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Dell, Incorporated: Building the ERP Business Case

ERP Systems. Dell, Incorporated: Building the ERP Business Case. Overview. ERP Systems. Organizational Background. Business Analysis: SWOT, Gap. Why ERP: Benefits. Assumption. Constraints in Building Case. Recommendations. Organizational Background. ERP Systems.

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Dell, Incorporated: Building the ERP Business Case

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  1. ERP Systems Dell, Incorporated: Building the ERP Business Case

  2. Overview ERP Systems • Organizational Background • Business Analysis: SWOT, Gap • Why ERP: Benefits • Assumption • Constraints in Building Case • Recommendations

  3. Organizational Background ERP Systems • 1984 Founded by Michael Dell 1996 Listed in S & P 500 Stock Index2002 #1 US Computer Systems Provider 2005 #1 America's Most Admired Company (Fortune Magazine) • Dell Direct Business Model: eliminates retailers that add unnecessary time & cost, or diminish Dell's understanding of customer expectations. • Dell Effect: award-winning customer service, reliability, support, focus on innovation, encourages business process improvement (minor to moderate changes)

  4. SWOT Analysis ERP Systems Strengths Opportunities • Standardize processes for global presence • Exploit economies of scale • Facilitate mergers & acquisitions • Diversify into other consumer electronic markets • Domination of PC Market Share • Effective biz infrastructure • Shrewd branding • 8 year alliance with SAP Threats Weaknesses • Stiff competition for sales of product lines in service & storage • Unstable partnership w/HP in R & D for blade server solutions • Merger & acquisition? • Talent drain w/exec mgmt leaving • Online shopping not a way of life beyond US • Lack of solid dealer relationships • Lack of engineering expertise • Customer satisfaction may suffer due to lack of visible storefront

  5. “As – Is” Analysis ERP Systems Current State: Source: Dell 2005 Annual Report

  6. “As - Is” Analysis (Cont’d) ERP Systems Global and distributed nature of business

  7. “As - Is” Analysis (Cont’d) ERP Systems Current State: • Dell turns over inventory every 4 days on average. Most of Dell's expenses are made up of selling, general and administrative costs rather than R & D. • Biz Process Improvement Initiative to continuously refine its direct approach to manufacturing, selling & servicing • Price for Performance biz strategy: Dell vs. competitors like HP, IBM… like Wal-mart vs. Saks Avenue • Biz focus: customer vs. product; end customer vs. dealer • 2/3 of sales to large corporations broadened brand & appeal • Learn from best practices of global operations: “we actually find we learn … when we compare our own operations around the world…” (Michael Dell, March 2004, Harvard Biz Sch)

  8. “To - Be” Analysis ERP Systems Desired State: • Mission Statement: “To be the most successful computer company in the world at delivering the best customer experience in markets we serve.” • Facilitate growth & diversification into new markets, “expanding the role of the PC” (Michael Dell, 2004) • Enhance dealer relationships • Align and standardize business functions & processes • Continue to expand its global market presence • Expense Management: keep operating costs low • Accountability: “just one strike and you're out…” Kevin Rollins, CEO, May 2005

  9. Why ERP ERP Systems Benefits • Help grow its share of the world market • Augment its supply chain and inventory management • Reduce manufacturing overheads thru integrated system • Boost productivity through standardization of processes(Standardization will help facilitate entry into new markets) • Enhance its credibility in B2B market • Improve its repair / re-cycle and maintenance services • Improve quality, cut costs, reduce delivery time

  10. ERP Assumption ERP Systems

  11. Research + Interviews with Stakeholders Real World Business Systems Proposal would involve: Feasibility Analysis: Technical, Economic, Organizational Value and Risks Statistics Work-plan Constraints in Bldg Case ERP Systems In this case, unfortunately, we do not have access to proprietary business information that Dell guards judiciously: “… we are a moving target. We're not going to tell you our most secret new things that we did two or three years ago…” Michael Dell, 2004.

  12. Recommendations ERP Systems Without further ado, we recommend that Dell… • implements an ERP system. • learns from its past failure and conducts a better and more thorough feasibility analysis. • selects SAP as its choice of an ERP system.

  13. Acknowledgements ERP Systems Dell, Michael. Harvard Business School Remarks. Mar 10, 2004. http://www.dell.com/downloads/global/corporate/speeches/msd/2004_03_10_msd_harvard.pdf Rollins, Kevin. Arcadia University Commencement Address, May 16, 2005. http://www.dell.com/downloads/global/corporate/speeches/kbr/2005_04_05_fose.pdf For more information, please visit: http://www.dell.com or http://www.sap.com/index.epx This is a production by T1 Members from IST 600 ERP Systems: Implementation Issues, Summer 2005Virat Chirania, Yin Wah Kreher, Enit Thomas, and Miao Yang Thank you and we appreciate your business!

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