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A brief on IT past present & what lies ahead

To ERP or not to ERP that is the question? In one of the dealers we had a dilemma on whether the company should embark on an ERP or not? Presentation highlights setup of IT and touches on company culture. Emphasing Accounts current commitment to process improvement

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A brief on IT past present & what lies ahead

  1. 1. A brief about IT Dept Activities in all tenses Past, Present and Future. Emphasis on Accounts. Ghassan Kabbara, CISA January 8th 2007
  2. 2. My Profile  Strong background in IT/IS management combines experience as Group IS Manager and Consultant in Information Systems, with ability to develop and deploy IT plans that achieve strategic business goals. Over 22 years Work Experience . 12 years experience in Auto Dealer Ships and over 4 years Consultancy in Inventory Management. Consulted over 20 Companies to-date.  Experienced in building, leading and motivating teams of up to 25 employees.  A professional Manager with over 16-year track record in information systems management. Ability to streamline and maintain focus on multiple Projects. Strong Analytical Skills.  I have also played a crucial role in the Financial management & Control of the companies I worked for / Consulted by discovering to date half-a-dozen fraud cases.
  3. 3. EMPLOYEMENT HISTORY  Jun 2005 – Present Mutawa Al Kazi Co Info Systems & Dev Mgr/Automotive Consultant  2003 – 2004 NAPESCO, Kuwait Systems Dev & Quality Mgr  2002 – 2003 Mass Consultants, Kuwait IT Project Manager & Consultant  1998 – 2002 Al Sayer Group, Kuwait Group Info Systems Mgr  1992 – 1998 Arabian Motors Group, Kuwait IT Manager  1989 – 1992 Management Info Systems Software Dev Manager / GM  1987 – 1989 PROJACS, Kuwait Training Coordinator / Instructor
  4. 4. Consultancies to date…  NAPESCO – Consultancy for Review and evaluation of ERP Vendors. Prepared RFP.  Al Zayani Group – Conducted Review of IT Department operations and made recommendations for Improvement and documented a Plan of Action.  Mutawa Alkazi – Conducted Review of IT department operations and made assessment of Internal Departments utilization of IT Systems.  IMCO – Evaluation and Recommendation of Accounting Applications and HR Solutions; Frequent Reviews and Audits of systems.  Consultancies over 2 years old:  CONCO, OAPEC, MASS, PROJACS, CCC, S&B, EXACT Dubai, Horizon, KIA, Canar, and many more…..
  5. 5. IT Dept Structure  IS & Development Manager  Senior Analyst Developer 1  Analyst / Programmer 2  DBA / Programmer 1 (Part Time)  Part Time Developer 1 (Legacy)  Systems Administrator  IT User Support (Sherhan & Hunaif Sites)
  6. 6. Brief of IT Setup before my joining:-  Multi OS & Decentralized Systems.  Different Platforms (Clipper, Oracle8i,9i.)  No Software Development Leader  Each System was designed by a different Programmer.  What was migrated from Clipper was migrated as is.  Hard Ware / Servers / Computers all outdated.  No Licensed Software
  7. 7. Brief of IT Setup before my joining:-  System Went Live in an absolutely Short Time Period. (Min End User Involvement)  No Documentation Exists.  GIGO phenomenon. (No controls for Data Capture)  Too much Hard coding of Business Rules that have been inherited from old legacy have been coded in new application.  Vast amount of Reporting being Generated.  Too much Centralization in Accounts and that is still a Fact to-date.
  8. 8. Why I was hired in the First place!  I was hired to lead the IT Department & co-manage Inventory/Rental Departments; and as such management has made a decision 18 months ago to hire me on a Full time basis to Enhance the existing system (complete the Development Project), Review & Enhance Business Processes and Co-Manage the Inventory / Rental Operations. Basically get it out of its comatose state it was in.  I had prior to joining made recommendations to purchase an Auto-Dealer ERP application.  Other consultations on IT Operations were made as well, in the last 3 years by IT consultants.  During First two months of Employment a company was pitching to Out-Source all IT services.
  9. 9.  Back then in November 2004 I had made recommendations to Purchase an eRP Dealer Ship application (DMS).  Now after having had sufficient intelligence about our operations in the last 18 months; I can candidly say that our Current Setup is not geared to undertake such a Project, unless first a “Change Management” Program is enforced. Call it Culture Change if you wish.
  10. 10. My IT Strategy  Again bearing in Mind that I am the “OUT- SOURCE” and was hired to extend the Life of the Current System and introduce incremental Changes for better hopefully. I formulated a Plan to First Address all the Centralization and Migration of the decentralized Databases.  But First it took over 4 months to understand the existing design before formulating the plan. I had no documentation to refer to.  I had presented to MD 3 months after my employments my Observations to-date and again re-confirmed that there was a big challenge ahead, as the system needed a major Overhaul.
  11. 11. Current Project To be Centralized Next Project Upgrade and Centralization
  12. 12. Current Project To be Centralized Next Project Upgrade and Centralization
  13. 13.  Meanwhile I kept trying to penetrate the Information Arena of our Accounting Department to Under take a Process Mapping Project. Unfortunately this was not accomplished.
  14. 14. The “Family Business” Phenomena  To begin with We do not have a Clear Vision, Mission Statement or Business Goals as such.  We do not even have an HR Strategy in the company. Simple things such as a Job Description are not in place.  This is a Family business where Decision making is very much Centralized.  Unfortunately this is the Major Bottle Neck for the business.  Gentlemen these are the Facts!
  15. 15. Project Objectives  It was and still is part of my plan to one day secure a ready made ERP into the Organization. So my Current Strategy was in affect addressing two very important issues:- 1. I was merging the Data from Decentralized Databases to a Centralized Database that would eventually be used for Historic Data Migration to any eRP DMS. 2. I was bringing together all our data into one repository. to have better visibility of our real time Business Transactions. And centralize all Executables of our application, for optimizing the Programs Change Control Process, security, maintenance, cost reduction in licenses..
  16. 16. Project Objectives  Another Project that was a personal Challenge for me was the re-implementation of the Rent-A-Car Application (ARMADA). This project again served two business Purposes:- 1. Utilize what We’ve paid for as it had been shelved after two attempts. And of course Phase out CLIPPER. Lots of resistance from End Users. 2. As a Pilot Project to monitor the End User Commitment to this Project and to see if they would take Full Owner ship of the Application. (This was a vital measure in order to gauge progress of system utilization; IT had not developed the Application. So in theory the Internal players were the End Users (Rental & Accounts) and External Player (VOYAGER). Again although the Project Went Live with a lot of Commitment & Push from my end; To-date there has been no self reliance. The system is being used only for Contract Opening and Closing. The P&L from Armada cannot be produced. Symptom Check: If this project cannot see the light of day, what chances does a Full Fledged eRP application have.
  17. 17. Current and Future Plans. (Pre-requisite to a backend Accounting Application)  Phasing Out the Last of our Clipper Application Motor Cycles and Power Products. Parts & Service to Oracle Database. (Obstacles so far is the vast number of Junk Data.) (Target Date End of First Quarter 2007)  Migrating Motor Cycle Sales Application to ORACLE 10g and Forms 6i. (Target Second Quarter 2007)  Multi Franchise And Part Number Restructuring  Centralization of Customer Databases.  Ongoing Improvement of Systems. Refining of Process for Body Shop and Parts Estimation. Integrating EPC with Application………Revamp of Reservation & Sales Application. Introduce a Used Car appraisal module.  Maybe one day break the ultimate barrier and Map the Accounting Processes……  Still Waiting.. But the clock is ticking
  18. 18. Is our Existing Culture up to the Challenge for a Full Fledged DMS?  An ERP implementation is not only an Info-Tech project. It will bring about a change in the roles of different departments, requiring different skill- sets, change in the authority and responsibility. (Armada Example)  In short, it will result in a change in the existing power structure.  Be sure not to underestimate the complexity of this change initiative.  In Summary we do not currently have what it takes to embark on such a Major Undertaking.
  19. 19. Current Symptoms that prohibit us to go down the Road of DMS (eRP)  Armada: No Ownership. Lack of commitment from end users. No Reports being generated at Middle Management Level. We Cannot run a P&L!  Sales & Prospecting Application: Again no Ownership. Lack of commitment from end users. GIGO phenomenon. Extra burden on Accounts Personnel to re-input Customer and Sales Info.  Parts Application: No Forecasting to HBD. Being Reactive to Business Situations. No policies in place. Ordering Module is undergoing an Overhaul.  Accounts: Do Not Enter. Confidential.  IT=EDP
  20. 20. A Sample Problem due to Centralization.  There has been a Stock Reduction in Inventory in the last 16 months, yet this is not reflected in Financial Reports (B/S).  Using a metaphor we have a sub-ledger (Inventory Stock App.) and a control Account (Stock Account in GL). The GL has been touched directly (provisioning) in the past which has in essence distorted any means for reconciliation.  The Stock Cycle has now been affected. We have two sets of Cycles for Purchases, Stock, and Sales.
  21. 21. Sales Cycle from multiple sources affects P&L and B/S. And Reconciling Nightmares Stock Purchase Sales Cash Sales Stock Purchase Cash Source: Inventory System with Stock Value without provisioning or Aging. COGS for Slow moving is reflected with WAVG Target: G/L Account Summary Stock Value With Provisioning. COGS for Slow moving cannot Be identified. COGS Inflation. Stock Discrepancies Provisioning & Write Off
  22. 22.  So even if we were to address an Accounting Application we will not solve the Crux of our reconciliation problems. Unless a tight integration is possible between the source applications and the Accounting Application.  Our Aim is to interface all Transactions that have Financial Impact into the Accounting Application periodically. It is our objective to eliminate Manual Postings, Adjustments in the GL for those respective Accounts that are affected by from the Sales, Service and Inventory Modules  If we are unable to do so now with the available resources, we definitely cannot do so later.  My approach is to introduce incremental improvements to the Business Bottlenecks.
  23. 23. One Important Note:  Before we can even consider to undertake a new DMS eRP project the majority of listed projects need to be finalized. (Only of course if we intend to migrate historical Data to the new application).  We are an Auto Dealership and as such the eRP should be a vertical application with proven track record for Auto Dealerships. Any Accounting Module in a DMS should address the majority of our accounting requirements.
  24. 24. Important Note: Second Part  We have to-date completed many successful Innovative Projects and as such we have already begun to see the added value to some areas of the business.  Other Successful Projects:  (e.g. Revamped Business Processes, Stock reduction, Intro of Prospecting App, Automated Work Order Requests, CR, Improved Controller Screen, Recall-Campaign, Service Follow-up, Controlled Transfer Module of Fleet from RAH to Used,P&L for Rental Fleet, and much more.)
  25. 25. To Recap: Why Accounts Application to-date is not being addressed?  Internal Politics: No Cooperation & Commitment from Accounts to gather requirements and map processes? We cannot proceed without having a Requirements Document.  We are unable to Currently undertake such a project until all applications are on a common platform. Our Accounting Interface Applications are all hard coded and these need to be parameterized to address any potential Chart of Accounts.  It would not be Wise to purchase an Accounting application now, undertake a lengthy project and come late 2007 when we might need to make the change to a Full Fledged ERP, which will already have an Accounting Module in place. (DMS)  We would have to halt all projects in IT to focus on the Accounting Project and as such would be in a catch22 situation.  Not Satisfied with the current state of interaction being received from Accounts. Its one way street in information sharing. This needs to be Addressed.
  26. 26. Its all about Processes  I have already recommended that most of Accounts Problems could be due to too much Centralization of Processes, duplication and excess manual controls. This overload of work efforts are an indicator where part of the solution is starring us right in the face  By Mapping the Processes we can gradually identify the Bottle Necks and then offload Accounts from having to do lots of Manual Work. Further more the Mapped Processes can eventually be used as part of our requirements Document for an Accounting Application.  What are the problems we currently face in Accounts Department?  And if we do need an Accounting System in haste, it is because of Technology and not functionality issues.  I wonder how many Spreadsheets / (bootleg) Documents are being annually compiled by Accounts?
  28. 28. Benefit Of Customer DB Centralization. Uses Customer Info for Credit Control. Customer # In systems = Customer # in Receivables. Option to blacklist Customers
  29. 29.  Lets take a look of some of the Face Lifts our application has had….. And also a couple of the processes we have mapped and used to Refining the Process.
  30. 30. A Parts KPI
  31. 31. Sales Conversion Ratio KPI
  32. 32. A Little Stats (source TRACK IT) 35% of Requests 15% of Requests 15% of Requests
  33. 33. Break down of Finance WO by Type Break Down of Work Orders for Finance 0 10 20 30 40 50 60 70 80 90 Total 80 60 54 50 49 48 40 25 20 15 12 8 MCPP Application Application s Parts Application Reports Vehicle Application Armada General Enquiry Service Application Hardw are Netw ork Mistakes MCPP is decentralized. Current Project on Hand to phase out From Clipper Environment.
  34. 34. IT Department SWOT Analysis Show me the company’s SWOT Analysis and I’ll Show you mine.
  35. 35. Summary  Predicament is not whether we require an Accounting Application; that is inevitable. Its only a question on time.  Its Whether we require a Full DMS (with a built in integrated FA module) Versus An Accounting Application from a third party Vendor.
  36. 36. We should asking?  Why should we implement an ERP package?  Will it significantly improve our profitability?  Will it lead to reduced delivery times for our products and services?  Will it enhance our customers’ satisfaction level in terms of cost, delivery time, service and quality?  Will it help reduce the cost of our product?  Will it enable me to achieve the same business volume with reduced manpower?  Will it enable me to reengineer our business processes?  Apply the Same set of questions to “Why we should implement an Accounting Package”
  37. 37. Quote for the Day.  “You can not find a solution using the same thinking that created the problem”  Albert Einstein  To Achieve any measure of “Success” Investment in IT must be accompanied by substantial changes in business operations & processes & changes in management culture, mind-set, & behavior. Absent these changes; investment in IT can be a waste of precious investor resources.  G. Kabbara
  38. 38. Implementing New Information Systems.. By John Silltow. MD, Security Control and Audit Ltd.  Organizations invest in information systems for a variety of reasons. Some want to resolve technology problems with their old systems. Others want to improve the effectiveness of their current business processes. Still others want to create significant change and improvement in their organization’s overall business. Irrespective of the reasons for purchasing them, the task of implementing a major new system, in anything but the smallest organizations, is a complex and risky project. There are many classic errors that lead to delay, lack of benefits, and failure, yet other routes lead to success, timely implementation, and short and long-term benefits. One important aspect to keep an organization on the track to success is to understand what is being implemented and why. This can be achieved by process analysis.
  39. 39. Fact for the Day
  40. 40.  Thank You for your Attention.  Q&A