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Durakon Division Enterprise Software Recommendation

Durakon Division Enterprise Software Recommendation. JBA System 21, 5-26-98 Board Meeting. Viable options considering Year 2000 risk and timing JBA System 21 with new AS400. Cost: $1,311,500 JBA Business 400 with new AS400. Cost: $997,500

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Durakon Division Enterprise Software Recommendation

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  1. Durakon DivisionEnterprise Software Recommendation JBA System 21, 5-26-98 Board Meeting

  2. Viable options considering Year 2000 risk and timing • JBA System 21 with new AS400. • Cost: $1,311,500 • JBA Business 400 with new AS400. • Cost: $997,500 • Durakon Management recommends JBA System 21 with a new AS400 and selection of FYX, Inc. for implementation consulting and training, with technical support from JBA.

  3. Cost Detail System 21 Business 400 New AS400 New AS400 Already Expensed (50,000) (50,000) System 21 Software Upgrade 202,000 System 21 Software Maintenance 112,000 AS/400 620 Purchase 255,000 255,000 AS/400 620 Maintenance 109,000 109,000 JBA Mentor Training Software 20,000 20,000 NT Server 35,000 35,000 AIMS Reporting Software 82,500 82,500 LAN hardware & software upgrade 19,000 19,000 PC hardware, op system & office upgrade 80,000 80,000 ERP software Implementation 390,000 390,000 Coopers & Lybrand 27,000 27,000 Estimated Consultant Travel Expense 30,000 30,000 Total 1,311,500 997,500 Estimated 1999 Expenditure Y2K certified software 350,000 Implementation 100,000 Recalculated Total 1,311,500 1,447,500

  4. System 21 to Business 400 Comparison - Year 2000 certified thus providing less risk for year 2000 issues. If there is a year 2000 problem with the Business 400 version, JBA will not be providing support (all support ends 12/31/99). - Any changes (i.e., regulatory, accounting, taxes) that necessitate software changes would have to be done by Durakon after 12/31/99. This could conceivably generate substantial increases in programming costs at a later date. With System 21, JBA will keep the product up-to-date with the latest industry and business requirements needed for Durakon to stay competitive. - Graphical (Windows) interface would provide Durakon with the ability to re-introduce JBA. Successful implementation should eliminate many of the homegrown systems (spreadsheets) that have cropped up, due to user dissatisfaction. To the user, the software will appear to be a new system, while retaining much of the familiarity of the old product (thus reducing implementation costs versus a non-JBA system).

  5. System 21 to Business 400 Comparison Features: System 21 Business 400 Year 2000 Certified Compliant, Not warranted Year 2000 Problem Support Yes No Support Into 21st Century Ends 12/31/99 Upgrades Through ESSA Contract Ends 12/31/99 Bug Fixes (PTF's) Through ESSA Contract Ends 12/31/99 New Business Acquisitions Available for purchase Not available User interface GUI Green Screen Allows re-implementation of the software as a new product. Platform for Internet (www) Yes No Integrate with latest, lower cost, programming languages Yes No Technology Growth Will utilize newer improved Deadend - Old Technology technology

  6. Advantages of new AS400 • 100% performance increase. • New software and added processing for manufacturing could reduce performance of current AS400. • Assist in eliminating monthend bottlenecks, allowing quicker financial close. • More than 100% data storage (disk) space increase, current system is at maximum capacity and could hinder the implementation if done on that system. • Room for acquisition growth. The current system could not handle anything other than a small acquisition; thus the acquired company could not be integrated on the Durakon system. • Includes Year2000 compliant operating system, current operating system requires upgrade (this is the last upgrade for current AS400, IBM has discontinued ongoing support). • Latest operating system provides support for open environment. • Supports newer, more powerful programming languages which should translate to lower ongoing programming costs. • Supports internet capabilities, which could provide improved communications with employees, customers and vendors. • Safer implementation, reduced risk of interrupting business during the new system implementation. If a business interruption occurs, the savings of keeping the old system would evaporate quickly. • Lease on current AS400 expires next year, system would need to be purchased. • Hardware maintenance on current AS400 expires next year, a maintenance contract would need to be purchased.

  7. Implementation Options JBA International JBA has provided separate quotes for software, consulting, training and technical work. Allowing Durakon to utilize their staff where appropriate. Durakon used their services for the Version 1 to Version 3.2 upgrade. Advantages Disadvantages Their software Less experienced people UK support Resource shortage Expensive consulting rates FYX, Inc. FYX is a consulting company that specializes in JBA software. They only hire technical staff and people from business that have been through a JBA software implementation. We have utilized their services as experts in JBA over the past few years while communications with JBA International were severed. Advantages Disadvantages Highly competitive rates JBA views as competitor Experienced staff

  8. Implementation References

  9. Implementation Factors for Success

  10. There will be 3 formal teams working on this implementation, as well as involvement from users in all areas of the business. System Integration Team: Meets monthly to review project status. David Wright, Jim Smith, Joe Mawhinney, Durakon Project Manager, Randy Lhowe (FYX), Coopers & Lybrand. Project Management Team: Meets weekly to review project status. Joe Mawhinney, Durakon Project Manager, Manufacturing Representative assigned to implementation, FYX Project Manager, JBA Project Manager. IS Steering Committee: Meets as required by the project management team. Joe Mawhinney, IS Business Analyst, Customer Service, Engineering, Finance, HR, Marketing, Materials, Production, Purchasing, Quality, Sales. Project Methodology

  11. Project Timing

  12. Financial Summary • Current system (AS400 and JBA software) was financed through an operating lease with a monthly payment of $22,684. The lease expires in March, 1999. • JBA System 21 software and new AS/400 could be financed as follows: • Buy out the current lease, and extend a new lease for 5 years. • Estimated, at the current prime rate, a new lease would provide monthly payments of $1,000 per month less than the existing lease. • Implementation cost of $390,000 would be expensed during 1998 and is covered in the 1998 profit plan. Potential option of including in operating lease. • With the purchase of JBA System 21, Durakon Division would maintain an Information Systems department cost level of less than 1% of sales for the next 5 years assuming current sales levels. Industry ratios indicate that companies spend between 1% - 2% of sales on information systems.

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