Evaluation of an Enterprise Application
: ERP Systems of Volkswagen and Nestle
Enterprise resource planning integrates internal and external management information across an entire organization, coupling finance/accounting, manufacturing, sales and service. ERP systems automate this activity with an integrated software application, facilitating the flow of information between all business functions inside the boundaries of the organization and managing the connection to outside stakeholders. Although ERP systems offer a bird’s eye view in the working of the company and allow users to cross-reference business functions, implementing an enterprise resource system (ERP) project in the estimated time, for the estimated cost, and with satisfying results is a rare occurrence. Most organizations do not understand the costs associated with ERP implementation when they first embark on the project. While the benefits are usually well understood, the costs do not surface until well into the implementation. When everything goes smoothly with ERP resource planning projects, the ratio of savings to dollars invested typically increases over time. As the streamlining efforts start and stall and start again, however, resulting in disastrous detours and cost overruns, savings if they come at all, occur many millions of dollars and many months later than planned. Too many executives see ERP solely as a technology project, believing that if they buy a new software system, inefficiencies will magically disappear. Unfortunately, for companies such as Volkswagen and Nestle, a hiccup in ERP implementation in the pursuit to gain a competitive advantage over their rivals can be disastrous in the short and long term.
1. Case Study 1: Volkswagen
The Volkswagen Group is Europe’s largest car maker and one of the world’s leading manufacturers of automobiles. In 2009, according to data published by all three companies, Volkswagen was the third biggest motor vehicle manufacturer, with 6.29 million units delivered to customers, after Toyota Group with 7.23 million units and General Motors, with 6.50 million units. Although the company offers a variety of mobility-related services in addition to being a leading carmaker, combining all of these subsidiaries and their individual portfolios, brands, missions, and visions under one umbrella is a big challenge for Volkswagen. Through ERP implementation, Volkswagen reasoned that contributions can be made by all the brands and companies of the VW Group without compromising the individual identity of these brands. This would result in added value to the common stream of interest and help the group achieve significant milestones moving forward.Volkswagen Accessories is a VW subsidiary that provides more than 8,000 accessory parts for virtually every model in its parent company’s range of automobiles. These include communication components, car maintenance and fashion products, specially styled rim-and-tire combinations, and other optical enhancements. Until recently, Volkswagen Accessories’ 200 employees analyzed data from the company’s individual SAP ERP modules by hand before entering them into Excel files. Due to the considerable demands of the Volkswagen group’s internal reporting, this involved a tremendous amount of effort and tied up significant resources. As Project Manager Björn Lange states: “Besides taking far too much time, this method simply couldn’t meet our current requirements anymore. Shorter development cycles are constantly demanding new reports that employees need available on an ad hoc basis whenever possible.” For this reason, Volkswagen Accessories decided to implement a modern business intelligence solution. “Our goal was not only to establish a uniform basis of data, but especially to ensure our ability to distribute information in a flexible, largely automated way,” Lange explains. From a macroeconomic perspective, the...