Magazine wholesaler Menzies Distribution has started a £10m, five-year business overhaul based on the implementation of SAP software at 20 UK locations.

The Edinburgh firm is undergoing a major change initiative in response to declining sales of magazines and newspapers.

At least 13 different IT systems are in place for managing Menzies’ supply chain, some of which are 25 years old. Almost all have been developed in-house.

IT director David Speirs told Computing that the business has no alternative but to change its approach. “We can’t not do this. If we want to continue being successful and to grow, we have to go down this route,” he said.

“This is the biggest single project in Menzies Distribution’s history. It is going to touch every single person in the company. It is a change in culture.”

The introduction of SAP will be used to drive standardisation of business processes across the organisation.

“At the moment, if you go to two different branches, they use two different processes. The common theme in the project is standardisation and centralise where possible,” said Speirs.

“We built a business case, but it wasn’t solely on the cost benefits we were going to get out of SAP. Because of the difficulties in the market, we need to look at potential revenue streams and we need software that is flexible.”

The SAP project kicked off in March and is now in the blueprint phase, said Speirs. Financial systems will go live in January next year, with the first branch live in May. The project is due for completion by the end of 2009.

The 70-strong IT team face the challenge of learning new skills.

“We have strong focus on internal software development, but in the ERP world we will need different skill sets,” said Speirs.

“We need to map out the transition from old to new. We will work with staff to retrain them in the new SAP processes and technologies. We need to put people’s minds at ease.”