NIBCO’s “Big Bang”: An SAP Implementation
NIBCO, Inc. is a midsized private manufacturer the makes valves and pipe fittings headquartered in Elkhart, Indiana (Brown, DeHayes, Hoffer, Martin, & Perkins, 2012, p. 468). NIBCO wanted to convert to SAP R/3 at all ten plants and the four new North American distribution centers at the same time endorsed as the big bang approach (Brown et al., p. 468).
There were several reasons behind NIBCO’s decision to implement an enterprise resource planning (ERP) systems. The organization could not succeed with it current system. The systems did not communicate with others and as a result the distribution couldn’t see what manufacturing was doing and manufacturing couldn’t see what distribution and sales were doing (Brown, et al., p. 470). A lot of time was spent trying to resolve disconnects and building custom interfaces which did not allow the time to improve the productivity. The systems required a lot of maintenance and required a lot of ad hoc changes due to system crashes. A new system was needed to replace patchwork of legacy system with a new integrated system for the ten plants and distribution centers.
NIBCO was faced with many pros and cons when approaching the big bang implementation. “Among the benefits would be multimillion dollar operational improvements and reductions in inventory costs; the ROI was based on a six percent forecast growth rate in NIBCO’s revenues”(Brown, et al., 2012, p. 471). The decision to put its best people on the project to ensure it was well managed against implementation risks. Also the involvement of representatives from different functional areas to evaluate the different alternatives allowed the end users to evaluate the prospective system from their own perspective. Some of the cons were the estimated cost of the project was 17 million dollars which was a huge. Also the timeline of 15 months was a high risk. It required pulling some its best employees from their regular jobs to...