IT investment pays off for RMC

RMC's £40m investment in a leading-edge IT system - including ERP software from SAP and a new shared service centre in Stockton-on-Tees - will have paid for itself by the end of the year.
The group's IT transformation has produced annual cost savings of £10m in its first three years. All legacy software products will be phased out by the end of next year.
John Robinson, deputy managing director of UK materials and the aggregate group's finance director, said: "You don't have to change your business system to suit the software. We have proved that."
RMC has transformed its operating structure. Administration, previously provided by 21 regions, now comes from a national service centre in Stockton.
Robinson said: "Changes got under way three years ago. The spend on SAP, our choice of ERP provider, was part of this £40m programme, which has taken RMC from being 10 years behind to being a leader of the pack in technology.
"Our IT investment accounts for 50% of the £20m-a-year cost saving we have achieved through our latest business restructuring. On that front alone, the spend will pay for itself within four years.
"But there are indirect benefits on top of this. For instance, we have been selling some of the former regional sites and reducing group debt."
The big five global ERP providers are SAP, Oracle, PeopleSoft, JD Edwards and Baan. The latter was recently bought by PeopleSoft, reducing the field to four. Many UK construction groups have hesitated over signing up to an ERP system after watching their competitors suffering financial pain as costs spiralled; Atkins took a total hit of £120m after anticipating a spend of £20m.
"ERP has a bad name," said Robinson. "Our auditor Price-waterhouseCoopers has seen more failures than success in ERP so it kept a cagey eye on us all the time. But we are now through the threshold. I think that ERP's reputation is because senior management does not realise how much time it will need and that means chief executives don't really understand what's going on.
"In our case, we spent a year looking at where we are and where we want to be in 10 years before even thinking of SAP or Oracle. By that stage, we regarded ERP as a tool to facilitate the future we planned," he said.