Cost-Conscious ERP

CIO Executive Council —

Scenario from Janis O'Bryan, CIO & SVP of IT, Hudson Advisors LLC

Formed in 1993, Hudson Advisors LLC is a globally integrated asset management company employing nearly 900 professionals worldwide who manage and restructure real estate and under-performing assets, including corporate liquidations and financial asset restructurings. We are headquartered in Dallas, Texas, with affiliate offices in New York, Montreal, London, Frankfurt, Munich, Paris, Luxembourg, Brussels, Dublin and Tokyo.

Hudson Advisors principally handles the management, restructuring, and servicing of assets acquired by Lone Star, including asset management, underwriting, real estate due diligence and valuation, operating company oversight, management of mortgage backed securities portfolios, financing, accounting and reporting, income and property tax compliance, currency and interest rate hedging, risk management, and information technology development and systems support.

The Situation

• Hudson Advisors uses 11i version of Oracle (ORCL) Financials modules GL, AP, AR, FA, Cash Management, PO & HR on premise. The estimated cost of upgrade to R12 with internal labor and external consultants is $1.5M spanning 9 months.
• We also own Oracle's Advanced Benefits, Time & Labor, iExpense and Project billing modules, which are in our roadmap to deploy in the near future to retire legacy systems. We have only deployed core HR domestically and wish to deploy all modules globally.
• Oracle's software is not well accepted in our environment as it is not intuitive and requires increased effort by our user base versus established legacy systems.

The Challenges

• We have one more year to upgrade to the newest release (R12) or must pay an additional support fee on top of our regular maintenance.
• Each new module we deploy historically has taken 6-9 months and costs $400,000+ of internal labor and external consultants.
• The current chart of accounts has not met the need of our Investment accounting department to manage the complex cash flows through our structures.
• Our tax preparation has many manual steps and is time-consuming due to the limitations of our current software setup.

Actions So Far

• Determined our TCO for Oracle.
• Met with our Oracle senior regional senior manager to discuss our concerns and offer an opportunity to save our business.
• Seen demos of Microsoft (MSFT) Dynamics AX, NetSuite, Workday and Intacct as potential solutions for our corporate accounting needs.
• Received demos of Investran and Framework to see if either solves our Investment and Fund accounting and tax preparation needs.

Workshop Responses

Vendor Selection & Provider Management: Janis has spoken with many vendors and gone through various demos. What do you consider best practices in selecting a new ERP financials vendor? What advantages are there in keeping Oracle in-house rather than moving to a new vendor package?

• Need an overall business strategy—5 year road map.
• Defining a matrix of features. Comparing apples to apples and may find out that other options are cheaper but may not have some customization.
• Getting all business units involved, including involvement from the stakeholders.
• Reviewing full scope -identifying necessary requirements, cost of implementation, why are you doing this? Cost of functionality? What are the resources needed to manage new system?

Change Management: Hudson Advisors is a global company. What are some ways that Janis can create a cohesive environment and manage domestic & international resistance to a new implementation? What should she keep in mind when handling change management issues with the global team, like business processes, infrastructure and governance issues?

• Leadership may not be mature enough to do this along—outside consultants should come in and help. Make sure you have very good IT business analysts to sit through meetings and hear from each business unit.
• Needs to be defined as a business problem, not a technology problem.
• Need Matrix for business project.
• Business process review.
• Rely on some of the big hitters like GE (GE) and folks who have done some of these things, using their tools.
• Communicating out the change—IT Analysts, etc. use a team within your company that is good at messaging. Marketing folks, etc. to share information internally.
• Pick simple tool sets to help stay on track.
• Need an executive champion (CEO) for project and communicate early and often.
• Cleary determine the goals and scopes—CEO, stakeholders, is everyone clear on process.
• Engage stakeholders early enough to have buy in and on board with project.
• Implementation and training will be critical at end.
• Implement pilots in certain areas.
• Factor in costs of training and development.
• Consider International issues—regulatory and legal.

Global Roll-Out: Once she decides on a global core financial ERP, how should Janis handle region-specific modules? Should she force all local offices to follow the global model, or is there an advantage to allowing small and mid-sized markets to have regionally specific, customized modules for processes like HR, purchasing, and time & labor?

• What are the Global tasks, functions, etc? Different for a holding company vs. an operating company.
• Define criteria—what you are going to globally vs. locally.
• What are the local customizations and what options do the local folks have?
• What are the data integration points and how often do you need that data to be filled in to the global template?
• Talk to other customers who use Oracle.
• Pilot it in one area—highest chance of success and lowest cost. What is the gap analysis? What needs is built? Deploy it.
• Expand time frame of project to have someone come in to help you to better refine the requirements.
• Take some more time and spend some more money...if you can't solve the problem, look for another opportunity.
• What are the data integration points? How often do you need to integrate? What's the gap analysis and what needs to be built? Test, deploy and go on to the next level. Come back 3, 6, 9 months later and what can you do to improve.
• May have to spend more to guarantee success.
• Consider cultural issues.
• Train, train, train.

Business Process Reengineering: Janis and her team will need to complete a comprehensive business process review as part of this initiative. What are some tools and frameworks you have used to streamline business processes? How do you secure buy-in from the user base to make these process changes?

• Develop major driver for change of system whether it is functionality or cost.
• Review internal processes to document processes and desired functionality moving forward.
• Develop mapping of process/desired process with technology.
• Prepare gaps and develop reengineering solutions in partnership with consultants and business units.
• Delay upgrades so you are not disruptive to our users—increases costs.
• Pull together a task force to assist with this process.
• Do a case analysis for where we are in current process.

The CIO Executive Council is a global peer advisory service and professional association of more than 500 CIOs, founded by CIO's publisher. To learn more, visit council.cio.com.

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