Oxygen spreading its net wider

By ADAM GIFFORD

IT hosting and services company Oxygen is on the verge of signing its first customer outside its parent, the Carter Holt Harvey group.

Chief executive Jeremy Fleming said Oxygen was putting the final touches to a deal to implement SAP business software systems in an Asian company linked to CHH's main shareholder, International Paper.

Smaller deals are also imminent as the company builds up a sales team to pursue what it estimates is a $1 billion contracting-out market in Australasia.

"If you look at the penetration of outsourcing in New Zealand and Australia, it is still relatively low by international standards," Mr Fleming said.

"We are not trying to compete with EDS and CSC in terms of general outsourcing, but if you take our specialty, which is hosting and delivery of SAP, it is a relatively immature market."

Most big SAP deployments are still supported by in-house IT staff. Mr Fleming said many organisations were not getting the full benefit of the software.

This was because they might not have enough skilled people to run the system at optimum levels, they might not have done enough process automation or business process re-engineering, or they might not have built up sufficient scale to bring down the cost of transactions. He said the experience Oxygen had built up running CHH's IT systems gave it a strong base to work on.

"If you compare our performance to industry benchmarks from [analysts] Meta or Gartner, our SAP cost per user is up to 40 per cent below benchmark, and we are well within industry acceptance standards across most of the service lines we offer."

Oxygen has a five-year, $300 million contract to manage IT services for companies in the Carter Holt Harvey group.

The network includes about 5000 NT desktops in 180 sites across Australia and New Zealand, of which 3000 are SAP users.

Most of Oxygen's 240 staff work from its Otahuhu base, with about 40 support staff and consultants in Australia.

"Most SAP deployments are financials and associated modules like purchasing," Mr Fleming said.

"Carters from the outset looked at full suite penetration where it made sense in the business, so in most of Carters' manufacturing businesses we are using SAP for full 24 by 7 production support.

"That means the sawmill in Nelson dispatching packets of timber is managing the stock, doing the bar coding and managing production with SAP."

Oxygen had delivered bottom-line cost savings to CHH and put in place measuring tools that other providers could not match.