SchmidtCo (A) There are obvioulsy some major problems that need to be addressed before a recommendation can be made.

1. Poor History of Software providers in past, previous one went out of business soon after SchmidtCo aqcuired their product. increased volume and complexity of distribution, an independent consultant enhanced their original system which has many limitations and requires a lot of manual work Late implementation, over budget, and bad qualtiy 2. DTech is mainly used in Europe / only 15 systems have been installed in the U.S 3. DTech is in the middle of their own integration / acquisition 4. Newly aqcuired consultants at DTech don't even know the DTech system that well 5. John promoting staff lay-offs as a result of the new system - (not exactley a great motivator) 6. IT consultant quiting and nobody to run the current system. ( due to being overloaded and acting as an assistant to DTech consultatnts) 7. Lack of time on John's part to devote to the new project that he is spearheading. 8. Poor / prolonged implementation process diverting attention away from day to day operations 9. System should have been installed earlier and before rapid product expansion 10. Fragmented implementation teams on both DTech and Schmidco (A) and consultants --How these problems came about--No one wanted the conversion they wanted to live with the old system. There were a bunch of wizzards and the longer they wait to imlement the more resitence they will have. Their rapid growth much like Google's has caused them to stray from their mission The company relies on reccommendations from their system becuase no one understands the system enough to challenge it. The lack of support and training from DTech and the Implementations team Network not secure or reliable ---How could they have been avoided--Project manager should have an IT background or have a few team members that can help him lay out a strategy The conference room pilot Integrated IT department that worked well with all areas of their company They outsourced a network management company for upgrades this should have been done internally Positives If there are any?

$200,000 is a large sum of money that has been invested, but let's not forget that for a $40MM company it is not the end of the world, especially when those expenses can be amortized over a 7-10 year period of time. SchmidtCo's suppliers are European based so it is a good possibility that Dtech's systems link up with their systems. Thoughts on Reccomendations. 1. John needs to remove himself as the captain of this project and install his acquaintance David to be the leader.(John should not leave for his business conference in the heat of the problem)

2. Contact some of the other 15 U.S. companies that received the DTech program and see how it is working for them 3. Put into place an IT team of 2-3 individuals to help with implementations and further growth being that this is a family company it is important that people do not fear for their jobs and therefore implement cross-training so that all employees can help with implementation and the new system. 4. John may want to interview some of the owners of the other ERP companies system to see how their IT transitions went. DTech to this point gets a vote of no confidence and some of SchmidtCo down payment for the system might be recoverable. If the other company gets rave reviews then it might be time to switch suppliers, remember "However, when he heard that one of his customers just gone through its own conversion and had botched it so badly that it drove the customer out of business,...". Losing $200K is an acceptable loss when figuring in losing the company. To this point DTech is close to driving SchmidtCo out of business. 5. Stay with DTech and demand that they fix the problems from their side / demand a group of seasoned DTech employees that know the system inside and out. If this does not happen in 60 days (while interviewing and reseraching ERP) then abandon DTech and go with ERP runner upIf the other ERP company gets bad reviews then John needs to go back to the drawing board with David as a full fledged ally. 1. Prior to implementation, understand objectives and deliverables. SchmidtCo. poured considerable time and effort into understanding their objectives and need for a new system. The company created a cross-functional Selection Team, listed critical modules of business and their functions, and sought to implement the new ERP system that would best overall complement their systems objectives. Despite their well executed fact-finding mission, SchmidtCo failed to fully investigate the deliverables of DTech which resulted in costly, faulty implementation. To avoid, SchmidtCo should develop a deeper understanding of vendor capabilities such as: - vendors with an extensive, verifiable track record of successful implementations. - vendors with fully knowledgeable, available support to aid SchmidtCo before, during, and after implementation - vendors who can help identify integration and functional gaps. Gap analysis can indicate the feasibility of deliverables so SchmidtCo can prevent undesirable (1) surprises, (2) delays, (3) and costs due to misunderstood deliverables. 2. Lean ERP Package. SchmidtCo has a complicated legacy system. Over many years of operations, they added a significant amount of customization. Adding too much complexity to an ERP system often increases set-up cost and drain operation revenue ongoing. Perhaps, SchmitCo can use this opportunity to make their information systems leaner. An off-the-shelf package with little customization --- which still covers core modules identified by the Selection Team --- is a great start. Once it has been successfully implemented, then SchmidtCo can phase in any additional NECESSARY(!) features.

3. Oversight team. Create an oversight team solely dedicated to managing change and creating stability along the way. This team, who ideally can be headed by David Goldberg, should be responsible for decision making, database administration, help desk, testing, training, and other operational issues. They should also socialize the change with key stakeholders, especially end users. It is important to engage and educate the people (from payroll to purchasing) so they can more easily acclimate to the system on the golive day. Even the best technology fails if organizations ignore the human element. 4. Manage risks. SchmidtCo did not understand the major pain points until it was too late. SchmidtCo should ask the following questions before they continue with the implementation process: - Are the risks clearly defined and understood? - Is there in escalation plan? (clearly there was not one in place with DTech) - Are there any technology risks? - Are scarce skills required? - How much risk can we mitigate through testing? - DO we have a fall back plan for each time we encounter risk?

Automobile parts distributor SchmidtCo has recently installed a new ERP platform, integrating all information systems within the operations of the company. After many considerations over different providers, SchimdtCo decided to hire DTech systems considering its great reputation of warehouse and inventory management. However, many problems have occurred with the implementation of the new system, leaving SchmidtCo at a decision point to regain control over the company. Presented with this problem we have analyzed the situation as well as provided possible remedies for SchmidtCos current situation. Before providing any recommendations to SchmidtCo, there are obviously some major problems that need to be addressed. The company had recently replaced their outdated eighteen year old system and had been far behind implementing a new one. Having no prior experience with any modern ERP system, SchmidtCo has become unaware of the quality services to look for within a provider. The organization also has a poor history of software providers in past. The previous suppliers went out of business soon after SchmidtCo had acquired their product. Being quite aware of this, SchmidtCo remained using the software with a lack of support as SchmidtCo felt it was difficult to switch to a new system. SchmidtCo also hired an independent consultant to enhance the original system which has many limitations and required much of manual work. Meanwhile, SchmidtCo increased their volume of inventory and complexity of distribution. They were already late in this project by three months and were $50,000 over budget as the quality of operations were far below the company's standards. In turn all of these indicators have left SchmidtCo in a position to make poor decisions in such a limited amount of time. We feel that the system should have been installed earlier before the company performed its rapid expansion of inventory and distribution. Due to this disregard of time management,

a poor prolonged implementation process has evolved while diverting attention away from day to day operations. Choosing DTech to install the ERP system was a poor choice considering their lack of involvement within the US. DTech's services were provided within European countries as only 15 systems were installed in the US. Recently, the company had only emerged within the U.S. due to an acquirement of another ERP provider based out of Baltimore, Maryland. This shows that DTech has very minimal experience working within US. based systems and has minimal support within the states. Considering this, the newly acquired consultants at DTech are extremely unfamiliar with the companys systems. Meanwhile, Manager of Operations John Schmidt started promoting staff lay-offs considering the abilities that he assumed would be implemented along with the system. We feel that this is an extremely poor mindset and only reveals the lack of experience John has with an ERP system. John must also consider that the consultant who was working on the old system had quit upon notice of the DTech ERP. The system he had left behind was also extremely unstable. This had left SchmidtCo overloaded with problems considering this consultant would have assisted the other DTech affiliates. The project was then left to a fragmented team of both DTech and SchmidtCo consultants. There are many underlying facts that support why these problems had come about. First of all, it was well known that no one wanted to convert to a new system. The company became too comfortable and wanted to live with the old system. The company relied on recommendations from their system because no one understands the system enough to challenge it. The longer that SchmidtCo waited to implement a new system, the more resistance they built. Also, the company made too many decisions geared towards their rapid rate of growth which has caused them to stray from their core mission. It is extremely hard to have support for a new system when you are introducing consultants into operations to work along employees of the company. By rushing into this process, the company had run into a lack of support and training from DTech and the implementations team, resulting in an insecure and unreliable network. We have presented a list of duties that the company should have followed before implementing the new system. 1. Prior to implementation, understand objectives and deliverables. SchmidtCo poured considerable time and effort into understanding their objectives and need for a new system. The company created a cross-functional Selection Team, listed critical modules of business and their functions, and sought to implement the new ERP system that would best overall complement their systems objectives. Despite their well executed fact-finding mission, SchmidtCo failed to fully investigate the deliverables of DTech which resulted in costly, faulty implementation. To avoid, SchmidtCo should develop a deeper understanding of vendor capabilities such as:

- Those with an extensive, verifiable track record of successful implementations. - Vendors with fully knowledgeable, available support to aid SchmidtCo before, during, and after implementation.

- Vendors who can help identify integration and functional gaps. Gap analysis can indicate the feasibility of deliverables so SchmidtCo can prevent undesirable surprises, delays, and costs due to misunderstood deliverables.

2. Lean ERP Packages. SchmidtCo has a complicated legacy system. Over many years of operations, they added a significant amount of customization. Adding too much complexity to a system often increases set-up cost and drain operation revenue on-going. Perhaps, SchmidtCo could have used this opportunity to make their information systems leaner. An off-the-shelf package with little customization which still covers core modules identified by the selection team would have been a great start. Once it has been successfully implemented, then SchmidtCo could have phase in any additional necessary features. 3. Oversight team. Create an oversight team solely dedicated to managing change and creating stability along the way. This team should be responsible for decision making, database administration, help desk, testing, training, and other operational issues. They should also socialize the change with key stakeholders, especially end users. It is important to engage and educate the people from payroll to purchasing so they can more easily acclimate to the system on the go-live day. Even the best technology fails if organizations ignore the human element. 4. Manage risks. SchmidtCo did not understand the major pain points until it was too late. SchmidtCo should have asked the following questions before they continue with the implementation process: - Are the risks clearly defined and understood? - Is there in escalation plan? (clearly there was not one in place with DTech) - Are there any technology risks? - Are scarce skills required? - How much risk can we mitigate through testing? - Do we have a fall back plan for each time we encounter risk?

By following this course of action, SchmidtCo could have avoided many of the problems now at hand. The company is now left to solve these problems with a short amount of time. There are many possible

recommendations that could be offered to SchmidtCo. First of all, John Schmidt needs to remove himself as the captain of this project. David Goldberg, who was temporarily hired by John, should be the new head of the operations. Goldberg is much more experienced as he has worked in IT process involvement and manufacturing for quite some time. He also has a well understanding about the problems with the new implemented system. John should also not leave for his current business conferences and should stay at hand as a reference. At the same time, SchmidtCo should contact some of the other 15 US companies that received the DTech program and see how it has helped thus far. To educate both the consultants within SchmidtCo as well as outsourced consultants, the company needs to implement cross-training so that all employees can help with implementation and the new system. Our final recommendation consists of a plan that we feel will be most viable to accommodate the resources available at SchmidtCo without abandoning the project. We feel that the company may want to interview other ERP companies in order to analyze their prior system transitions. If the other company becomes qualified then it might be time to switch suppliers. To this point DTech is close to driving SchmidtCo out of business. To ensure a smooth transition, SchmidtCo should stay with DTech and demand that they fix the problems from their side with a group of seasoned DTech employees well trained to their systems. If this does not happen in 60 days then abandon DTech and go with a company qualified in the ERP interviews held prior. If this were to occur, this would give DTech a final chance to cover their mistakes while also providing a back up plan of hiring an ERP provider who has experienced success in system transitions. Losing $200K is an acceptable loss when figuring in losing a $40-million company. Therefore the company has the expenses to follow through with this plan before losses increase to an unreasonable amount. SchmidtCo has been dealt with the consequences as a company that has fallen far behind in modern technology standards. These problems have been caused by a disregard for change, time, as well as the knowledge of today's information technology systems. These problems however may have been avoided if the company would not have been so neglectful to hire an ERP provider with so many faults by spending the time doing some proper planning. If DTech does not comply to fix their problems, they will soon be terminated by SchmidtCo and exposed throughout the business world.