Enterprise resource planning Case Study

Example Penguin’s Global ERP Strategy

3 The Globalization of Supply Chain Systems Anne Naramore Vice President International Technology Strategy Pearson plc Frankfurt Book Fair 28 th International Supply Chain Specialist Meeting

4 Agenda Pearson Supply Chain Environment Today Supply Chain Technology Strategy Case Study: Asia Summary

5 Pearson is a world leading education and information company, helping people of all ages to live and learn Sales: £4,096 M / $7,045 M +9% 2005 Adjusted Operating Profit: £509 M / $875 M +22% PEARSON A Good Read

6 Geographic Businesses Penguin: 20% £804 M / $1,383 M FT Group: 15% £629 M / $1,082 M Professional: 14% £589 M / $1,013 M Higher Education: 19% £779 M / $1,340 M School: 32% £1,295 M / $2,227 M North America: 66% £2,717 M / $4,673 M Europe: 24% £963 M / $1,656 M Asia Pacific: 7% £300 M / $516 M Rest of World: 3% £116 M / $200 M Main Businesses

7 250 New authors published by Penguin around the world 18 M U.S. school students learning English and Math with a Pearson programme 3.5 M Professionals who qualified in our testing centres Interesting Facts

8 4.5 M Readers reached by the Financial Times in print and online 0.5 BN People learning English with Longman materials 3.6 M College students in America using a Pearson online service Interesting Facts

9 Pearson’s business strategy and organization culture has yielded a relatively diverse, decentralized portfolio of ERPs implemented at the region/operating company level. Business process standardization within Pearson occurs largely at the region/operating company level due to market demands. Consequently, Pearson has adopted a decentralized IT strategy, with implementations occurring at the region/operating company level. Supply Chain: Environment Today Business processes: The life cycle of a product/title Editorial & Production Sales & Marketing Inventory Management Sales Order Processing Financials Distribution and Warehousing eCommerce Human Resources/Payroll Business Intelligence (analysis and reporting)

10 ERP Editorial & Production Sales & Marketing Inventory Mgmt Order MgmtFinanceDistributioneCommerceHR/Payroll Business Intelligence Oracle - Assessment SAP Penguin SAP 3.1i - School Vista - Canada Custom System - Higher Education Complex Environment: North America Supported by ERPNot supported by ERPLegend:

11 ERP Editorial & Production Sales & Marketing Inventory Mgmt Order MgmtFinanceDistributioneCommerceHR/Payroll Business Intelligence Vista - Dutch JDE - Spain Infos - Germany Exact - Poland Libris - France Oracle - Italy SAP UK Vista - UK Complex Environment: Europe Supported by ERPNot supported by ERPLegend:Not in scope for business

12 Complex Environment: Latin America ERP Editorial & Production Sales & Marketing Inventory Mgmt Order MgmtFinanceDistributioneCommerceHR/Payroll Business Intelligence JDE - Mexico Siscorp - Brazil Stradivarius - Argentina JDE - Colombia Saab - Chile Figaro - Uruguay Supported by ERPNot supported by ERPLegend:

13 Complex Environment: Pacific Rim ERP Editorial & Production Sales & Marketing Inventory Mgmt Order MgmtFinanceDistributioneCommerceHR/Payroll Business Intelligence IBS Bookmaster - Hong Kong - Singapore - Malaysia Epicor - Taiwan - Korea Custom System - Japan IBS Bookmaster - Australia Supported by ERPNot supported by ERPLegend:

14 Exercise What should Pearson do? Identify three strategies – Identify business risks with each strategy

15 Supply Chain Technology: Strategy Pearson has adopted a decentralized strategy, with implementations occurring at the region/operating company level. While supporting all the operating companies from a single ERP is desirable, the cost to consolidate is high and difficult to justify, and the process standardization required could inhibit business performance. Pearson’s Roadmap sets a course to: Maintain a decentralized approach Allow ‘scope’ to meet regional /operating company requirements Upgrade as versions go end-of-life Govern introduction of new systems Consolidate and standardize when cost justified

16 Case Study: Asia September 2004: Consolidate business units into a single ERP instance NPV: $954.9 K | IRR: 37 % | Payback: 1.3 years Goals: Standardize business processes & operating procedures across the region Reduce long-term costs (IT, Customer Service, Finance) Improve utilization of IT systems & resources Provide standard system platform for operation Scope (Locations): Hong Kong, Taiwan, Korea, Japan, Singapore and Malaysia Hong Kong hosting location and support center MPLS connectivity for each country access

17 Case Study: Asia Consolidate business units into a single ERP instance Functionality: Editorial & Production processing Academic adoption management Sales Order processing Inventory management Procurement Distribution & warehousing Financials (GL, AP, AR) Royalty management Business intelligence (analysis and reporting)

18 Case Study: Asia Consolidate business units into a single ERP instance Rollout Timeline: Apr May Jun Jul 2006 Aug 2006 Sep 2006 Oct 2006 Nov De c Jan 2007 Feb 2007 Mar 2007 Apr 2007 May Jun 2007 Jul 2007 Aug 2007 Sep Singapore Malaysia Hong Kong Korea Taiwan (delayed 6 months) Japan

19 Case Study: Asia Consolidate business units into a single ERP instance Solution Provider: IBS Bookmaster Build upon existing implementation in Singapore Build upon existing relationship with vendor Singapore and Malaysia Pearson Australia South Africa (MML) Most cost effective solution Met majority of functionality needs

20 Case Study: Asia Consolidate business units into a single ERP instance What We Learned: Partnership with vendor Strong executive sponsorship and project governance Thorough functionality requirements Functionality gaps always found – accept it and manage closely Dedicated and skilled project managers (internal & vendor) Contingency: money, time and resources Don’t underestimate language barriers and cultural styles: slows process down Replicate Success and Learnings: Taking approach to Europe

21 Summary: Environment today

22 Summary: Future environment Long-term strategy | Time, Money, and Strong Partners

23 Exercise Could Reach (the Irish government SOA programme) have used an ERP? Identify organisational and technical barriers. What are the legal implications and can they be dealt with?