Why ERP: Benefits

Business Analysis: SWOT, Gap

OverviewOverview

Assumption

Organizational Background

Constraints in Building Case

Recommendations

Organizational BackgroundOrganizational Background

Dell Effect: award-winning customer service, reliability, support, focus on innovation, encourages business process improvement (minor to moderate changes)

19841984 Founded by Michael Dell 19961996 Listed in S & P 500 Stock Index 20022002 #1 US Computer Systems Provider 20052005 #1 America's Most Admired Company (Fortune Magazine)

Dell Direct Business Model: eliminates retailers that add unnecessary time & cost, or diminish Dell's understanding of customer expectations.

SWOT AnalysisSWOT Analysis

StrengthsStrengths OpportunitiesOpportunities

WeaknessesWeaknesses ThreatsThreats

Domination of PC Market Share

Effective biz infrastructure

Shrewd branding

8 year alliance with SAP

Online shopping not a way of life beyond US

Lack of solid dealer relationships

Lack of engineering expertise

Customer satisfaction may suffer due to lack of visible storefront

Standardize processes for global presence

Exploit economies of scale

Facilitate mergers & acquisitions

Diversify into other consumer electronic markets

Stiff competition for sales of product lines in service & storage

Unstable partnership w/HP in R & D for blade server solutions

Merger & acquisition?

Talent drain w/exec mgmt leaving

““As – Is” AnalysisAs – Is” Analysis

Current State:

Source: Dell 2005 Annual Report

““As - Is” Analysis (Cont’d)As - Is” Analysis (Cont’d)

Global and distributed nature of business

Dell turns over inventory every 4 days on average. Most of Dell's expenses are made up of selling, general and administrative costs rather than R & D.

Current State:

Biz Process Improvement InitiativeBiz Process Improvement Initiative to continuously refine its direct approach to manufacturing, selling & servicing

Price for PerformancePrice for Performance biz strategy: Dell vs. competitors like HP, IBM… like Wal-mart vs. Saks Avenue

Biz focus: customer vs. product; end customer vs. dealer

““As - Is” Analysis (Cont’d)As - Is” Analysis (Cont’d)

2/3 of sales to large corporations broadened brand & appeal

Learn from best practices of global operations: “we actually find we learn … when we compare our own operations around the world…” (Michael Dell, March 2004, Harvard Biz Sch)

““To - Be” AnalysisTo - Be” Analysis

Mission Statement: “To be the most successful computer company in the world at delivering the best customer experience in markets we serve.”

Desired State:

Facilitate growth & diversification into new markets, “expanding the role of the PC” (Michael Dell, 2004)

Enhance dealer relationships

Align and standardize business functions & processes

Continue to expand its global market presence

Expense Management: keep operating costs low

Accountability: “just one strike and you're out…” Kevin Rollins, CEO, May 2005

Why ERPWhy ERP

Help grow its share of the world market

Augment its supply chain and inventory management

Reduce manufacturing overheads thru integrated system

Boost productivity through standardization of processes (Standardization will help facilitate entry into new markets)

Enhance its credibility in B2B market

Improve its repair / re-cycle and maintenance services

Benefits

Improve quality, cut costs, reduce delivery time

AssumptionAssumption

ERP ERP

Constraints in Bldg CaseConstraints in Bldg Case

Research + Interviews with Stakeholders

Feasibility Analysis: Technical, Economic, Organizational Value and Risks

Work-plan

Real World Business Real World Business Systems Proposal would Systems Proposal would involve: involve:

StatisticsStatistics

In this case, unfortunately, we do not have access to proprietary business information that Dell guards judiciously: “… we are a we are a moving target. We're not going moving target. We're not going to tell you our most secret new to tell you our most secret new things that we did two or three things that we did two or three years ago…”years ago…” Michael Dell, 2004.

RecommendationsRecommendations

Without further ado, we recommend that Dell…

implements an ERP system.

learns from its past failure and conducts a better and more thorough feasibility analysis.

selects SAP as its choice of an ERP system.

AcknowledgementsAcknowledgements

This is a production by T1 Members from IST 600 ERP Systems: Implementation Issues, Summer 2005Virat Chirania, Yin Wah Kreher, Enit Thomas, Virat Chirania, Yin Wah Kreher, Enit Thomas, and Miao Yangand Miao Yang

For more information, please visit: http://www.dell.com or or http://www.sap.com/index.epx

Thank you and we appreciate your business!

Dell, Michael. Harvard Business School Remarks. Mar 10, 2004. http://www.dell.com/downloads/global/corporate/speechttp://www.dell.com/downloads/global/corporate/speeches/msd/2004_03_10_msd_harvard.pdfhes/msd/2004_03_10_msd_harvard.pdf

Rollins, Kevin. Arcadia University Commencement Address, May 16, 2005. http://www.dell.com/downloads/global/corporate/spehttp://www.dell.com/downloads/global/corporate/speeches/kbr/2005_04_05_fose.pdf eches/kbr/2005_04_05_fose.pdf