Ikon's Attempt at ERP
Material Requirements Planning (MRP) and ERP Ikon Office Solutions is the world’s largest independent office technology company, with revenues approaching $5 billion and operations in the U.S., Canada, Mexico, the United King-dom, France, Germany, and Denmark. Ikon is pursing a growth strategy to move from what was more than 80 individually operating copier dealers to an integrated solutions company. Its goal is to provide total office technology solutions, ranging from copiers, digital printers, and docu-ment management services to systems integration, training, and other network technology ser-vices. The company has rapidly expanded its service capability with an aggressive acquisition effort that has included technology services and document management companies.
Given these objectives, the company seemed to need ERP software. A few years ago, it be-gan a pilot project in the Northern California district to assess the possibility of using SAP’s en-terprise software applications companywide. Chief Information Officer David Gadra, who joined Ikon about a month after the pilot system was turned on, however, decided not to roll it out. Ikon will take a $25 million write-off on the cost of the pilot.
“There were a number of factors that made us decide this project was more challenging than beneficial for us,” says Gadra. “When we added everything up—human factors, functionality gaps, and costs incurred—we decided our environment is ill defined for SAP.” Instead, Ikon is bringing all 13 of its regional operations onto a home-grown application system.
“I don’t blame the consultants or SAP,” he says. “We made errors on our side in estimating the amount of business change we’d have to make as part of this implementation.”
The vast majority of the $25 million loss represents consultant fees; less than 10% went to pay for the software itself. At any given point in the project, Ikon was paying 40 to 50 outside consultants $300 an hour....
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