Nissan opts for financials in the cloud over SAP on-premise

The car manufacturer looked at SAP SRM but found gaps in its functionality

Nissan has selected a cloud-based procurement and financial management tool rather than an SAP on premise solution, in a bid to migrate away from paper to full electronic order to invoice processing.

Barry Wilmer, purchase systems development manager at Nissan Europe, told Computerworld UK that even though its core ERP is SAP, integrating with SAP's Supplier Relationship Management (SRM) tool still wasn't an option due to problems with its functionality and increased cost when customising.

Instead Nissan selected Wax Digital's web3 P2P, which will be used by its business units and manufacturing plants to support multiple languages and currencies across 16 European territories and process 600,000 invoices each year.

The cloud based system will ultimately be handling billions of Euros worth of non-production spend each year.

Wilmer explained that the project came about due to difficulties with Nissan's legacy system, which was shared with Renault as part of their on-going alliance. When the alliance came to fruition, Nissan expanded Renault's SAP system to cover Nissan in Europe.

"We effectively bought servers from Renault. It was basically a system that had a Java front-end that was able to raise purchase requisitions and get them approved, which then were brought into SAP and processed into purchase orders," said Wilmer.

"We basically had a system that we could do very little with. We couldn't do any of our own development, as we had to go back to Renault every time. Renault worked on the principle that if they thought it was a good idea they would do it, if it suited them."

He added: "If it was a Nissan only development they wouldn't do it because they didn't want two systems to maintain."

Wilmer also said that there were lots of errors in integrating with Nissan's existing SAP system, which caused problems later on in the payment process.

In addition to these problems, Nissan has a midterm business plan for the company to achieve a global market share of 8 percent and increase corporate operating profit to 8 percent by 2016. It is hoped that the new cloud tool will help with achieving these goals.

"We looked at SAP SRM, but we found that there were a number of gaps in terms of what we needed to make it work the way we wanted to work and if you start customising SAP you can add two zeros to the end of any number," said Wilmer.

"We began by looking at companies to manage contracts to bolt on to SRM, but then we came across Wax, and a bunch of other suppliers, who questioned why we would do it like that. As a result, we switched from considering developing our SAP products to using a cloud based service."

Nissan's IT security team and finance department did initially have concerns about using a public cloud tool. However, it undertook due diligence to mitigate these worries and is operating a model whereby Nissan pulls its data back from the cloud on a regular basis and stores it in an on-premise database - just in case.

Wilmer is also hoping that by moving to electronic invoicing, Nissan will be able to start asking for discounts from its suppliers.

"This is part of a big financial transformation project and we are looking to move to electronic invoicing and increase our supplier payments on time. After that, once we have consistently paid our suppliers on time, we are looking to move towards dynamic discounting," he said.

"So, we will be able to say to the suppliers: If we pay you early, can we have a discount? But of course, unless you pay the supplier on time consistently, you can't possibly convince them."

When undertaking a project of this nature, Nissan not only has to overhaul its own systems to electronic invoicing, but it also has to persuade all of its suppliers to do the same - some 20,000 across Europe.

Wilmer said that some suppliers are 'knocking down the door', asking when they can start using their electronic system, whilst others are concerned about the implications for tax and VAT.

"I think there will be some countries that aren't necessarily up to date with the technology to be able to come to the party, but that's as much training and education. If we have any major ones that don't [accept electronic invoicing] it will be accounted for in a resourcing plan," said Wilmer.

"The tax position is quite interesting. When we pay an invoice we pay VAT on top of it, so we pay 20 percent extra on top of the goods to another company. But that company then gives us an invoice to say we paid 20 percent VAT - when we go to the government and get 20 percent back."

He added: "That's fine in a traditional world because people literally went with a filing cabinet and said our claim is £5 million. But now, we are going to Inland Revenue with an electronic file asking for the same amount of money."

Nissan uses AuthentiDate to independently verify every single electronic document that goes through its system, which isn't specifically required in the UK, but is in certain European countries.

"In the UK all of this is acceptable to the government, but in some other countries electronic invoicing is allowed, but there is a lot of local resistance to change. There is a lot of sensitivity around the legitimacy of VAT claims," said Wilmer.

Nissan began evaluating tools in April last year, signed a contract with Wax in December, goes live with its first territory in March, and hopes to complete the roll-out by the end of 2013.

In other SAP news, SAP recently announcement that its Business Suite applications, which are deeply embedded in many global enterprises, will now be able to run on its in-memory database technology, HANA.

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