NIBCO’s IT systems essay
Why did NIBCO decide to purchase an ERP system? Why did they decide to implement SAP R/3 without any customization?
NIBCO’s IT systems were outdated and were isolated from each other. As it was mentioned above, there was wide dissatisfaction with the functionality of old IT systems. Thus, NIBCO decided to choose an integrated system that could be used across the organization and would provide opportunities for integrating data and creating business intelligence. In terms of implementation, NIBCO was choosing between a set of high-class supply chain and financial solutions wrapped around one database and an ERP system. The cross-functional team responsible for selecting an ERP package evaluated the pros and cons of each solution and chose ERP as the best solution for NIBCO. Since the company chose a “big bang” approach, there was not much room for customization, and the evaluation showed that the existing capabilities of SAP R/3 were sufficient to satisfy NIBCO’s needs. The expected effect of implementing SAP R/3 included reductions in inventory costs and multimillion operational improvements.
Why did NIBCO choose a Big Bang approach rather than the 3-to-5 year plan? What are the pros and cons of the Big Bang approach?
The initial recommendation of the Boston Consulting Group was to choose a phased SAP implementation that would last between three and five years. After the strategic planning meeting, the selection team came to the conclusion that they should adopt a big bang implementation plan (implementing SAP R/3 in 1.5 years). The major concern regarding the 3-5 year plan was that the implementation would stop at a particular phase if the new functionality covered sufficient areas. The advantages of the big bag plan were cost savings (especially the consulting costs), quicker transition to the new system, and dramatic change in the company’s culture. The cons of the big bang plan were resistance to change, the complexity of quick implementation (along with a number of failed ERP projects associated with this approach), and significant commitment in terms of resources.
