Royal Cup Coffee brews fresh business benefits with SAP and IBM

Royal Cup Coffee, based in Birmingham, AL, USA, has grown from its hometown roots into a US$230 million revenue business. Family-owned, it reaches markets throughout the United States, Mexico and the Caribbean, both directly and through business partners selling under license.

Coffee and beverage providers operate in an intensely competitive market for hotels, restaurants, hospitals, convenience stores and offices. Providing outstanding customer service is essential along with competitive prices.

Brett Caffey, IT Manager, reports, “With 100 years of experience in the coffee business, we understand the art of quality coffee and the importance of business relationships. Our customers consist of prestigious hotels and resorts like The Ritz-Carlton and The Greenbrier and many premier restaurant brands, such as Outback Steakhouse, McCormick & Schmick’s, Cracker Barrel Old Country Store, and Waffle House.

“For both SAP applications and IT operations, our objective is to support sales teams and production with the services they need to build the business, and offer truly sensational customer service.”

Compact, cost-effective infrastructure

For many years, Royal Cup Coffee had been operating in-house designed software. Facing the challenges associated with the Year 2000, Brett Caffey took the opportunity to price up the development work needed to prepare the legacy systems for Y2K, compared with migration to packaged software.

“The reality was that it would cost a cool $500,000 purely to preserve existing functionality, a budget that could be better invested in an integrated ERP solution with enhanced capabilities,” says Brett Caffey. “After an exhaustive selection process, we chose SAP applications, and have recently updated to the latest releases.”

Royal Cup Coffee runs a wide range of SAP applications, including financials, controlling, sales and distribution, production planning, and warehouse management. The central SAP software runs on an IBM Power Systems server, with three separate logical partitions for production, development and quality assurance, and test services.

Around 150 users in 25 states access approximately 1.4TB of data in the SAP applications.

The IBM Power Systems platform – an IBM System i 570 server running IBM i 5.4 – is managed by just two people for the entire company. Other non-SAP applications, such as document management, network file servers, the credit-card payment gateway for Internet transactions, each require separate physical servers.

“By comparison with other platforms, the SAP applications on IBM System i are highly cost-effective,” comments Brett Caffey. “When we first introduced SAP, we looked at alternative infrastructure. In many cases, we effectively needed to double up on server hardware, purely to ensure availability during system outages. With multiple servers came increased management requirements, a dedicated database administrator, and higher licensing overheads.”

Handling rapid business growth

Business is growing fast at Royal Cup Coffee, where revenue typically increases 20 percent annually. As the total amount of data grew and new users were added, previous systems – also from the IBM Power Systems family – were reaching the end of their design life.

Brett Caffey and the team reviewed the alternative platforms for the SAP applications, including Windows- and UNIX-based systems. The assessment looked at technical aspects, such as reliability, availability and processing capacity, and at total support costs such as database administration, license costs and personnel requirements.

“With the ability to host all our SAP applications, including production, quality assurance and sandbox, on a single i570 server, we made great savings in operational costs,” says Brett Caffey. “We were able to demonstrate in hard numbers that System i offers the most cost-effective platform for SAP applications.”

Low staffing requirements

With sales expanding throughout the Americas, Royal Cup Coffee is a 24-hour operation. However, the IT team staff keeps regular hours, with no need for expensive shift coverage. The i570 provides reliable unattended service, supporting sales teams and business partners in multiple time zones.

“With the i570, we operate a single instance of the SAP applications, and there is no need for a dedicated administrator for the DB2 database built in to IBM i. The ability of the IBM System i servers to minimize staff costs is an important element in delivering the lowest total cost of operation.”

Opening up the solution

Royal Cup Coffee is extending its SAP applications to reach out to customers and business partners in new ways, particularly by enabling Internet-based connections through the corporate Web site. Customers will be able to order products, confirm delivery schedules and more by connecting directly to the central SAP applications.

“We are looking at allowing sales teams to place customer orders on-site, in real time, with wireless access to our central systems,” says Brett Caffey.

“This kind of speedy service is essential as a differentiator, as it will allow all sales to be confirmed with issued invoices and delivery instructions on the spot. The i570 is able to manage the extra workload easily, and we have the advantage that capacity can be increased quickly and easily if required.”

Royal Cup Coffee is reviewing the SAP customer relationship management application as the core enabling software, supported by IBM WebSphere on the i570 to handle connectivity, messaging and presence for handheld devices.

“Customers and licensed business partners will be given self-service access to the SAP applications, giving them immediate access to order delivery status. These ambitious technical goals will allow the company to grow its sales and distribution, while continuing to drive down the operational costs with SAP and IBM,” says Brett Caffey.

“The complete reliability of SAP applications on the i570 server combined with its easy expandability ensures new customer service functionality can be implemented quickly and at low incremental costs. The SAP applications on i570 are central to meeting our strategic goals.”