abas: The Chinese Dream of a German ERP

Recently, at a tradeshow in Shanghai, I interviewed Mr. Mario Raatz, CSO and Director of abas Software AG, a German software vendor which offers the best-in-class ERP solutions for mid-market businesses. Mario introduced the history and strategy of abas, the features and advantages of its ERP solution, and the growth of abas in China. He also shared his view about Industry 4.0. Mr.Geethal Fernando, Partner Manager APAC, abas Software AG, Mr. Forrest Yang, abas China, and Mr. Gary Yu, abas Hong Kong also joined the interview.

Why ‘abas’?
Mario introduced the foundation of abas:“In 1980,two young Germans, Peter Forscht and Werner Strub, founded the company after graduated from university. In the first four years, the company finishedseveral software projects. Then, they met a well known consultant, Mr.Wolfgang Dannemann, who came up with the idea to standardize the business process and develop standardized software. Then, the two young men began to developthe management software and in 1984, the first version of abas ERPcame out.”
The reason of choosing abas as the company name is interesting. The founders wanted to choose ‘abacus’, which is an ancient calculator invented in China, but the name has been used, so they chose abas to show the name meaning. The company name implies the link of abas to China.
abas remains a private company without any external capital investment, whose shares are mainly held by employees. Financial soundness makes abas the customer demand-oriented company.
Now, the abas group employs1,000 employees in total, with 360 IT professionals working at abas Software AG in Germany and over 600 more at 41 abas sales and implementation partners at 65 locations worldwide. All the development of software are conducted in the headquarters in Germany, and the partners support customers in 29 countries by providing tailored IT solutions, while accounting for the local, legal and cultural characteristics of the individual markets and regions.
Industry focus of abas depends on the particular industry in the region and the specific demands of the market. For example, in Germany, the industry focus is automotive; in Spain, it is cosmetics; and in China, it is mechanical production. abas has very flexible software to address wide range of industries, from technical perspective, it can do everything.

‘ERP’ term is old, but abas ERP is new
abas ERP helps customers get business success with a wide range of functions that reduce cycle time while increasing productivity and competitiveness. Every sector of the customer’s value chain can be optimized with abas: from sales to costing, procurement, production, finance, and supply chain management.Customer relationship management (CRM) and detailed planning (APS) are integrated in the standard abas ERP package. Project management and document management system are also available.
abas ERP is multi-company, multi-language and multi-currency system and is supported by an international partner network and a methodology designed to leverage customer’s ERP application across borders. Users can work within the same database, but in different languages, enabling simplified workflow and communication. This is also a benefit for companies that deal with customers or vendors in multiple countries.
Notably, abas is one of the first vendors offering mobile solution for ERP. The mobile application included in abasERP enables the user to access relevant company data from abas ERP system anywhere, anytime, and on any mobile device.
Technically, abas is ready to run the system of cloud offering. However, customers still have security concerns. As for IoT, abas has standard interfaces to connect the machines.The webshop interfaces round out the extensive abas portfolio. The users can connect to any webshop, such as Magento.
In China, some people think ‘ERP’ is old. Mario shared his view: “ERP is old as a term, but it is still the essential system for a manufacturing company and abas ERP is innovating continuously. So, abas ERP is always new.”

The ‘Transformers’ERP
Mario mentioned: “Just like the movie Transformers, a key advantage of the abasERP system in comparison to other systems is its flexibility. It’s very easy to customize the software to customer’s needs, as it has strong package of processes and best practice for particular industries. Every customer has its own fingerprint and wants to see his unique process in the system. With the abasERP system, the customer can make changes and customizations at any time without sacrificing system upgrades.Another unique advantage is that abas has its own database on JAVA platform, which is deeply linked to application. The kernel process goes from application down to the database. Integration to 3rd party systems like CAD, CAM systems also optimizes productivity.
Another unique advantage of abas is its continuous upgrade strategy. Normally, an ERP product has a life of five to seven years, then it’s finished, and a new product comes out. But abas system delivers new version with new functions and improvements to customers every year. 30-40% of the core code of abas ERP is optimized and updated using new technology every year and allkernel updates and new features are included in software updates. abas has keptupgrading customers since 1984.
Two advantages result in a 93% customer retention rate since its inception in 1980, and 24% of the 3000 customers all over the world have used abasERP more than 10 years.
There is an APS (Advanced Planning and Scheduling) module in abas ERP, which extends the functions of abas ERP.
The license price of abasmight be higher, but the total cost of ownership (TCO) is lower, which factors inimplementation, after-salessupport, maintaining, operating, database, future customizations and so on.

Think global, act local
abas views China as an important strategic market. Withthe annual growth of 50%, abas is still at the early age of growing in China. It opened an office in Hong Kong in 2003, an office in Shenzhen in 2005, Shanghai in 2010, and Beijing in 2014. The subsidiarycompany in China is 100% localized, not only serving German companies in China, but also local manufacturers. abas combines the strong package of knowledge and experience from 30 years of history in Germany and the requirements from the Chinese company.
The target customers of abas are midsize companies, which usually do not have good IT background, and their first requirement for the software is that it should be easy for use. abas ERP can perfectly meet the requirement.
The challengefor midsize manufacturers to deploy ERP lie in two areas, the first is their requirement to ERP system is not so clear, and the second their process is still not so stable. abas ERP can meet the challenge by flexible architecture and localized service. For the companies who already used part of the ERP function or have deployed local ERP systems, with the experience of usage, they have better understanding of what they need, and the advantages of abas ERP system are more obvious.
Having the notion “Think global, act local” in mind, the headquarters of abas provides strong support to sales. Taking the core system from headquarters to localize to specific markets, they are confident to grow the business in China very fast.

Industry 4.0 is not far
Now, the concept of Industry 4.0 is hot in Germany and also in China. According to Mario, Industry 4.0 means that all the resources in the company such as machine, people and software, all connect with the resources in the working process such as the vendors and suppliers to share data and resources to ensure a very proficient and smooth process.
As a VIP member, abas work closely with VDMA, which is the association of German machinery companies, so the R&D team of abasis deeply involved in this strategic topic.
Mario gave two examples to explain CPS (Cyber Physical System). The first one is that a machine can recognize the demand of goods is going up, if it’s put into ERP system, people don’t have to take care of the machine, it can automatically work faster and also the purchasing process goes automatically. It is intelligent manufacturing. The second example is that in the morning, you take out the last box of milk from a refrigerator, then the refrigeratorrecognizes and will order milk from the store, and in the evening when you come back home, milk is there waiting for you.
Chinese manufacturers are still on the way to the convergence of information technology and industrial technology, however, industry 4.0 is not far away for them. With the fast application of Internet of Thing technology, mobile technology, e-commerce, cloud computing, robot, AGV, etc, Chinese manufacturers are transforming and upgrading quickly with the help of specialized ERP vendors like abas.

From left to right:
Gary Yu, MD, abas Hong Kong, Forrest Yang,MD, abas China, Mario Raatz, CSO/Director, abas Software AG, Pei Huang, PhD, CEO, e-works, Geethal Fernando, Partner Manager APAC, abas Software AG

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