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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

ENTERPRISE RESOURCE PLANNING AT

ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI

John Molson School of Business – Concordia University

November 23rd, 2012

slide3

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
slide4

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
slide5

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

slide6

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
slide7

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
slide8

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

slide10

DATA FLOW WITH

Forecasts

vs.

Actual

slide12

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.

slide13

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
slide14

IMPLEMENTATION TEAM

Steering Committee

CFO, CHR, CIO

& Senior Dir.

slide15

CURRENT IT GOVERNANCE

PROJECT

X

X

X

X

X

X

X

X

X

X

slide17

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

slide18

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
slide19

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
slide20

JOURNEY : STANDARDIZING

Localizing : Realized that IT costs too much

Standardizing: Shared data and reduced IT costs

slide21

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.
slide22

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
slide23

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

slide24

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
slide25

PROJECT TIMELINE

Total IT Team includes 50 people

slide27

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
alex bottausci mark lemoine yousef madani1

THANK YOU!

ALEX BOTTAUSCI MARK LEMOINE YOUSEF MADANI

John Molson School of Business – Concordia University

November 23rd, 2012