CASE STUDY: THE SAN DIEGO CITY SCHOOLS-ERP ROI MAYANK MITTAL 501204021 MBA-1st Year
Que-1: Calculate the ROI for San Diegos ERP system. How can you quantify the soft benefits of theSystem and include them in the analysis? This question should include ROI calculations for thefollowing three scenarios:- ROI based on cost savings only ROI based on cost savings & efficiency improvements ROI based on cost savings, efficiency improvements & soft benefitsAns: (1) Return On Investment based on cost savings Total hard cost savings=$3316709 Total projected incremental yearly cost=$1820000 ROI= (Total hard cost savings-Total projected incremental yearly cost)/Total projected incremental yearly cost = (3316709-1820000)/1820000 = 0.82 (2) ROI based on cost savings and efficiency improvements Total hard cost savings= $6397834 Total projected incremental yearly cost=$1820000 ROI= (6397834-1820000)/1820000 = 2.51 (3) ROI based on cost savings, efficiency improvements & soft benefits Soft benefits= $(320000+400000) = $720000 Total hard cost savings= $(6397834+720000) = $7117834 Total projected incremental yearly cost=$1820000 ROI= (7117834-1820000)/1820000 = 2.91
Que-2: With the information you have access to, what should Wiemann present and recommend atthe board meeting? Specifically, would you recommend going forward with the HR systemimplementation? If not, what alternatives would you suggest?Ans: The deputy chief of business services, Jeff Wiemann should recommend to implement the HRmodule of the ERP solution with the benefits and the Return on Investment associated with it. Heshould try to convince the board members by telling them the benefits of the module throughfollowing points: The administration of employee benefits could be automated. The payroll division had several areas and was handling more than twenty eight different forms to process various pay actions. The processes involved in personnel section of the HR division were also complex. By the implementation of ERP software these processes can also be simplified. I will recommend not to implement the HR module. There are alternatives to implement an HR ERP system that will still achieve some improvement in efficiency with a smaller upfront cost, but they are less effective in the long term because of the lack of a central database and increased chance of resistance. The alternatives that can be suggested here are: They can chose only to upgrade the process of payroll instead of implementing a full HR module by installing an electronic sign in system. This will help in maintaining the database more efficiently. Another alternative is to roll out the HR ERP implementation to only a portion of schools in order to test out the deployment. This thing is also risky but it doesn’t seem to be as the experimental will face some unexpected difficulties and give a bad impression about the ERP implementation.Que-3: What are the risks associated with the project? Would you advise the school board of theserisks?Ans: The following risks are associated with the ERP implementation in the schools: (1) The timeline and costs of implementation could be increased if the district allowed requirements to be expanded over the course of implementation. (2) Deploying full system at one time increases the risk of project failure. (3) There is less technical expertise in the education department as compared to the industries. So they will face the difficulty in making the required progress. (4) Scope creep is another general ERP risk. It refers to expanding the requirements of the ERP system over the course of implementation. To avoid the risks, the following measures could be taken by the school board: The deployment of the ERP system should be done in phases to avoid the risk of the complete project failure. They can train their existing employees through some IT consultants who will provide them with the required software and train them.
Que-4: What are your take aways from the case?Ans: The following are my take aways from the case- 1. Before the ERP implementation the costs and benefits related to the ERP implementation should be known. 2. The ROI plays a very significant role in the ERP implementation. It should be calculated before going for the implementation. 3. The risks associated with the ERP implementation must be identified before the process of implementation.