assessment of erp implementation for a car dealership

04/12/2023 1Prepared by Ghassan Kabbara, IT

Director Group

Assessment of eRP Project.Past, Present, &Future/IT Org

Prepared by Ghassan Kabbara28/03/09


Director Group

Table of Contents

Introduction ERP Utilization Stats SWOT Analysis Index of Observations Part 1 Index of Observations Part 2 Illustration of a Vertical Dealership “DMS” vs

Group Zricle eRP. ERP Costs (Historic and Forecast) Problems with this Setup IT proposed Setup Problems eliminated with this setup Time Frame to receive benefits of eRP


Director Group

Introduction

Group has invested in an Zricle eRP Generic application, and that has been installed in over 20 industries.( Our investment , 4,200,000). Zricle has over 20,000 Tables. (currently Group is touching only on 10% of these Original tables in the last 6 months. And 1.6% of the tables developed by Group IT ERP Team).

If you were to do a simple calculation in terms of the actual amount of Group investment in Table Utilization, then just take 10% of the 4,200,000 investment to just give you an idea of what was paid and being used in terms of Zricle Functionality.


Director Group

Introduction

The Zricle ERP does not have a Vertical Dealership Automotive Solution.

Our Zricle eRP is not a Vertical Automotive DMS application. (The Vehicle, Service & Parts Process are intertwined harmonically throughout a proven DMS solution. )

As you will also see in the next slide the automotive industry that Zricle has been installed in is primary for Automotive Manufacturers & OEM Suppliers.


Director Group

Zricle


Director Group

Introduction

Group Invested in a team of Consultants & Developers to design / develop / implement / maintain the eRP Zricle Application Investment ( 3.2 + 1.2 Mil in Maintenance Costs in the last 3 years)

Group has further invested in two consultants Consultant1 and Consultant2 who were assigned the task to map out Group current business processes and recommend a “best re-engineered” process. ( 9,000,000).

This was required as a pre-requisite to implementing Zricle at Group as Zricle does not have a Vertical Solution for a Car Dealership.


Director Group

What is wrong with this scenario. The expertise Consultant1 bought to our business was based

on fine tuning best practices of the Process of a generic industry. (logistics, Procure-to-Sales, Make-to-Order, etc..) This also is reflected in the proposal by Implementer. (who only were planning on introducing 6 customized modules.)

Some of Consultant1 recommendations were introduced in Dolphin

The expertise that Consultant2 bought to our business was reviewing of Consultant1’s Process maps and fine tuning the missing Dealership processes. This was done by conducting a study of Group current processes, that was being used by the previous application. Dolphin. (Basically a cut n paste and a little customization.)

These processes are not Optimized for a Car dealership. As they involve a lengthy process from Start-to-Finish.

One of many examples is the creating of a Sales Order for an Inventory Item. (that has caused us a lot of issues .. Referring to the last 6 weeks of investigation being conducted by the Parts Steering committee.)


Director Group

Introduction

The Deliverables of Consultant2 were used to design the Zricle system. Consultant2 were involved in confirming the high level process maps. As I mentioned earlier these are generic processes.

Unfortunately Consultant2 did not propose a solution to cater to the more intricate sub-processes and controls for the dealership. Well they did to some extent as I mentioned earlier they mapped Group current processes then.

Is was then left to the Implementer team who are now part of the Group IT team, to ensure that the processed mapped by Consultant2 that were to some extent copied from Group current processes were designed and applied in the eRP Zricle.


Director Group


Director Group

In Summary: Two International consultancy

companies were hired to map Group existing processes, add their final touches that would be used by Implementer Consultants to design, develop and implement the Zricle eRP at Group.

When we touch on the Opportunities of the SWOT analysis section, I will further speculate why this strategy was used in more detail. (make a note)


Director Group

What went wrong?

The problem with this approach was that Group originally invested in an Zricle ERP base; to be used with minimum customization but ended up developing the extra functionality required to suite the DMS business. (by introducing 500 plus tables)

Thus the deviation from the original plan. We would have been much better off by

Investing in the Zricle Development tools to design the system from scratch. (for more info on this kindly make a note)


Director Group

Introduction on Stats

The next slide will show a little stats that confirms that Group eRP team has been developing the current system as appose to merely customization of the screens.

Requiring to have a ERP dev team to support the developed Sub-modules for the years to come.


Director Group

A Brief OverviewData derived from first extract.

AAC using Original Oracle Tables

AAC new tables Created XX

Oracle tables not beinng used

AAC New tables not being used

% 0.216697247706422

0.0241743119266055

0.756330275229358

0.00279816513761468

Table Count 4724 527 16488 61

100000.00%

300000.00%

500000.00%

700000.00%

900000.00%

1100000.00%

1300000.00%

1500000.00%

1700000.00%

Zricle System Utilization

Axis Title


Director Group

Statistics in more details. Drilling down into True Utilization of Database Tables.Data derived from Second Extract


Director Group

Keeping in mind as we go through this presentation

The ERP Consultants and Dev Team have been in process of developing the DMS for Group. (527 new tables were added) This is NOT a customization effort but a Full Fledged Development initiative.

The IT ERP Team current setup was not established for such a development initiative as we will see in the coming slides. (no QA, formal documentation procedure, change control process,)

Too many rules are being broken, shortcuts to get the job done; this has in Fact caused a lot of data integrity issues; Impact of which has contributed to stock Variances.$$$$


Director Group

80 / 20 utilization on Custom Tables

150 Group Customized Tables have over 10,000 Records. No documentations exists as to what purpose these

tables serve to the benefit of Group business. Not to forget technical Documentation that should be prepared as part of the development process.

These are being touched by on a frequent basis. We do not have any technical documentation. Risk

of which means that any developer that leaves Group, the replacement will have a very hard time trying to understand the design process. 116 tables are touched on during the last 6 months.


Director Group

Immediate Action required

Identify what role do these Customized tables play in the key daily processes. Document those that are being affected

by these processes. Formalize a QA program to Map

processes setup in Zricle. Control future development initiatives


Director Group

SWOT Analysis

In the next slides I will focus on the Weaknesses and Threats that I have identified and that I believe are quantitative and qualitative enough to let us pause on moving further with the City Rollout and as such work on an immediate contingency plan to salvage the ERP project. (that is if it is salvageable)

The Opportunities are best left to be discussed outside the scope of this presentation as they do not coincide with Group Core business Strategies. (can be discussed after the presentation.)

It is part on the IT Governance Initiative to share all this crucial information with you the “Owners” of the application as whatever system we end up with will be utilized by you to assist you Direct Managers/Directors and Management in meeting your business goals, objectives and accordingly achieving your KPIs.


Director Group

Ground Rules that were broken

It should not be IT’s decision to decide on what eRP should be used.( Unfortunately IT disqualified DMS1 for a technical issue, that is secondary to Group Business Requirements) for discussion.

The decision lies in the hands of management and the Team of End Users. IT should provide enough facts / intel to aid

management in this decision. Wrong / Distorted / Incomplete Facts means

wrong decisions.


Director Group

Two Things to remember

Group is in the Business to Sell Cars and the last thing they need to worry about is “re-inventing the Wheel” (i.e. developing a tailor made application on a tier 1 ERP platform) that requires an army of ERP consultants to maintain the application.

Garbage in, Garbage out, (GIGO). Management requires Reliable reports to make key decisions. If these reports lack integrity and cannot be produced in a timely manner the competitive advantage will be within our competitors.

Group will remain at the mercy of the IT ERP Consultants for many years to come. (Benefit to consultant is CV update.)


Director Group

Three Facts

We went out of a Legacy and back into another pre-legacy built on the Zricle ERP Platform.

Delusion that Zricle best practices are currently applied in Group needs to be confirmed. (will be a wasted effort)

The facts gathered from the IT Staff, the users complaints heard to-date are substantial indicators to confirm we are having major issues with the application that are not be addressed. (recent trip to City2 confirmed with end users)


Director Group

Index of Observations in detail Part One

• IT eRP Staff Competency– ERP Consultants– Dev team (are requesting to attend training courses)– DBA

• Performance Issues(DBA purchased “Doppler’ a Database monitoring tool)• Zricle eRP Utilization. Chart • IT non ERP Setup (no architect, not using helpdesk, experimenting with

expensive devices, trojans / viruses in network, no IT policies)• Business Rules Setup( HR, Weighted Avg cost for vehicles, role setup)• DMS1 Copying. 4 Executives have DMS1 experience• ERP Staff commitment to see the project through.• Current Competency of End Users. Pre-requisite to using Zricle.


Director Group

IT Staff Competency

ERP Functional Consultants: 6 key consultants having a total of 96 years

experience, with 24 years Automotive. (15 of those are by the 2 consultants that have been working with Group on Dolphin.) Only 6 years of combined new Automotive Zricle experience comes from outside Group.

In Summary the 75% of the Combined eRP consultants experience prior to working at Group is purely Zricle Consultancy, Development experience in non – Auto- Dealership environments.

eRP Project Manager does not have any previous automotive experience prior to his joining Group. Excellent Project management skills however


Director Group

More Facts

The team has been learning along as they develop “Customize “ in the last 3 years.

Receiving feedback from End Users who were used to working on the old Dolphin application.

Cut and Paste Trying to integrate where possible the

customized forms into the Zricle base


Director Group

IT Staff Competency

Check Point: As much as the Team tried to stick to

the Deliverables of the AIM methodology when the system was first being designed, through-out the last 2 years the end users have had a large influence on changes being made to the original design.


Director Group

IT Staff Competency

Development Team The 2 – 4 developers that are part of the ERP Consultancy

team are creating newly customized tables: Customization means creating custom forms that talk to

new tables, that in essence need to linked to the Original Zricle tables. (which affects causes performance issues;)

This amount of customization means that we require a development team , to support for as long as Zricle is being used in Group. The more the customization being created, means more maintenance and developers are required. And a high risk of “bad programming”

Especially when no formal methodology of development is used. Proof of which; No documentation exists.

Customization means we are diverting from the Zricle bases. Once more Creating performance problems, and tailoring the Zricle to look like Dolphin.


Director Group

IT Staff Competency

Database Administrators Two DBAs. Each acting as backup to each other.

Redundancy. Before my joining an expensive tool “Doppler” was

purchased, not yet applied, that will used to monitor the database performance. Approx TCO 2 years ($140,000)

I am have requested that the initial amount of $50,000 be refunded as this was paid. (no action on this to-date)

Tool is not required as the dbas’ have the qualifications to identify performance issues, but in reality many of these issues are out of DBAs control. (as we will see in the coming slides on performance issues). Eg( programmers need to revisit their Queries to address their SQL programming)

Currently on Zricle DB 11x; Upgrading to 15z DB will have a better monitoring grid control management panel that needs to be looked into.


Director Group

ERP Project team current Org

Currently the ERP project team is as follows: DBA should not report to Erp project manager

especially once development has increased in our current environment.

Dev team should not be under Project manager for implementation.

Project Manager Should only have to deal

With ERP FunctionalConsultants


Director Group

Performance Issues

One of the Performance Issues are due to programming inefficiencies by the consultants and developers. They have been hired initially to implement a project, being out-sourced. Now they are part of the group family they are being forced to customize. (due to pressure from End users)

Risk to Company: Losing customers as they are unable to wait for their invoice to be generated.

Decreasing Productivity of staff. Time consuming tasks being sent to IT. EDP once more. Consultants who are not experienced in optimizing

programming code cannot have time to re-fix the code. DBA has purchased a very expense tool to monitor

performance. “Doppler” that will cost us $ 140,000 for the next 3 years if we cannot get a refund.

This tool itself will be a performance overhead.


Director Group

Performance Issues

Another Performance Issue lies in the created Customized Tables that need to be linked to the Zricle Built in tables. This causes an Overhead to the database, as the transactions needs to touch on all these tables in the Original Zricle Schema. Especially for reporting Requests. (A never ending requests by end users) Risk to Company: This affects other users that

are doing more critical tasks such as invoicing, creation of job cards, etc. Hence we lose customers. (15 min in City2 SC to close a job card, up to 30 min to create a new JC for a new customer.)


Director Group

Performance Issues

Performance can be affected by 3 Variables, Network latency, Database Efficiency, and bad programming, Hardware specifications, and Viruses/trojans traveling in our network.

Current Network is not designed/ optimized to handle Current and Future traffic.

Computers are not Centrally controlled by IT allowing users to install own programs, access internet, etc. (started testing of a Centralized IT Asset Control application) Risk to Company: High cost of passive devices to

improve bandwidth, increase bandwidth, and affecting end users. ($70,000 for a cache server)


Director Group

Zricle Utilization. Where do we stand?Un-necessary Overhead

Wasted $$$


Director Group


Director Group

73% of total Records / Table Hit Ratio is in our Customized Tables.

Meaning The customized tables have more records per table 3 times more than the Original Zricle Tables.

Meaning 3 times more transactions per hit on the “XX” Customized

Tables.

Zricle


Director Group

IT non ERP current Setup and Issues

IT non ERP Section, is fighting fires. Trying to adjust to Performance issues.

No planning for Infrastructure. No Architect Concerned with Personal Projects for personal gain. (DR,

Telephony, training, Utilities) Total PCs over 1600 in company having over 3000 programs. No formal IT policies and procedures. No control over regional

dealership Purchases, Assets. No planning. No Delegation when required. Emails can be accessed by IT. Recommend Outsourcing. No Helpdesk for ERP Issues. Verbal Calls, emails. Link between City3 and City2 crippled due to trojan. EPC being introduced via web affecting bandwidth. Did not

consider alternative option of using DVDs. Still using old method of backing up data. Tapes.


Director Group

Business Rule Setup in Zricle

Vehicle Weighted Average Calculation of Cost for vehicles. Decision by IT. Affecting Gross Margin, Reconciliation.

Finance COA. No control Accounts security. Too complicated. No Posting reports

HR Payroll Calc. Loans Cutoff Other Issues. Role Setup. Duplication of roles.


Director Group

Business Rule Setup in Zricle

Parts Recent finding Invoice can be

generated while SO status in Entered, booked or Shipped.

Abuse by end users, that contributed to Stock variances.

System is triggering automatic transfer of parts to locations that are not being requested by End Users.

Affect stock variances.


Director Group

Index of Observations in detail 2

• DMS1 Copying. 4 Executives have DMS1 experience• Zricle Bugs • Development Issues affecting Data Integrity, Customer confidence.• User Friendliness of the Zricle Forms.• Complexity of understanding the process. Lack of User documentation.• Lack of End User Training • Why we cannot hand over the Superusers functionality to Corporate

Departments.• Why I believe the eRP has failed in Group and will Continue to Do so.• How the IT eRP Team are handling Problem issues that has been an

obstacle for me to gather significant intelligence on the amount of maintenance that the ERP team has been /is working on.

• User Feedback & Feedback from Existing-Customer Internal Staff regarding the Zricle Project

• RFP Feedback from Zricle. Evaluation Criteria is too ambiguous. CCenter, back office issues.


Director Group

Historical Direct Costs of Zricle Investment and Optimistic Forecast for next 3 years

Forecast based on Assumption

the Current Staff stay with Group for the next

3 – 4 years


Director Group

Problems with this approach

We are creating Legacy once more using the old “Dolphin” Screens for many forms and touching on many tables that are affecting performance.

As an example:- In the Dolphin system we the same

screen (kardex) possibly touched on 3 or 4 tables. In Zricle the same screen is touching in not less than 15 tables.


Director Group

Problems with this approach

The new tables we touch on need to be maintained, hence they need to be documented.

Any future upgrades we receive by Zricle means we need to re-visit the customized tables.


Director Group

Three Questions that need answers: If the processes were re-engineered for automotive

“dealership best practices” by Consultant1 / Consultant2 were they applied in Zricle? Consultant2 did review the Design however, but post implementation was not verified.

Over 20,000,000 has been invested so far for eRP. Forecast for the next 3 years will be approx 10,000,000. Are the shareholders ready to make this substantial investment. (This does not include indirect costs eg. invest in Users with high skills to take ownership of Zricle eRP.)

Is Management aware that the current ERP team are in the process of developing(not Customizing) a Dealership application at the expense of the Company?


Director Group

Issues noted to-date

1. The eRP team are Zricle experienced and most of them do not have automotive experience.

Risk to Company: They have been taking requirements from users who have used the old “Dolphin” systems and applied many of the business rules / screen layouts. The team has been learning as they go along. Taking requirement from one Region, from possibly an end user that has gone and left.


Director Group


2. The Customization / Development is an ongoing process, that requires through testing by development team and end users. The current IT environment is not setup for this.

Risk to Company: New forms are migrated to Production. Program could have “Bugs” that will effect Production Data. We are already witnessing this phenomenon with Parts. And Zricle Service tickets are being raised with Zricle.


Director Group


3. There is no formal documentation process for Development as our consultants are overloaded and which to continue with project implementation. Over 500 Customized Tables have been created in Zricle so far. (this is a major issue, 2.5% of the total Zricle Database)

Risk to Company: Losing a developer means crippling the progress of the maintenance process. More importantly we cannot verify the Programming integrity of the developer.


Director Group


7. Business Rules have been applied in the Zricle by IT department. That are not as per the best practices of the Auto dealer ships. The introduction of the Weighted Average for Vehicles for example.

Risk to Company: This is creating a lot of issues with our Gross Profit. (Refer to Finance for problems this has caused). It is affecting our Bottom Line.


Director Group


8. Even though eRP team has customized a few of the screens to simplify the process, the end users still suffer from the complexity of the process. Upon a recent visit to City2 to discuss issues with Vehicle specs, I was informed that the end users cannot take an initiative to fix the specs as it takes them over 30 minutes to review specs of one vehicle. This is just one example:

Risk to Company: Need to find time to customize more screens if doable. More importantly the current skills of the users need to raised to be capable of understanding the process. (this is fine for back office ops.) Take example of City staff capabillity.


Director Group


9.Customization Overload. This will no doubt mean we will require a team of developers


Director Group

Aging

379 1- 3 months 2430 3 – 6 months 2471 9 -12 month 2542 12 >


Director Group


Director Group

Taken from Sales Data for 2008Percentage of Invoices breakdown generated for 2008

(i.e. 2.1% of total Invoices On Average are prepared 1st Day of each Month; While13.2% are generated on the 30th of each Month)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31


Director Group

In the next few slides I will present the current iT organization


Director Group

iT current Setup

IT Director

ERP Application Manager

Unix Admin 1

DBA 2

eRP Tech

2

eRP Functional

9

IT Manager

RegionalSupport

City5 4

City 4

City2 7

HT 1

Microsoft System 2

Comm

Infrastructure

3

Web Dev (Vacant)


Director Group

Problems with this Current Setup

IT Director

ERP Application Manager

Unix Admin 1

DBA 2

eRP Tech

2

eRP Functional

9

IT Manager

RegionalSupport

City5 4

City 4

City2 7

HT 1

Microsoft System 2

Comm

Infrastructure

3

Web Dev (Vacant)

Functional team who need to implement should Be isolated from Tech Team who develop.

DBA should be isolated from tech. Regional Offices de-centralized in support.


Director Group

What is missing in this setup

No Quality Assurance. IT Functional doing Operational

Tasks No super users in business units.

No ERP training Unit to support new users.


Director Group

Proposed Setup

IT Director

Corporate

IT Operations

eRP Tech

Quality

Assurance

(

Security

Super

User

Support

Regional Support

City2 City Towns

eRP Projects

Functional


Director Group

Proposed IT Org

IT Director

Assistant

IT Operations

Infrastructure

Comms

Support (Corporate, Regional)

Security

eRP Project Manager

Functional Consultants

Super User Support

Quality Assurance

Dev testing

IT polices & proc

DBA

Development

eRP Tech

Web Master

Training (Via HR)


Director Group

Zricle todate does not have a vertical DMS to sell to clients., finds an IT Manager who is trying to convert his IT dept to a profit center and It offers a high discount to potential Dealerships, promising the IT Manager that after he implements Zricle in his company he can sell the product to potential clients.

This way both are happy IT manager goes to management and convinces them that there is a future in selling DMS. Zricle then sells the Zricle to other dealerships telling them they have an expert DMS implementer, and as such sell licenses.

In the end the company doing R&D on the implementation suffers. (competition1, competition2, competition3)


Director Group

Symptom check

52 two sub modules proposed by Implementer.

What are we touching on now from these sub modules. What has been modified

7 customizations.(what was done


Director Group

In addition to the above applications, the end users also use Excel / Access or manual systems in the following areas:

Vehicle Sales Sales forecasting and order planning; Prospect tracking; Sales quotations; Sales & Inventory reporting; Campaign management. Vehicle Service Vehicle loading & planning in the workshops; Repair orders for Opel vehicles; Tracking technician productivity; Warranty claims management; Pre-Delivery Inspection (PDI) management. Finance and Accounts Financial Budgets; Financial consolidation & reporting; Cash forecasting; General Purchasing (non vehicles and parts procurement); Fixed Assets tracking. Human Resources All the activities except payroll processing.

assessment of erp implementation for a car dealership

Automotive

director group

introduction group

group investment

years group

group existing processes

ghassan kabbara

zricle erp base

zricle erp generic application