• nonprofit,
• independent
• world –reowned
Genetic research institue faunded in 1929.
Located in Bar Harbor,
Budget $80 million,
1200 employee.
•Jackson
Laboratory decided to install an ERP system with $5 million budget and a 1 year time frame.
•Despite
the installation challenges, the project's actual cost was close to the budget
and took only about 6 months longer than expected.
Major
installation challenge was the integration of its unique mouse-development
functions into Oracle's ERP system.
. One of the problems faced by Jackson stemmed
from an internal HR issue (i.e., the risk that the action or inaction of the
software provider would hinder the implementation)
modifying the ERP system to accommodate its business
process, placing special emphasis on training, seeking a fixed-fee contract with
Oracle and purchasing a surety bond to reduce project risk.
•Jackson
Lab selected an integrated ERP suite from Oracle rather than a best-of-breed
option.
•The
Oracle applications suite included modules for process manufacturing,
accounting, e-procurement, and HR, among others. Their biggest challenge was modification
of the Oracle Process Manufacturing (OPM) module to accommodate the
lab's unique business processes of raising and distributing mice.
The
implementation team chose a phased
implementation
approach instead of a big-bang approach.
The first phase initially
went live in February, including the management of production
capacity, accounts receivable, some general ledger functions, and the
purchasing of manufacturing material; in April they launched other modules
including accounting
for research grants, the rest of general-ledger functions, accounts payable,
and fixed assets.
For
the second phase,
which began in June, the remaining modules including process
management, human resources, payroll, labor distribution, and a grant filing
application were
installed
•Jackson
faced personnel
problems during
ERP installation when the best and brightest employees were
involved in the implementation process leaving them short-handed to do the
everyday work. In
addition, Jackson's IT staff lacked experience with ERP, only
one person had some experience in installing an ERP. Further
cost overruns resulted \ from training, an especially big cost item. The timeand-materials
basis contract would have increased the risk of overtime and going over budget
because vendors and consultants have an interest in quoting low and seeing the
work grow as the project proceeds.
•Jackson
faced personnel
problems during
ERP installation when the best and brightest employees were
involved in the implementation process leaving them short-handed to do the
everyday work. In
addition, Jackson's IT staff lacked experience with ERP, only
one person had some experience in installing an ERP. Further
cost overruns resulted \ from training, an especially big cost item. The timeand-materials
basis contract would have increased the risk of overtime and going over budget
because vendors and consultants have an interest in quoting low and seeing the
work grow as the project proceeds.
•There
is a natural competitiveness between the buyer and the
ERP vendor.
vendor benefits by placing a "veil of complexity"
over their work; the buyer wants to get the system up and running with the
least amount of work and customization.
•The
service level agreements generay tend
to be very complex because
much clearer definition of roles and responsibilities
between client and service provider is needed. From a consultant's and vendor's
perspective, a high (>25 percent) contingency is quite reasonable depending
on the nature of the work, whereas this is too much from the buyer's
perspective
•Jackson
Lab used several strategies to reduce the risk. First,
they negotiated a fixed-fee contract with Oracle rather
than use the more commonly used time-and-l11aterials contract.
Second, they
bought a surety bond from Gladwyne, a risk management conSUlting
firm. This
strategy protected Jackson Lab from the project's cost overruns caused by IT
staff being forced to solve the technological challenges with
"out-of-the-box thinking." Third, it spent considerable time and
effort on changing the business processes and training its employees with the new
processes. Finally,
they
got better cooperation from the vendor, Oracle, by negotiating a fixed-fee
contract and a favorable service level agreement. In
addition, Jackson
Lab should have built a time buffer into their ERP implementation life cycle to
avoid the pressure of delivering the system on a predetermined timeline.
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