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ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI

ENTERPRISE RESOURCE PLANNING AT . ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI. John Molson School of Business – C oncordia University November 23 rd , 2012. AGENDA. COMPANY BACKGROUND ENVIRONMENT ANALYIS ERP & THE ORACLE DECISION CHANGES TO IT GOVERNANCE

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ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI

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  1. ENTERPRISE RESOURCE PLANNING AT ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI John Molson School of Business – Concordia University November 23rd, 2012

  2. AGENDA • COMPANY BACKGROUND • ENVIRONMENT ANALYIS • ERP & THE ORACLE DECISION • CHANGES TO IT GOVERNANCE • CHANGES IN OPERATING MODEL MECHANISIM • THE IT SAVVY JOURNEY • EVALUATION OF ALTERNATIVES • RECOMMENDATION • CONCLUSION

  3. COMPANY BACKGROUND • Public company • One of world’s leading engineering & construction firms • Founded in 1911 • Headquartered in Montreal • 28,000 employees • Offices in over 35 countries • On-going projects in over 100 countries: • Buildings, bridges, roads, mass transit, mining, power plants, etc. • Growth has come from M&A’s • Total Revenues of $7.2B in 2011 • Net income of $378M

  4. ENVIRONMENT ANALYSIS Strengths Recognizable brand and great reputation Global presence Historically solid financial results Resources to tackle big projects Specialist in enviro-construction Weaknesses Excel is the default tool for reporting Low data visibility and/or accessibility M&As created internal lack of control Decentralized: Divisions make own decisions & compete between one another Highly complex IT environment from M&As Opportunities Large markets remains to be exploited Few competitors operate in certain potentially unstable countries, such as Africa Growing market in sustainable construction Threats Regulatory & statutory reporting changes More sophisticated money laundering & fraud Other big competitors Operations in politically unstable areas

  5. WHY AN ERP SYSTEM? Improving IT systems can help SNCLavalin combat weaknesses & threats while taking advantage of strengths & opportunities • Drastically improve on Excel’s limitations • Improved internal financial controls • Reduce money laundering and fraud risk • Improved centralization and control of data and information • Decentralized business units can share more info more efficiently • More flexibility vis-à-vis regulatory & statutory changes • Supporting one system will be less costly and easier to maintain • One system would unite the divisions and encourage common vision & behaviour between them

  6. THE DECISION • SNCLavalin studied many systems Oracle or SAP • Oracle & SAP are robust enough to handle its international operations • Oracle is a better fit as it allows modifications • Oracle has many products & services - hardware, software and consulting • Oracle offers several ERP applications: E-Business Suite • Oracle’s E-Business Suite has 50 modules • SNCLavalin chose 16 modules with intent to implement more in future

  7. HISTORY OF THE PROJECT Go Live - May 2010 3 Canadian Divisions Encountered problems 2 Canadian Divisions Per Quarter Oracle Chosen BOD endorses ERP 2010 2008-2009 2007 2011 2011-2012 Team Studied Various ERP Systems Implementation Began 2ndGo Live - April 2011 1 Canadian Division

  8. E-BUSINESS SUITE AT

  9. DATA FLOW WITH Forecasts vs. Actual

  10. INITIAL IT GOVERNANCE BEFORE THE PROJECT X X X X X

  11. INITIAL CHALLENGES OF THE PROJECT Lack of clear directives and support from senior management Lack of training for business units Certain key functionalities missing- i.e. B.I.

  12. CHANGES MADE TO IT GOVERNANCE • 2010 KPMG recommends restructuring the Oracle implementation process • V-P ERP position is created and is responsible for the implementation process • Oracle Steering Committee is created • CFO, CIO, CHR and senior leaders report to BOD and CEO • Other corporate divisions (i.e. HR & Finance) now more involved; they meet each month to share feedback and suggestions

  13. IMPLEMENTATION TEAM Steering Committee CFO, CHR, CIO & Senior Dir.

  14. CURRENT IT GOVERNANCE PROJECT X X X X X X X X X X

  15. vs. TOP 3 IT GOVERNANCE MODELS

  16. CURRENT CHALLENGES OF THE PROJECT Lack of clear directives and support from senior management Steering Committee Created + V-P ERP Lack of training for business units Comprehensive training Certain key functionalities missing- i.e. B.I. Customization of features but B.I. & data mining still are issues

  17. CURRENT OPERATING MODEL MECHANISIMS: DIVERSIFICATION • Standardization • LOW • Different software systems at local sites • Decision making is localized at each site • This is due to M&A • Integration • LOW • Many international sites – data is not being shared

  18. FUTURE OPERATING MODEL MECHANISIMS: UNIFICATION • Standardization • HIGH • One standard software at all sites • Strong centralized governance for IT • Integration • HIGH • Share data across international sites • Via BI module which will make data mining easy

  19. JOURNEY : STANDARDIZING Localizing : Realized that IT costs too much Standardizing: Shared data and reduced IT costs

  20. TWO ALTERNATIVES Eventually both need to be done … but which first? 1 – International Rollout 2 – Enhance Current Solution Goal – 1 global system Replace multitude of systems 35 countries • Software Oracle upgrade recommended every 2 years • New modules to consider – e.g B.I.

  21. CHALLENGES & BENEFITS 1 - International Rollout 2 – Enhance Current Solution • Language • Culture • Training • Legal/fiscal/tax consideration • Data conversion • Senior management not convinced enhancements are necessary • Integrating new modules is highly complex and costly • Higher user acceptance • Improved functionality • Better data mining capabilities • Less bugs • Service level agreements with Oracle up-to-date • One system worldwide • Improved internal controls • Data visibility & mining • Simplified financial reporting

  22. RISK ASSESSMENT 1 - International rollout 2 – Enhance Current Solution • User acceptance low if key features are missing • Team inexperienced with international rollout • Data conversion issue: • Canada (80%) = one system (JCS) • World = various systems (i.e. Accpac, Peachtree) • Delays global rollout – another year or two with limited control over foreign offices Less than perfect functionality Lack of data mining capabilities More bugs Service level agreements with Oracle not up-to-date Limited control of foreign offices Loss of financial control – i.e. $56m missing! SNCLavalin committed to investors to upgrade

  23. RECOMMENDATION Alternative 2  Enhance Current Solution • Enhance current system • Higher user acceptance • Improved functionality • Better data mining capabilities • Less bugs • Up-to-date service level agreements with Oracle • Implement new module  B.I. will increase data mining flexibility • Easier to manage one site for up grades instead of 35 countries • Rollout mayhave risks associated with it • Enhancement is a guarantee to have risks

  24. PROJECT TIMELINE Total IT Team includes 50 people

  25. PROJECT BUDGET

  26. CONCLUSION • SNCLavalinhas come a long way • It still has a long way to go • Improvements to Governance are complete • We recommend enhancing certain solutions for reasons mentioned earlier

  27. THANK YOU! ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI John Molson School of Business – Concordia University November 23rd, 2012

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