Company: Albany SoftwareCustomer: Greene KingSubmitted by: The itpr PartnershipDate: July 2002The distinguished hospitality group shows how a fast-growing organisation can benefit from the latest technological developments without jettisoning stalwart financial systems. Freelance journalist Alison Classe investigates.
It is often said that companies tend to replace their core financial systems unnecessarily, when they could benefit instead by spending their money on making better use of the solutions they already have in place. This approach has certainly paid off for Greene King. With help from hospitality systems experts Touchstone, Greene King has enhanced its SunSystems core financials with the addition of complementary features including a full eTransactions software suite from Albany Software. This incremental approach has brought major business efficiencies without having to replace a perfectly good financial package.Greene King’s Financial Director Marc Lombardo says, “Apart from the obvious benefits, these solutions have helped us reduce our costs at a time when we’ve been growing our business.
We now have fewer people in the finance team than we did before, even though there’s more work to do.” The savings arising from replacing older communications methods with Albany products are quite significant when labour, postage costs and reduced banking charges are taken into account.
BUSINESS BACKGROUND: 200 YEARS IN BREWING
Greene King has been established for over 200 years. From its base in Bury St Edmunds, Suffolk, the company has grown into one of the UK’s leading pub retailers and ale brewers. Today it is a fast growing organisation and demonstrates an unusually sophisticated ability to make the technology it uses facilitate change rather than hinder it.The managed pub division of Greene King looks after around 500 public houses, which are mostly concentrated in the South of England.
The division’s head office in Bury carries out a variety of administrative tasks on behalf of the pubs, including purchase ordering. The pub managers themselves place orders directly with their preferred suppliers of food, beer and other day-to-day requirements. These orders are then logged on the company’s EPOS system. Suppliers send their invoices directly to head office, which then has the job of checking them against the recorded order details, processing them via SunSystems, and making the payments. The whole process is extremely involved as orders can total as many as 24,000 invoice lines per day from an average of 30 different suppliers.
NEW SUPPORT, NEW EDI
In the late 1990s Greene King, already an established SunSystems user, began working with Touchstone with a view to harnessing a better support service. Touchstone came recommended as one of the largest and most successful resellers of SunSystems and as a specialist in the hospitality and leisure industries, boasting 350 clients in that sector alone.One of Greene King’s immediate concerns was to get some help in improving its EDI arrangements. “We already used EDI at that point,” explains Peter Hawkins, Finance Manager responsible for Management Accounts and Business Intelligence within Greene King. “But the system we had was largely unsupported and undocumented.
There were doubts, too, as to whether it could be made Year 2000 compliant. Apart from that, we wanted to extend the scope of our EDI facilities, particularly in the area of purchase invoice matching. All in all, it seemed like the time to consider implementing a new EDI system.”Greene King and Touchstone discussed the EDI requirement very early in their relationship, and Touchstone recommended EDIfy, a product from its partner Albany Software. Touchstone had worked with Albany on many previous occasions and regarded EDIfy as the best-of-breed product in this area.
Greene King was satisfied with the recommendation and work began on an EDI implementation that took around six months from start to finish.
A THREE-WAY COLLABORATION
The project was a three-way collaboration between Greene King, Touchstone and Albany. Between Albany’s EDI gateway and the SunSystems application, there was to be an additional software module created for Greene King based on LinkPlus, a package written by Touchstone for the hospitality sector. This software addition acts at an intermediate level and is designed to simplify the task of dealing with invoice lines by performing checks on price tolerances, and then consolidating the validated transactions as far as possible prior to posting to the main ledgers.This was one of those rare projects where everyone went beyond the call of duty to get the system up and running.
At one point the project ran into telecommunications problems that interfered with the transmission of EDI messages, which could have threatened the system’s stability. Although fixing this glitch was the responsibility of Greene King’s telecommunications provider, Touchstone shouldered the burden on behalf of its customer by hosting the EDI software and keeping the service running reliably until the problem was resolved.
STREAMLINING THE PROCESSES AROUND EDI
Albany and Touchstone continued to work closely together to address any other issues as they arose. Peter Hawkins acknowledges that Albany’s contribution went well beyond help with troubleshooting. He advised, “Albany helped us produce a procedures manual that is proving invaluable for introducing prospective suppliers to our EDI solution. It defines exactly how suppliers need to interact with us, what information they need to deliver, and when and how that information should arrive.
Given that we’re continually bringing new suppliers online, the manual saves us a huge amount of time and it ensures that everyone is conforming to the right standard.”The new EDI approach improved on the old in several respects. “Our old system was quite labour-intensive: an employee had to find the files, check them, initiate processing, and make sure everything went through smoothly,” recalls Peter Hawkins. “By automating that, we’ve saved ourselves around 3/4 of a full-time person.” Not only can the process now run pretty much unattended, but it also takes much less time – perhaps half-an-hour instead of six hours a day.
The validation checks are also more thorough than before, particularly in areas like pricing. It is easy to understand that an error of as little as half a penny on the price of a bottle of beer can quickly add up to a significant amount when multiplied over several thousand items.
Based on its satisfaction with EDIfy, Greene King went ahead and implemented two more Albany modules, again with the participation of Touchstone. The first, ALBACS, went live early in 2001 and allows Greene King to pay its suppliers electronically through BACS, one of the world’s largest automated clearing houses. Previously, the company had been a user of BACS for payroll purposes but had continued to pay its suppliers by cheque.
With around 1,500 suppliers on the books and cheque runs most weeks, the process of producing, verifying and signing cheques had meant a great deal of work and time for Greene King. Printing cheques on special computer stationery cost money too, as did the associated postage costs. In addition, the company faced security issues which always posed a threat when sending cheques through the post.ALBACS has meant the elimination of virtually all of those costs and risks, and has also pleased Greene King’s suppliers by reducing their clerical workload, and by ensuring that they get paid rapidly. Greene King has also been able to reduce the bank charges it pays – banks, too, would rather process BACS payments than cheques.
ALBACS proved straightforward to implement, with Albany taking charge of the paperwork required by BACS as well as the technical implementation. “For us it was really just a question of getting the necessary banking information from our suppliers and putting them onto the system,” says Peter Hawkins, adding: “The whole ALBACS implementation has been a painless process, and a very successful one.”Following the success of these first two projects, Greene King is eliminating a large chunk of its remaining paperwork by implementing a third Albany solution, CONNECT. CONNECT will remove the need to send hardcopy remittance advices through the post. When total payments can be as much as £2 million a month to a single supplier, remittance advices are correspondingly hefty, and a document of 100 pages is by no means uncommon for Greene King. The result of this is a large amount of corporate stationery, a tedious printing task and an expensive bill for postage.
By using CONNECT to transmit the advices electronically straight to the supplier, via fax or email as the supplier prefers, Greene King expects to save itself up to £12,000 each year in postage costs alone. Suppliers, too, will be happy because they receive the advices in a format that they can process electronically, and in some cases reconcile automatically with their bank statements and their own records.
TECHNOLOGY INVESTMENTS THAT PAY FOR THEMSELVES
All of these changes have taken place in a period where the company has undergone a rapid growth. Greene King has also acquired a number of other organisations during this timeframe, but the Albany solutions implemented by Touchstone have ensured that any new business operations were assimilated with no corresponding increase of overheads – in fact the clerical overheads associated with the finance department have reduced. Marc Lombardo explains that when Greene King has bought other companies, consolidating processes with the help of these highly efficient systems has enabled the anticipated benefits of the acquisitions to be realised sooner rather than later.
Marc Lombardo sums up: “We periodically revisit the question of replacing our core systems, but our philosophy is to be sure first that we’re making the most of what we’ve got. Adding these complementary solutions to our existing systems has allowed us to keep up with technological advances while minimising disruption to the business. “