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Tosco Corporation is one of the largest independent refiners of petroleum products in United States. It was founded in 1955. After that it became one of the U.S major and successful oil Refiner Company with its effective workforce and well-organized technologies. Donna Hogan is the chief executive officer of Tosco Corporation who plays one of the major and significant parts in the case story.

As like other organizations, Tosco had its own ERP system to maintain its operation. And that was COMETS. Tosco had tried their level best to make the COMETS programme successful. After a lots of ups and down and enormous troubles, Tosco made it possible to implement the COMETS project and Donna the Chief executive of Tosco played a major role in implementing the COMETS programme.

Regarding the development of the COMETS system Tosco formed teams comprised of Operational & accounting users, system analysts & programmers and also consultants from Aspen technology. (Aspen Technology is a consultancy firm which helped Tosco in successfully building it’s ERR system). Most of the people hired for developing this programme were assigned part time, so that people when available were pulled off their jobs to some needed location. Every month budget was tracked within the COMETS project.

The COMETS system enabled Tosco to maintain its resources quite successfully and gain a competitive market share in the U.S refining industry. And through the help of this COMETS programme Tosco was able to maintain its large business operation which was spreading every year by several acquisitions.

Tosco is currently using COMETS as its ERP (Enterprise resource planning) system. It is developed by a number of Tosco engineers and also with the help of Aspen Consulting.

Basically, in the modern world developing an ERP programme has become a crying need. It is necessary to maintain the resources within an organization successfully and effectively. That is why ERP system has become the biggest need for the organization’s to

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survive. It is a strategic tool helping an organization to successfully gain and edge over their competitors by integrating its key business operations. In the competitive environment, it helps the organization to plan and optimize the resources available within the organization.

ERP’s importance has crossed over the resource planning to add more functions within the organization. In terms of delivering the orders to the customers just in time and keeping them well informed about their orders, ERP plays a successful role. ERP has the effect of making the organization more time sensitive. Through the daily reports of the resources and orders from the clients/customers the manager can pre-plan their activities long before. This helps them to make an optimization, about how the company is going to react with the future possible changes, or how timely the organization can react with their future customers.

ERP is also beneficial to make future projections about sales during a particular period of time of a certain product. Through the proper utilization of the particular ERP system management could able to forecast which product to increase or which one to decrease. It is also helpful for getting a higher number of ROI (Return on Investment).

These are some basic reasons Tosco felt the need of having their own ERP system to manage their resources well. They developed their own resource planning system with the help of a consultancy firm name Aspen consultancy. The name of their ERP system was COMETS.

Because of all these necessary needs Tosco was in a pressure to implement the COMETS system as early as possible. So, Donna the chief executive of Tosco started her driving on towards implementing the project.

The major problems that were identified by the Tosco throughout the process of implementation were:

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Cost Overrun:

Soon after starting the implementation process Donna had to face lot of problems. At he first phase she had to face problem regarding the cost issue. The cost of implementing the process was going out of the bound. This was because of the underestimating the difficulty of the project design by the employees. After the close observation, Donna found that the cost was getting high because of a major problem. One of the particular processes among the implementation process was taking much longer time than expected. This was raising the cost to a peak.

To make a solution against this difficulty Donna went back to Aspen consultancy for several times. She wanted to make Aspen people realize that how much vulnerable the situation can be if they don’t put a stop in this cost overrun. She even argued with them to absorb the additional cost and make the Comets system a success. To implement the COMETS system a five person management team was established. Among them 3 of them were from Tosco corporation and two of them were from Aspen Consultant. She discussed about the matter with the management team for several times. But the ultimate result was not optimistic for Tosco,

1. Cost overrun.

2. Problems with the commerciial department.

3. More pressures to

inaugurate the COMET.

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It was stated that if Tosco added some more requirements into the project they will have to pay for the extension.

After a long discussion, at last Donna was able to make the deal quite comfortable for Tosco. Though the cost went up from $10.5 million dollar to $40 million.

As, Donna was liable to submit a report regarding the viability of the system, she made her monthly meeting with the COMETS steering committee, consisting of heads of different departments, operation, marketing, service, manufacturing. After the meetings everyone realized that the project was not that much comfortable what they expected. The implementation of this process will require much more complications than planning it.

Problems with the commercial department:

The next problem Donna faced regarding the implementation of COMETS system was with the commercial department. The traders in the commercial department were the most potential substance of the COMETS system, because they input the necessary information in the COMETS system, which will be used by the other people using the COMETS system. There was a fear that if the traders refuse to use the new developed ERP system it could crash down the implementation of the whole COMETS system, and that happened.

The traders of the commercial departments were not quite ready to take up the new ERP system, rather than that they felt comfortable using the old system. They were quite frustrated by the drastic change within their job duties. Few of them raise questions about the confidentiality of this system. So, often they hesitated inputting the details of the contracts in the computer, which led the system in the vulnerable situation.

One of the major challenges Donna was facing regarding getting the traders to input relevant information in the system. It was quite true that the new system drastically changed the working requirements which are not at all expected by any employees. But Donna had to make the deal done for the bigger sake of the company. After some profound thinking, Donna came ended up into a point that if she want to emphasis the need of the company, she had no other choice than revealing the fact in front of the upper management. But this recommendation may put his reputation among the employees into threat, she may also loose employees moral. Her analysis told her that it is quite difficult to make the traders enthusiastic about the COMETS project, which can result to the destruction of the COMETS project.

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So, at last sacrificing employee morale and her own reputation also, he placed the problem before the upper management.

More pressures to inaugurate the COMET:

In March, 1997 Tosco made an acquisition of three union 76 refineries in Los Angles, Santa Maria and San Francisco as well as pipelines, terminals and the 76 service station. The trade was value about U.S $1.4 billion.

With this acquisition the need for launching the COMETS had become larger. Not only that the requirements had just become bigger and complicated also than before.

Donna was not at all upset about that, as because the first phase of COMETS was going to be launched in the next month. But the only worry she was having that how much success the COMETS system could bring to her organization. She knew many successful stories about using the ERP system within the organization. She knew how organizations were capable of lowering down their cost by several million dollars with the proper implementations of the ERP system.

But besides that she also knew about the failure history of several ERP programmes.

Hershey Food Corporation, one of the major players of the food industry launched a 4 year ERP project which costs about $112 million. In July 1999 the new ERP system costs the company tens of millions in loss while it was supposed to gain favor for the company. The process failed to achieve success due to system glitches that led to shipment delays, deliveries of incomplete orders and inventory pileups.

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After a long peaceful wait, the COMETS system was on the run. Donna and other stuffs working in the COMETS project were at last successful of the inauguration of the system within Tosco corporations.

The launching of COMETS system was done in 2 processes. Those are:

In April 1998, the company was on a point to make a major decision regarding whether they should be on the testing zone of phase two or they should go for the launching of the full version of phase two.

But to the utter surprise Tosco corporation made the launching of phase 2, and with these launching of phase two, the demanding COMETS project was on action in Tosco Corporation.

Despite the successful launching of COMETS there were many other problems still left. Those are

Bugs in the design.Data’s were not showing right.Columns and details had been forgotten.User requirement had been cut or left out.

First PhaseLaunched in April 1997.Included deal capture, scheduling,contract issuance, administration.Supposed the independent usage of Microsoft database by the commercial department.

Second Phase (billing module) Sice it was smaller it was put partially to reduce risk.The programme ran despite the problems of inventory data and report.

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Regardless of these problems their customers were billed. These problems continue to happen for the next several months.

In 2001 Tosco faced a major change within their organization. Phillips Corporation showed their interest to buy Tosco in $7 billion stock transition.

Phillips Petroleum Corporation at a glance:

It is expected by Phillips Corporation that with the acquisition Phillips would be the second largest oil company in the United States. Though behind ExxonMobil (The largest U.S. oil refiner). The acquisition will place them in the top 20 of the fortune 500 companies. Their projected sales would rise to $45 billion per year.

The merger decision was made because of some specific reasons, like:

Tosco was the largest independent refiner and marketer of petroleum, Tosco’s refining capability would give Phillips to achieve greater success in the following sector. Also, they had some convenience stores located almost everywhere, which is also counted as an additional advantage for Phillips.Phillips created a brand name in the whole North America with wholesale skills and expertise in refining and fuel technologies.

Founded in 1917 by L.E Phillips and Frank PhillipsFully integrated petroleum company

Also produces & distributed chemicals & plastics

engaged in production and exploration worlwide natural gas & refining

3 U.S refineries produced 3,60,000 barrels per day

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Phillips was hoping to gain some competitive advantage by compiling the two company’s comparative advantage into one, with a view to achieve greater market share.

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Underestimation of the design problem by the consultant agent and

also Tosco.

Consuming enough time than needed for a particular process.

Cost overruns than expected before.

Massive disputes between commercial department and the upper

management.

Decrease in employee moral with the initiatives of CEO.

No supplementary benefits/incentives given to the traders for the

additional work loads.

Go for several acquisitions without finishing the implementation of

the ERP system.

Conflict among the usage of the IT system after being bought over by

Phillips.

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What strategy should Donna follow to make her employees adopt with the upcoming changes regarding the ERP system within the organization?

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Tosco Corporation is a refiner and marketing company of oil operating in U.S.A. As like other present corporations Tosco also maintains its own ERP system to conduct its trade operations. The name of their ERP system is COMETS. In order to develop this COMETS system they organized a team comprising of Operational and accounting users, system analysts and programmers, and also they hired consultants from Aspen Consulting.

The system developer team comprised of 30% of the members from Aspen consulting and 70% people from Tosco Corporation. To have more flexibility in changing the job requirements and area most of the people of this developer group were assigned part time. It helped the corporation to change the job sectors of the employees whenever it needed.

To develop this IT project there was a five person management team who were responsible for making any upper level or strategic decisions. Within this management group three persons were from Tosco and the remaining two were from Aspen consulting. And the CEO of Tosco often had some meetings with this management team regarding the proficiency or deficits within the implementation of the COMETS project.

Combined effort generated better output:

As, Tosco and Aspen consultants took up the initiative to implement the COMETS system in a integrated process, they gained some advantage. They could combine their individual efforts in the segments where they have gained the comparative advantage and take out the best from the implementation process.

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Allowed Tosco to hold the major power within them

Regarding the development of the COMETS programme Tosco formed the developer group consisting of 30% people from Aspen and 70% people from Tosco, even in the management team there were 3 people from Tosco and 2 people from Aspen. This gave Tosco additional advantage over the implementation process of COMETS. With this majority, Tosco could able to make some major decisions over the COMETS project by holding majority of power within them.

Cost escalation due to frivolity of any one group:

The cost of implementing the COMETS system was at a peak due to inconsistency of the two members of the development team. It is a general matters when two firms combines to reach an ultimate goal. This worst thing can happen for many reasons, like: Linger in implementing any particular process, not getting on the right track to solve any particular issues, lack of proper communications and consideration between the two firms.

Underestimate the difficulty of the project design by any group:

In case of joining operation to develop a ERP system can cause any group to underestimate the difficulty of the project design. This is what happened in Tosco in developing COMETS. There developing team were made of two group of peoples (from Tosco and Aspen Consulting). Definitely the project design is complicated for any ERP system like COMETS. But this complication was underestimated by the Aspen consultants, which raised the cost of the overall project and also lingered the COMETS process to be implemented.

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In the lifetime of Tosco Corporation Tosco made several acquisitions to expand its business operation at a larger scale and earn more revenues.

In the first year of the implementation of the COMETS project, Tosco acquired Circle K convenience stores, which had it’s headquarter in Phoenix, Arizona. With this acquisition Tosco could able to expand its core business operation within U.S.A.

In March 1997, Tosco had another major acquisition of Union 76 Refineries projects, which were located in Los Angles, Santa Maria and San Francisco. They also acquired pipelines, terminals and 76 service stations’. This is the most significant acquisition made by Tosco Corporation. The amount of this transaction was $1.4 billion.

Acquisition led them to grow bigger:

The more and more acquisition of several firms let Tosco to grow bigger at a range. It helped them to expand their core business operation.

Tosco is country’s one of the largest independent refiner and marketer as well. They are the successful runner in the Refining operation, though they go for the acquisition of several other companies to expand their core business operation.

The expansion through acquisition helped Tosco to grow at a bigger range. It helped them to place themselves in the industry as a bigger competitor. Through the acquisition they could enhance their common market and attracted more and more customers with a higher return of operation.

Gain competitive advantage in the industry:

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Obviously through the acquisition process a corporation gets further competitive advantage in the core industry over the rivals. This is what also happened with Tosco. Tosco is a major runner in the Refining operation in U.S.A. Since the acquisition process helped them to have some extra benefits out from that and gained a competitive advantage over their rivals.

Getting additional funding sometimes difficult:

Even if the acquisition helps a corporation to grow at a bigger range by expanding its overall operation, still there always lies a question about the additional funding, which is necessary for every organization after acquisition.In Tosco, after acquisition of the Circle K convenience stores, they were facing a little bit problems about the additional funding, So their team were re-examining the source of the additional funding. Because it is universal that, if a corporation can’t go for the proper source of additional funding what they basically need, their overall objectives for the acquisition decision may get ruined.

Getting complicated with the ERP system:

Acquisition is always good for a company, but it is only good when a company can afford with the massive change within their organization through acquisition.

Tosco Corporation had their own ERP system to maintain day-to-day operation. Through the acquisition Tosco faced major change within their operation. Their ERP system gets much more complicated than before with the added requirements. Even sometimes, it is hard to make the acquisition successful in case of the failure in ERP system, which caused by the rapid change through acquisition.

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Antagonistic relationship was found in Tosco Corporation, between their buyers and the management level. This relationship was weakening the implementation of the COMETS project.

The basic problem with the commercial department was the traders. The traders of the commercial department were the main user of the COMETS system. They will have to put the necessary information in the COMETS programme that is needed by the other users of the COMETS system. But in the Tosco case, the traders were not ready to fill up their job requirements. Because they are not accustomed with the needed change in the new system. This change will ultimately increase their job requirements, which they did not want to be happening.

As, Donna (the CEO) had to ride her subordinates toward the COMETS system, she had to go to her upper management to make the necessary adjustments within the commercial department, this laid to a conflict between her and the traders.

Helped Tosco to ride off the implication with the traders:

As, Donna approached to her upper management to talk with the issue of traders in commercial department, it forced the traders of the commercial department to work on the new developed ERP system COMETS. Through this Tosco was able to set off their problems regarding the launching of COMETS system.

Hampering employee Moral Toward the CEO:

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For the sake of Tosco Donna had to went through the upper management level to discuss about the issue of the regarding the traders of the commercial department. After the initiative Donna could able to solve the issue, but literally she failed to maintain her Moral toward her the traders, as she sent beyond their interest.

In April 1997 after a long wait Tosco could able to launch the ERP system for their organization, COMETS. This was a day of success for Tosco. Tosco authority decided to launch the ERP system in 2 segments.

As per, the decision Tosco launched the first phase of their COMETS system in April, 1997, which included deal capture, scheduling, contract issuance and administration. They launched their 2nd phase of COMETS in January 1998, which was basically the billing module. Tosco authority did not launch the full phase of the 2nd phase, besides they decided to launch the smallest region of the 2nd phase as there were lots of problem to be solved yet. Like: There were bugs in the design, datas were not showing right, columns and details had been forgotten, user requirement had been cut or left out.

Opportunity to solve the troubles regarding the COMETS:

As Tosco initiated COMETS in two phases it gave them the opportunity to find and solve the major problems with their new system. Because, obviously in the new system there will be some defects, which one needs to find out. Partial launching of the system is a way to solve the issues. That is what Tosco did.When Tosco find the first phase of their launching quite successful then they stirred on for launching the 2nd phase of the system.

Delay in the initiating leads towards losses in overall maneuver:

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Tosco’s delay in initiating the COMETS project may harm their business process, because Tosco has already made two big business deals by acquiring two major corporations (Circle K and Union 76). Through these acquisitions they enhanced their business requirements which force the quick launch of the ERP system. Without the quick launching of the COMETS system Tosco was in a verge towards the haphazardness in the entire business process.

In the year 2001, February the proposition came from Phillips Corporation to buy Tosco. Phillips was one of the countries leaders in Refining and Fueling. The Firm was growing toward success at an epidemic rate. It offered Tosco to buy its share to become Country’s second largest oil company, behind Exxon Mobil. The amount of the trade was $7 billion.

Phillips Corporation was worldwide explorer and producer of natural gas and other minerals. It was also involved in marketing and transporting petroleum and petroleum products. It also produced chemicals and plastics. With the production of 3,60,000 barrels per day and 6000 U.S outlets Phillips was one of the successful runner in its business operation.

The purchase was expected to gain full shareholder and they were actually waiting for the approval of the government. The only concern with Tosco about the purchasing was about their COMETS project. Phillips was generally using the SP based system while Tosco was using the COMETS system. It is natural for a corporation to have one system within it. So, it was big questions that will Phillips allow Tosco to keep their own Information System or compel them to convert into SP.

Allow both of the companies to be the market giant:

With the acquisition of Tosco by Phillips they could accumulate their resources into one and gain more competitive advantage on the oil industry. Tosco had

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greater refining capability and better convenience store expertise and Phillips had branded wholesale skill and expertise in refining and fuel technologies. Combining the two technologies they could bring about the revolutionary change in their business operation.

Conflict among maintaining the ERP system:

With the trade, both Tosco and Phillips will gain a lot, but the major conflict arises in the name of ERP system. Both Phillips and Tosco maintained their own ERP system. Philips used SP based system and Tosco maintained COMETS. But to combine the operation of these companies into one needs one particular system. It is quite common in nature that Tosco will adapt to the Phillips system, because Phillips owns the majority of its share. But top develop their COMETS project they had to spend a lot ($40 million). Even, how much rational Tosco’s employees will be regarding the adoption with a totally new project also raising a big issue. So, definitely there are some conflicts here apart from the return.

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The design problem of the Comets was a massive one. From the time Tosco had decided to build its own EPs system it faced many problems. There were many reasons for the complexity in the design process; one of the main causes for this was acquisition of various business sectors at regular intervals by Tosco. Yes it is true that Tosco did introduce Comets on various stages but it over looked the problem faced by using the system. Tosco was more eager on lunching the system and actually overlooked developing and making the system perfect.

Tosco had launched its first phase of Comets on 1997. Though it was successful to an extent it had problem regarding data integrity, especially with inventory number and persistence. The launching of the Phase two was actually done with proper care but even than there was problem regarding data not being shown on the right columns and details were forgotten. All in all Comets system was not designed properly and was launched in a hurry.

1. Tosco has to ensure that it paying their design team adequately, for the changes in job requirement.

2. Tosco has to make sure it the right kind of people for the right job. COMETS took longer time than expected, so if required new employees could be haired.

3. Bonus could be given out, as with every acquisition the job requirement increased massively.

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4. A proper technical training for the designers should in place.

Pros

More confidence from commercial department

The major groups of people who would be using the EPS system dint show any interest in Comets. They were happy to use Microsoft access and resisted change in every possible way. If the system were designed properly and had subsequently benefited the traders it would have accepted by the third parties. If the system were designed properly pushing the commercial department in using Comets would have been meaningful. The faith of them was lost. By letting the top management know that the traders dint want to use comets, and later forcing them to so damage the relationship.

It company made a fool out of themselves as there were various problems in the comets. If these problems were checked and solved before the launch it would have been better. Once Tosco forced them to use comet and then fixing it after it was launched showed Tosco’s ignorance and lack of an effective IT department.

Cons

Increase in cost

The massive increase in the project’s cost forced Tosco to introduce comets. The difference between the estimated and actual cost was about thirty million dollars. It’s quite unnatural and this had an effect on the decision of launching the new ESP system.

If Tosco delays and waits for their engineers to complete Comets it would possess another problem. The cost of running the project would increase substantially. The labor cost would increase thus raising the cost of the overall project by few more million dollars. Thus the management faces a dilemma and they have make decision whether to concentrate on the design or to launch the EPS system as quickly as possible.

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The new EPS system was resisted by various commercial departments. This was mainly due the fact that all the users were accustomed to using Microsoft Access. Tosco dint make any kind of effort in introducing the new system to the traders. They were more concerned on developing and system and keeping the project within the budget. They forgot to look into human aspect. Comets were going to be used by the traders, in order for this system to successful users would have to be kept satisfied.

If various seminars would have been held the transformation into the new system would have much more easily. Tosco dint really bother to introduce and orient the new EPS system to the third parties. If the commercial department were briefed about the advantages of the new system, the change would have been easily accepted.

Initially various seminars, lectures and knowhow of the system should have been discussed. Later a proper technical training process for user should have provided by the company. This would certainly reduce anxiety and insecurity amongst various groups. Training would only be helpful to the commercial departments but also would have increased the overall efficiency of the company.

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1. A proper orientation program and seminars should be held to introduce the new ERP system.

2. Provide training regarding the usage of the COMTES.3. Tosco should also consider giving incentives to the traders, not because that they

are using new system. These incentives should only if new ERP system is successful.

Pros:

Reduce anxiety amongst various groups

With the introduction of the training process the commercial department’s anxiety will be certainly under check. It would formally introduce the system to the third party. Moreover if a proper training program is present, it would mean that the company is serious about introducing the new EPS system. This would in turn reduce resistance to change.

Technically sound users

Training will help the employees to be accustomed to the various functions of COMETS. Moreover, training would increase their knowledge and skills about COMETS. Improved knowledge would also instill confidence among the employees. As a result, they will be able to perform better and this in turn will also contribute to their productivity.

Cons

Ever Increasing Cost

Training programs are always cost absorbing. As a result, the cost of maintenance on COMETS project will increase. Moreover, training can be a mechanism to increase productivity but it does not ensure 100% transfer of skills to all the employees. There can be some employees who may take training program lightly and also find training program difficult. As a result, they may not fully receive the skills and knowledge. As a result, they will lag behind in terms of performance and productivity. So, there can be wastage of resources (money and time).

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Tosco has always had a problem communicating different ideas to Aspen. The company had haired Aspen consulting agents in order to keep the cost down. At about thirty percentages of the workers in the COMETS project was form Aspen. The initial requirement of the COMETS project was discussed by Tosco, the scope and the requirement increased continuously with major acquisition. This aspect of the business was not communicated properly to Aspen.

Cost began to increase drastically due the fact that designers overlooked the project difficulties. Each and every process took longer than expected and often doubling the price tag. Aspen charged extra even if a small alteration was made from the actual contract. If the requirement had been clearly stated by Tosco this problem would not have arouse. Due to the fact that there was a communication gap from Tosco’s point of view, the COMETS project got over budgeted. Only if a better communication would have been present this problem wouldn’t be around. Tosco should have actually stated different combination and clause in the contact, which dealt with alteration in the project. This way a better communication would have been beneficial.

1. Proper arrangements have to be made in order to facilitate the contract conflicts. A legal representative could be haired.

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2. Yes it is true that there is a steering committees present but a regular meetings could be held regarding new developments.

Pros:

Cost control

If there is a good communication between different parties in an organization, the working and running of the business becomes much easier. If Tosco had a proper communication system with Aspen the cost could have been under control. A contract which dealt with major changes in the design requirement would be helpful, in constraining the cost. The conflict between the two parties would have been avoided and the designers of COMETS could concentrate on the project

Better work environment

Tosco was under constant discussion with Aspen, regarding alteration in the new EPS system. A good communication would have reduced the conflicts and create a better working environment. Designers and engineers of the COMETS program could concentrate on the actual job of building the system, increasing the overall efficiency and effectiveness of the project.

Tosco continuously acquired various businesses. It was very much interested in acquiring and it business operation in every possible way. These dints only possess a problem for management but also to the COMETS design group.

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In the very first year of implementation of the COMETS system Tosco had a major acquisition. It purchased Circle K which was convenience stores. Circle K’s headquarter was based in Phoenix, Arizona. This created a unique problem from finishing of COMETS. Circle K operation was somewhat different from the core business operation of Tosco. Adjustments had to be made in order to facilitate this. . The teams had to re-examine some requirements and get additional funding, although the convenience stores would largely continue to be run on their own system and adjustments had to be made to the COMETS system.

In March 1997 Tosco had another major acquisition. This time it was three Union 76 refineries in Los Angeles, Santa Maria, and San Francisco, as well as pipelines, terminals, and the 76 service stations. One the positive side COMOTS was already launched, but the new EPS system had to be adjusted and improved in order to facilitate this.

These major acquisitions increased the cost of COMETS considerably.

1. Tosco could stop any kind of major acquisition until the COMETS system was fully finished.

2. Tosco should also make sure that they translated the benefits of the already acquired companies to its employees. A discussion on this matter could also be very helpful.

Pros:

Increasing profit

One of the major reasons that Tosco continuously kept on acquiring various business sector was that it was very successful in it. If a company is successful it means that they have good financial strength. With these acquisitions Tosco’s profit would have increased.

Cons:

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Increasing cost of the project

Even if the acquisition was good for the company it caused some massive problem towards making and building of COMETS. Every time Tosco made an acquisition it had to upgrade its new EPS system. This certainly increases the cost of COMETS extraordinarily. The estimated budget of the project was at about ten million due major acquisitions the cost rocketed up to fourth million dollars. The increase in cost can only be explained by the acquisitions, as every time Tosco acquired something new the COMETS deign were changed. This gave Aspen a reason to charge extra with every alteration.

Uncertainty amongst the design teams

Every time Tosco made an acquisition the design team of the COMETS project was put under lot of pressure. They had to make changes and upgrade the new ERP system. This created uncertainty and lack of security about their job. They were never sure of what was needed from them. Thus the moral and commitment of the group reduced drastically.

Tosco assigned most of their employees on part time basis. This possesses a unique problem to the company. Its employee cannot be trained properly as they are part timers. One has see that they can develop in an organization and thus work accordingly. It very hard for an individual to be motivated to do well when he/she knows that there is no room for development. They almost all the time are laid back, as one knows that they wouldn’t be working in the organization for long time.

On the other side of the story, the company would not be interested in training someone who want be staying in the company for long. It would be very

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foolish on their part to invest valuable resources on part timers. These resources could be used for other reasons. Moreover part timers do not give their heart or soul in the job. The efficiency of the employees working part time is mostly way below their actual potential. People will work as much as they are paid or rewarded hence if part timers are paid less than full timers then their work rate will also be lesser.

Here what we planned is to get the part timers to take active participation in the day to day activities of the organization. We have to get them motivated and get them to feel that they are a part of the organization. This can be done by implementing various steps; Tosco has to make sure it values part timers and full timers at the same level.

1. It can strive to have an effective orientation program2. On the job training have to emphasized as is less time consuming than other forms

of training3. A proper incentive plan has to be in place for the part timers, the part timers

should not feel discriminated.

Pros:

Cost effective for the organization:

In this case we have seen that the project COMET has already crossed beyond the estimated budget. The estimated cost was far below the current cost of running the project. So by employing more part timers in the organization one can really reduce the cost drastically. In is a very common practice to pay the part timers below the actual range of salary. This way the company will be able address the problem of over costing.

Part timers are motivated:

If Tosco do implement the suggestions put forth by us is part time work force would be highly motivated. Once a part timer sees that there is a proper orientation program and a sound training program for them they would feel indispensible. This can only create a win situation for the company. As now its employ would be ready and rearing to perform well for the company.

On the other hand if its part time work force does see that they incentives are not that bad compared to the full timers, he/she would be motivated to perform well for the company.

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Tosco has to keep this mind that its major part of the work force are part timers, thus keeping them happy would open doors for successful returns.

Cons:

Full timers might feel neglected

Once the company concentrates on its part timers the full time employees might feel that they are being overlooked. If the incentives are at par with the part timers or only better by small percentage than they would not feel valuable and secure about their job. The motivation of these employees would be damaged. Tosco has balance this and have make sure that all kinds of employees are ready to give hundred percent every single time.

Phillips had acquired Tosco for about seven million dollars. With this acquisition Phillips would become the second largest company in oil refraining behind ExxonMobil. This possessed a new change to the design team. The management had to decide whether to continue with COMETS or not. Phillips was using SAP-system but now it had to decide between it and the newly billed COMETS. It was exciting time for Tosco and the design team of COMETS.

What we suggest is that we use SAP system. As this would be better for Phillips there would no additional cost. They already have the system build and cost incurred would be an indirect one. Moreover Phillips is a very successful company so using an already proven ERP system would be better option.

1. Phillips could introduce a demo version of the SAP system to Tosco workers. Doing this user would get accustomed with the system.

2. A training program should be given regarding the usage of SAP.

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3. Changing of the system every time would affect the moral of the workers and traders, a proper benefit package have to given.

Pros:

Managing becomes easy

With the introduction of SAP system into Tosco, Phillips task of managing the newly acquired firm becomes easy. It can understand and work easily with the help SAP system. Phillips doesn’t have worry about understanding COMETS. More over it is easier to compare and analyze the various aspect of business. Phillips IT sectors job would be trouble free. Only a single department of IT could be maintained.

Cons:

Increasing amount of frustration amongst employees

Tosco had already made its employees change from Microsoft Access to COMETS system. It would be very difficult for them to change into the SAP system. They would not like it and this would create dissatisfaction amongst many employees. Employees will for certain resist and will oppose using SAP.

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Phase 1: Employee development needs are prioritized

Tosco has faced many problems from the time Tosco had decided to build its own ERP system it faced many problems. Tosco was more eager on lunching the system and overlooked many problems which gradually surfaced.

First and most important is to provide Training to the employees. The training program is basically letting the employees associated with designing COMETS know about the requirements needed in COMETS. After the employees have submitted their work and drafts, the work has to be evaluated and examined carefully if the requirements put forward are satisfied or not. If it is not satisfactory, the lacking has to be pinpointed and given back to the team associated with the project. The cycle continues until all the requirement needed are satisfied. This provides two functions. First of all it allows the team associated with the project to do the work again and again and increase their experience and knowledge. Secondly, the work that has evolved as a result of the process will be satisfactory.

Phase 2: Resources are allocated in priority order until they are exhausted

Implementing of any plan is very necessary. Implementation of training program is a very difficult task. It’s because not all the people want to attend the training program or take them seriously. To solve this issue, the person attending the training the program would be given incentives. Moreover, seminars could have been arranged for the employees to develop their knowledge on the work they are to perform. Since, developing an IT system is sophisticated and also involves a huge amount of money, there should have been arrangements like daily or weekly discussion among the members. This would also give the employees a chance to bring forth their problems and may be a solution could have been developed. This would also help the employees in increasing their knowledge and skills and a chance to develop them. It must be mandatory for the employees to attend seminars and group discussion.

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Phase 3: Surviving programs are integrated into working plan

After the program has been implemented, it must be seen that the program has been maintained. In order to do that some procedures must be taken. For example, a monitoring body can be set to keep record of the employees attending the training and development program. This committee is also responsible for monitoring the activities. This committee should be responsible for organizing seminars and group discussion and keep a record of the issues that have been brought up in seminars and discussion. As oil companies have to keep up with the latest technologies, this committee should be responsible for looking for new technologies and also develop training program to impart knowledge and skills to its employees.


The COMETS system is primarily developed for easy business integration of Tosco. Therefore, it is a need to teach all the people associated with Tosco- employees, traders the handling of different functions of COMETS. Training was the only solution to solve this problem.

Training would develop their knowledge and skills in the operation of COMETS. Training would also provide them to understand the basic functions of COMETS. Training programs would also answer their question regarding the instillation of COMETS.

The traders must be provided regarding the basic handling of COMETS. Since COMETS is new software, therefore its function would be not known to the users. By arranging training programs, the users could be given knowledge

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required to operate the software. This would also act to clarify certain misconception held towards COMETS.

If various seminars would have been held the transformation into the new system would have much more easily. The advantages of using COMETS have to be stretched so that the traders can accept the system without much effort. Training would certainly reduce anxiety and insecurity amongst various groups.


In order to make the training program efficient, some steps have to be taken by the management. To ensure all traders involvement, an incentive can be given. In order to see that the time spent on training is justified or not, a quick quiz can be taken to see that the traders have learnt and developed their skills from the training program. Efforts must be taken to clarify all their mistakes and questions in a proper way. Moreover, to keep the trainee involved breaks can be provided between training programs to refresh themselves. Moreover, seminars can be held to improve the trainees’ knowledge on COMETS. Moreover, the trader’s feedback should be taken with respect and given a second thought.


A monitoring body can be set to keep record of the traders attending the training and development program. This committee should continuously monitor the performance of the traders and keep a record of that too. If the performance level deteriorates, then steps must be taken to improve the performance even at the cost of retraining them.

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Communication is very important to any organization. Clear communication can have an immense effect on the employees in terms of better understanding of job responsibility, better performance and therefore increased productivity.

Tosco should have had proper arrangements in order to minimize contract conflict. For this to happen, the clauses in contract have to be made clear beforehand in order to prevent intensity to rise among Tosco and Aspen Consulting. It is true that there is a steering committees present but a regular meetings could be held regarding new developments in order to communicate with both the companies and help to tie their relationship. A clear communication is very helpful not only to the employees but also to the organization because it provides a clear understanding of ones responsibilities.


In order to strength and maximize communication, the steering committee must clearly transmit information between the two companies. Care must be taken to see that no information distortion takes place. Moreover, the information must be conveyed in a way so that it can be understood by the company receiving the information. Moreover, a record of each information transmission must be strictly maintained to prevent future confusion.


The steering committee has to submit the works they have done on monthly basis. Moreover, the committee can also arrange discussions between Aspen Consulting and Tosco.

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Time management is a very key aspect of any business. Lack of time management is also responsible for many problems in COMETS project. The problem associated with time management is that the processes were taking longer time than expected. This in turn led to cost escalation. As a result, the company’s in order to solve this problem; it was a need to find the root cause of the problem. We need into the factors what is causing the time delay. There can be problems due to lack of motivation, unwillingness to work, boredom in work or low workers skills in their area.

In order to respond to this problem, the employees can be provided with on job training in order to develop their knowledge and skills. Moreover, Donna can set a dead line for the submission of the due work. Moreover, the importance of time must be clearly communicated to the employees by letting them know their contribution to the organization.


If the work is not been delivered or done in due time then the employees involved has to be pay an amount of compensation from their salary to the company. This process may seem harsh but in order to manage time this is the best solution that can be applied. If the employees the work in due time, then the employees will be appraised and if the performance level continues the same way,

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then they can be given incentives and bonuses. Moreover the employees can be given motivation by praising their work. This will also boost up employee morale and a sense of belongingness to the organization.


The management has to keep a record of the work given and due date for the completion of the project. This would also help to keep records of all the works being done. This can also help to identify the performance and the extent to which the employees take the works se3riously.


Whenever Tosco made a new acquisition, the teams associated with the project had to re-examine some requirements and change had to be made to the COMETS system. This ended up taking time and money. Moreover, employees who are working hard over developing COMETS had to re access some COMETS for some changes. This could have caused employee morale to slide down.

In order to stop this from happening Tosco should have stopped acquisition and concentrated on developing an integrated COMET. The employees could have done all their work time and time

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again to develop a full perfect system and also gain enough knowledge by the time COMET was ready. After the COMET was fully integrated, changes could have been made. This could have had allowed the employees to utilize their skills, knowledge and experienced gained to develop the system.


The customized approach used by Tosco even before COMETS have even fully been integration may have played a role in decreasing the employee motivation due to the work pressure even before the actual work is completed. In order to motivate the employees, the company could give benefits or bonuses to the employees and also have seminars and discussions to solve the employee’s problem. As a result, the employees would surely attend seminar to bring about their problem.


In order to maintain the program, the company must ensure complete integration of COMETS before going for acquisition. Moreover, budget should be kept at hand not for acquisition but for any basic change that may arise while the system is being integrated.


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Most of the people in Tosco who are assigned to COMETS project are part timers. This provides a major setback to the in terms of productivity. This is because part tine employees are not much concerned with the company’s performance and image. They often take work lightly because they know that the project’s high or low performance would not have any effect on them getting a bonus or decrement in their salary. Moreover, the part times know that even their better performance cannot justify their promotion. So, the part timers do not put their heart and soul into their work as compared to the full time workers.

To overcome this problem, Tosco should hire full time workers for COMETS project. Hiring does not mean that they would hire people without any qualification or knowledge in the field. Hiring the right people is very necessary for any project. Hiring full timers would also help the project in terms of productivity. Moreover, the full time work force would also be aware of the fact that their performance can lead to them getting attractive benefits and compensation. As a result, the initiative, dedication, enthusiasm and commitment shown by the full time work force is much more as compared to the part timers.


Hiring the right people is very necessary to the organization. So, the part timers should be replaced by full time workforce. But this does not mean hiring people without any proper skills and knowledge in the given field.

As mentioned earlier, hiring the right people is very important to the organization. Equally necessary to the organization is to hold on to the current work forces who are well accustomed to Tosco’s culture. So, to ensure this care must be to provide adequate incentives for the amount of being done Moreover, the employees

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should be given additional compensation for impressive performance. This serves two purposes. First of all, it motivates the employee getting the compensation and encourages him to repeat the same level of performance. Secondly, other employees in associated with COMETS will strive to achieve the compensation by improving their performance level. As a result, Tosco’s productivity will increase because of the workers increased productivity level. Moreover, the current work force should be provided adequate benefits to make the work more lucrative.


The company must take initiative to see that the employee number is kept constant. This means that if there is a shortage of employee, the company must take initiative to employ new employee as fast as possible in order to avoid overcapacity of work load on the existing work force. In order to monitor this, the company must keep a body or committee who can monitor over the employees.


After Phillips buying of Tosco, the company should use SAP –based system. We know this would be tough but there are reasons for our suggestion:

Phillips is a very successful company so using an already proven ERP system would be better option

One system, one company.

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As a result, we have to provide training to the employees and the traders for increasing their knowledge and skills on SAP-based system. The training program would also give the employees a chance to have experience with the SAP-based system. Training has to be done on continuous basis in order to get the employees into the groove of using SAP-based system. Moreover, time has to be given to the trainee to be accustomed to the new system.


The employees and traders will obviously be affected the most as a result of changing to new SAP-based system. They may resist to this change. But the new Phillips management has to put forward the advantages the employees would get as a result of changing into the new system. So seminars and discussions have to be held in order to impart the knowledge into the traders and employees. The employees may face a drop in their confidence but the new management must take initiatives to prevent this from happening or at least minimize the effect by giving incentives and bonuses to all the employees and traders. Moreover, the company must also ensure that the training program is effectively utilized by asking the employees to actively participate in seminars and listening to their feedbacks. Moreover, the trainer must ensure solution of any problem that trainee face by helping him/her and assisting him/her to solve the problem.


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In order to cope up with the changing ERP, the employees have to cooperate with the management’s decision. Moreover, management must make sure that the employees are given time to settle to the new system and be accustomed to it. Once the employees are accustomed to the new system, management must evaluate the performance the employees. Poor performing employees have to be pointed out and re-given training.

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Documents

Tosco