trade customers, Graham Sopp apologises for ongoing problems, although problems are attributed to “business process bottlenecks” rather than to the software itself:

We originally planned to implement the new system in August. However as the date approached, it became apparent that further testing of the new system was necessary before we could commence training people in how to use the system. We were faced with a choice of going live in late October or waiting until January 2009. Unfortunately, we would have faced immense difficulties in standing down our external project team of consultants for three months while we prepared to go live and then to re-assemble that team in January. After extensive testing of the system we were confident we could start with, at most, minor disruption. So we took the decision to go live in October.

Most of the problems we have encountered over recent weeks are related to business process bottlenecks and are not directly related to software and, in fairness to the system team, could not have been anticipated by the extensive testing we carried out.

I report briefly on the BACBG meeting: STL: Light at the End of the Tunnel?

22 December 2008: STL Blog: In the face of continuing difficulties faced by trade customers, a detailed explanation and defence of the SAP implementation is offered: Why SAP and why now??

19 January 2009: Trade customers receive further apologies for delays in despatch along with the following explanation:

The reason for this is our team of consultants are still working on solving a number of bedding down issues in SAP where orders can get stuck in the system.

January/February 2009: Keith Danby takes control of UK operations and apologises for the problems caused by the UK SAP implementation. From Christian Marketplace, February 2009:

Asked about the recent difficulties which the trading arm of the charity had been experiencing in the UK, following the introduction of new systems at its warehousing operations in Carlisle, Danby said, “SAP has been a very big investment for IBS-STL. We made this investment because we believe this will ultimately give us a Global Enterprise System.”

With regards to the timing of the implementation he commented, “When we embarked on this project we wrote into the contract that we would not ‘go live’ during the autumn trading period. Originally, it was to be launched in the spring. Like all major computer projects, there was slippage and the revised date was then end of August which slipped to September and the finally to October. At one time we had over 20 SAP consultants working to keep deadlines.” He also stated, “It is important that you know that Graham [Sopp] was not asked to step down as CEO because of the SAP problems.”

Danby also made the point that had the system not gone live in October then the launch would have had to be held back to March 2009. “Delaying to March would mean the SAP consultants having to leave for 4-5 months … as they are all freelance consultants, getting them to come back as a team was regarded as unlikely.” The SAP software was successfully installed “and it works” said Danby, “but we encountered significant operational procedure problems”. He admitted that more time was needed for testing it with their operating procedures than had been anticipated.

“We have spent 21 years being committed to serving the UK Christian Retail trade”, he said. “We take failures like this very seriously and I say again we are deeply embarrassed and sorry.”

25 February 2009: STL Blog: Update given on returns, receiving and backorders:

Single line backorders are still occuring; however we have seen a substantial reduction in the incidence. Our team along with consultants from SAP are continuing to work on resolving the residual issues.

8 April 2009: STL Blog: Message from Keith Danby acknowledges ongoing unresolved issues “with the new IT system” and announces the appointment of Andrew Clyde as Director of IT with specific responsibility for SAP development work.

1 May 2009: STL Blog: Problems with SAP blamed for Invoices with 0% discount:

If for a new product a product group is selected on a discount matrix where no value is maintained then SAP will apply no trade discount to the order – the result on your invoice is 0% discount. So how could this happen? Well, SAP is not able to automatically check that for say a particular Authentic book the combination of product group and customer group is correct.

14 August 2009: STL Blog: Trade Announcement from Keith Danby states:

A number of factors including the SAP implementation have caused STL Distribution serious Supply Chain difficulties, which have resulted in severe cash flow problems.

16 November 2009: Biblica announces the sale of its UK operations and lays much of the blame for the crisis upon the problems with SAP. This is perhaps best summarised in Tania Mason‘s report for Civil Society, Top-250 Christian charity to close, 18/11/2009:

David Young, the charity’s UK general manager, said the charity had been struggling financially for some time but the failed attempt to install an Enterprise Resource Planning (ERP) system in October 2008, that should have integrated all its warehousing, sales and customer services, was the nail in the coffin.

“We installed the accounting software a year earlier and on its own it worked fine, but the implementation of the ERP caused all kinds of problems with inventory and it was just as the recession hit. Those two things together gave us serious problems.”

They resulted in significant cashflow pressures, excess stock, and supply chain and service difficulties in the charity’s distribution and retail units. […]

[…] SAP is yet to respond to IBS-STL UK’s criticism of its ERP system. A spokeswoman told Civil Society: “They are still talking about and trying to get to grips with the problem.”

18 November 2009: STL Distribution USA issues a statement — cited at Christian Book Shop Talk — to counter rumours that its operations are also under threat, advising customers (amongst other things) that

The US organization has not attempted to install the SAP software, and our systems are not affected by the attempted installation in the UK.

Concluding Reflections

The fact that the USA division (and presumably the other international divisions mentioned in Groupsoft’s October 2007 announcement) has not attempted to install SAP raises at least two questions:

  • At what point was the decision made to discontinue the global roll out?
  • Why, at that point, was the UK implementation not halted?

To an outside observer — judging purely by the extent to which the blame for STL UK’s crisis has been placed on the SAP implementation failure — it appears that IBS-STL UK, its employees and trade partners seem more than anything else to be paying the price for drawing the short straw: for being unfortunate enough to be first in a roll out that was part of a much grander scheme. If the implementation had first been attempted in the USA, South Africa, China or India, would it now be one of those divisions fighting for survival instead of the UK?

Clearly other factors have been at play, not least the state of the economy, but the SAP implementation had to start somewhere and it is a tragedy that Biblica, in the end, did not have the necessary resources to support the division that drew that terrible short straw.

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23 thoughts on “SAP and IBS-STL UK: A Timeline and Some Reflections

  1. The problem really lies not with the SAP software per-se but with the consultants and management. With all of these types of packages you spend time looking at the business processes, create business rules and then apply those rules to the software. From what I’ve read to cut corners they decided that as well as implement the new software they would also use it as an opportunity to severely change the operational procedures of the warehouse business. By changing the procedures to fit existing working models that SAP has already had defined saved time (and officially money) but caused chaos in the warehouse.

    I’ve worked in this field for over 18 years so If I can help when it comes to the future, I’d be interested to know more.

    Thanks for a comprehensive history Phil.

    Mark

  2. The question I would like to ask is…

    ‘As Christians and fellow resourcers for the Kingdom, How can we support STL?’

    A question Phil that it seems you haven’t addressed in your blog?

    Forgive me if I am wrong?

    mark

    • Hi Mark – actually it’s this very issue that my post A Modest Proposal to Save STL UK sets out to address. I believe that the best way that we can support STL UK is by showing solidarity with them, by standing together, forming a trade/church/community consortium, and buying them out ourselves.

      Unfortunately, because I have yet to receive even an acknowledgement of my requests for detailed information from either Keith Danby or Baker Tilly I am currently unable to take that proposal forward.

      In the meantime, as has been suggested in the responses to that thread, perhaps the best thing we can do for STL right now is make them our first port of call for all orders.

      As they are not currently recording dues/backorders, there’s no point in ordering things that they’re out of stock with, but I’d encourage as many of us as possible to order whatever they do have in stock from them whenever possible.

      And, of course, pray for them…

  3. Where is Global when you need it? I always thought that a Global organisation supported its individual parts much in the same way that the Bible uses the illustration of the body. I would have thought that a Global organisation would be able to allocate resources to its weaker members when they are struggling because one day they will be up and others down. It seems that STL UK have (as part of a Global organisation) implemented a computer system the size and complexity of which would not have been attempted if they were just STL UK. Therefore surely the implementation costs of the system should have been carried by the whole global organisation as they were supposedly going to benefit from it.

    When we started our shop in 1976 we first discovered STL in a warehouse in Bromley and would occasionally go and pick a box of books off the shelves. Then there was the Van with Daan (yes STL used to drive a van round packed with goodies), the move to Carlisle, the fire and out of it the growth of the distribution system. In all those years STL has been staffed with committed, dedicated people and it is tragic that the Distribution system (which is needed in this country) seemingly has paid the price.

    Ok, its a lot more complicated but I’m just looking from the outside and that’s how it seems.

    • I’ve been thinking much the same, Geoff. The current situation does seem to make something of a mockery of Keith Danby’s reassurance given back in April:

      I can also re-assure you that IBS-STL UK has benefited from being part of a wider global family, and that resources have been used to ensure our financial base remains secure, enabling us to maximise opportunities to benefit the Christian Retail trade in the UK and overseas.

      • For the record – and as Geoff has mentioned it – Daan van Belzen is one of the unsung heroes of the original STL. When the history of the company comes to be written, Daan’s contribution and commitment will be writ large. Not only did Daan drive the van around the country, he would often sleep in it as well to save money! Let’s keep praying that STL will be able to continue to do the job that so many bookshops need it to do.

    • I think this is a pretty complex question. Is it right that money from the parent company that would be used to distrbute scripture around the world be used instead to support a commercial venture in the UK?

      I’m not answering that one way or the other, but I think that is the question that will be asked in Colorado Springs.

      • I think its a perfectly valid question, otherwise what is the point of joining a global network if it is only a one way exercise. And what was the point of installing a global computer system if no one else was going to pay for it (I assume)? You could easily argue that if STL falls (and I would still hope that it doesn’t)and a number of shops with it then less opportunities will be available to make scripture accessible in local towns. Not everyone buys online.

        • Hi Geoff

          Absolutely, and I suspect there has been a significant level of support from the US. Although even if the number of Christian bookshops halved in the UK we would still have infinitely more access to scripture than most of the world.

          In the US the ‘STL’ side of the business is pretty small compared to the ‘IBS’ side, and I do wonder if the US authorities would take a dim view of a not-for-profit organsiation using their money to sustain a commercial operation in the UK. I think the charity commissioners would feel the same about Biblica UK using profits from the UK to suport the US distrituion business (formerly Appaclachian), rather than for the charitable aims.

          I may be wrong, but I think this will be a significant factor.

          Also, the tie-up is much more than just the UK – the work of OM/STL in India was probably an important aspect.

        • Personally I’m much more concerned about Biblica/IBS-STL’s employees being subjected to all this uncertainty over their future than I am about people elsewhere in the world having Bibles (especially if it’s variations of the NIV being foisted on them). What good is it for a mission organisation to say to people in other parts of the world, “Here’s a Bible, God bless you” if it leaves its own people in the lurch?

          My view is that an employer has a duty of care towards its employees — and when that employer is a supposedly Christian organisation that duty of care is even greater. A good number of staff at STL in Carlisle aren’t Christians — so what does the way Biblica are now treating them tell them about Christianity? What kind of mission is this that pulls the plug on people’s livelihoods in this way?

          OK, so the search is on for a buyer or buyers — but they’ve been told in no uncertain terms that if no buyer is found, that’s it: administration kicks in. Meanwhile STL USA reassures everyone that its finances are secured by the license fees and royalties being paid by other organisations for the privilege of using the NIV …

          As Simon says, can’t help thinking the balance between mission and business been lost somewhere along the line…

        • Phil. I’m not sure sure you’re being fair to Biblica here. The missional aims of the ‘IBS’ side of the organisation are bible distribution and the financing of bible translation around the world. That is the pledge given in every NIV about how the royalties will be used.

          I am just suggesting that to divert significant funds (a multi-million pound sum I guess) from that pledge is more complex than you are suggesting. It is absolutely a tragedy for all those people (including a lot of my friends) are facing such uncertainty. I know – I am still walking through this myself. But, it isn’t a simple solution to take all the charitable funds of an organisation from one country (where a promise on the spending them has been made) to support a financially struggling commercial enterprise in another, and I don’t think it is fair on the STL employees to insinuate that Biblica are remiss for not doing this.

        • Ian, if it were as simple as STL UK being “a financially struggling commercial enterprise” in another country then, yes, I’d say you’ve got a point. But STL UK’s distribution work — and its publishing division along with its chain of “100% Charity” Wesley Owen shops — is just as much part of the organisation’s global mission as any other. We’re not talking about two separate organisations here — at least, we weren’t until things started going belly-up here in the UK. Until then, it was one big happy global family; but now, thanks to the convenient legal loopholes of different parts of the organisation coming under different jurisdictions, the one can pull the plug on the other.

          And why did things go belly-up? Because of the attempt to create a “Global Enterprise System” for which the UK effectively became the dummy run. Yes, bad timing too and other factors that will no doubt come to light, but it’s Biblica themselves who are saying that the failed SAP implementation was the killer.

          Why is it acceptable to prop up STL Distribution USA with the royalties from the NIV but not STL Distribution UK? Because that’s what they’re doing:

          The financial health of the US organization is stronger, partly because of the 30+ year success of the NIV Bible which is owned by Biblica US, our parent company.

          and whilst STL UK’s finances might not have been rock solid, they were certainly in good health until they were swallowed up into the IBS global mothership.

          In my view, then, it most certainly is remiss of Biblica to have allowed things to reach this point. The analogy of a body, as cited by Geoff, is a good one. When one part of the body is injured then you do divert resources that would have otherwise been allocated to other parts to bring about healing.

          In the meantime, my prayers — along with everyone else’s — are with those who find themselves to be part of the limb that’s being lopped off; and my prayer is that that limb will not die but survive to grow into something leaner, fitter and stronger…

  4. Nope it’s still £3.50 if you put in an order below the minimum order level – but then STL charges if you order below the minimum with them too, so all’s equal on that front. The minimum with Gardners is comparative (indeed for weekday delivery slightly less assuming 35%) to that with STL, it just seems higher because they reckon their figure on the retail value of items purchased whereas STL works it on the Invoiced value.

  5. At 35% trade discount, Gardners UK £100 carriage-free minimum works out at £65 trade price as compared to STL’s £75 — can make quite a difference in practice, especially as Gardners next day delivery cut off point is later in the day (5.30pm if memory serves me correctly; STL remains at 2.30pm for phone/fax/email and 4pm for online).

    In the run up to Christmas, STL have (as in previous years) reduced their carriage-free minimum to £50 trade price (always strikes me as odd: the very time of year when most shops are busiest and thus likely to be ordering more is when we’re offered the terms we really need in the leaner times… oh, well… )

    I’m in the process of compiling info for a new post, “Publishers and Suppliers supporting Retailers” and I’ll be including this in that along with info from a few others who’ve been in touch to say they’re offering special terms, either to help us through the current uncertainty with STL or simply in the run up to Christmas.

    Rather than take this thread any further off topic, please contact me directly with details of any special deals/revised terms you’re aware off. I’ll also aim to include details of publishers offering trade partnership terms to retailers — if that’s you, please shout!

  6. The story about Daan, one of so many amazing stories from OM’s early days, reminded me that STL began life as an arm of an adventurous mission movement.

    His commitment – shown in the miles he drove and the fact he slept in the van – was a commitment to making Jesus known not maximising profit.

    I guess somewhere along the line STL became a business driven by the need to generate a return on capital. I guess that this enabled it to do things it couldn’t do in those early days. And there’s nothing wrong with that per se.

    But i wonder if it lost something vital as it made that transition. in my role as a charity trustee i have always emphasised the need to think in a business-way about what we’re doing, to use resources as efficiently as possible. But always at the forefront of my mind has been the need to remain true to and maximise the charitable objectives – always, in my case, to make Jesus known through what we’re doing.

    Has the balance between mission and business been lost somewhere along the line?

    I guess this might apply to Christian publishing as well as Christian retailing – but that’s awhole different conversation!

      • I would be interested to know what Mark perceives to be the balance between mission and business. Could he give some examples of where/in what way this balance has been lost?

        It is no good just saying that it is this situation that IBS-STL finds itself in that proves his point. That could be because the focus of the business is wrong – or the the focus of the mission is wrong. Not necessarily an off-kilter balance between the two.

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