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SPX Board Meeting IT Discussion. Current IT Situation Key IT Issues/Direction Current Projects Strategic Initiatives Oracle Migration eCommerce. Current IT Situation Business Environment. Complex business environment Number of customers – 2,500/6,000 locations
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SPX Board MeetingIT Discussion • Current IT Situation • Key IT Issues/Direction • Current Projects • Strategic Initiatives • Oracle Migration • eCommerce
Current IT SituationBusiness Environment • Complex business environment • Number of customers – 2,500/6,000 locations • Number of products – 6,000 ABC; 30,000 K; • Number of custom (configured) products – 6,500 in 2006 • Daily Sales (average): • Orders – 1000/day • Order Lines – 7,500/day • Order $$ -- $2.0M/day • 21 (mostly small) locations • HQ – 1 • manufacturing facilities – 15 • distribution centers – 5 • Number of employees – 2,200
Current IT SituationSystem Environment • U.S. and Mexico current business applications – AS/400 based, fifteen plus years old, heavily modified, off support • Mexico plant on local G/L, payroll • EGS/Canada uses a local package for all commercial functions supported by a local consulting company. • ATX/France uses MAPICS and is self supporting. • U.S. eCommerce (web strategy/public sites) dated • All EGS (including Canada and France) Infrastructure – network, computer administration, Firewalls, E-Mail – are Emerson compliant • IT spending ~ 1% of sales
Issue No HR system, payroll system outdated No consolidated/integrated sales information Current business applications at end of life Customer expectations/needs are changing -- current applications cannot support new requirements. Canada and ATX on separate systems eCommerce/web sites inadequate Direction Oracle HRIS/Payroll/Kronos Create Sales Data Warehouse Oracle Applications Oracle Applications Oracle Applications New eCommerce Strategy Key Issues/Direction
Current Projects – Configuration Software ($230K) • Status: In process • Externally hosted, web based configurator will be available to sales force, customers, and end users get accurate information up front • Back office processes will be re-engineered for configured products • Automate pricing (interact with Vendavo) • Time line: • Lighting products – 2/07 • Control stations – 3/07 • Sola transformers – TBD Objective: improve customer service for configured products
Current Projects – Vendavo Upgrade ($400K) • Status: In process • New functionality … • New index calculation • Manage list prices • Improved workflow • New module: Price Console • Timeline: • Started 12/4/06 • Technical Conversion – 2/07 • Enhancements – 4/07 • Price Console – 6/07 Objective: Improve operational reliability, Profit Analyzer module, new functionality
Current Projects – Kronos ($185K) • Status: Approved • Implement Kronos time and attendance system in six key manufacturing locations • Preparatory step for Oracle Payroll System implementation • Timeline: • A/R approved – 1/07 • Finalize approach and begin project – 1/07 • Go Live – July 07 Objective: Replace current unreliable plant systems (seven locations)
Current Projects – Oracle HRIS/Payroll System ($183K) • Status: Approved • implement the Oracle HR and Payroll modules • EGS has no HR system today • Payroll system obsolete • Application hosted and supported by Emerson • Timeline: • Needs analysis – 3/07 • Begin project – 6/07 • Go Live – 1/08 Objective: Implement Oracle Human Resources and Payroll modules in U.S. operations
Current Projects – Sales Data Warehouse • Status: Analysis/feasibility study • Concept: • Collect detailed sales data on a daily basis from all EGS operations and consolidate into a single data base for reporting • Objectives: • Measure business on a daily basis • Sales rep performance and compensation • Communicate summarized data to field sales via extranet site • Cost target: < $500K Objective: Develop/implement a sales data repository for all EGS operations
Strategic Initiatives • Business Strategy • Operate as a single company and grow business organically and through acquisitions • IT Initiatives to Meet Business Strategy • Common systems to support global company • Common ERP solution • Robust eCommerce strategy eventually integrated with ERP EGS Critical need Order Management & Distribution
Oracle Implementation Strategy Customers “Supply chain” approach Order Management Order Entry F/G Inventory Mgt Distribution Invoicing Sales Reporting General Ledger Accounts Receivable Accounts Payable Cost Accounting Phase I Manufacturing S&OP Production Planning Capacity Planning Shop floor Control Purchasing Phase II Suppliers
Oracle Alternatives • “Oracle in a Box” • Join existing EPT environment – start with Oracle Finance and Nomad • Join EPT environment – start with Oracle Financials and Order Management • Implement a stand-alone EGS instance of Oracle
Timeline • Complete OIB Evaluation • EPT Oracle/Nomad, Oracle/Oracle, New EGS Instance Discovery – January/February 2007 • Selection of Approach – March 2007 • Oracle high level feasibility study – April 2007 • Target to present approach high level plan at next profit review. Evaluation Completed -- Option Eliminated
E-Commerce Number One Strategic Initiative
Pricing Services • IDW2 • Trade Service • Material Express • Customer Service & Tech Support • Distributors & End-Users • Catalogs & Website Speed Reliability Eliminate Redundancy Development of a Product Information Database Enables EGS to Upgrade Its Electronic Capabilities • Over 40,000 Cataloged Products • Preliminary work has begun on Sola & Appleton (domestic) products • Our competitors, through system conversions, have invested in the technology • Cooper C-H • Hubbell • T&B • Rockwell • Schneider Electric Square D • Eaton Electrical • Multi-year project requiring significant investment, software & internal resources
Data Transfer Handled Electronically Through IDEA, NEMA & the NAED are Aligned on E-Business Priorities “NEMA Data Supply Program” • Presented at July NEMA session • 20 NEMA Members agree by end of CY06 to work with 40 IDEA distributors populate IDW2 with: • Enhanced product data • Net stock price files • Benchmark product data with 2 of the 40 accounts • Data Synchronization (832, 845, IDW2, Flat File) • Product & price file updates • Customer specific contract pricing (SPA) • Rebate filing (844 & 849) • Request for rebate • Response for request for rebate
Our Competitors are Responding Requirements of the Channel Necessitate EGS Participate “The 20/40 Program” Participants Sales 2006: $180M (46%) Strategic Accounts: $160M ECM: $140M Sola: $20M
$45M $25M $30M $383M Heating Cable EGS Canada ATX Appleton & O-Z Sola Curlee Firestop Allocation of Adjustments: Credits, Rebates, POS Sales Data Warehouse Consolidates the Metrics of EGS’ Multiple Business Systems • Today’s data resides in 4 silos that are not consolidated – getting to the number is an arduous task requiring time & effort that is prone to error Consolidated Sales Data • Measure business on daily basis – morning report • Sales rep performance & compensation • Appropriate allocation of adjustments • Communication of metrics via sales reporting tool through extranet
Sales Analytics Quotation Tool Policies $ AS400 Vendavo Upgrade Provides the Tools to Implement More Sophisticated Pricing Tactics • Project Overview to migrate from V4.3 to V6.6 • Total cost estimated at: $400K • Project kick-off: December 2006 • Project completion: May 2007 • Benefits • System stability – 80% of EGS custom code is now standard in V6.6 • Transfer manual BPCS processes to automated Vendavo system • List price increases • Quotation take report analysis • Price list & quotation publishing • Process improvements • Workflow triggered on quote changes • Simplify mass edits of quotes • Alarm notification of non-conformance quotes • Enhancements • “True” price measurement metric • Improved price level indexing • Quote & price rules comparator & modification tool
Project Overview Total cost estimated at: $250K Project kick-off: July 2006 Project completion: March 2007 Provides customers with ability to select, price, & order product Lighting – Phase 1 Control Stations – Phase 1 Transformers – Phase 2 Other products – Future Reliable repeatable holistic process Select, price, order Part number – build it and load it on the system Quote it on Vendavo Plan and Manufacture it – Bill of Material Report it – Sales Reports Big Machines Product Configurator – Replaces Engineering System to Create Bill of Materials for Specials and….
Our Websites Require Updating and Consolidation to a Common Technology & Platform • Current Situation • 13 Public and 1 Extranet Site • Housed on multiple servers • Limited functionality • No common platform • Extranet site services only ECM (domestic) and Sola Businesses • Order Status • Shipment Tracking • Invoice View • Inventory Availability • Order Entry • Stock/Job Pricing • Project Registration (SHD only) • File Download • Return Request • Literature Request • Technology • Static HTML pages • Modifications require a Developer • Annual investment: • $50-75K/year • 1 IT resource • ½ Marketing
Extranet Extranet Vendavo Sales Reports CRM Big Machines Product Database Product Catalog EGS Branded Websites Enhanced ERP Branded Sites Consolidated Technology Serve as Portal to the EGS Tool Set • Multiple Branded Sites with Similar Consistent Look/Feel • Leverage Technology Investment Across Divisions & Departments • Functionality • Enhanced product selection • Attributed product data • CSP pricing & RFQ • Transactional data • Order entry & tracking • Content Management System • Site content managed by functional departments • Developer/Programmer not required
Strategic Initiatives – eCommerce Strategy Solicit Help To Conduct Needs Analysis And Develop Strategy Select Service Providers Proposal to: Plan to Proceed Integrated Systems Management Laurus Technologies One Other • Conduct Needs Analysis: • Competition • Strategy • Timeline • Technology • Budget Cost Estimates Needs Analysis $75 – $100K Implement Plan $1.5 – $3.0M (over 2+ years) Selection made by January 31 Plan completed by mid-March