Glencore has said it is looking to extract better decision making and more consistent processes from a new standardised SAP enterprise resource planning system, as it issued an initial public offering prospectus valuing it at approximately $60 billion (£36.5 billion) on stock markets.
The world’s largest commodity trader said in the weighty 1,637 page document that it had a preference for “integrated, standard [software] components” in order to improve management processes, particularly in marketing and finance.
An exact price for the shares in the IPO has not been decided ahead of the 19 May sale date, but given the current range it is expected be one of the largest-ever European flotations. The company is also planning a major expansion in its mining and production operations.
Glencore said an IT and business overhaul was crucial to its future. Under a new technology project known as the Glencore Global Accounting Programme, the company said it was attempting to have “improved facilities over decision making, assembling resources and financial control”.
“The implementation of a third-party specialist, SAP, as enabler for GGAP is intended to provide greater reliability and accuracy of financial information and better support for the diverse information requirements from across the Glencore Group,” the company stated.
The programme is being managed centrally in the company’s Swiss headquarters in Baar, it said, “and will replace the current local accounting application used by Glencore’s main marketing sites in Baar, London, Singapore, Rotterdam and Stamford”, all of which have a large IT department.
The Baar module of SAP will go live in the summer of this year, followed by London, Singapore and Stamford in the third quarter, and Rotterdam in early 2012.
Glencore’s IT systems are based on what it calls the “three primary elements” of its business: the group main offices, marketing, and industrial assets including mining sites, with technology staff for each business unit and experts on specific systems working across departments. Each system is supported locally.
In addition to GGAP, Glencore has a number of other key IT projects running, including the replacement of the systems and processes in its oil commodity department. A new, undisclosed system will go live in its energy business in the next two years.
The company said it is also “continuously expanding and upgrading its communications network" in order to better link employees and to "store, organise and make available to its staff the increasing volume of data transmitted within the global network”.
While most of its IT systems are essentially standard, off-the-shelf products, Glencore also runs some in-house developed systems for specific processes, managed from Baar.
When Glencore shares go on sale in two weeks, its chief executive and largest shareholder Ivan Glasenberg, who owns nearly a fifth of the company, will hold a stake worth about $10 billion, making him one of the world's richest people. The company has expressed its interest in a possible merger with mining giant Xstrata, which would likely result in a major integration programme.