October 04, 2007
The 35 m2 salesrooms of Euroset branches are packed to the rafters with electronic goods, earning the retail chain a kind of cult status – it is seen as young and dynamic. The firm’s approximately 30,000 employees sell digital cameras, cell phones, CD and MP3 players, and related accessories. When it comes to the Russian telecommunications sector, there’s no avoiding Euroset. Major cell phone manufacturers such as Nokia and Samsung sell up to 2.5 percent of their global production through this Russian retail chain. Nine million cell phones were sold in approximately 3,300 Euroset branches in 2005 – a market share of some 25 percent. And Euroset is growing faster than any other Russian company. Last year, four new Euroset branches opened throughout the country every day.
But as each new branch is added, the amount of data involved increases. Each day, information from the entire retail network is fed to the head office in Moscow where it has to be processed. This data – customer and material master data, assortment lists, and information on sales revenue and exchange rates – forms the basis for financial and logistical forecasts such as cash flows and follow-up deliveries. The data is particularly important for Euroset. “We currently collect over three gigabytes of data every day,” explains Eugeniy Balahonov, head of SAP integration at Euroset. “Our IT system was sometimes overloaded by this flood of information, which consists of stock lists from each individual branch. And the floodwaters are still rising.”
Besides the sheer amount of data, the heterogeneous IT landscape itself caused problems. Within its corporate network, Euroset was working with a range of solutions, including a cash desk solution and an enterprise resource planning (ERP) system, as well as 1C 2005, a bookkeeping system designed specifically for legal requirements in Russia. There were also some in-house developments such as the data warehouse, the prepaid payment system, and the human resources (HR) administration solution. The cross-component interfaces were technologically outmoded. A vast range of data had to be laboriously combined, which frequently led to errors. “Our interface landscape lacked transparency and it was only by investing significant amounts of time and money that we could operate and maintain it,” remarks Balahonov.
In view of this situation, Euroset decided at the beginning of 2005 to integrate all stand-alone solutions into SAP R/3 at the company’s headquarters. The software landscape consists of the functionalities for HR, SAP for Retail, SAP Business Information Warehouse (SAP BW), and SAP NetWeaver Exchange Infrastructure (SAP NetWeaver XI).
The aim of the project was to find an application that would provide daily updates of the collected data in the SAP software of the Moscow headquarters, thereby offering an efficient means of managing the large volume of data. It had to function as a central platform. Integrating all processes and individual solutions into SAP NetWeaver XI was chosen because of the open integration technologies it offers. This enables SAP software and third-party components to work together in a process-oriented manner and in a single environment. The main focus of the new system was the integration of the 1C Parus POS in branches and SAP software in head office via XML, using standard SAP software and non-standard 1C document formats.
The first stage developed an introductory concept for SAP NetWeaver XI, which occurred in collaboration with SAP partner IDS Scheer, which handled the implementation work. IDS Scheer was chosen because of its knowledge of SAP NetWeaver and its close SAP NetWeaver partnership. Communication and data exchange between SAP NetWeaver and connected IT systems is based exclusively on standardized, Web-based, and state-of-the-art technology such as XML or Simple Object Access Protocol (SOAP). “The interfaces of the individual systems needed to be adapted based on XML standards. We used the benefits of JCA adapter technology to realize the interface,” comments Balahonov. The implementation team planned the interfaces for the individual branches, implemented them, and adapted SAP NetWeaver XI to them. The definition of the required data, data format, frequency of interchange, and monitoring of interfaces were the focus of this phase. The following technologies were used:
IDS Scheer also improved the concept design for the individual interfaces. Furthermore, the team developed data types for XML exchange that are centrally administered from SAP NetWeaver XI. Each document type and graphical or XSLT mapping was developed because each interchange document format for 1C POS, developed as XSD definition and centrally managed within XI, was derived from corresponding XML IDoc structure or a BAPI interface (DEBMAS, HRMD_A, and so on). These formats were extended with additional 1C-specific fields.
A number of company-specific compression, decompression, and encryption services were developed based on the Java and ABAP functionality of SAP NetWeaver Application Server (SAP NetWeaver AS). Due to poor throughput rates, the instability of the Internet connection for some POS locations, overly large data volume, and XML payloads and XI control information within payloads, additional non-standard solutions had to be developed to solve the problem.
“The implementation of interface requirements went smoothly, thanks to the cross-platform and flexible XML standard,” reports Balahonov. “We also used existing resources, as the 1C system for payroll reports and the KIC system for registering working times and other functions, to achieve the implementation.” Because there were no specifications for interface data or technology for 1C, standard technology such as files for asynchronous communication and SOAP for synchronous communication were used. “One common knowledge base contains all the information needed to access functions, integrate systems, and support processes,” explains Balahonov. “SAP NetWeaver XI enables us to implement new requirements rapidly and easily. Changes and extensions to existing, live scenarios can be implemented smoothly.”
The first problems encountered during the implementation were related to the use of different identification codes for debtors, creditors, or sales locations in SAP R/3 and other existing systems. To solve this problem, two variants were discussed. The first variant was to use SAP NetWeaver XI to convert the identification numbers; the second variant was to adjust codes to the identification system of SAP R/3.
In the end, the second variant was chosen because SAP R/3 was defined as the leading system for the definition and maintenance of master data. Euroset could then reduce the administrative efforts for master data management and increase the quality of the essential data. This approach was a crucial benefit of the project, because Euroset data management became more and more complex due to the expansion of its business.
After five months of work on the project, SAP NetWeaver XI went live at Euroset in June 2005. At the start, some 600 sales offices in and around Moscow were connected to the SAP software using the localized J2SE adapter framework of SAP NetWeaver XI. “We are now able to work in a process-oriented manner with our SAP and third-party applications,” comments Balahonov. “Although we are still using in-house developments such as a data warehouse, our payment systems, and the 1C bookkeeping software, the different IT systems are now interconnected through SAP NetWeaver XI.”
SAP NetWeaver XI makes business process management much easier. Decision making processes for the distribution of data are mapped so that liquidity and credit limit checks can be activated from the SAP software. “The management team, which is responsible for financial and logistical planning, now has all the data it needs, when it needs it,” states Balahonov. “That has greatly improved the quality and reliability of planning.”
By bringing together various IT systems into one centralized general environment, Euroset is cutting operating costs: the time needed for manual transfers and the risk of errors have been reduced. “We can currently share data with over 900 sales offices via SAP NetWeaver XI. The integration of SAP R/3 and 1C in a large retail network is the first of its type in Russia,” explains Balahonov. “We are planning to incorporate another 750 sales offices into the data exchange solution in the months ahead.”