Arithmetics Approach

NIBCO is a privately held company headquartered in Indiana. They manufacture valves and pipe fittings with the help of more than 3000 thousand employees.

Facing the possibilities of future growth and becoming a more global company, NIBCO’s management analyzed their current information systems and came to the conclusion that NIBCO was actually information poor. They came to the conclusion that they could no longer continue to grow with their current information technology, which consisted of a series of legacy systems and reporting tools that were unable to communicate with each other. Distribution could not see what manufacturing was doing and manufacturing could not see what distribution and sales were doing.

NIBCO decided to bring in a team of consultants, the Boston Consulting Group. The group was to help the company with coming up with a solution and to develop a strategic information system plan to help them meet their needs. BCG found that employees were highly dissatisfied with the functionality of the legacy environments and having to deal with multiple databases

BCG’s final recommendation was to replace their current legacy systems with common integrated systems that could be implemented in a 3 to 5 year process. This new integrated system would allow the company to have clear communication between the manufacturing area, distribution area and across the company.

ERP Selection Team

A cross-functional team was organized in order to determine the best ERP package for the company. The team was sponsored by the CFO and included director-level management. The team pinpointed seven possible ERP packages, which were evaluated in detail. They visited many different vendors’ customers and had associates from every department participate in different walk-throughs to determine the suitability of each particular ERP package. The selection team also ran different benchmark tests to determine what type of approach the company should adopt. They had the option of implementing the 3-5 year approach that was suggested by the consulting group or they could make one swift move and utilize the Big Bang approach.

Some of the members of team though that the approach recommended by the consulting firm was not the best option for NIBCO and that employees would eventually tire down and stop the momentum before actually completing the implementation. Also, the team became aware of several companies that had implemented this slow approach and were not as successful as other companies. Last, while the risks associated with a Big Bang approach would certainly be higher, the costs would be significantly lower than the 3-5 year approach.

In July of 1996, the team recommended for NIBCO to purchase a single ERP system: SAP R/3. The plan was presented to the board, approved and later a contract was signed with SAP to purchase