Group 7

Arnab | Rudra| Atul| Ankur

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Family owned automobile parts distribution company

Product portfolio included 10000 different SKUs

21 suppliers and over 1000 different customers

Shipping 20 million pieces a year

90 employees based out of warehouses in Philadelphia, Mexico and Los Angeles

Business worth 40million$

18 year old obsolete system

Current system unable to cope up to the expanding product line

It is primarily an inventory management system

Original vendor was out of business and work carried out by a consultant

Accounting and other business units worked separately without any integration

Too much manual work

Current work force highly reluctant to move from legacy system to ERP model

 Cross functional Implementation team 5 core modules Warehousing, Inventory, Accounting, Purchasing, Sales and CRM Project contract given to Dtech- new player in US $400000 cost including installation Automation would result in reduction of staff Project to be completed in 6 months Already running late by 3 months and $50000 over estimated budget IT consultant has quit resulting in a vulnerable IT system Project quality below standard

To continue working with DTech despite project cost and time overrun:. SchmidtCo had already incurred $600,000 expenses, presently it had budget overrun and 3 months delay.
Should he continue with old system, modified and updated regularly like before? Should he change vendor? How to cut costs and reduce delays if he continues with DTech?

Change in Leadership: John was not able to devote time and he had to leave for executive program.
Should he appoint David Goldberg as the CIO? Should he appoint a new full time project manager to take over the project?

Maintenance of the old system: While the ERP implementation is taking place, the firm still works according to the old system.
Should he hire a different consultant for maintaining the system? Should he appoint a new IT manager for the report writing?

Pr
O A C T

Problem Identification

Objective of the Project

Alternative actions for achieving objectives Consequences of each alternative Trade offs while selecting from multiple alternatives

Identifying the reasons why he wanted to switch to ERP system

Objectify the final expectations for the transition

Identify the risks associated with the transition

Evaluate various alternatives to achieve the ERP system

Select evaluation criteria to select alternatives

Identify pros and cons and finally select the viable alternative

Requirement of integration of IS for improved performance ERP implementation is essential

Increasing budget overruns and delays

High amount of investment for the implementati on backing out now would mean these were dead investments

Business risk

Change in personnel

the choice of vendor could have been wrong

if the ERP system is not efficient, the business would get affected

hiring and firing is always difficult, especially in a family business

To manage the Project cost overrun and reduce execution and implementation time.

To get greater commitment from the ERP implementation firm Dtech

To address the issues relating to troubles in other areas of IT consequent to unexpected quitting of the IT Consultant.

To improve the commitment and efficiency of the in-house Implementation team

To build a highly customized ERP system of high quality and performance

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1.

Change the vendor from DTech to the runner-up vendor

Cons 1. Already 600000$ had been invested by Schmidt 2. The Implementation team was extensively trained on the system already 3. Schmidt will lose bargaining power with a larger player 4. It will lead to pessimism in the team which was already apprehensive about moving from legacy system to ERP

Pros 1. DTech was not able to meet deadlines and project quality 2. Employees did not have adequate know how 3. It was a new player in America with only 15 installed system

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2.

Make David Goldberg the Operations Manager for the ERP Project

Pros
1. 2. 3.
4.

5.

David Goldberg had the required qualification for the job ( MBA from MIT) He had extensive experience in the IT industry ( Intel, IBM, Accenture) He had already worked partially on the system and from his experience had pointed out a few loopholes in the implementation John Schmidt was predominantly a technical person with no past experiences in such projects He was not able to devote time to the project

Cons
1. 2. SchmidtCo was primarily a family run business. It would mean conceding too much power to David on a very important project Increased cost of paying him full time

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Pros
1. 2.

Cons

3.

4.

5.

The work would be easier to monitor and implement Transition from legacy system would be easier and gradual Risks associated with projects are reduced due to continuous monitoring Deadlines and targets are more reasonable and can be estimated with greater accuracy More critical functions like inventory and purchase control can start adding value to the operations more quickly

1.

2.

More time would be required for project completion Costs would be higher due to repetition and more pilot runs

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A joint task force involving John, Implementation team and VP sales of Dtech should be formed to oversee the running of the project

Pros
1. 2. 3. Greater adherence to timelines leading to reduced costs Shared responsibility and a sense of win-win for both the parties Utilization of resources in a complimentary fashion thereby leading to more efficient use of available resources

Cons
1. Conflict of interest and power distribution in the joint committee

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Pros 1. Will reduce workload on IT Manager and will also bring in expertise required for the new system 2. Conversion of data and design of reports for ERP systems can be made faster 3. Other IT related issues like security and virus attacks can also be tackled 4. Huge expenditure being incurred since it was outsourced

Cons 1. Higher fixed cost in terms of salaries paid to the new team 2. Existing employees might feel hostile and inferior

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Continue with Dtech as the company would be willing to put in effort to make a name in the US market

Appoint David Goldberg as the operation manager for the ERP project and John should be part of the Supervisory team overseeing the project

Phased implementation of the project with the Inventory and Purchase modules being converted first from the legacy system

Formation of a permanent IT infrastructure team and provide requisite training to the current employees to make their transition from legacy systems to ERP

Stricter deadlines and project deliverables for Dtech through the supervisory team Carry out talks with other ERP vendors in case Dtech still fails to deliver

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THANKS

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