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January 1999
Critique as a Defense

A realistic look at alternatives can protect HP 3000 manufacturing solutions

By Cortlandt Wilson

One popular saying is that the best defense is a strong offense. Perhaps the best defense of the HP 3000 as a strategic business system is to encourage your organization’s decision makers to look at the alternatives with a critical eye.

Technical managers of enterprise-wide, business-critical software systems appreciate the simplicity, maturity and reliability of the HP 3000 as a platform and the cost savings that those features bring. Everyone knows that implementing a new ERP or manufacturing system will cost money. What is less appreciated are the demands the implementation of a enterprise-wide business system place upon the entire organization — especially on management.

In my last article I suggested that HP 3000 proponents face an uphill battle. We want decision-makers to know the truth about the relative merits of the HP 3000 compared to the alternatives. A good offensive strategy would encourage non-IT management to look at the facts themselves. Instead of waiting, IT might do well to encourage a formal analysis of the options.

A realistic appraisal of what it takes to implement and run an enterprise wide, client-server ERP system is a sobering experience. Beyond the direct IT costs (hardware, software, conversion, installation, consulting) there are costs to the entire business. These less obvious costs include the demands that an ERP installation places on management.

In my earlier article I recounted the experience of a MANMAN user who found such a thorough analysis an exhausting experience. The major ERP consulting firms offer standard packages to assist companies in selecting their next ERP system. Full service packages go for around $100,000. The key to selecting the right system demands a lot of that most precious commodity — management time and attention. And the demands on the business don’t end there.

Nibco is a $500 million manufacturer of values and pipe fittings. Nibco rolled out SAP at 10 plants and four distribution centers on one day last December. This ERP success story was made possible by the nine key business managers who worked on the project full-time for more than a year. A total of 20 business-unit employees were drafted into the team. A consultant was quoted as saying, “To do that kind of project you have to have people driving it who you can’t afford to pull out of the rest of your world.”

The implementation cost Nibco more than the $15 to $20 million implementation budget. With all those key players away from their usual responsibilities, financial performance suffered. Shipments fell well below plan. Ten weeks after rollout, Nibco was described as still being in start-up mode.

“I have never seen a successful ERP implementation that did not have the buy-in of both executive management and the process owners” writes Scott Langdoc, the CIO and VP of Raley’s, a supermarket and drugstore chain based in California. Many companies find that simple buy-in is not enough — managers at all levels must be actively involved. That means project teams are weighted much more toward business units than IT. Rolling out an enterprise-wide system is much more than a programming project — it’s a deployment of a new way of running the business.

A SAP implementation team at a $5 billion utility company reported they made almost 3,000 business process decisions in one five-month period. The team was equally split between representatives from IT and from business units, and close to half the IT representatives were business analysts rather than hard-core technical types.

A bankrupt drug company sued their big six consulting company for a botched SAP implementation. After five years of steady growth, Snap-On Tools reported $50 million in lost sales for the first half of 1998. Analysts said that problems with their new Baan ordering system frustrated dealers — and drove some of them to buy from the competition. The chairman of Snap-On stated that the problems “have had a significant adverse affect on service levels, with a negative impact on sales, expenses, and productivity.”

Being successful in implementing new systems may place heavy demands on key business unit managers. In determining the total costs of implementation, organizations should factor in the opportunity costs of lost management attention, lost productivity during the steep learning curve, and the risk that key business systems may fail to perform.

The methodologies of rapid or evolutionary implementation may help, but they still may put heavy demands on managers’ time. One option is to start the evolution with the existing HP 3000-based applications.

Cortlandt Wilson is a software consultant specializing in MANMAN on the HP 3000, the co-chair of SIGConsult and a board member of SIG MANMAN/Choices.

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