Problems faced by VISTA Builders before introducing the new system
Initially, the company operated under different lines, with each line taken as a single entity. There was no consolidation of operations. These lines include the fiberglass insulations, external siding and roofing materials.
Each of these lines had its own set of information systems. The company had more than two hundred rigid, old fashioned and isolated systems. Truck carriages, pricing schedules and product lines were also separate and different for each plant.
Customers – due to the disintegrated system – had to make separate telephone calls when ordering each item. A customer had to make up to three different calls – one for the external sidings, another for fiberglass insulations and another for roofing materials. The company appeared as a collection of autonomous or rather independent fiefdoms.
For example, before centralizing purchase, the sourcing manager, Mr. Vik Mike said that they were buying widgets from all over the world without enough knowledge of whom they were going to buy from and did not know how much they cost. This is before the company began using the SAP’s R/3 software.
The management, technological and organizational issues faced by VISTA Builders face
The whole process proved very expensive, estimated at about £100 million and it was also time consuming. This means that it took several years to be fully implemented.
The company faced a drop in overall production and there was a deterioration in customer service during the first six months. Installing something like a new SAP means a lot since it entails changing how people have been operating in the last two decades, like in the case of the VISTA builders.
The first problem that the organization faced was technical problems. The response time changed from seconds to minutes with the introduction of the new system. VISTA Builders director of global development, David Johns affirmed that the functionality was not as it was supposed to be and this, according to him, was due to inadequate testing.
Another set of problems that arose with the introduction of the new system were business problems. People were assigned new roles. There were changes in communication, business processing and even in management.
The new SAP system, for example, required the entire co-operation to come up with a single product and price list. The staff resented this since they were incapable as a result of lack of enough knowledge. The staff had not been trained and the workload was overwhelming. This made them very erratic in their operations.
In any business or organization, configuration is a great challenge. It requires a motivated team that is selected with a lot of keenness. It requires a team that is motivated and empowered to perform. To come up with such a team, it requires a serious employee education through vigorous training (Daniel, Jeane, & Marie, 2000)
John admits that they had under-estimated the impact that an overhaul of an old system would have had on their operations. ERP systems are quite complicated and errors are the order of the day. In the old system, VISTA builders could afford to easily work their way out of errors without being noticed or without being caught and this only affected the local functions.
In the R/3 system, there was no time to correct errors since databases were updated immediately the data was entered. Data flows instantaneously. It moves from purchasing to logistic systems.
These errors could be as serious as a customer failing to receive an invoice as a result of the person at the warehouse failing to tell the system that a truck is leaving. The accounts department would never find out since the transaction details would not spread.
The staff also had to be kept away from the system until they were qualified. This was after doing a test and getting certification. Those who failed had to redo the training and testing. A substantial number of workers did not pass the test. Those who failed looked for employment elsewhere.
Since this involved a great number of personnel shifting, it became time consuming. This disrupted the organization’s normal running. The training process that was anticipated and budgeted to cost 7% of overall cost ended up consuming 13% of budget.
The advent of the new system also posed some problems to the customers. Once the new system went live, the customers were shocked and some even opted for other suppliers for their goods and in effect to this, the company lost customers.
The way business was influenced as the system of the enterprise changed
ERP changes come with many business philosophy changes. The implementation brings great changes into an organization’s business structure and daily practice (Aleksey, 2009). Because of this fact, VISTA Builders had to undergo great transformation in its operations.
Johns remarked that the new setup was a great success. However, there were various volatile situations, which greatly affected the life and existence of the organization. The entire systems were enabled to act and perform as a single unit. Customers were afforded a single point of contact for all their orders.
With the old system, the organization could never tell what inventory they had in stock. However, with the new system, the company could now not only see what inventory was in stock but also tell when it will be produced and whoever the lowest-cost carrier will be.
With the ERP system, it became easier to make a commitment to a customer before hanging up the phone. With the ERP system rollout in 2000, the company acquired and in-cooperated 17 companies, thus succeeding in expanding their product offerings.
The company’s sales hit a whooping £5 billion annually. Inventory was cut significantly and the co-ordination of various functions and divisions centralized. The organization had the ability of controlling and planning its activities while making use of the network of routes. The system was used in identifying the greatest suppliers.
Centralization of the company’s system was not only applied in the states but also in foreign countries. This transformed the company into a truly globalized enterprise.
Was installing the system the right solution for company?
Installing a new system was a great idea and a great vision for the company. In complete disregard of the challenges that VISTA Builders faced while setting up the new system, the SAP helped the organization to make big development strides in their operations. Be it the managerial, organizational, operational and technical squares, the new system brought great positive changes in the end.
The old system – as noted – was non-flexible, archaic and isolated. This is a status that would undermine the operation of any organization or company. The new system brought an air of efficiency to the entire organization and its operation.
It usually takes organizations years or even decades to realize some IT-enabled transformations – chances are that an organization may still fail along the way (Lynne & Cornelius, 2001). For the case of VISTA Builders, the transformation was never occasioned with failure but a bright looking future in terms of business and organization.
References
Aleksey, O 2009, ‘The 5 Biggest Challenges When Implementing ERP for the First Time’, Information Systems Research, vol. 10, no. 2, pp. 167-185.
Daniel, R, Jeane, WR & Marie, B 2000, ‘Learning To implement Enterprise systems: An explanatory Study of The Dialectics of change’, Organization Science, vol. 1, no. 3, pp. 213-219.
Lynne, M & Cornelius, T 2001, ‘The Enterprise System Experience-From Adoption to Success’, Academy of Management Review, vol. 20, no. 3, pp. 510-540.