ERP and Supply Chains

1. ERP and Supply Chains Shawn Sevetsky IST 402 11/15/2004

2. Introduction • Supply chains are collections of organizations that work together to provide raw materials that are converted into products and delivered to retail outlets where customers can obtain them. • The value of a supply chain is control and efficiency. • Today’s companies gain efficiency through a higher degree of specialization. This appears in various forms, including outsourcing.

3. Supply Chain • The part of an industry value chain that precedes a particular strategic business unit is often called a supply chain. A company’s supply chain for a particular product or service includes all the activities undertaken by every predecessor in the value chain to design, produce, promote, market, deliver, and support each individual component of that product or service.(6)

4. Vertical Integration • the idea was to closely coordinate the supply chain internally. • Automobile firms in the 70’s and 80’s often tied vendors and retail outlets together into closely coordinated supply chains to gain production efficiency (appearing in the form of just-in-time manufacturing). • With the advent of ERP systems, along with telecommunications technology, supply chains have provided increased efficiency. • Almost 20 percent of U.S. manufactures in one survey had implemented supply-chain extensions into their ERP systems.

5. supply chain of an automobile manufacturer • include every activity undertaken by every component supplier, including engine manufacturers, steel fabricators, glass manufactures, wiring harness assemblers, and thousands of others. • The purchasing department had traditionally been charged with buying all of these components at the lowest price possible. Usually, purchasing staff did this by identifying qualified vendors and asking them to prepare bids that described what they would supply and how much they would charge. The purchasing staff would then select the lowest bid that still met the quality standards for the component. • This bidding process led to a very competitive environment with a large number of suppliers that focused excessively on the cost of individual components and ignored the total supply chain cost, including the cost to the manufacturing organization of dealing with such a large number of suppliers.(6)

6. Supply Chain Management • Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. • Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). • As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service. (2)

7. Supply Chain Management • Supply chain management flows can be divided into three main flows: • The product flow • The information flow • The finances flow • The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting ordersand updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.(2)

8. ERP • ERP (enterprise resource planning) is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business. Typically, an ERP system uses or is integrated with a relational database system. The deployment of an ERP system can involve considerable business process analysis, employee retraining, and new work procedures. (1)

9. Advantages of Supply Chains • Supply chains can provide competitive advantage from combinations of cost and value. • -on the cost side , production efficiencies can provide output less expensively. At the delivery end, added value many be gained through logistics efficiencies that lead to lower costs, better coordination of advertising campaigns, enhanced service from larger-scale operations, or other means. • One of the most important motivations for manufacturing firms to implement ERP has been to improve interactions and communication with suppliers and customer. Thus ERP has a role in supporting supply-chain activities. A study of more than 400 Midwestern manufacturers reported that 20 percent of the firms surveyed had already implemented supp-chain extensions to their ERP systems and another 25 percent were planning to.

10. Advantages of Supply Chains • Typical ERP installations can also impose some restrictions on this communication. Internally focused ERP systems can constrain supply-chain coordination. ERP systems should be able to provide useful integration over supply-chains in the long run, but in the short run could hinder logistical operations. ERP systems make integrated information available within the organizations that adopt the systems. However, unless all business units in the supply chain use the same system, ERP system can be barriers to communication. Units across supply chains would benefit by adopting a single vendor. (This could work well in the long run, but imposes very high cost if a supplier is required to spend millions of dollars on a system to do business with one client, as some automobile manufacturers have done in the past.) Many of the problems of communicating across ERP systems relate to data incompatibility, as well as different software tools.

11. Advantages of Supply Chains • While theoretically open supply chains linked across organizations would have a major advantage, currently this degree of openness is rare. Organizations moving toward more open systems have been reported to gain advantages in ordering and logistics operations. The Internet offers a rich information infrastructure making negotiation, knowledge sharing, and transaction processing much easier and faster. Traditional firs can be pushed aside by more effective and competitive Internet-based supply chain groups. • Part of the problem relates to system openness. Supply chains require open systems. ERP systems were developed on the assumption that a relatively small proportion of the workforce would need access to information. This led to a pricing mechanism where license fees for each user were set at a high level.

12. What It Takes to Make a Supply Chain Successful • All supply chain professionals strive to improve business processes by bringing providers, shippers, consumers and goods closer together, and by doing so, enable global commerce. • In order to do this effectively over time, the industry's ability to evolve as customers' needs change is paramount. • The necessity of leveraging both physical and intellectual assets to improve a company's supply chain started as recently as 10 years ago with the convergence of many marketplace dynamics. These memorable events include new enabling technologies, such as the Internet and vastly improved supply chain visibility tools, that ease the way business is conducted; increased globalization, with production in Asia, particularly China; greater reliance on third parties for non-core logistics activities; and the continuing effort to open up more countries through free-trade agreements. (4)

13. What It Takes to Make a Supply Chain Successful • As these marketplace activities began taking shape and companies started to expand globally, companies turned to third-party logistics providers to help them accomplish their new goals while being prepared for the unthinkable. Prior to these activities, the biggest concern supply chain professionals faced was the effect a local disruption such as a parade or highway accident would have on the flow of commerce. The truth is that companies were able to adapt to disruptions more quickly because supply chains were much more localized and controllable than they are today. • Today's supply chains are much more fragile, having become more elongated, complex and global. The slightest disruption can now cause ripples not only through a supply chain but also through entire economies. Companies and the supply chain industry are more concerned about events on a grander scale and around the world -- terrorist activities, health catastrophes, wars and labor rifts are all factors. In the past couple of years, these types of events have highlighted the fragile nature of global supply chains and the need for flexibility in responding to unforeseen circumstances. (4)

14. What It Takes to Make a Supply Chain Successful • Of course, the bottom line is that goods, information and funds still need to move, and this needs to happen effectively and efficiently. So what does it take to make a supply chain successful? • Thought leaders who aren't satisfied with the status quo and who seek and find more efficiency in the supply chain for their companies. • The maintenance of both physical and intellectual capabilities globally as well as strong global partnerships that maximize service reach and expertise. • Integrated technologies that coordinate activities across the entire supply chain, from upstream with raw materials through manufacturing and sale and then reversed back. Companies need relaible visibility tools to track these product movements and then manage interruptions. • Adaptation to new security requirements and the ability to provide companies with the proper guidance in order to comply with new regulations. • The opening of more economies to improve trade practices. (4)

15. What It Takes to Make a Supply Chain Successful • Companies are no longer looking to supply chain professionals for simple transportation and distribution services. They are looking to synchronize supply chain events throughout the product life cycle. They now understand that demand forecasting, procurement, manufacturing, distribution, transportation and end-of-life-cycle activities must be intertwined. • Companies are also beginning to understand that a well-run supply chain can be a competitive advantage that improves the balance sheet, income statement and customer experience. There's no doubt that every supply chain professional's job is getting tougher as supply chains become more complex and companies try to squeeze out more efficiency at lower cost. But the good news is that the challenges also provide unlimited opportunities for these companies and the supply chain industry to find ways to do it smarter and quicker than ever before -- a constant supply chain evolution.

16. Managing storage as a supply chain • Supply chain management is using the entire fulfillment process for greater responsiveness, speed and efficiency. This concept can easily be translated to network storage management in today's enterprise. The delivery of storage services involves a network of distributed resources and organizations: host administrators, database administrators, storage operations and storage engineering personnel, file systems, databases, volume managers, servers, host bus adapters, switches and arrays. • The key to any type of supply chain management, whether it's for manufacturing or IT storage services, is to understand the interrelationships and performance of each resource within the supply chain. Another key is to optimize the entire end-to-end supply chain while meeting the business objectives of cost, delivery timeliness and quality. Often, IT technology is intuitively purchased without a clear relationship to its overall value to the business. Perhaps this is why many organizations today are only getting a $4 return for every $10 spent on their IT infrastructure.

17. Managing storage as a supply chain • Managing the storage supply chain leverages many of the same concepts and practices as traditional supply chain management. The key to these concepts is to understand the process necessary to complete the task, whether manufacturing a widget or supplying highly available storage to a critical application. • This concept easily translates to network storage management in today's enterprise. The delivery of storage services involves a network of distributed resources and organizations. These concepts are: • Production: Types of storage available • Supply: Tiers of storage • Inventory: Available storage • Location: Both primary and secondary • Availability: Overall storage network performance • Reclamation: Reuse of existing storage • Information: Application through to the spindle on the array

18. Managing storage as a supply chain • The goal of supply chain management in manufacturing is to reduce the massive amounts of excess or misused inventory, enhance delivery time and customer responsiveness, improve quality and reduce costs. The goal in storage supply chain management is to optimize every storage component used by designated applications and improve responsiveness to the business while reducing costs. • Managing the IT infrastructure and the availability of the IT components like other components of the business is the foundation for managing storage as a supply chain. The goal is to achieve just-in-time delivery without sacrificing service levels or increasing costs. • As in traditional supply chain management, the quality and timeliness of information is critical to the success of storage supply chain management and to the continuous improvement cycle. • The application-level storage supply chain needs to be automatically discovered, continuously monitored and analyzed for the network storage infrastructure to be optimized for all service-level objectives.

19. Managing storage as a supply chain • Managing storage as a supply chain • The management of the storage supply chain needs to include constant monitoring and correlating of all data to ensure that all potential problems are discovered and corrected before they can affect the application. In order for this timely monitoring and analysis to occur, the process needs to be automated. This must include automation of policy monitoring and event resolution so that when a policy is violated, an action to correct the violation is automatically generated. • The supply chain, with proper management, can lead to tangible service and value to the business. Managing storage as a supply chain can lead to short lead times in meeting business application deployments and high quality of delivered storage services at reduced costs of operations and capital. To successfully implement a storage supply chain management system, the company needs to take a holistic view and manage every component from an application perspective. • An agile company needs to constantly balance the needs of the business with the cost to provide services. The storage environment can be optimized for the business requirements and enable an agile business by managing storage as a supply chain. This transformation, tying businesses and IT decisions together, is what the storage industry is moving toward for fast and measurable return on investment of the networked storage environment.(5)

20. Value Creation in the Supply Chain • In recent years, businesses have realized that they can save money and increase product quality by taking a more active role in negotiations with suppliers. By engaging suppliers in cooperative, long-term relationships, companies have found that they can work together with these suppliers to identify new ways to provide their own customers faster, cheaper, and better service. This process of taking an active role in working with suppliers to improve products and processes is called supply chain management. By coordination the efforts of supply chain participants, firms that engage in supply chain management are reaching beyond the limits of their own organization’s hierarchical structure and creating a new network form of organization among the members of the supply chain.(6)

21. Technology in the Supply Chain • Clear communication and quick responses to those communications are a key element of successful supply chain management. Technologies can be a very effective communication enhancer. Firms can effectively manage the details of their own internal processes and the process of other members of their supply chain. • Supply chain management software includes demand forecasting tools and planning capabilities that allow all supply chain members to coordinate their activities and continually adjust their production levels.(6)

22. Technology in the Supply Chain • Currently the two major firms offering supply chain management software are i2 technologies and Manugistics. The i2 technologies product, RHYTHM, includes components that manage demand planning, supply planning, and demand fulfillment. The demand planning module includes proprietary algorithms customized for specific industry markets that examine customer’s buying patterns and generate continuously updated forecasts. The supply planning module coordinates distribution logistics, inventory level forecasting, collaborative procurement, and supply allocations. The demand fulfillment module handles the execution elements, including order management, customer verification, backlog control, and order fulfillment. • The Manugistics supply chain management product includes a constraint based master planning module that controls the other elements of the system. These other elements include modules for transportation management, replenishment management, manufacturing planning, scheduling, purchase planning, and materials control. (6)

23. Advanced Planning Systems • Computer technology makes it possible for improvements at both the cost and value ends of the supply chain. Demand uncertainties can be better managed through improved inventory demand forecasting, reduction of inventories, and improved transportation costs through optimization of coordinated activities across the supply chain. • Advanced planning systems(APS) provide decision support by using operational data to analyze material flows throughout the supply chain. Increased computing power enables more sophisticated analysis. • APS products are available from: • BAAN • CAPS Logistics • i2 Technologies • J.D. Edwards • Manugistics • Numetrix • Oracle • PeopleSoft • SAP

24. Advanced Planning Systems • Advanced planning systems use historical demand data as the basis of forecasts that are used to manage future demand. However, to optimize systems, a certain stability level is required. John D. Rockefeller was able to manipulate demand for petroleum products more than 100 yeas ago. Demand manipulation is still possible in some markets today, but it is much more difficult. The idea of supply-chain optimization is more difficult to implement in conditions of constant product innovation, highly volatile global demand, and increased product customization (such as applied by Dell and other computer vendors allowing customers to custom design their computer systems on-line). This turbulent market environment makes it difficult to obtain extensive pertinent demand history. It is easy to collect data, but demand changes too rapidly to take advantage of it for extended periods.

25. Advanced Planning Systems • ERP vendors are expanding their functionality to provide services formerly supplied by supply-chain vendors such as Manugistics and i2 Technologies. SAP has introduced mySAP.com, which is an open collaborative system integrating SAP and non-SAP software. SAP APO supports supply-chain activities such as forecasting, scheduling, and other logistics-related activities. PeopleSoft has Enterprise Performance Management to support decisions at many levels. J.D. Edwards products have support for planning and execution. Oracle’s 11i Advanced Planning and Scheduling system was designed to automate customer, supplier, and firm interactions. Vendors are moving toward greater integration of Supply-chain products.

26. Advanced Planning Systems • In dynamic market environments, supply-chain software many not be able to attain optimization, but there still is a great deal of benefit to be obtained from coordination of supply-chain partners. IT also provides rapid coordination that can be even more beneficial than optimization in a stable supply-chain environment. Technology makes it possible to find new partners at short notice in response to new market developments.

27. i2 Technologies • i2 Technologies knows a thing or two about supply and demand. The company makes supply chain management software used by manufacturers to boost operating efficiency, schedule production and the delivery of raw materials, and collaborate with customers and suppliers. i2's software suites also include applications for related functions such as procurement, content management, customer relationship management, and the integration and administration of public and private electronic marketplaces. In addition to software, i2 offers a number of professional services such as consulting, maintenance, and training. Company founder and CEO Sanjiv Sidhu owns 27% of i2, while Q Investments owns 26%. • An early leader in supply chain management software, the company has used strategic acquisitions to expand past that core expertise into related fields, such as procurement and customer relationship management. However, its growth could not spare i2 from the severe downturn in the economy that started in 2001. The company has initiated major cost-cutting and restructuring initiatives, including multiple rounds of layoffs. (7)

28. Manugistics • Manugistics Group puts the logic in logistics. The company is a leading provider of supply chain management software, which helps direct the flow of products from the raw-material stage through manufacturing, distribution, and delivery. Manugistics' NetWORKS software suite combines manufacturing and logistics functions to coordinate -- over the Internet -- activities such as distribution, manufacturing, purchasing, and transportation. The company also provides software to automate demand chain functions, such as pricing and marketing. In addition to software, Manugistics offers a range of customer support services, including consulting, planning, and training.(8)

29. Manugistics • Manugistics has used acquisitions to expand past its core area of expertise in supply chain management software and into related fields, including applications for the optimization of enterprise profit, pricing, and revenue. As part of the company's restructuring plan, Manugistics has sharply reduced its workforce and contractors to cut costs, and moved the majority of its product development department to India in 2003. The company plans to cut its headcount to 725 employees by early 2005, a reduction of around 34% in one year. • Most of the company's clients are in the retail and consumer goods industry, including AT&T, Boeing, Cisco Systems, Coca-Cola, Delta Air Lines, Ford, Kraft Foods, and Texas Instruments.(8)

30. On-line Marketplaces • Open Internet marketplaces are becoming more widespread. These exchange mechanisms benefit suppliers and purchasers by providing a more competitive environment with broader access. . E-marketplaces aggregate buyers, sellers, content providers, and business services. They also provide a single point of integration for interaction of buyers and sellers. A buyer can log on to an e-marketplace, issue a request for proposal, and be flooded with bids. This creates a problem of bid comparison and interpretation., On-line marketplaces also provide services to help sift through large numbers of bids.

31. On-line Marketplaces • Vertical on-line marketplaces have narrow but deep product lines. Multivertical marketplaces access multiple sources of product lines in the same way. These site types are particularly useful for those seeking products that are difficult to find. Horizontal on-line marketplaces deal with a broader set of products and more extensive linkage to buyer purchasing systems. A number of ERP vendors have horizontal on-line marketplaces, such as mySAP and Oracle exchange.

32. On-line Marketplaces • These marketplaces also can be grouped by transaction methods. Auction-based services are common. One use of auction-based methods is as an exchange, seeking simultaneous bids and offers to determine efficient prices. Future contract variants allow buyers to lock in supplies or hedge prices. Pure auctions seek only bids to establish prices for unique products. Reverse auctions do the same, only from the perspective of offers rather than bids. Metacatalogs focus on reducing search cost rather than on pricing. Mall-based on-line marketplaces allow buyers to surf a single site, with visits to individual areas representing different suppliers.

33. On-line Marketplaces • Advanced planning systems and online marketplaces represent tow applications of technologies making supply chains more efficient. Lean manufacturing was originally proposed as a way to make supply chains efficient as a strategy not supported by information technology. ERP vendors are seeking to show how their systems can support lean manufacturing ideas.

34. online marketplaces • Many online marketplaces are finding that mush of the catalog-type content they need to conduct business is not formatted for digital use. And even if this data has been converted, it is often not in a clean form that the exchange can use. Several companies have stepped up to help businesses create and manage catalog and other online business content, whether on their own e-commerce and procurement sites or in marketplaces. (9)

35. online marketplaces • DESPITE THE VARIED faces among the new crop of online marketplaces, all require the same foundation: content. In providing descriptions and data about products and services being offered through an exchange, content is a vital link between buyers and sellers. • Creating and managing content is proving to be a challenge, however. Although exchanges aim to make online buying a faster and more streamlined process than traditional print catalog-shopping, many online marketplaces are fording that much of the catalog-type content they need to conduct business is not formatted for digital use. And even if this data has been converted, it is often not in a clean form that the exchange can use. (9)

36. online marketplaces • "That's where some of the challenge is; getting the product data online, whether it's marketing collateral or product spec sheets," says Kent Allen, a senior e-commerce analyst at Aberdeen Group, in Boston. • The explosion of vertical marketplaces is also influencing the need for catalog content to be moved online, a space on which i2 Technologies -which recently acquired Aspect Development to add aggregator e-content services to its portfolio - is setting its sights. • Focusing on the business supply chain, Dallas-based i2 Technologies offers customers the option of buying and leveraging reference content from its collection, which can then be used in marketplaces and exchanges or to fill in a company's own online catalog. • "You really cannot effectively transact business with another company if you don't all speak the same language. You have to know exactly, specifically what you're talking about across distributors and suppliers and manufacturers," Devore-Kenney says. (9)

37. Lean Manufacturing • Lean manufacturing is a bundle of techniques pioneered by Toyota in the 1950’s. It has become a common philosophical approach to supply-chain organizational design in the automobile industry. The key principles of lean manufacturing are to cut out waste by eliminating activities that don’t add value, by making sure that this principle is applied throughout the supply chain, by creating continuous flows of product without bottlenecks, by producing to order (demand-pull rather than supply-push), and by emphasizing quality. This approach will typically lead to elimination of backlogs and more synchronized production to forecast. Lean manufacturing approaches have been credited with improved customer service as well as reduced procurement and plant-floor costs.

38. Lean Manufacturing • Initial ERP applications often did little to obtain efficiency on plant floors. Problems with early ERP systems were complex bills of materials, inefficient work flows, and unnecessary data collection. Switching plant-floor management in ERP systems to demand-pull (lean manufacturing) was cited as a way to overcome these limitations.

39. Lean Manufacturing • There are differences in emphasis between ERP and lean manufacturing. ERP emphasizes planning based on sales forecast. Lean manufacturing ties production to actual customer orders. Lean manufacturing emphasizes continuous improvement. ERP tracks every activity and material price, which often generates many non-value-added transactions, contrary to the lean philosophy’s emphasis on speedy and smooth production. Some ERP users have dealt with this difference in philosophy by turning off ERP logs and reports that involve push motivation rather than pull. Other companies prefer a change in ERP software.

40. Lean Manufacturing • Many ERP vendors have expressed lean features of their systems, but not all customers have been convinced of ERP’s comprehensive support of lean ideas. Bradford surveyed 14 ERP vendors, all of whom indicated their product supported at least one lean manufacturing feature. Specific lean manufacturing features that vendors have included are demand smoothing, mathematical models to synchronize daily production to demand, Kanban replenishment calculation, and exception reporting. Bradford's overall assessment of ERP vendor products’ ability to support the lean business strategies in discrete and continuous manufacturing environments is summarized in table 9.3

41. Lean Manufacturing • The J.D. Edwards’s basic ERP system supports mixed-model scheduling, demand-pull production, flexible material and capacity planning, distribution scheduling, and supply-chain information sharing and analysis. The J.D.Edwards’ One World ERP system supports quality management, shop-floor management, product data management, forecasting, and material planning, all of which relate to lean manufacturing.

42. Lean Manufacturing • Many modern ERP systems allow users to configure more than one of these business strategies. • Most ERP vendors support all but the engineer-to-order strategy, which was found in less than half of ERP vendors surveyed by Bradford et al. While it appears that ERP vendors are providing greater support to lean manufacturing, the current state of systems has not yet achieved that ideal. • The limitations of current ERP software led Bartholomew to view ERP and lean manufacturing to be competing approaches to plant operations. Bartholomew’s view is supported by the actions of Dell Computer, which has used customer demand as the basis of its system, the pull approach. As discussed in chapter 3, Dell discarded a proposed ERP system after two years of study, concluding that the ERP approach was too inflexible for its demand-pull system.

43. Key trends in Supply-Chain Management • Akkermans et al. conducted a Delphi workshop of 23 Dutch supply-chain executives of European multinational firms. That study reached consensus of over 50 percent on only two issues: • Further integration of activities between suppliers and customers across the entire chain(87 percent support). Thus current ERP systems require greater openness. • Maintaining flexibility in ERP systems to deal with changing supply chain needs (57 percent support). Vendors have moved to increase their ability to support Internet operations. • Mass customization (39 percent support).

44. Key trends in Supply-Chain Management • There is an inherent trade-off in centralized, controlled, internally focused ERP systems and the openness of systems required to adequately support supply-chain connectivity. This relates to both of the two most important issues identified. ERP systems do support mass customization by providing standard interfaces. • Implementing ERP in a supply-chain environment takes great care, as demonstrated in the Hershey case. While Hershey continues to be a strong producer in its market, its installation experience emphasizes the need for allowing sufficient time to adequately plan and implement ERP systems. The idea of applying ERP and related hardware to supply chain environments clearly has a great deal of potential benefit.

45. HP’s ERP Migration Problems • The goal was to merge business and IT not only at the corporate level, but also in the field, in each region and each country. • A lot of the pieces of the supply chain, order management and IT [functions] were in different businesses. Bringing those things together into one operation became official on May 1. • This was the 35th transition we had done; 34 had gone well, and this one did not go well.(10)

46. What went Wrong? • It's a lot of little things that added up. Not one or two of them would have created the problem, but the combination of them created a bigger problem than we expected. We had planned for three weeks of disruption, and there were six weeks of disruption. • These problems are in three major categories. One we call working across silos. The team that was driving this [consolidation] program had to work with other parts of the company -- they were dependent on other parts. And working across these seams proved difficult. People have different priorities, so it made program management a little more complex. For example, logistics was in a different group, and the front-end order-taking was in a different system, hosted in a different group. So there were a lot of these little disconnects. (10)

47. What went Wrong? • Secondly, there were a lot of data integrity [problems]. Orders fell out between the legacy front-end system and SAP on the back end, which required a lot of manual intervention. Orders started falling out for a lot of different reasons -- training, [product data management] issues, all kinds of little things. So backlogged orders started doubling, and by the time people were finished fixing those issues, we had a fairly large backlog, which took several weeks to get rid of. The backlog was not resolved until the end of the quarter, which had an impact on our financials. • The third element was increased demand. This migration had to do with our industry-standard Intel-based server business. The demand really increased for those products, and it's still very high right now, which is good news. But it put even more pressure on the whole system. (10)

48. Implementation problem, not SAP • It was initiated by merging a product line into an SAP instance; we merged that product line from a legacy SAP to the target SAP platform. So clearly there was an SAP component to it, but the issue that created the problem was not the SAP itself. It was the set of business processes that went around it. • Exactly what should you have done differently? In August, we went back and basically polled everybody involved in the program and all the stakeholders and tried to turn this into a learning experience. Because those things happen. Every CIO knows problems like this do happen. We had done many of [the migrations] that had gone well, but I wanted to make sure we really understood what happened this time -- what was different -- and build it into our knowledge base so we could be a smarter organization looking forward. (10)

49. Implementation problem, not SAP • We just got the results a few weeks ago, and it's those three major buckets I talked about. It is about managing better across the silos. The good news is that's kind of what we did when we changed the organization. All those things where things fell through are now together on my team. A lot of the people, when we polled them, had the comment that it helped resolve the problems when we changed the organization on May 1, and it might have helped us avoid them if we had done this a bit earlier. • When you consolidate, by definition, there's a lot more interdependencies. When everybody's got their own ERP, they can all work within their own silos. Now there's a lot more commonality and a lot more sharing and a lot of learning in terms of program management. We've invested a lot in program management. (10)

50. HP’s ERP Migration Problems(10) • When you gained this increased responsibility and power and started merging those silos, how much political resistance did you face? Were people sniping at you from the bushes? This has been a very good surprise, to be honest. I mean, I built a team of 10,000 people, taking at least half the people from other groups. So I was expecting the kind of things you're talking about. But frankly, it did not happen. • In January, I brought together most of the key operational leaders across the company and asked them to work on [creating a new organizational] model. I gave them a few guiding principles, but I didn't tell them what the model should be. They came from different businesses with potentially different political agendas, but within two days, they had agreed on what the model should be.