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HS2041: What are the key Goals IGT wanted to achieve using an Enterprise Systems - Case Study Assessment Answers

December 21, 2017
Author : Julia Miles

Solution Code: 1ACGH

Question:

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Assignment Description: In this assignment you need to read a case study on Enterprise Resource Planning (ERP) implementation and answer three questions. This assignment will let you define and describe the evaluation of Enterprise Resource Planning (ERP) systems. It will also let you examine and judge the role of EPR and their adoption process in organization. Most importantly, you will learn to analyse and develop arguments organisation’s ERP selection, planning, implementation and ongoing support phases. Student will also argue about the roles of key stakeholders in an organisation’s ERP selection, planning, implementation, adoption and ongoing support phases.

Assignment requirements:

You need to read the case study on ‘IGT ERP Implementation’ and answer the following questions:

  • What are the key goals IGT wanted to achieve using an ERP system?
  • Discuss the pros and cons to customising the system.
  • How should IGT handle change management during ERP implementation?

Answers to the three questions can be presented in a Question Answer style. A formal business report structure is not required.

At A Glance: IGT

Headquarters: 9295 Prototype Drive, Reno, NV 89521 Phone: (775) 448-7777 URL: www.igt.com Business: Designs and manufactures slot and gaming machines for casinos and government lotteries. Technology Chief: Rayleen Cudworth, vice president of information systems Financials in 2005: Revenue of $2.4 billion; net income of $437 million

In 2002, International Game Technology (IGT), a leading manufacturer of slot machines and lottery machines, depended on several different systems to manage its sales, customer orders, manufacturing and accounting. When an executive, sales manager or production staffer wanted to learn the status of a particular order, there was no single system he or she could go to—each functional area had its own system that contained a different piece of information about that order.

This dependency on a host of applications by different functional groups was common among large manufacturers until the mid- to late 1990s. Keeping all of these systems connected and talking to each other was an onerous, if not Sisyphean task for those assigned to information systems.

By 2000, many companies had begun scrapping these older systems in favour of a single core, or "backbone," information management system. Evolving out of what had once been called material requirements planning (MRP), this new software package was dubbed enterprise resource planning (ERP). It consisted of a set of core business applications, including finance, manufacturing, distribution and human resources, all linked together for the first time.

Although it was a little late to the ERP party, IGT was in many ways typical of companies that adopted the enterprise technology. For one thing, the company desperately needed a more cohesive information technology infrastructure that would allow for growth. And, similar to many manufacturers, IGT had lots of business information contained in applications that lacked smooth integration.

IGT’s accounting department wanted one system to do all the accounting, but IGT’s management was concerned that if accounting started buying its own software, all other departments would follow. It would be more sensible to acquire a full ERP system.

Emphasizing that the project was undertaken for business reasons and not simply to upgrade the technology, the company assigned a project team that established a set of desired business functionality. The team then looked at competing ERP packages from JD Edwards, Oracle and SAP.

At the end of the day, SAP won out, being the best fit with the least amount of business gap. The finance and accounting system of SAP covered a gap we had. The financial- consolidations and foreign currency modules were much better than the other ERP systems."

In 2003, following a 2_-year implementation effort, IGT converted to a SAP enterprise resource planning system. By using SAP R/3 version 4.6, IGT was able to integrate its three major business functions—finance, manufacturing and product development— through this common information platform. The company typifies many large manufacturing companies that depend on an ERP system such as SAP or Oracle for front-office applications that connect with existing plant-based control systems.

As has been the case at most of the thousands of manufacturers that have installed ERP systems over the last 15 years, IGT found it necessary to change some of its business processes to accommodate the new technology.

Even though SAP had a flexible product configuration engine that allowed manufacturers to build to order, IGT had to revamp its order process to accommodate the way the software works. "The greatest change in the order process was not releasing a sales order to the production schedule until two weeks before the build," commented by IGT. Also, more emphasis was placed on the quoting process to get a better-quality sales order up front, she says.

There were benefits on the plant floor as well. Operations employees now can get manufacturing process sheets online at their workstations. At each step, the ERP system helps foster process gains through the discipline it requires. Employees who might before have been able to cut a corner on a particular process now get stopped by the system. The discipline enforced by the software in effect forces workers to do things the right way. The end result is fewer errors and higher yields due to more efficient processes. As an example, the company was able to establish a quick-turnaround process enabling rush orders to be handled in four weeks instead of seven to eight.

IGT manufactures 140,000 machines annually at its Reno site alone. The company also operates factories in Las Vegas and Manchester, England. The SAP system is used to connect the company's operations worldwide, integrating customer orders, document management and new product development.

On the factory floor, IGT continued to use its homegrown factory control system, integrating it into SAP. The company already had experience with integrating the factory control system with its old MRP system, Cudworth says, "and we knew the data it required. This interface wasn't any more challenging than any other."

The factory control system coordinates the delivery of materials to the production line at the proper location and time. Meshing it with ERP allows IGT customer order staff to find out exactly which machines were built and at which plant locations. IGT also uses SAP's project management system to monitor costs and design changes in developing and launching new products, such as its EZ Pay "cashless" feature—with winners paid off in redeemable or reusable tickets—introduced on many gaming machines starting in 2003.

IGT management commented: "SAP has a great configuration product, but getting all that information into the system was not an easy task. SAP is customizable, but we didn't have all the unique aspects of our products documented. And you can't test every single configuration. That was the biggest challenge." The company overcame this challenge by assembling a team of people from the order group and engineering department, and assigning them the task of customizing the system to accommodate the company's complex bill of materials for its various product lines.

Similar to most large manufacturers, IGT has installed other technologies in its manufacturing and shipping areas to boost efficiency and throughput. For instance, the company revamped its warehouse management process so that parts are delivered to the assembly line faster, with employees using handheld radio frequency readers to pick and deliver various parts and subassemblies to the production lineWhile IGT struggled a bit to adapt SAP's ERP system, the company has seen significant improvements as a result of the shift to the newer enterprise-wide technology.

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Solution:

  1. There are a number of goals that IGT wanted to achieve using an ERP system. The key goals IGT wanted to achieve using an ERP system include managing its manufacturing, customer order, sales and accounting. ERP helps a company in managing all its activities in an integrated manner without much hassle and implementation of ERP system in IGT will also serve the same (Dunning & Lundan, 2008). At present the company is dependent upon different systems to manage all these functions. The major goal of the company was to reduce the dependency on host of applications. The company also needed an infrastructure that is more cohesive and that allows the growth of the company. The company wanted that ERP shall enable integration among all the major service areas and due to that it becomes easy and smooth to manage all the functions. ERP enables a company to manage its data and IGT also has enormous data that it wants to manage with the help of an ERP system (Ahmed & Cuenca, 2013).Thus its business information that lacks smooth integration can be managed with efficiently by EPR and this is also a major goal upon which IGT is focussing.
  2. Customizing in ERP systems is a process in which a company asks the vendor to add some specific features while remove the ones that are not in the use of the company. It enables a system that is flexible and as per the demands o the company. Customizing not always brings the positive results and this is why there is a dark side of it as well. Customising helps the system to work as per the requirement and due to that there is no need of revamping the existing process (Bernoider, Wong, & Lai, 2014). This further enables the company not to change its process and thus huge efforts are saved. But at the same time customising may lead to non-optimized functioning of the ERP system in the organisation. This is due to the fact that the quality of services gets affected because of customising. This will further hamper the proper functioning of the system. The major function of an ERP system is to make everything easier to perform but customising it may sometimes increase the complexity of the system and thus it becomes fatal for both the vendor as well as the organisation.
  3. Change management is an integral process in an organisation and it can never be ignored. At the time of implementation of a new system like ERP it is very obvious that a few things in the organisation will change. The most significant point is that these changes shall not hamper the organisational process and this is why managing them with utmost care is very vital. IGT shall first of all make all the departments and its staff aware about the new process that the organisation will use. There will be several changes such as revamping warehouse management process, changes in delivery of materials in the production lines, integrating customer’s orders, new product development, etc. (Caldwell, 2008). These changes can be handled creatively by educating the employees about new upcoming changes in the company. Along with that the company shall also provide training to all the staff to deal with the changes. Managing change can also become easy for IGT if they make it easier for everyone to adapt to the change and this is only possible if the company provides proper training to adapt to the new changes.

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