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College of Business Administration
December 6, 2000
Florida International University
IBM Personal Systems Group: Implementing ERP
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There was an eerie quiet in the IBM Personal Systems Group (PSG) plant in Research
Triangle Park (RTP), North Carolina.
Hundreds of forklifts sat idle in the factory.
The shipping
docks, usually filled with incoming supplies, were empty. The 2,500 employees who normally
worked in the plant each day were gone. The plant, which normally produced 20,000 PCs a week,
was shut down. The date was April 6, 1999. On this date, the plant was to ‘go live’ with an
implementation of the SAP R/3 system known as Production Release 2 (PR2).
As John Corcoran, Director, SAP Production Project, waited for the first transaction to be
processed by PR2 on April 6, he reflected on how PSG had come to this milestone event. Several
years before, PSG had recognized the need for an integrated system that would allow better
management of the supply chain across all of its plants and quicker response to changes in the
business environment. Most recently, the success of Dell made clear to PSG the value of creating
a CTO (Configure-to-Order) business model in addition to its standard MTM (Machine Type
Model) business model. Having a set of autonomous plants, each with a multitude of independent
legacy systems that supported different business processes was a significant obstacle to
implementing this or any other new business model.
On January 1, 1998, the first version of an integrated production system based on SAP
R/3, known as Production Release 1 (PR1), went live in the PSG plant in Guadalajara, Mexico.
Given the experience with implementing PR1 in the Guadalajara plant, the dedicated work of his
170-person international team, strong executive support, and an adherence to a disciplined project
management system, Corcoran was very confident of a successful deployment of PR2 in the RTP
plant. He was also very much aware of the enormous risks involved. Failure to bring the plant
back on line as scheduled would be disastrous for the PSG group.
PR2 was significantly more
complex than PR1. Imbedded in PR2 were over 300 new business processes and subprocesses
that would need to be executed by over 2,600 users.
Corcoran also knew that there would be no time to rest and savor this major
accomplishment.
The project team would have to quickly focus on the next system, PR3, which
would be implemented at a production facility in Greenock, Scotland. The team would also have
to provide upgrades to PR1 and PR2 in Guadalajara and RTP, respectively, so that all three plants
would be operating under a single “Group Model.” The Group Model would allow PSG to
optimize its business across the plants by having common business processes, a single
development environment, and real-time access to information from all PSG production and
distribution facilities. As Corcoran reflected on the work that would need to be completed during
the next year, he knew a solid foundation for success had been put in place, but there would still
be many challenges ahead.
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- Spring '11
- JOHNSON
- Business, SAP AG, PSG, SAP Implementation
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