IBM_ERP_case - College of Business Administration Florida International University December 6 2000 IBM Personal Systems Group Implementing ERP1 There

1 College of Business Administration December 6, 2000 Florida International University IBM Personal Systems Group: Implementing ERP 1 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.