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
A brief about IT Dept Activities in
all tenses Past, Present and
Future. Emphasis on Accounts.
Ghassan Kabbara, CISA
January 8th 2007
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
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.
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
1989 – 1992 Management Info Systems
Software Dev Manager / GM
1987 – 1989 PROJACS, Kuwait
Training Coordinator / Instructor
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…..
IT Dept Structure
IS & Development Manager
Senior Analyst Developer 1
Analyst / Programmer 2
DBA / Programmer 1 (Part Time)
Part Time Developer 1 (Legacy)
IT User Support (Sherhan & Hunaif Sites)
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
What was migrated from Clipper was
migrated as is.
Hard Ware / Servers / Computers all
No Licensed Software
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
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.
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.
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
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.
To be Centralized
To be Centralized
Meanwhile I kept trying to
penetrate the Information Arena of
our Accounting Department to
Under take a Process Mapping
Project. Unfortunately this was not
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!
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..
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.
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
Still Waiting.. But the clock is ticking
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.
In short, it will result in a change in the existing
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.
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
Accounts: Do Not Enter. Confidential.
A Sample Problem due to
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 Cycle from multiple sources
affects P&L and B/S. And Reconciling
Inventory System with
Stock Value without
provisioning or Aging.
COGS for Slow moving is
reflected with WAVG
G/L Account Summary Stock Value
COGS for Slow moving cannot
Be identified. COGS Inflation.
& Write Off
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
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.
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
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
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.)
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
Not Satisfied with the current state of interaction being
received from Accounts. Its one way street in information
sharing. This needs to be Addressed.
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
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?
CURRENT INTERFACING TO
FINANCIAL ACCOUNTING SYSTEM
Benefit Of Customer DB Centralization.
Uses Customer Info for
Credit Control. Customer #
In systems = Customer # in
Receivables. Option to blacklist
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
A Little Stats (source TRACK IT)
35% of Requests
15% of Requests
15% of Requests
Break down of Finance WO by Type
Break Down of Work Orders for Finance
Total 80 60 54 50 49 48 40 25 20 15 12 8
Armada General Enquiry
Hardw are Netw ork Mistakes
MCPP is decentralized. Current
Project on Hand to phase out
From Clipper Environment.
IT Department SWOT Analysis
Show me the
Analysis and I’ll
Show you mine.
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)
An Accounting Application from a third
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
Apply the Same set of questions to “Why we
should implement an Accounting Package”
Quote for the Day.
“You can not find a solution using the
same thinking that created the problem”
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, &
Absent these changes; investment in IT
can be a waste of precious investor
Implementing New Information Systems..
By John Silltow. MD, Security Control and
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
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.