Enterprise Resource Program
Case Analysis
Ikon’s Attempt at ERP
A. COMPANY BACKGROUND
Ikon Office Solutions is one of the world’s leading office technology companies, with revenues exceeding $5 billion and operations in the US, Canada, Mexico, UK, France, Germany and Denmark.
B. GROWTH STRATEGY, GOALS AND OBJECTIVES AND ACTION PLANS TO ACHIEVE THESE OBJECTIVES
I. Growth Strategy
Ikon is pursuing a growth strategy to move from what what more that 80 individually operating copier dealers to an integrated company twice that size in the next 4 years.
II. Goal
• Its goal is to provide total office technology solutions, ranging from copiers, digital printers, and document management services to systems integration, training and other network technology services.
• The Company has rapidly expanded its service capability with an aggressive acquisition effort that has included technology services and document management companies.
III. Solution Implemented to Achieve Goals and Objectives
Piloting of SAP
• Given the above goals and objectives, the Company seemed to need ERP software. A few years ago, Ikon began a pilot project in Northern California district to assess the possibility of using SAP’s enterprise software application companywide.
• CIO David Gadra, who joined Ikon about a month ago after the pilot system was turned on, however, decided not to roll it out.
Cost of dropping SAP
Ikon will take a 25 million write-off on the cost of the pilot.
1. Consultant fees - The vast majority of the $25 milion loss represents consultant fees. At any given project, Ikon was paying 40 to 50 outside consultants $300 an hour.
2. Cost of software - Less than 10% went to pay for the software itself.
3. Cost of implementation - Ikon budgeted $12 million to get the system running. That cost came inat over $14 million, including $8 million paid to IBM for consulting.
Problem Areas or Issues with SAP
Ikon’s Attempt at ERP
A. COMPANY BACKGROUND
Ikon Office Solutions is one of the world’s leading office technology companies, with revenues exceeding $5 billion and operations in the US, Canada, Mexico, UK, France, Germany and Denmark.
B. GROWTH STRATEGY, GOALS AND OBJECTIVES AND ACTION PLANS TO ACHIEVE THESE OBJECTIVES
I. Growth Strategy
Ikon is pursuing a growth strategy to move from what what more that 80 individually operating copier dealers to an integrated company twice that size in the next 4 years.
II. Goal
• Its goal is to provide total office technology solutions, ranging from copiers, digital printers, and document management services to systems integration, training and other network technology services.
• The Company has rapidly expanded its service capability with an aggressive acquisition effort that has included technology services and document management companies.
III. Solution Implemented to Achieve Goals and Objectives
Piloting of SAP
• Given the above goals and objectives, the Company seemed to need ERP software. A few years ago, Ikon began a pilot project in Northern California district to assess the possibility of using SAP’s enterprise software application companywide.
• CIO David Gadra, who joined Ikon about a month ago after the pilot system was turned on, however, decided not to roll it out.
Cost of dropping SAP
Ikon will take a 25 million write-off on the cost of the pilot.
1. Consultant fees - The vast majority of the $25 milion loss represents consultant fees. At any given project, Ikon was paying 40 to 50 outside consultants $300 an hour.
2. Cost of software - Less than 10% went to pay for the software itself.
3. Cost of implementation - Ikon budgeted $12 million to get the system running. That cost came inat over $14 million, including $8 million paid to IBM for consulting.
Problem Areas or Issues with SAP