Bombardier

Problem

The problem Bombardier has is that it went through two ERP transitions each successful but each had their flaws.  For the next installation Bombardier is looking to fix those flaws which are found in their processes in implementation and the standard of best practices. 

The main problem in this case is that there are disagreements between the project team and company employees over the validity of certain processes and the necessity and scope of some methodologies. 

Here are some symptoms:

• Improper concentration of knowledge in a narrow set of users
• A project structure perceived as overly complicated
• The absence of contingencies or “shadows” for specific key employees
• The sense from some users that the new system did not apply to enough of that person’s responsibilities.

The scope of the problem is the ERP systems in place at Mirabel and Saint-Laurent, as well as future locations. 

Situation Assessment

Roll Out 1:

•  Communication gap
• Reduced inventory by $1.2 billion
• Didn’t jeopardize production
• Mismanagement of user input

Roll Out 2:

•  Much Smoother
•  Employees adequately trained
• Clear Vision
• Unified Message from Sr. Management

This third roll out should build on the successes of the first two and improve on its failings by adhering to ERP best practices.

The decision criteria should be how well the determined solution can adhere to the established ERP best practices.  An ideal ERP implementation would have:

• Executives should back the project and VPs need to implement
• Executives need to be actively involved in the implementation process
• IT and area of installation should have shared responsibilities during deployment
• Executives need to understand the company’s ability to adapt to changes coming from the new system
• A full time project manager assigned to implementation
• A project team that represents all areas affected by the implementation
• The same project team should delegate their current duties to someone else
• Training for staff on successful teamwork before implementation starts
• A retention of ownership of the deployment process by the institution wherein skills have been fully transferred from consultants to employees
• Training for all users of the new system
• A reformation of administrative processes by the company to fit the new system
• Appropriate communication of deployment details to the business community

Alternatives

There are two alternatives:

• Change the implementation process to more closely reflect the ERP best practice standards with several alterations in the company’s transition approach
• Follow an implementation that closely resembles the deployment in Saint-Laurent without any serious adjustment. 

Changes that could be made using best practices would be:

• Enroll more employees as part of team that has the specialized knowledge required to insure the continuity and stability of the project. 
• Roll out 2 had issues with having adequate number of team members with specialized knowledge needed to work intensively on each deliverable
• This would allow Bombardier to better retain ownership of its own implementation process by having enough internal employees with the necessary skills.
• It would represent a better understanding by management of the company’s ability to adapt to changes that occur through implementations, as more team members with the necessary skill set could meet the rigorous informational demands of ERP implementation.
• Inform the project team that any communication with the users and management must be crystal clear and that any obvious exaggeration will be punished. 
• The project team may be tempted as in the Saint-Laurent deployment to exaggerate certain details to keep the business side from worrying but any false information from either side is unacceptable and must be addressed as such by top management to allow for the smoothest transition.
• Train employees prior to project initiation and then add them to the team during the course of the implementation. 
• One of the major issues in the Mirabel deployment was that the quality of the support was not adequate because the team members were too far removed from the everyday business responsibilities (some of the team members during the Mirabel implementation had not had business responsibilities separate from the project in over 10 years). 
• To meet the best practices of training for employees on teamwork prior to the project and insuring the project team’s composition represents all functional areas where the software will be implemented, Bombardier could give the project team a more updated sense of how the implementation could reflect functionality over process and the actual daily business tasks. 
• Change training program to be less rigorous before the Go Live period and more advanced shortly after the Go Live period. 
• This would respond to the complaints of users who felt that by having a base knowledge of the system prior to the Go Live and then learning more of the advanced SAP functions once they were familiar with the tool they would better be able to fully take advantage of the new system. 
• If done properly, this would qualify the project better under the best practice standard of all employees using the software receiving thorough training.
• Maintain a project manager that is assigned full-time to the deployment.  
• In order to insure that this project costing hundreds of millions of dollar is functioning as perfectly as possible, the lead project manager must be dedicating his entire workday and necessary overtime to the implementation. 
• This would be a clear message to the entire staff that this project is a top priority and is being handled with the necessary attention. 

Recommendation

My recommendation is to adopt the five proposed alterations to the implementation process.  From my perspective, none of these changes would demand a huge amount of resources, though some need more than others. Having a full-time project manager, adjusting the training program’s depth before and after the Go Live, and setting a clear standard for the reliability of communication all can be done with relatively little pressure on the budget.  However, increasing the quantity of team members with specialized knowledge of the project and injecting additional staff into the project team during the project would represent additional investment for Bombardier as well as a shift of human capital away from actual business related responsibilities.  Considering the hefty sum invested in an implementation and the potential cost savings associated with inching this process towards perfection, I would recommend that we adopt all five of the proposed changes in order to better align the deployment process with ERP best practices

Ubuntu Implementation

Sir, 

Ubuntu does offer some benefits which could be beneficial to our organization but there are a few issues we should look into. The key question is whether or not the benefits outweigh the risks.  We have 2,500 hundred computers/laptops throughout or organization with each costing the company around $1,200.  Windows OS is about $200 out of that $1,200 a small portion but much more than Ubuntu—this does not include the cost of labor spent on maintaining and uploading the software since this will be required for both Operating Systems.  If we switched to Ubuntu we could save $500k each round of upgrades.  We upgrade our laptops every 2 years which would give us $250k savings each year. 

There are other cost which fall under “switching costs”, the cost it would take to switch the current laptops and training each employee.  According to the IT manager it will take 2 hours to switch systems and another 2 hours to train the employee.  We thought about doing lecture style training but we find that to be very unproductive and in the end require IT personnel to go to each employee for very small issues which will add to more than 2 hours.  The average cost per hour for IT is $25. If we take 4 hours per employee our IT department would spend 10,000 hours or $250k in initial costs to switch.  This makes the savings a net zero in our first year.  The last factor is opportunity cost with each employee spending time to train, set up & get familiar with the system.  We can give this a number by averaging out our salary cost at $80k/year per employee or $42/hour--this comes out to $417k.  There is also the productivity which is affected, though employees get their 2 hours, productivity will take 3 months to reach current level.  With efficiency levels at only 90% it will cost us $4.20/hour in lost production.  If this happens for three months we can expect another $630k in costs.  Our second year will have a savings of $250 which comes from not upgrading the Windows OS.  With these costs and stats we will be able to recoup the costs in the 5^th year.  Please see the chart below.

	1st	2nd	3rd	4th	5th	6th
Savings	250	250	250	250	250	250
Set up Cost	250	-	-	-	-	-
Training Cost	417	-	-	-	-	-
Inefficiency  Cost	630	-	-	-	-	-
Total Cost	1,297	-	-	-	-	-
Net Cost	1,047	250	250	250	250	250
Cost Recouped	1,047	797	547	297	47	(203)

Is this worth all the effort and cost?  Though we can calculate some of these costs by using hours spent or not spent we don’t know what some of the inefficiencies can do to the quality of the product we produce.  If we are inefficient it could leak into our product and cause our reputation to be tainted which could cause untold damage to our bottom line. There is no significant change to our bottom line or efficiency that is worth such a huge initial investment.  I believe the cost of Operating systems will continue to drop as Ubuntu and other alternatives become more popular.  The possible savings each year will actually decrease each year. 

I hope this is helpful in our decision to transition to Ubuntu.  If you have any questions please let me know.

Thanks

Rajae

Zara Reflection

Sir,

Unfortunately I won’t be able to make tomorrow’s meeting regarding the consultants’ recommendation on our IT infrastructure.  Here are my thoughts.

I know you have strong feeling about our current system-- it hasn't failed us and it isn't broken so we should leave it as it is.  Though I am tempted to follow that path I think the consultant’s recommendation should be entertained. 

The mere fact that DOS will no longer be supported by Microsoft is a huge risk to us and we need to create a sound and feasible solution.  I understand that this system allows local stores some autonomy and if we believe this is an asset to this company we should be sure any solution keeps that in place. Also, the price tag is a huge roadblock; it is hard to justify so much investment into a potential risk that has many workarounds. 

Since this is not an immediate problem, meaning that if Microsoft decided tomorrow not support DOS we can manage on our own for quite some time with aftermarket parts and left over IT Techs who still know the system, we can slowly transition out of DOS into a system over a long period of time.

This situation will allow IT a chance to analyze many solutions in depth rather than the usual reaction to an immediate problem. 

So my recommendation is, yes, move forward with modernizing but we shouldn't spend $7+ million in a short period of time. I hope this perspective is helpful to you and the whole transition team.  Please let me know if you have any questions.

Thanks

Rajae EL Temawi

CIO

iPad for Success

Dear Joe,

 

I did the research into iPad vs. Laptop as you requested. 

Here are the functional requirements I believe are necessary after interviewing all parties involved (IT, Finance & Sales).

·         Set a plan—Calendar use

·         Battery Life-Need long life and ability to access power plug

·         Quick Access to presentations

·         Security (access files behind the firewall)

·         Call doctors—make appointments on the fly

·         Access to MS docs-View & Edit

·         Create notes—quick access to jot down notes

·         Portability-light and easily moved

·         Price—with 2,500 users, price needs to be comparable if not cheaper then laptops

With all of the requirements met it seems like a wise move to continue with the iPad transition project.

We will save money on the hardware and software will creating a more agile sales team who can be more efficient. 

Total cost for a maintenanced laptop is $1,200 (according to IT manager) while a 32GB 4G LTE iPad with needed applications will cost $750. 

 

Thanks

 

Rajae

Accenture Case Study

 

The Problem

 

As Accenture began the total overhaul of their IT systems they realized two things.

 

·         First, the complete overhaul they chose for a complete transformation of the IT infrastructure turned out to be very effective. Very few organizations could complete such a massive task so quickly. As an organization that  consults clients on simplifying processes and technology whenever possible, while maintaining state-of-the-art technology this decision showed clients that Accenture believed in what they sold to its clients.

·         Secondly, Accenture was strongly considering another upgrade to enhance its business intelligence (BI) as well as a total management of their ERP system. The framework software that Accenture was considering for the upgrade was COBIT 5. Even with its current IT system Accenture had to consider its financial reporting systems among many regulations globally. Besides regulations COBIT 5 could possibly enhance Accenture's IT systems’ ability to communicate causing greater integration and sound business decisions.

 

The IT overhaul of the IT system focused in on four key areas:

 

·         Redefining IT at Accenture from a cost center to a profit center

·         Reducing IT cost by the implementation of a web-enabled technology solution

·         Greater IT governance and oversight based on key strategic business objectives

·         A single-vendor/platform approach to software eliminating the need for multiple suppliers

 

Solutions

 

Accenture is ultimately considering two solutions:

 

·         Continue with the current IT framework

o   Would ensure that Accenture would be maintaining the system that made them so successful from 2001 to today

o   Decreased IT spending by 58% (60% decrease of IT spend/employee) while nearly doubling revenues at the same time.

o   Local applications had been cut by 87% from the levels they were in 2001 before the upgrade while also maintaining high levels of satisfaction among employees internally and earning praise from external stakeholders.

o   The ability to continue the use of a decreased number of suppliers and applications needed to conduct business operations

o   Could also continue to lean on their existing value chain and reporting systems that virtually revolve around the clock while ‘following the sun.’

·         Structure or implement COBIT 5 standards.

o   High investment and change in current practices already in place.

o   Many similarities to their current IT model, with several practices that seem to overlap.

o   Could create efficiencies, control, and flexibility in key IT areas

§  Plan & organize

§  Acquire& implement

§  Delivery & support

§  Monitor & evaluate

o   Has proven practices that minimize unwarranted software’s and applications and an overall reduction of IT spending.

o   A main cost is training for employees.

§  Roughly $175/employee for materials

§  Another $1,500 for the two day class.

o   Employee downtime and travel expenses.

o   Time to implement and master the practices learned within the classroom and transfer to every day practices.

 

Recommendation

 

Considering the investment needed along with the risk I believe it is not in the best interest of the organization to implement COBIT 5.

·         Investment could exceed $20 million in costs, training, and loss of productivity

·         Potential backlash from stakeholders who have taken an interest in Accenture’s industry standard IT systems and processes

·         The current model already has in place a number of the best practices and standards--implementing COBIT 5 would duplicate this.

o   The one-vendor and single-platform approach has been in place and has already streamlined processes and reduced costs significantly.

o   COBIT 5 seeks control over IT governance and regulations however Accenture has these areas covered.

§  Project sponsors who see a project through all phases as well as a ROI auditing process

§  Linking IT processes to the objectives of the business through processes such as IT support on a per needs basis through an ‘internal customer’ and their need for the support.

I believe that the upgrade is not warranted at this time as number of the key functions of COBIT 5 has already been in place since the overhaul in 2001. Though COBIT 5 provides insights into continually evolving our IT structure but the implementation is not a practical choice at this time due to the high investment. 

Zara Case Study

Sir,

Our biggest problem is our current IT structure.  Our POS system is using DOS which is outdated and limited in terms of capability. It is a huge risk to continue to use this system since the hardware might not be available to us in the near future.  Both Badas (Head of IT for Inditex) & Ocampo (Tech Lead for our POS system) are concerned our infrastructure is a risk to them since we are their biggest client.

A few examples of how our system is inefficient is the inability of employees to look up their own inventory or other store’s inventories in real time or spending excessive time to complete returns on the small screens on their Personal Digital Assistants (PDAs).  

This problem runs through the entire chain of operations related to Inditex’s Zara fashion stores, from the vendors to the warehouse and distribution centers to the actual store properties. 

Here is the run down the situation. 

·         Due to the nature of our business we need quick turn over on our inventory to satisfy customers with new fashion lines. 

·         We have 500+ stores with many more coming on board (one per day)—all need inventory to be updated in real time

·         Since our POS is very simple no IT support is required for store openings or any malfunctions.

·         We give store managers flexibility in what products to hold in inventory which causes unique orders and higher manufacturing costs

·         Without aggregated inventory data we miss out on potential sales.  A hot item on one region can be moved to the rest—real time inventory tools can help determine this.

Here are some of the decision criteria:

·         Fast, reliable and accurate system

·         Networked solution for real-time tracking

·         Integrated data controls for automation

·         Ability to port the POS system to retrieve data

·         Cost of upgrade and maintenance

·         No disruptions to current operations

·         Plug and play capability to make it easy for new stores to install and maintain.

·         Is time saved even with the additional functions added

Plausible alternatives:

• Current DOS POS system
• Pros
• Low up-front cost
• Employee familiarity with the system
• In-house support, maintenance and custom development
• No down-time necessary to migrate to the new POS solution
• Quick and easy to get new stores up and running
• Cons:
• Business is growing too rapidly for the IT infrastructure to maintain
• Time and costs associated with internal IT team managing the development and maintenance
• Inventory tracking system is completely manual
• DOS no longer supported by Microsoft
• POS terminals lack functionality of newer systems
• Modernize POS system including hardware
• Pros:
• Migrating to a new Operating System (Windows, Linux, Unix) that Microsoft support
• Potential to develop an online sales channel and additional revenue stream
• Additional features and capabilities of the newer system
• Real-time inventory tracking between stores
• Con
• High initial costs, potential for additional costs around customization and support of software, retrofitting the company to meet the new systems requirements
• Learning curve associated with new solution (Hardware and software
• Lack of established infrastructure

My recommendation is to address the minimum business requirements that Salgado and Sanchez identify as critical sustaining operations.  Therefore we need to make the necessary investments at this time to migrate to a more forward looking solution supported by the vendor. The new system should include all of the functionalities that employees expressed interest in, and it should allow for network connectivity and real-time inventory tracking.