Case 7 Case Study Questions

What problems was Border States Industries encountering as it expanded? What people, organization, and technology factors were responsible for these problems? As Border States Industries expanded, they found that their legacy Rigel system had become outdated since it was designed exclusively for electrical wholesalers and could not support the new line of businesses they had expanded into. This was a result of growing sales, new direction from upper management, and the changing times. How easy was it to develop a solution using SAP ERP software? Explain your answer. The solution developed by SAP ERP software for BSE was not easy as they did not want to make a drastic change for the entire company. In doing so, customization and data cleansing was the bulk of the extra charges since they had not expected so much work. List and describe the benefits from the SAP software. Once the SAP ERP software had been implanted, BSE was able to take advantage of all the different lines of business and integration that they were provided such as e-commerce, online credit card processing and special pricing agreements. These new changes also helped to structure the company in such a way that more employees could be used for sales and less for accounting. Warehouse costs when down by 1 percent, deliver costs down by .5 percent, and total overhead declined by 1.5 percent. All-in-all, the ROI came into about 3.3 million dollars per year between 1998 and 2006. How much did the new system solution transform the business? Explain your answer. The new system helped BSE tremendously. With the new system in place, BSE processes over 360,000 SPA claims each year. It also helped BSE to reduce rebate fulfillment time to 72 hours and transaction processing time by 63 percent. Before the implementation of the new system it took 15 to 30 days for BSE to receive rebates from vendors. Since BSE first deployed SAP software in 1998, sales have increased 300 percent, profits have climbed more than 500 percent, 60 percent of accounts payable transactions take place electronically using EDI, and as stated before SPA processing has been reduced by 63 percent. The company turns over its inventory more than four times per year. Instead of waiting 15 to 20 days for monthly financial statements, monthly and year-to date financial results are available within a day after closing the books. (Essentials of MIS, Ninth Ed, p.300) How successful was this solution for BSE? Identify and describe the metrics used to measure the success of the solution. The solution for BSE was extremely successful. In 2006, Gartner Group Consultants performed an independent evaluation of BSEs ERP implementation. The consultant group interviewed top executives

and analyzed BSE data on the impact of the ERP system on BSEs process cost, using costs as a percentage of sales as its final metric for assessing the financial impact of SAP software. Gartners analysis validated that the SAP software implementation cost from 1998 to 2001 did indeed total $9 million and the investment was recouped by savings from the new ERP system within 2.5 years. Between 1998 and 2006 BSE produced total savings of $30 million, approximately one-third of BSEs cumulative earnings.

If you had been in charge of SAPs ERP implementations, what would you have done differently? Deciding to customize the system during the first implementation was not the best choice since the ERP system was not designed for this type of extensive customization. Implementing these changes required so much customization of the SAP software that BSE had to delay the launch date for the new ERP system. By that time customization and tweaking raised total implementation costs to $9 million. The initial budget was $6 million. Also, converting and cleansing data from BSEs legacy system took far longer than management had anticipated. The need for to have the system look and feel like the old may have not been the best move, although the corrected this in the second implementation. From the beginning, I would have adopted a new system which would have handled all the needs of the company and retrain the employees to master and embraced the new system rather stick with the old and extend it through customization.