How to Realign ERP Apps and Slash Costs - Page 2

Hashing Out a Plan

OConnor huddled with two senior team members, Morse and senior business analyst Paul Donnelly, to plot strategy after the meeting with Brockett. Hashing out their plan on a whiteboard, the team came up with a strategy they believed could dramatically cut costs and improve reporting capabilities. They also knew it would be controversial. Key to the strategy:

  • Freeze further deployment of the SAP system. It would essentially serve as a transaction engine going forward.
  • Halt other non-critical application maintenance and development.
  • Implement a business intelligence strategy to pull information out of existing applications and put in into a central data warehouse, as opposed to rewriting applications to make them more functional.
  • Institute a 90-day development-to-implementation cycle to generate new reporting applications.

The business case projected reducing technology spending by $3 million in the first year to $17 million, followed by a further reduction of $3 million in year two and $2 million in year three. By 2004, OConnor believed he could shrink annual technology spending to $12 million, a savings of about $17 million over the three years.

OConnor presented the plan at a Zarlink managers meeting, and braced for battle. And he got it, especially from senior managers responsible for purchasing the SAP system. "Doesnt it make more sense to leverage its capabilities rather than freeze development?" they asked.

OConnors proposal to build custom business intelligence applications to pull information out of the existing applications raised red flags. Some executives were worried about development costs and project failure.

"There was a lot of angst around that boardroom table, and most of it was directed at me," OConnor recalls. Only one person in the room fully supported the plan, but it was the voice that counted.

"I love it," Brockett said. OConnor was told to get moving.

The I.T. team met to go over the plans. There was a tremendous backlash. Critics said that freezing further development of the SAP system was a colossal waste of money and good technology. SAP, they argued, should be the primary tool to gain intelligence on the corporation, not just an engine to input orders or track receipts.

For many in the 36-person SAP development and support team, OConnors pronouncement was tantamount to getting a layoff notice. OConnor knew he would have to watch for friendly fire. If the project ran into even the slightest problem, a small army of threatened workers would be waiting to pounce.

The first application had to be rock solid and important enough to quickly win converts. The initial phase involved installing the data warehouse and selecting the business intelligence tools. The team picked Oracles 8i platform for the database and Cognos for the reporting software. SAPs Business Information Warehouse was considered, but the cost was more than $1 million for the software, hardware and development, compared to just over $100,000 for the Cognos implementation, according to OConnor. He also liked the fact that Cognos was based in Ottawa and its experts could be called upon quickly.

Next Page: Building daily reporting.