1. Enterprise Resource System
At Nestle
* * *
TEAM: H
Krista Collins
Christine Chim
Dorothee Deckert
Sara Villanueva

2. Literature Review
Main Benefits
Potential for great savings (both tangible like inventory cost savings and intangible like happier customers due to faster delivery)
Main Costs
Huge upfront cost (purchase of hardware and software)
Huge cost of re-implementation if failed initially
Lessons Learned:
Do not implement ERP because it’s the “trend” must evaluate organizational need and fit

3. Methodology
Research
Internet search engine (i.e..
Research and business based websites (i.e..
Analysis
Textbook and class materials from MIS
Models and concepts from other courses (i.e.. PEST model from BU 481)

4. System Implemented An ERP system with SAP
Role based work-place templates
Effects on general efficiency
Unit brands and divisions that act independently
Effects on service efficiency
mySAP Supply Chain Management will provide cost savings and increase speed of produciton
mySAP.com will track customer preferences/orders more efficiently, responding to their needs in terms of location and timing of delivery
SAP’s flagship ERP software, SAP R/3, along with:
mySAP Customer Relationship Management,
mySAP Supply Chain Management,
mySAP Product Lifecycle Management,
mySAP Business Intelligence and
mySAP Human Resources
mySAP.com e-business platform

5. Company Objectives By implementing SAP, Nestle is pursuing four goals:
Define common business processes and roll them out across the Nestle worldwide locations
Standardize the master data
Standardize the entire IT infrastructure
Implement web-based initiatives

6. Environmental Forces
Technological: Increasing speed and power
Managerial: CEO embraces change
Organizational: Integration of global operations
Market Trends: More demanding customers
Competitive: ERP adopted by other competitors

7. Outsourcing
Nestlé chose the outsourcing option to SAP system: hire external vendor to design and create software for Nestlé system.
80 different information technology infrastructure over the world
Long and very complex project
Nestlé could not monopolize their IT people or hire more staff to set up the project for several years
Outsourcing is more cost-effective than maintaining IS staff
The June, 2000 Nestlé new agreement is one one of the largest software deals in the history of SAP
Reasons:

8. Reasons for success Managerial reasons:
Nestlé USA did errors but they took lessons to implement successful other SAP system in Nestlé firms over the world
No one from the IT team were directly affected by the new business processes
Rebellion of employees and divisional executives
ERP was not about system but change management
Nestlé USA improve relationship and communication with their employees
Managerial reasons:

9. Reasons for success Organizational reasons:
Reduce redundancy, better share information and do economies of scale
Be aware of difficult and complex task to accomplish
No start projects with deadline in mind
Frequently revisit numbers to minimize trouble surprises

10. Worldwide system standardization * Project size = greater risk
Challenges
Managerial
Worldwide system standardization
* Project size = greater risk
* High up-front investment
* Size of the implementation team
Long process: loss of momentum
SAP’s flagship ERP software, SAP R/3, along with:
mySAP Customer Relationship Management,
mySAP Supply Chain Management,
mySAP Product Lifecycle Management,
mySAP Business Intelligence and
mySAP Human Resources
mySAP.com e-business platform

11. Challenges
Technological
The first SAP R/3 Enterprise customer
* changes introduced will have large cost implications
Unicode compliance with all mySAP.com
components
Technological capabilities

12. Challenges
Organizational
Change in corporate processes and culture
Employee resistance
Technological experience

13. Results
High employee turnover rates
Efficiencies
Organizational structure
Shareholder interests
Contingency costs

14. Take Home Lessons
Training
Contingency plans
Testing
Different policies
Top level commitment
Employee emplowerment
Open to structur changes
Update budget
Timelines
No One Likes Change!

15. Exhibit 1: Drivers of Change in the Environment
Power and memory capabilities increasing 10 fold over five years. Ignoring this trend is not an option.
Technology has advanced to the point where SAP now offers its products in parts of the world where it once did not. Thus, Nestle can implement SAP in parts of Syria and Far East countries
Strong top-management support for investing in ERP
Brands and divisions were using different systems that that did not facilitate data sharing or integration.
Inventory costs were high due to lack of communication between suppliers, packaging companies and other nestle divisions.
Points of customer entry were numerous, which resulted in entering customer information more than once, and into different systems.
Market: Customers more knowledgeable, and demanding higher quality, lower costs, better service and continued innovation.
Competition: Nestle has many large, well established competitors such as Coke and Hershey, both of which have implemented their own ERP or IT/IS systems.

16. Worldwide Investment in ERP Projects, In $ Billions
Growth over time
: From 8.41 to 11.98
42% increase
: From to 16.7
39% increase
: From 16.7 to 17.7
6% increase
Conclusion: The rate of growth has slowed down recently, possibly due to cutbacks in spending or negative feedback form firms that have attempted to use the ERP systems and failed. Overall, growth has endured, suggesting that ERP still has a great deal to offer companies.

17. Company
System
$Spent (US$)
Savings?
Nestle
SAP
280M (in US subsidiary only)
500M global project
325 Million savings till date (Claimed since it’s headquarters not in US don’t have to disclose numbers)
Coca-Cola
8M in India alone (Full Contract Amount Undisclosed)
Better utilize the information from daily operations enhance customer service, improve execution, efficiency, grow our business (no numbers given)
Hershey
112M
Initial 100M lost in sales b/c bad implementation
United Biscuits
16.3M
Undisclosed
Cadbury-Schweppes
212M
“Counting on a 500M pounds ROI” (no actual figures given)