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DRAFT V1

Opportunity analysis concerning the information systems for BG Deutschland April 2008 Version DRAFT. DRAFT V1. Table of contents. Context. LISI Automotive is an industrial division of LISI (the others are LISI Aerospace and LISI Cosmetics) which represents about 50% of the Group revenues

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DRAFT V1

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  1. Opportunity analysis concerning the information systems for BG DeutschlandApril 2008Version DRAFT DRAFT V1

  2. Table of contents

  3. Context • LISI Automotive is an industrial division of LISI (the others are LISI Aerospace and LISI Cosmetics) which represents about 50% of the Group revenues • Located in France (6 plants), Germany (7 plants), Spain (1 plant), Canada (1 plant), China (2 plants), Czech Republic (1 Plant), LISI Automotive has a workforce of about 3000 people and a revenue of 407 M€ in 2007 • In order to drive its international growth and serve its clients, LISI Automotive makes its organization change and its information system • LISI Automotive has decided to implement a new organization and created mainly four Business Groups (BG): • BG France • BG Global Tier One • BG Asia • BG Deutschland • LISI Automotive is questioning about the evolution of the information systems of BG Deutschland • This document aims at presenting an analysis and possible evolution scenarios for this BG

  4. Table of contents

  5. Approach • Many interviews have been undertaken to build this report

  6. Table of contents

  7. Zoom on BG DeutschlandSome figures • Without considering the BG inter flows, BG Deutschland weights as much as BG France and has to have a robust and efficient information system to monitor its activities (both operational and financial) • Roughly 80% of the revenues of LISI Automotive is made by BG France and BG Deutschland • Knipping, composed of numerous companies, represents about 2/3rd of BG Deutschland revenues

  8. Zoom on BG DeutschlandCurrent information systems compared to other LISI Automotive plants Simplified chart(main tools) • Beyond the functional coverage of the tools or the lacks, maintaining the numerous information systems is expensive in terms of: • Resources : IS Dept. : Delle (21 people) ; Kierspe (9 people) • Licenses costs • Running costs (maintenance, administration, improvements, release upgrades….)

  9. Zoom on BG Deutschland Context of MOVEX project • LISI Automotive has chosen MOVEX and decided to implement firstly the Sales and Distribution module ; the project last several years and LISI Automotive had to cope with some difficulties such as: • The new release V12 Java had never been implemented before, hence some bugs and a lack of support from the software provider • No German key-user except M. Pepin but not fully dedicated to the project • Delle IS resources are strongly mobilized by the roll-out, not enabling to support enough the German users after the Go-Live • The decrease of the project team size from 12 people down to 6 people due to departure… • In KKP and Mecano, the implementation of Movex (SD) is considered as a regression given that: • The users do not find the tool very friendly (too many windows) • The database is managed centrally in Delle generating a heavy procedure to update the data (client forms…) for the Germans • The lack of support after the Go-live although they listed some improvements • In some cases, the functionalities generate some more work: • EDI requires a lot of control and checks • +3,5 FTE in KKP • + 1 FTE in Mecano • The management of the clients packaging could be improved • Nevertheless, the users admit the benefits of having a unique and shared database with the same codifications, enabling to have visibility on the stocks,… within LISI Automotive Group

  10. Zoom on BG Deutschland Context of MOVEX project • Some figures about MOVEX implementation in KKP et MECANO (source: Mr. Fidon, ERP Director): • Total cost of the project: 900 k€ • Assets (during 5 years) : • MECANO: 330 k€ • KKP: 355 k€ • The next batch N°2 of MOVEX project consists of implementing the following functional domains: • Manufacturing • Purchasing and supplies • Maintenance • The conception of the Core Model will start in September 2008 (duration 1 year), with representatives from Puiseux an Melisey plants, for a total cost estimated at 2,8 M€ (without licenses) • The first Go-Live is planned in 2010 with a total cost of implementation valued at 450 k€ per plant (without licenses) and a project duration of 5 months • At the moment the project team is being set-up without German representatives

  11. Table of contents

  12. FinanceExecutive summary of interviews • LISI Automotive has chosen to have a centralized organization for Finance to monitor, follow-up its financial activities and to implement a financial strategy • For instance, Consolidation and Controlling Departments play a key role for the Group monitoring • Controlling Department in Delle has different objectives (using MOVEX and EASY OPEN): • Before the month closure (J+2), checks and controls of the accounts through EASY OPEN • Advises the plants on financial specific or complicated problems • Monitors the financial activities of the Group in the respect of financial LISI Group rules • Consolidation Department receives each months the P&L through Magnitude (interface with EASY OPEN or interface via Excel for Knipping, and understands the accounts, completes manually the forms to provide accurate (by phone & mail with Knipping, through EASY OPEN with the other plants) and definitive financial consolidation data for the whole LISI Group • The case of Knipping using PORTOLAN currently represents some difficulties for the Group Finance Department: • According to the Chartered Accountant, • The account certification is obviously possible but not easy (extra-work under Excel required) • Knipping is LISI Compliant conceptually but is working in a deteriorated way: • The management rules are mainly different: • Examples: calculation of cost prices, calculation of the pending loses… • The lack of on line direct access to the accounts does not able a good monitoring and understanding of the social accounts by the central financial Departments in Delle • The new rules that the Group wants to implement require the harmonization of the practices and a unique IS • Example: Management of client risks per risk family, …

  13. FinanceScenario 1 : implement PORTOLAN for BG Deutschland ADVANTAGES • Harmonized tool enabling the BG Deutschland Managing Director to monitor financially and accurately its activities • System fully adapted to KNIPPING and covering the requirements correctly • Kierspe has a internal skill center around PORTOLAN solution • Implementation could be fast as the core model is created, but based on the Knipping management rules • Only two plants to implement : KKP and MECANO as M&F is on going DRAWBACKS • Cost of the scenario (Source: Mr. Krüger, IS Manager Knipping) : • For KKP, Mecano and M&F: • Licenses : 0 k€ • Internal consulting travel : 12 k€ • Internal consulting effort: 0 k€ • External consulting: 0 k€ • External programming: 16,8 k€ • Hardware: 0 k€ • 70,8 k€ for the 3 plants • 70,8 k€ for M&F, Mecano and KKP • Plus additional costs to implement: P&I and MBB • BG Deutschland is fully independent financially and notably in terms of consolidation: • Requires to create de facto a specific consolidation center for this BG (need to recruit obviously additional people) (validated by the Chartered Accountant) • Delle looses the financial control and follow-up of this BG activities • Quid of the applications and the evolutions of Lisi Group rules (example: client risk) • More difficulties for the accounts certification (gaps analysis…) • This scenario freezes the organization of BG Deutschland Internal resources and hardware not valued

  14. FinanceScenario 2 : implement EASY OPEN and ABEL for BG Deutschland ADVANTAGES • Unique financial tool for LISI Automotive Group and for BG Deutschland enabling: • For BG Deutschland to monitor its activities • For LISI Group, to harmonize the financial practices, to facilitate Accounting, Consolidation and Accounts Certification and to implement new rules • Unique tool enabling some organizational changes (IS flexibility) • Facility to certify the accounts • EASY OPEN and ABEL has to be implemented only for KNIPPING as the other plants already have the solution • Delle keeps the control of the Group and is able to implement new Group financial rules: • Example : client risk per family • BG Deutschland can keep and harmonize its payroll and time tracking tools • BG Deutschland is fully LISI compliant in terms of management rules (ex: same cost price calculation) • BG Deutschland would have the same management rules and codification facilitating the commercial reporting within Business Object • Costs of the scenario (Source: Mr. Parent, LISI IS Director) : • Implementation of EASY OPEN in KNIPPING: • Implementation of a self billing invoicing system and interfaces: • Implementation of ABEL: • Interface with the electronic banking system: • 86,4 k€ for M&F, Mecano and KKP • Plus additional costs to implement: P&I and MBB DRAWBACKS • PORTOLAN has a better functional coverage and is more integrated than EASY OPEN ; so EASY OPEN has to be completed to provide the same level of efficiency and productivity: • Self billing invoicing system (solution to be found to replace PORTOLAN module and to be interfaced with EASY OPEN) which enabled to save 2 FTE in KNIPPING (95000 invoices per year) • Electronic banking system has to be interfaced • Assets can be covered by the Group tool ABEL but requires to be interfaced with EASY OPEN • The project requires the complete change of financial management rules of KNIPPING to become LISI Compliant WAITING FIGURES FROM M. PARENT

  15. FinanceAlcom Consulting recommendations • Even if this scenario 2 is more expensive, this scenario which consists of implementing EASY OPEN and ABEL for BG Deutschland (ie only in KNIPPING) seems logical and preferable: • This scenario is compliant with Delle strategy which consists of having a centralized financial Group to monitor and follow-up the BG performance • One unique financial tool for the Group • On-line and direct access to the plants accounts to control, understand and check • Harmonized financial management rules within the group (examples: same cost prices calculation, same stocks valorization…) • Accounts certification becomes easier • Consolidation process becomes easier and secured • Commercial reporting becomes more accurate (in BO) • Capacity of deploying new rules for the Group: client risks, credit insurance…. • BG Deutschland has a unique financial tool to monitor its activities LISI AUTOMOTIVE GROUP Other BG BG Deutschland KIS KPI, intranet Electronic Banking System Deutsche Bank MBB Time tracking P & I Payroll To be found or use of PORTOLA module if possible Self Billing Invoicing Invoicing (no paper) EASY OPEN Accounting Controlling ABEL Assets MAGNITUDE Consolidation BUSINESS OBJECT Commercial reporting

  16. Table of contents

  17. LogisticsExecutive summary of interviews • Knipping has an efficient, robust system XXPS for sales distribution and manufacturing covering perfectly the German market: • EDI runs perfectly, clients demands are taken into account directly by the software supplier (INFOR) • System is fully integrated with the financial tools • Mecano and KPP use mainly for manufacturing an obsolete system GEOPSYS (not maintained any more) and are not working with the best industrial practices, notably covering the concepts of MRP2 • Stakes are important for the implementation of a new system: • Lower level of the stocks of raw materials • Better negotiations with the suppliers and better follow-up of supplies • Better production monitoring and resources utilization maximization • Productivity of teams (current system not integrated with financial tools) • … • From a business point of view, the implementation of an efficient manufacturing solution can be considered as a priority for BG Deutschland owing to the stakes identified: • KKP: Revenues 2007: 27,7 M€ and 220 people • Mecano: Revenues 2007: 26,3 M€ and 112 people Source BG Deutschland

  18. LogisticsScenario 1 : implement XPPS for BG Deutschland ADVANTAGES • Cheap and fast scenario to implement as the core model is created • Harmonized tool enabling the BG Deutschland Managing Director to monitor operationally and accurately its activities • System fully adapted to KNIPPING and covering the requirements correctly, especially the German market and the customer requirements • XPPS is fully adapted to the automobile industry in Germany • Pro-active software provider • Kierspe has an internal skill center around XPPS solution • Only two plants to implement : KKP and MECANO as M&F is on going • This scenario could be a good temporary scenario before the implementation of Movex, and allows to stabilize Movex N°2 before the roll-out in Germany DRAWBACKS • Scenario requires to remove MOVEX (Sales and Distribution) in Mecano and KKP • Loss of: 685 k€ corresponding to the assets • Human destabilization due to the efforts for the project and for the users (not good in terms of change management) • Functional regression for Delle: codification, online views on stocks, Delle Accounting Dept. uses the data… • The Core model creating for KNIPPING has to be adapted to Mecano and KKP as it is not the same process technologies for manufacturing • Permanence of the solution XPPS has to be checked in case the software provider would decide to stop the solution • Very high risk to keep XPPS once the solution will be implemented which is contrary to the Group strategy of having a unique IS • This scenario freezes the BG Deutschland organization • Cost of the scenario (Source: Mr. Krüger, IS Manager Knipping) : • For KKP, Mecano and M&F: • Licenses : 306 k€ • Internal consulting, travel: 12 k€ • Internal consulting effort: 42 k€ • External consulting: 0 k€ • External programming: 5 k€ • Hardware: 0 k€ • 365 k€ for the 3 plants • 365 k€ for M&F, Mecano and KKP • Interface between XPPS-EASY OPEN : 22 k€ Costs under estimated (prototyping, internal resources)

  19. LogisticsScenario 2 : continue the roll-out of MOVEX firstly in KKP & Mecano (transitional scenario) ADVANTAGES • This scenario is in line with the Group strategy for the implementation of a unique ERP, flexible for any organization • First in Mecano and KKP • Then in Knipping • This scenario goes directly to the target (no temporary step) • This scenario keeps the investments done in terms of: • IS : Movex N°1 implementation : 900 k€ spent • Human resources motivation who worked on the Movex project • French and German users that have been trained (change management is very important) • The period of the Core Model development allows to mobilize the German IS teams on an other project such as Finance if decided Note: MOVEX is not implemented in M&F as an XPPS project is on going and this is not a strategic plant (will be sold in the future) • Costs of the scenario (Source: Mr. Parent, LISI IS Director) : • Total cost of the Core Model: 2,8 M€ • Total cost per plant: 450 k€ (without licenses) • Estimation of licenses costs: • 40 users/plant for Movex N°2 and 2k€/license • 80 k€ per plant • 1,6 M€ for Mecano and KKP (without considering the costs of the Core model development) DRAWBACKS • This scenario requires the development of the MOVEX N°2 core model, which does not allow to BG Deutschland to have a quick manufacturing information system for Mecano and KPP • Nothing before 2010 • Moving to Movex requires to implement KNIPPING after Mecano and KKP in order to have an harmonized system for BG Deutschland • BG Deutschland Managing Director will have to cope with different systems for several years

  20. LogisticsScenario 3 : target for BG Deutschland ADVANTAGES • This scenario is in line with the Group strategy for the implementation of a unique ERP, flexible for any organization • Unique IS for BG Deutschland enabling operational monitoring • Same management rules and processes Note: for M&F, in case the plant is not sold • Costs of the scenario (Source: Mr. Parent, LISI IS Director) : • Total cost of the Core Model: 2,8 M€ • Total cost per plant: 450 k€ (without licenses) • Estimation of licenses costs: • 40 users/plant for Movex N°2 and 2k€/license • 80 k€ per plant • 1,6 M€ for Mecano and KKP (without considering the costs of the Core model development) DRAWBACKS • This scenario could be implemented not before 2011/2012, according to the resources and the roll-out strategy for Knipping plants WAITING FIGURES FROM M. PARENT

  21. BG Deutschland Logistics domains Target(2010) Sales & Distribution ManufacturingPurchasing Maintenance XPPS MP2 Knipping MOVEX MOVEX Mecano MOVEX MOVEX KKP XPPS(on-going) MP2 ? M & F LogisticsALCOM Consulting recommendations • Scenario 2 which consists of continuing implementing MOVEX for KPP and Mecano seems preferable for the following main reasons: • Losses and costs for KKP and Mecano: • Cost of XPPS estimated roughly at 250 k€ seems under estimated: • Mecano and KPP do not manufacture the same products as Knipping (different process), hence some new prototyping • Internal costs (Kierspe Team) have not been valued (34% of Movex costs were internal costs) • Approximately the total cost of XPPS implementation is more around 500 k€ • To be compared: costs plus losses of each scenario • Scenario XPPS: 1,2 M€ • Scenario MOVEX: 1,6 M€ (without Core Model cost) • This scenario keeps the investments in terms of: • Movex N°1 implementation : 900 k€ spent • Human resources motivation who worked on the project • French and German users that have been trained (change management is very important) • This scenario is in line with the Group strategy for the implementation of a unique ERP, flexible for any organization. This scenario goes directly to the target (no temporary step) • Removing Movex would be a functional regression for LISI Group • The implementation of XPPS for BG Deutschland would be functionally better and quicker but some risks are identified: • Permanence of XPPS by INFOR ? • Lack of flexibility if the organization changes • Strong difficulties or impossibility to replace the tool once implemented • Owing to M&F is not a strategic plant, which could be sold in the future, continuing implementing XPPS at low cost seems reasonable

  22. Table of contents

  23. MOVEX MOVEX KPP MOVEX MOVEX Mecano BG Deutschland: target applicative architecture for the two coming yearsALCOM Consulting recommendations BG Deutschland in 2010 Finance Logistics KIS KPI, intranet Electronic Banking System Deutsche Bank Sales & Distribution ManufacturingPurchasing Maintenance MBB Time tracking P & I Payroll Targeted Go-Live XPPS MP2 Knipping Self Billing Invoicing Invoicing (no paper) Q2 2009 INTERFACES XPPS(on-going) MP2 ? M & F Q1 2010 EASY OPEN Accounting Controlling Q3 2010 ABEL Assets Existing MAGNITUDE Consolidation Interface to be created BUSINESS OBJECT Commercial reporting

  24. BG Deutschland: target applicative architectureALCOM Consulting recommendations BG Deutschland in 2011/2012 Finance Logistics KIS KPI, intranet Electronic Banking System Deutsche Bank Sales & Distribution ManufacturingPurchasing Maintenance MBB Time tracking P & I Payroll MOVEX Knipping Self Billing Invoicing Invoicing (no paper) INTERFACES KPP EASY OPEN Accounting Controlling Mecano ABEL Assets MAGNITUDE Consolidation M & F BUSINESS OBJECT Commercial reporting

  25. Next stepsALCOM Consulting recommendations • Urgently, set-up a Movex Support Centre in Delle to fine tune the solution implemented and to support the German users • The users have listed some improvements with priorities • Continue the project in M&F consisting of implementing XPPS but keep Easy Open and ABEL (non strategic plant) • Integrate some German representatives in the Movex N°2 Core model conception and launch the project as planned in September: • At least 2 German key-users fully dedicated to the project • 1 FTE for manufacturing • 0,5 FTE for maintenance • 0,5 FTE for purchasing • Movex project must be both a French and German project (mandatory) • In the meantime, start the implementation of EASY OPEN and ABEL in KNIPPING (8-12 months project to be refined according to the resources available and the strategy of implementation) • Take the benefits of PORTOLAN tool replacement to work with the French teams and the Chartered Accountant to harmonize the financial management rules and the codifications to become completely “LISI Compliant” according to Mr. Weisse (LISI Automotive Financial Director) expectations • Work on the main following domains to ensure that there won’t be any loss of productivity for Kierspe: • Electronic banking system interfaced with EASY OPEN • Self Billing Invoicing system implementation and interfaced with EASY OPEN • Interface between XPPS and EASY OPEN • ALCOM Consulting estimation : 200 man.days at 400 €/day (if external) = 80 k€

  26. Go-Live Go-Live Go-Live Go-Live Go-Live Go-Live Next stepsALCOM Consulting recommendations Planning of IS projects for BG Deutschland 2008 2009 2010 2011 2012 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Decision for M&F XPPS, EASY OPEN & ABEL for M&F Movex N°1 & 2 for M&F EASY OPEN & ABEL for Knipping Movex N°2 Core Model development Movex N°2 KPP Project duration is strongly linked to the IS project resources involved (plant one after another, or in parallel) Project duration is strongly linked to the IS project resources involved (plant one after another or in parallel) Movex N°2 Mecano Movex N°1 & 2 for Knipping plants

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