1. Dirt Bikes Case Study
Team E :
Ryadh ZITOUNI
Ekaterina YAZYKOVA
Melissa ZEPHIR
Yann LANDREVIE
2. Contents
1. Business Challenge
Current Situation
Challenge
2. Business Solutions (Objectives)
3. Information System (Plan)
3.1. ERP System
3.2. Benefits of an ERP
3.3. ERP Modules
3.4. Providers (SAP, ORACLE, OPEN SOURCE)
3.5. Investment Analysis
3.6. Securing IS
4. Controls
4.1. Balance Score
4.2. Financial Perspective
5. Backups / Sources
3. Diagram of IS
Business
Challenge
People
Information Business
Organization
System Solutions
Technology
4. 1.1 Current Situation
Dirt Bikes USA is a small company
founded in 1991 that manufactures and
sells racing and off-road dirt bikes.
Dirty Bikes produces 4 bikes models :
Enduro 250, Enduro 550, Moto 300,
Moto 450, and sells it between $3.250
and $9.000
Headquarters are in Carbondale,
Colorado. The company has approx.
129 employees.
5. 1.1 Current Situation
As Top Managers we have to focus on
Financial Reporting based on the information
we have on the consolidated statements of
income and the balance sheet from 2006 to
2008.
6. 1.1 Current Situation
DUPONT ANALYSIS :
To Be Successful, a business must manage its:
– Operating Profits
– Level of Assets
– Amount of Debt
FIVE KEY FINANCIAL RATIOS :
• Profit Margin (PM)
• Total Asset Turnover (TAT)
• Equity Multiplier (EM)
• Return on Investment (ROI)
• Return on Equity (ROE)
8. 1.1 Current Situation
Formula 2008 2007 2006
PM = Net Income / Revenue 15,03% 11,41% -2,40%
TAT = Sales / Total Asset 1,04 1,02 0,92
EM = Total Asset / Total Equity 1,73 1,78 1,83
ROI = Net Income / Total Asset 103,51% 102,46% 92,42%
ROE = NI/S x S/TA x TA/SE 26,95% 20,82% -4,07%
PM = Profit Margin SE = Shareholders Equity
TAT = Total Asset Turnover
EM = Equity Multiplier
ROI = Return on Investment
ROE = Return on Equity
9. 1.2. Business Challenge
More Competition (new comers)
Market is growing up
Outdated systems
Manual business processes
10. 2. Business Solution
Reduce Costs
Increase capacity by squeezing costs
Improve asset turnover
Reduce excess inventory
Decrease Account Receivable / Increase
Cash on Hand
Increase profitability 10% per year
Increase productivity
11. 3. Information System
People :
Appoint new management team (tech friendly)
Design strategic transformation plan
Organization
Adopt best-practice processes
Technology
Implement ERP
Deploy Intel server running windows operating
system
Depoy SQL Server database
12. 3.1. ERP System
Enterprise resource planning (ERP) is an
enterprise-wide information system designed
to coordinate all the resources, information,
and activities needed to complete business
processes such as order, fulfillment or billing.
An ERP solution is characterized by
supporting a variety of business functions such
as manufacturing, supply chain management,
financials, projects, human resources, and
customer relationship management from a
shared date store.
13. 3.2. Information System : ERP
Benefits of an ERP System :
Help reduce operating costs :(inventory
control, production, marketing and help desk
support)
Facilitate day to day management :
(backbone data warehouses, better
accessibility to data for decision making and
managerial control. helps track actual costs
of activities and perform activity based
costing)
Support Strategic Planning
15. E.G :Order Fulfillment Process
Generate Submit
Sales
Order Order
Accoun Check Approve Generate
ting Credit Credit Invoice
Manufa Assemble Ship
cturing Product Product
Fulfilling a customer order involves a complex set of steps
that requires the close coordination of the sales,
accounting, and manufacturing functions
16. 3.4. Providers & Costs Study
Implement ERP System :
Software : SAP, ORACLE, OPEN SOURCE
Hardware : Dell and Microsoft
Training : 20 named users
Maintenance : Flat Support or per user
Costs : * Delivery
SAP : $16,8 Million . SAP : 20 Months
ORACLE : $12,6 Million .Oracle : 18,6 Months
Open Pro : $200,000 . OP : 17,8 Months
18. OpenPro Cost Study
Number of employees: 129
Number of named users: 20
Upfront costs (licenses, customization,
training, and implementation): $40,000 or,
$2,000 per user
Hardware and operating system (Dell and
Microsoft): $30,800
On-going support from Compiere partner:
$24,000/year or, $1200 per user
On-going support as percentage of upfront
costs ($24,000 / $40,000): 60%
19. 3.5. Investment Analysis
Feasibility :
Fixed costs (Hardware, Software Training) : $70,800
On going costs (Support, Maintenance) : $64,000
Other Costs : $50,000
TOTAL : $184,800
Acceptability : The ERP System will increase
profitability 10% per year
Current Gross Profit : $20 457 000
20,457,000 x 0,10 = $2,045,700
ROI = 2,045,700 / 184,800 = 11,07
Delay : 18 Months
Risk : Very low
20. 3.7.Securing IS
Confidentiality
Availability
Integrity
Access control
Identification
authentication
