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Case Study

 

How TomTom Drives Business in the Fast Lane

insiderPROFILES

July 1, 2010

They introduced the first ever GPS mobile device — and today they run their business using SAP software. Find out how TomTom, after outgrowing its back-end systems, addressed the increasing complexity of its business processes and employee roles by turning to SAP ERP and SAP BusinessObjects Access Control.
 

For TomTom, intensely rapid international sales of its popular car navigation systems, coupled with a host of acquisitions, led the company on a whirlwind ride of organizational and process transformations — the business was changing almost as quickly as the roadmaps delivered to its portable GPS devices. To address this growth, TomTom turned to SAP for a robust ERP system, plus SAP BusinessObjects Access Control to help manage the increasing complexity of the company’s business processes and employee roles.

At the company’s inception in 1991, TomTom focused on creating business-to-business applications for mobile devices. However, within 10 years, a completely new consumer products category — GPS navigation systems for cars — took the world by storm, changing the way drivers navigate their cities and highways. And TomTom led this innovation by introducing the first portable navigation device.

TomTom, which had been a small company of 150 employees, wisely changed its business focus to car navigation and embarked on a worldwide adventure — picking up 3,000 employees and a nimble business plan that could adjust to the new era of digital maps, turn-by-turn directions, and a tech-savvy generation of drivers who expect to never get lost.

Along the way, TomTom became an international GPS navigation leader, racking up 1.5 billion euros in annual revenue. At this pace, the company soon outgrew its existing back-end systems, which were intended for small and midsize enterprises. To help move the company to the next level, TomTom turned to SAP software — specifically SAP ERP and SAP BusinessObjects solutions.

New Complexities Lead to a New Platform

In a very short period of time, notes Marco Houweling, Finance Director at TomTom, the company shifted from a simple business to one that faced startling intricacies. “A lot of complex questions came to light that could not easily be answered with the business solutions we had in place,” he says. “Suddenly, we had to think about enabling cross-border sales, outsourcing production, handling transfer pricing between companies, and restructuring our intellectual property.”

“We were looking for an application with the best organized worldwide support and the most resources available for developing our new system,” Houweling says. “What we wanted was more structure and a platform for continued growth.”

“Now we can identify that a particular department has 300 conflicts, and we can put it to the managers to minimize those conflicts — for example, by tasking them to reduce the conflicts by 100 in a month’s time.”

Marco Houweling, Finance Director, TomTom

TomTom’s previous systems presented several challenges that the company needed to address quickly in order to better equip itself for the future. From a finance and audit perspective, the company wanted to improve how it reconciled transactions between its subsidiaries. “We needed to have a more automated inter-company or transfer-pricing policy that our system could support with automated postings,” Houweling says. “That is something you don’t really find in a small or medium-sized solution.”

“Also, we needed to restructure our material resource planning process,” he says. “For us, it is critical to manage our inventory levels, which is always difficult when you grow 100% per year.” For a company like TomTom that sells millions of products, getting inventory management right — knowing how much to buy of which product and when — is crucial. Otherwise, lots of inventory and money is wasted.

For these reasons, the move to SAP ERP was an easy decision for TomTom.

Marco Houweling

Marco Houweling, Finance Director, TomTom

Why a Dual Implementation?

Instead of undergoing a lengthy selection process for a scalable ERP system, the company took three months to evaluate its own key business processes to see if they could be modified to fit with a fast “vanilla” implementation of SAP ERP. The result was a resounding “Yes.” As it turns out, that can-do attitude is part of TomTom’s culture and was, in no small part, a key to the company’s decision to roll out SAP BusinessObjects Access Control at the same time that it implemented SAP ERP.

"In general, implementing an ERP system helps companies structure their organizations in a better way. A project such as this forces them to think about and potentially change their business processes, which immediately affects the roles and responsibilities of the people who are involved in those processes."

Stephan Ottenhoff, Program Manager, TomTom

“In general, implementing an ERP system helps companies structure their organizations in a better way,” says Stephan Ottenhoff, Program Manager for TomTom. “A project such as this forces them to think about and potentially change their business processes, which immediately affects the roles and responsibilities of the people who are involved in those processes.”

Without a way to document and predict the outcome of processes or transactions, users end up adjusting to the processes or transactions in order to explain the result. According to Houweling, this can be a disaster for those who work in a controls department. Consequently, TomTom decided early on that one of the key objectives for its new SAP ERP implementation would be to bring the organization back into control.

“One of the logical decisions that followed the SAP ERP selection was the desire to clearly define business rules and job rules. And when you do that, you want to be able to monitor whether the controls that you implement are effective,” Houweling says. “Wanting to make these controls measurable and reportable — which means you can actually do something with them — led to the decision to buy SAP BusinessObjects Access Control.”

Stephan Ottenhoff

Stephan Ottenhoff, Program Manager, TomTom

“Now everybody knows what we are doing. SAP BusinessObjects Access Control brings awareness — and from my perspective, that’s the best control.”

Stephan Ottenhoff, Program Manager, TomTom

From Planning to Action

Headquartered in the Netherlands, TomTom wasn’t reacting to a mandated governance, risk, and compliance (GRC) regulation like Sarbanes-Oxley to get a handle on its GRC efforts. “It came from within ourselves — we wanted this,” Houweling notes.

To kick off the project, the first step was to get all of the key stakeholders into one room at the same time. “By all stakeholders, I mean our internal audit team, our CFO, our external auditors, and, most importantly, the business owners,” Houweling says. “Together, we identified the peak risks in our processes and the major risks we wanted to mitigate using access or application controls.”

According to Houweling, another critical success factor was that TomTom brought in external auditors early to help identify its key risks and key controls to implement. “When we got to our post-implementation go-live audit, we didn’t want to be surprised or carry on lengthy conversations with auditors,” he says. “I think it was a process of real mutual understanding with our external auditors that added value and prevented a lot of inefficient use of time.”

Throughout the course of the implementation, TomTom improved many of its processes and altered employees’ roles and responsibilities; however, the company didn’t have to change any rules post-implementation — because the rules were the right rules for the business.

GPS

Adjusting to the New System

The main focus after go-live was making sure the system was working properly and training the end users on how to use it. “The first few months weren’t easy, but we had one objective: Make sure the business could sell its products,” Ottenhoff says. “Our main priority was to get the business moving by getting SAP ERP and SAP BusinessObjects Access Control up and running,” he explains.

For three months following the go-live, TomTom hired additional resources to help its 600 end users familiarize themselves with and navigate through the new SAP ERP system, helping work through any end-user issues that arose.

“Our employees are not shy about voicing their opinions — so if something wasn’t working, they told us,” Ottenhoff adds. However, the company’s overall culture was one of embracing rapid change, and the business as a whole knew it needed a well-structured system in order to grow into the future.

“Everything quieted down after those first three months,” Ottenhoff explains. “Once everyone knew how to use the system, we weren’t dealing with functionality questions anymore.” And because TomTom could now track and monitor access conflicts, the company had a leg up as it systematically started resolving them.

“Suddenly, we had to think about enabling cross-border sales, outsourcing production, handling transfer pricing between companies, and restructuring intellectual property.”

Marco Houweling, Finance Director, TomTom

Making Conflicts Measurable

One of the biggest benefits of SAP BusinessObjects Access Control, notes Ottenhoff, is its ability to concretely put a number on controls conflicts in an enterprise. “Now everybody knows what we are doing. The tool brings awareness — and from my perspective, that’s the best control,” he says.

“A tool like SAP BusinessObjects Access Control can motivate business departments to change their focus and segregate duties,” he explains. For example, consider conflicts around segregation of duties in an accounts payable department. A best practice is to set a control so an employee can’t create an invoice and then process a payment. Before SAP BusinessObjects Access Control, these conflicts aren’t particularly tangible, but after go-live, they can be made concrete.

“A tool like SAP BusinessObjects Access Control can motivate business departments to change their focus and segregate duties.”

Stephan Ottenhoff, Program Manager, TomTom

“A lot of managers are used to being managed on key performance indicators, and they’re used to having a target,” Houweling says. “Suddenly, now we can identify that a particular department has 300 conflicts, and we can put it to the managers to minimize those conflicts — for example, by tasking them to reduce the conflicts by 100 in a month’s time.”

This tactic, Houweling notes, makes the conflicts become real because they are now measurable. “The managers dive in, and whether the desired reduction is achievable or not, they will determine the source of these risks and how they can control them,” he explains.

Of course, not all risks can be eliminated. However, the fact that managers now can identify risks and understand where they are coming from — and, in turn, explain how they are controlling their part of the process — is a huge accomplishment. “That control of the process, then, is mission achieved,” he says.

“One of the logical decisions that followed the SAP ERP selection was the desire to clearly define business rules and job rules. And when you do that, you want to be able to monitor whether the controls that you implement are effective.”

Marco Houweling, Finance Director, TomTom

A World Awaits

As TomTom grows and diversifies its business from one unit that builds consumer-focused personal navigation devices (PNDs) to multiple business units that produce in-dash navigation devices for automobiles, map content licensing and services, and connected commercial fleet management services, its core PND opportunity still provides plenty of open road.

In Europe, TomTom reports that only 25% of the 250 million cars on the road are equipped with some kind of navigation device (in North America, only 20%), while various surveys show that more than 40% of car drivers are interested in purchasing navigation solutions.

With its new SAP solutions in place, TomTom’s processes are poised to let the company race ahead and win over the high percentage of potential new customers. 

 

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