Implementing a new ERP

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Implementing a new ERP Ism 50 Victor Soltero April 24 2007 ERP (Enterprise Resource Planning) Peter Solvik Who is he? What went Wrong? Why did he get 200K?

IPO in 1990 Becomes one of the Top Five Companies out of the 500, in 13 years. Ok, who gave them money? Mr. Valentine a venture capitalist invests 2.5 million.

1 Implementing a new ERP Ism 50 Victor Soltero April ERP (Enterprise Resource Planning) Peter Solvik Who is he? What went Wrong? Why did he get 200K? And would he do it again? Cisco Formed by 2 Stanford computer graduates in Main product: Router software and Hardware. IPO in 1990 Becomes one of the Top Five Companies out of the 500, in 13 years. Ok, who gave them money? Mr. Valentine a venture capitalist invests 2.5 million. Reserved the right to bring in professional management if need be. Valentine hires John Morgride as CEO Founders find Morgride s management too rigorous, after the IPO the original founders sell their stock and leave Cisco. 1

2 What made Morgride so Unbearable? He wanted Centralization! He wanted to Streamline! He wanted to integrate the 3 business lines: Marketing, R&D and Manufacturing into one. He wanted a tighter Value Chain. FF to 1993 Pete wanted a $5 Billion Dollar Company. A Versatile Application. Standardization in terms of software and hardware architecture including access to database information too! What stopped him? Cost of ERP implementation What do you mean my Value Chain isn t good enough? The Man. Rand Pond Director of Manufacturing. Complaints: Old system is out dated. We need a new system said Mr. Pond. Too expensive cried the Board Members. I know, Mickey Mouse it. Constant modification becomes the norm. System outages became routine. The system is tampered with so much that it breaks down. 2

Standardization in terms of software and hardware architecture including access to database information too! What stopped him?

3 The hair that Broke the Camels Back Cisco s Legacy Application Fails. Resulting from constant system modifications. The central Database becomes corrupted. Cisco Shuts down for 2 Days. What Cisco learns from the snafu Each application used to control day to processes by individual departments could not be corrected. There had to be a way to streamline the Value Chain and upgrade each departments app s at once Who do we call The New Guy Carl Redfield SVP of Manufacturing. Lets try and integrate Manufacturing, Order Entry and Financial Sections into the same app. This time 1 is better than 2. New look new Attitude All or nothing attitude the new system must by versatile, not overly specialized. The system mustn't demand too much new learning and getting use to. February 1994 Cisco closes its doors to under go a serious makeover. 3

There had to be a way to streamline the Value Chain and upgrade each departments app s at once Who do we call The New Guy Carl Redfield SVP of Manufacturing.

4 Selecting the Right ERP is all about asking the right people the right questions Ask, the Business Customers what they need. Who uses a system similar to what we need? Who is the Best of the Best? Oracle Why? Oracle promises compatibly across platforms and developed functionality. Who is this good for? Both, the order taker and receiver. The Estimate Cost $15 million Time to implement 3 months Which quarter will we commence the project? 3rd. See the cost as a Business Solution Not as a cost min cost Solution Implementation Rapid interactive prototyping. CRP Conference Room Pilots Crash Course 5 days= 2,16hr days. Configuration of the New System. Track teams in each department composed of Oracle, KPMG, Cisco IT and Cisco personal. Help configure. 4

The Estimate Cost $15 million Time to implement 3 months Which quarter will we commence the project? 3rd.

5 CRP #2 The teams find out that there are gaps too wide for patches. The new system will not work with the old software. Red? Yellow? Green? Oracle not providing the support originally promised? CRP #2 cont More Problems are found everyday and the need for a Data Warehouse becomes more apparent. It is strained A Bridging System CRP #3 Final Tests are GREEN Track leaders give the Ok for launch This system comes to life. Adjustments/ Costs Day to day inconveniences. On time Package departure fell from 95% to 75%. Company struggled, with the system breaking down daily. Hardware & Software incompatibilities. Lack of system capacity. 5

It is strained A Bridging System CRP #3 Final Tests are GREEN Track leaders give the Ok for launch This system comes to life.

6 Breakdown cont Software: 16% Hardware: 32% System intergration:38% Headcount: 14% The Costs and Benefits 3 months of shut down time 15 million dollars Education Capacity increase Room for Growth Tacit knowledge. What else can you think of? 6

months of shut down time 15 million dollars Education

Gaining Competitive Advantage Through Internet Business Solutions. 1999, Cisco Systems, Inc.

Gaining Competitive Advantage Through Internet Business Solutions Source Presentation_ID graphic: 1999, Cisco Systems, Inc. 1 Cisco - A Best Practice Example Who s been to Cisco and can tell us about the