Colgate-Palmolive Keeps the World Smiling
Executive Summary The objective of this RFI is to determine whether or not Colgate-Palmolive (C&P) should remain with SAP for their technology infrastructure, or if they should seek out other or new IT opportunities. C&P needs to determine what is important and whether or not IT supports it. We evaluate the current problem C&P is facing and the future trend of the technology. We reviewed SAP and its competitor, Oracle, to determine whether C&P should stay with their current provider and what advantages would be available to them from their current and other IT providers. C&P must have a very good handle on automation and rationalization.
Only $13.90 / page
These two items being the two most common forms of organizational change because they are slow-changing and slow-moving. Not only that, but they also offer reasonable returns with minor risk (Laudon, Laudon, & Dass, 2010, p. 483). We also researched from C&P, SAP and Oracle’s annual report and find data and articles to prove our points. Colgate-Palmolive Colgate-Palmolive (C&P) Company is a $15. 3 billion multinational enterprise (MNE) that as of December 31, 2009 employs approximately 38,100 employees worldwide and serves people in more than 200 countries and territories.
The company provides consumer products that help to make lives healthier and more enjoyable. They also focus on strong global brands in their core businesses — Oral Care, Personal Care, Home Care and Pet Nutrition. C&P is delivering strong global growth by following a tightly defined strategy to grow market shares for key products, such as toothpaste, toothbrushes, bar and liquid soaps, deodorants, antiperspirants, dishwashing detergents, household cleaners, fabric conditioners and specialty pet food (C&P Annual Report, 2009).
Truly global in scope, C&P sells its products in over 200 countries and territories and approximately 75% of sales come from international operations (Colgate. com, 2010). Analysis of Organization’s Current Problems IT management of projects in company at this size can be challenging. In the past, C&P developed its company into geographical regions and each region planned its own projects and deployed avaliable resources to build those systems (Laudon, Laudon, & Dass, 2010, p. 568). As global operations became more and more integrated, managers realize the need for C&P to have more global coordination and a global approach to IT resources.
They need to manage the firm from the top to down. The managers need to know who is working on what project and what the current status of each project is. They also need to ensure they have a skilled project manager who is able to coordination the project while demonstrating efficient resources allocation. Simultaneously they must also have an efficient supply chain to help them manage and allocate their inventory. When C&P management began to looking for solutions and trying to analyze the problem the have incurred they found they needed an enterprise system to help manage the company from a global perspective instead of regional.
C&P began using SAP’s enterprise resource planning system in 1993. Since the first year they began using the system, C&P has benefited, for example, the system has helped C&P reduce its finished inventory by half, while cutting order receipt-to-delivery time for its 50 top customers from 12 days to 5 days (Whiting, 1999), identifying savings opportunities has been enhanced by continuous improvement of globe approach program. Currently formal Global Funding the Growth programs exist that share, monitor, and track savings ideas in a searchable database accessible worldwide.
Previously, savings programs have been locally or regionally driven. According to C&P’s annual report, technology also helps C&P to perform its greater responsibilities as “category captain” (Annual report, 2002, p. 15) . Trade customers give to top companies in each category this designation. In this role, C&P advises their customers on category-specific merchandising ideas that increase consumer purchases. In the U. S. , handheld computers used by C&P’s sales force are improving merchandising effectiveness with new software that enables immediate analysis and communication right from the store aisle.
Achievements in this area led to C&P U. S. to being awarded Retail Merchandiser Magazine’s 2001 “Best in Class Category Captain Award” in oral care for merchandising effectiveness, operational efficiency and marketing innovation (Annual Report, 2002, p. 15) . The Company’s investment in technology continues to provide substantial returns. By mid-2002, SAP enterprise-wide software supported 94 percent of C&P’s business (Annual Report, 2001, p. 10) . SAP has already led to significant improvement in supply chain performance and customer service, and that is only the beginning.
C&P has a long history of strong performance, which comes from absolute focus on their core global businesses, combined with a successful worldwide financial strategy. Dow Theory Forecasts (Unknown, 2001) reported: The stock trades for 30 times projected 2001 earnings of $1. 92, high compared to its long-term profit-growth projection of 13% annually. How can a company, with less than 2% annualized sales growth over the last five years keep that valuation? By boosting profit margins, gobbling market share, and buying back plenty of its stock. Higher margins and a smaller share base will boost both earnings and return on equity.
Colgate controls 35% of the U. S. toothpaste market, up from around 31% a year ago (p. 4). C&P designed this financial strategy as a way to increase gross profit margin and reduce costs in order to fund growth initiatives and generate greater profitability (Colagte. com, 2010). Advantageously, SAP’s software helps C&P to improve its business process and business efficiency. According to C&P’s annual report in 2001: SAP has already led to significant improvement in supply chain performance and customer service, and that’s only the beginning.
Additional savings are just starting to come from the next generation of applications now under way that facilitate a wide range of key activities, including on-line ordering by customers, management of retailer inventory, store shelf management, sales forecasting, collaborative planning with trade customers, and purchasing. C&P has leveraged SAP to develop new unique technology that captures data on purchases of materials and services around the world, providing a distinct competitive advantage. Information on everything C&P buy is updated daily and can be viewed and analyzed in minutes.
A powerful business tool, this reporting system is driving efficiencies and simplification worldwide. For example, the number of glycerin specifications and suppliers were quickly identified and subsequently reduced by 50 percent, resulting in over $4 million in annual savings around the globe (2001, p. 14. ). In 2002, global implementation of the base SAP system was completed. Significant benefits are being realized as these new applications bring savings across many functions, including sales, marketing, the supply chain, and human resources.
These new systems are currently in several areas of C&P’s operations and global installation follow. For example, SAP’s new Business Warehouse module enables C&P managers everywhere to quickly access uniform companywide reports in many areas, allowing for easy analysis and faster generation of their action plans. Benefits are already in evidence in purchasing, where standardized reports reflect their daily data on the prices of raw and packaging materials in dozens of markets worldwide. In sales, enhancement of “flash” reports provides timely and detailed analysis of the number and status of new orders (Annual Report, 2002, p. 8) . The data is sorted by brand, customer country, category, or trade channel, which enables faster and better decision making for C&P’s management level and shortens business processes inside and out. Another new SAP application enables web-based procurement of goods and services while giving C&P the advantage of better financial control and tracking. Payment processes are becoming simpler and more efficient, as proven with the elimination of over 20,000 invoices annually (Annual report, 2002, p. 18) . The Continuous Quality Improvement process has identified many savings opportunities.
In order to share, monitor, and track savings ideas in a searchable database accessible worldwide, a formal Global Funding the Growth program was established. Not only that, a collaborative approach to identifying savings opportunities is encouraged throughout the supply chain. The benefits of continuous improvement are largely evident in the expansion of SAP software, now a vital tool in managing the Company’s business operations globally. The enterprise software has been a major driver of gross profit margin improvement, which has risen from 47. % in 1995 when implementation started, to 54. 6% in 2002, up 120 basis points over 2001(Annual report, 2002, p. 5) . S&P’s Gross Profit margin had steady growth after implementing the new system in 1993. Gross Profit Margin is a financial metric used to assess a firm’s financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold, the following example is the calculation for gross profit margin: Gross profit margin serves as the source for paying additional expenses and future savings (Investopedia, 2010).
We can see from the graph below, their Gross Profit Margin has shown continuous grow since SAP installation of applications from 1993 to the end of 2009. Economic crisis affected C&P sales, as shown in the graph below. Specifically, notice downward movement in years 2002 in Asia and 2008 in USA. Oracle Some background on the company, Larry Ellison, Bob Miner, and Ed Oates founded a new company by the name of Software Development Laboratories in June 1977. The company changed its name to Relational Software Inc. (RSI) in 1979 and in 1982; became Oracle Systems—and hosted its first user conference, in San Francisco.
Challenges, changes, and innovation have filled the intervening years for Oracle. As far back as 2001, the Dow Theory Forecasts (Unknown) informed readers that: Chairman Larry Ellison claims to have carved out an e-business market niche that didn’t exist before Oracle filled it. While outspoken Ellison is far from impartial, he does have a point, as the company began harnessing the power of the Internet five years ago, long before most of its competitors (p. 4). This makes a good point to show Oracles innovative and forward thinking ability.
They have been able to keep pace with their competitors, though have not yet been able to dominate SAP. In the past five years, “Oracle has made 57 acquisitions-a staggering pace of just about one per month. With $20. 8 billion in cash and a strong stock price, Oracle’s in a position to continue that pace” (Evans, 2010, p. 22). The rate of acquisitions, if handled with care, could be a great thing for the company. However, if not closely monitored could lead the company into financial difficulties. For a company that has been an industry leader for many of its 30 years they probably know what they are doing.
More recently, and in spite of Oracle’s “generally cautious stance on cloud computing”, they have also “vowed to focus on industry-specific functionality” (Evans, 2010, p. 12). This is important because SAP customized the software purchased by C&P in 1995. Oracles ability to offer customization will open doors and increase revenue capabilities for the company worldwide. Along the same lines, Henschen (2010) describes an important new product development for Oracle as follows: Oracle’s new product Enterprise Performance Management System release 11. 1. …includes Hyperion Planning enhancements such as user-configurable workflows for common planning and forecasting of processes, and “zero-code” Web forms for creating task-specific data entry and planning interfaces…. new apps in the suite include Financial Close Management, Disclosure Management, and Private Sector Planning and Budgeting (p. 18). The mentioned applications would simplify processes, which they directly affect. Additionally, the Disclosure Management interface allows the user easier handling of statutory reporting to government agencies.
Similarly, companies should be mindful of their business process management (BPM). To their credit, the Oracle-BEA System allows companies who purchase their product the ability “to verify that process performance has been improved and measure the impact of process changes on key business indicators” (Laudon, Laudon, & Dass, 2010, p. 483). A company with the ability to streamline their BPM in this way is also able to eliminate the need to juggle multiple mainframe applications. Information Week gave Oracle an overall grade of B in a recent report card they published (Evans, 2010, p. 2). Even though Oracle is able to deliver a fully integrated and optimized system, there were some concerns about the 22% charged for annual maintenance fees. That can add up to quite a chunk of money. Evans (2010) notes in the same article that “each quarter, co-president Safra Catz highlights Oracle’s 50% or greater operating margins and underscores how those are made by the maintenance fees” (p. 22). Evans goes on to say, Ms. Catz believes that customer satisfaction is at an all-time high. Which is a problem because the figures calculating customer satisfaction are not released (p. 2). Transparency or the lack thereof can say a lot about a company and affect its future success. Oracle would need to work with the transparency of their customer services measures if they hope for a higher grade by Evans in the future. Over the years, Oracle has proven to be a consistent threat to SAP, and by the looks of things, they will continue to remain a threat. According to the Oracle website (2010), their goal for the future is: To become #1 in middleware and #1 in applications, just as we have in database.
And we will provide our customers with complete, open solutions integrated from the disk to applications software that meet their business needs and solve their business problems. And, we will continue to innovate and to lead the industry, while always making sure that we focus solving the problems of the customers that rely on our technology. The company currently has over 370,000 customers and only time will tell how successful, how many more customers they will acquire, and if they are able to meet this goal. From the look of their current offerings, they have a good start on achieving their goal.
According to the Oracle website, their product, Oracle Accelerate, designed for the consumer products industry claims to deliver “a powerful combination of complete and scalable applications that can meet all your business challenges” (2010). The issue here is that the Oracle products are a good fit for small and medium-sized enterprises (SME), and is found in various places on the Oracle website, as well as stated in customer testimonials. As we all know, an SME is “a company with 500 or fewer employees in the United States” (Cavusgil, Knight, & Riesenberger, 2008, p. 68).
As always, companies must protect their intellectual as well as physical property. Not just physically safeguard it but to also pursue legal action if necessary. Oracle’s 2010 fiscal year, runs from June 1, 2009 to May 31, 2010 and according to the most recent Oracle Form 10-K Annual Report: On March 22, 2007, Oracle Corporation, Oracle USA, Inc. and Oracle International Corporation (collectively, Oracle) filed a complaint in the United States District Court for the Northern District of California against SAPAG, its wholly owned subsidiary, SAP America, Inc. , and its wholly owned subsidiary, Tomorrow Now, Inc. (collectively, the SAP Defendants) alleging violations of the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act, civil conspiracy, trespass, conversion, violation of the California Unfair Business Practices Act, and intentional and negligent interference with prospective economic advantage. Oracle alleged that SAP unlawfully accessed Oracle’s Customer Connection support website and improperly took and used Oracle’s intellectual property, including software code and knowledge management solutions (Unknown, 2009, p. 116, 117).
Naturally, the case is not as simple as state above and we are unable to judge it solely on what we read. As a direct result of technological advances in which information is “filtered through these social institutions, organizations, and individuals” (Laudon, Laudon, & Dass, 2010, p. 131) these types of intrusions and ethical issues become more common. The legal system will determine and award damages if they are due to the plaintiff. This case is of particular interest since it seems to be a battle of industry giants. Of course, this case has many amendments, allegations, and complaints, the above reference s simply the original claim filed. The court has set a new trial date of November 2010. Many individuals and businesses will be closely anticipating and watching how this trial unfolds. Oracle faces many of the same risks as other businesses, such as the current recession, the global economic crisis, political and market conditions, foreign currency exchange fluctuations, etc. They also share risks applicable specifically to their industry, such as ability to develop new products and services, integrate acquired products and services, ability to enhance existing products and services, etc.
The ability to foresee, plan, overcome, and take advantage of the risks shared by competitors will lead to their continued success. Technology This leading consumer products company is committed to using technology to create products that improve the quality of life for consumers wherever they live. C&P operates on an SAP® infrastructure with SAP R/3® as the core software (SAP R/3 functionality is now available in mySAP™ ERP). In the late 1990s, when the SAP software went live in Asia, there were a number of reasons why a single version of it could not be used throughout the region.
First, tax structures within India are extremely complex; resulting in SAP software for India had added separate functionality. Second, the SAP system did not handle complex languages like Chinese and Thai on the same system. As a result, the Asia-Pacific region had three SAP systems that could not be integrated: one for India, one for China, and one for the rest of Asia. Since 1987, Colgate-Palmolive Code of Conduct has served as a guide for company daily business interactions, reflecting our standard for proper behavior and our corporate values.
The Code of Conduct is updated and reissued on a regular basis to ensure comprehensiveness. The Code clearly conveys to each of us that the manner in which we achieve our business results matters just as much as achieving them. The C&P Code of Conduct applies to all C&P people, including Directors, Officers, and all employees of the Company and its subsidiaries around the globe. Vendors and suppliers are also subject to these requirements as adherence to the code is a condition for conducting business with C&P.
Most importantly, each employee is responsible for demonstrating integrity and leadership by complying with the provisions of the Code of Conduct, Global Business Practices Guidelines, Company policies and all applicable laws. By fully including ethics and integrity in their ongoing business relationships and decision-making, they demonstrate a commitment to a culture that promotes the highest ethical standards. The new technology helps C&P with the privacy policies. It collects information on or through company’s site that can personally identify you, only when voluntarily offered by the visitor.
Any non-personal information, communication, and material sent to this site or to C&P by E-mail are on a non-confidential basis. They are free to use and reproduce any such information freely, and for any purpose whatsoever. Specifically, they will be free to use any ideas, concepts, know-how or techniques contained in such information for any purpose, including developing, manufacturing or marketing products. Any information you send to this site must be truthful, not violate the rights of others and be legal. Like many other companies, they use “cookie” technology, where their servers deposit special codes on a visitor’s computer.
This information helps them to determine in the aggregate the total number of visitors to the site on an ongoing basis and the types of Internet browsers (e. g. , Netscape Navigator or Internet Explorer) and operating systems (e. g. , Windows or MacIntosh) used by their visitors. This information is used to enhance the visitor on-line visits. Under no circumstances do they use this information to personally identify visitors or cross-reference the information with any type of personal information that is voluntarily offered on or through the site.
C may modify this policy at any time, it is their sole discretion, and all modifications will be effective immediately upon their posting of the modifications on this site. Unless they specifically provide otherwise, this policy only applies to this site and their online activities, and does not apply to any of their offline activities. In all cases, however, they will take reasonable steps to help safeguard personal information. They will only share your information under terms and conditions that obligate recipients to protect the privacy and security of their personal information.
Except as described in this Privacy Statement or as required by law, they will not share personal information with a third party unless they have consent or have notified a visitor to their site about this practice when they first collected personal information. At any time, the visitor has the right log in to the system to modify, correct, or erase the personal information that you provided to use in your Job Profile or your resume. In the event that you erase your Job Profile or your resume, we will make your Job Profile or resume inactive.
However, you understand that we will retain your Job Profile indefinitely for its own record-keeping purposes. C evaluated several companies before deciding to engage SAP Consulting. John Giroux, head of the Asia-Pacific Shared Services Organization at Colgate-Palmolive explains, “There is a strong partnership between SAP and Colgate-Palmolive. We have co-developed solutions with SAP Consulting before and recognized that with its offshore delivery model we could take advantage of a very competitive price for high-quality resources.
We knew that SAP Consulting has developed work protocols, as well as communication and project management methodologies that ensure the physical location of resources is not an issue. ” Colgate-Palmolive was keen to use SAP Consulting both to access areas of SAP expertise and, through the offshore delivery model, to leverage Indian software developers from both SAP and other companies. C believed this would reduce costs and, if successful, would act as a model for a new way of working. Responsiveness to promotions and other changes in supply and demand have been enhanced due to the closer link between producers and consumers.
Improvements in cycle times, fulfillment performance, and inventory levels were supported through enhancements enabled by DP and the collaborative engine. In particular, forecast error with a major retailer was reduced from 61. 9% before CPFR to 21. 9% after CPFR was implemented. All three initiatives were supported by SAP APO’s real-time integration model, where any changes in stock, sales orders, and so on are transferred in real time between customer or internal ERP systems and SAP APO. This ensures that modifications to the plan can be ade rapidly – which is particularly important to facilitate planning for promotions. The VMI, CBS, and collaborative planning implementations will extend globally. As the implementation extends to all brands and plants, C expects to multiply the impact of the current implementations substantially. Moreover, savings are being achieved outside direct supply chain operations, including in key areas such as IT. As the standardization initiative is extended, visibility is being improved throughout the supply chain, and consistent data will be increasingly useful in management decisions covering tactical and strategic plans.
In particular, enhanced data availability using mySAP Business Intelligence (mySAP™ BI) supports improved tactical and strategic decision making at various levels in the organization. By improving C going forward, new forces are shaping their use of systems for enhancing competitiveness. These drivers include price competition, the evolving attributes of global trade, and the consumer goods industry’s use of promotional campaigns. These factors are motivating C to pursue continued cost reductions through all aspects of the business and to make use of collaborative tools that improve links with global customers.
E-commerce is growing at a high annual rate in the consumer goods industry, providing further impetus for them to make use of e-business tools that strengthen its integration internally and its links with partners and customers. C intends to continue to pursue supply chain improvements that will enhance its competitive position. In addition to extending the use of vendor-managed inventory, cross-border sourcing, and collaborative planning globally, C is pursuing; they are working with SAP to implement repetitive manufacturing processes using the PP/DS capabilities in SAP APO.
These processes will perform repeated production runs using a single bill of material, with back flushing of material requirements. Production will become more responsive to promotion-driven demand changes, as making and finishing operations will be distinguished as separable manufacturing processes, facilitating quick production scheduling changes. C is specifically supporting development of a PP/DS-related Wave algorithm. This algorithm will provide optimization of repetitive manufacturing during potential sudden peaks and valleys in requirements and finite capacity constraints.
Outsourced manufacturing: Due to the variations in supply requirements resulting from the promotions-driven environment, third-party manufacturing contractors are increasingly relevant to C business. They expect to make use of SAP APO-enabled collaborative planning links with these contractors. Transportation planning: C is planning to implement Transportation Planning/Vehicle Scheduling (TP/VS) in SAP APO to optimize its transportation network and derive ongoing cost savings.
Supply chain event management: C is planning to use SAP supply chain event management capabilities to track carrier tendering and customer shipments – and to provide early warning of undue delays or problems. Additional collaborative scenarios: C will pursue various additional forms of collaboration with customers and partners. Of significance will be company participation in consumer goods industry e-marketplaces, which provide exchanges for collaborative demand, procurement, and logistics planning.
For global companies like C, it has become increasingly important to harmonize systems and processes worldwide. C customers, such as major retailers, are expanding across country boundaries and expect to have their requirements managed consistently from region to region. C also has facilities that manufacture goods for worldwide markets. Managing global supply chains is more difficult when systems differ from country to country. In addition, development and maintenance work has to be duplicated on each individual system.
The demand planning (DP) capabilities and collaborative engine in SAP APO provide the Colgate sales subsidiary with a mechanism for communicating demand information to the supplier and further synchronizing planning across the supply chain network. For example, Collaborative Planning, Forecasting, and Replenishment (CPFR) is being deployed by Colgate by making use of SAP APO tools with customers, enabling collaboration on promotional activity, inventory levels, and demand forecasts. The associated CPFR processes can drive forecast accuracy improvements and thereby enable a range of cycle time and customer service improvements.
In particular, statistically computed-base demand is calculated by DP and can drive repeatable replenishment processes, and changes resulting from promotions can be incorporated using collaborative processes. The support that the collaborative process provides for separate management of base and promotional demand is very valuable. Promotional demand management is substantially independent of the base demand, and it is critical information for driving manufacturing, product finishing, and distribution in Colgate’s consumer products business.
To support the collaborative process covering promotional demand, the collaboration engine allows the exchange of up-to-date planning information, enables user-access security restrictions, supports exception-based management, and facilitates tracking of performance measures including forecast accuracy. The SAP APO-supported supply chain implementations have achieved significant, measurable benefits for the initial America-based implementations. The competitive position of C business has been enhanced – by improving service to the retail trade and internal customers, enhancing responsiveness, and improving margins.
They have achieved performance gains with SAP APO beyond what had already been achieved with SAP R/3, and the company is well-positioned for multiplying the benefits across the global enterprise. Quality Assurance Since 1993, SAP integrated with C to provide them business solutions. C is depended on SAP to do a lot of maintenance work for them. C outsourced as much maintenance work as possible to enable their internal IT to focus on their customers. They offer software to ensure the quality assurance and control, both for their own applications and C product.
To ensure success, it is important for C to select a partner who can support the entire project. SAP addressed both business-solution requirements and IT requirements, including implementation, live operations, administrative services, education, and professional services (Sap. com, 2010). According to their website, Sap offers a easy-to-use CRM functionality on a pay-as-you-go basis, clear and comprehensive service level agreements, 99% system availability, Compliance with data protection standards worldwide, single vendor viability and accountability and 24/7 global production support (Sap. om, 2010). They also tailor services and collaborate with C to customize applications for the best fit and to ensure quality and success. Their applications ensure to improved sales, productivity, achievement of revenue objectives, consolidated & accurate customer records, support continuous business improvement, enable quick ROI, and minimize implementation costs (Sap. com, 2010). Impact of New Technology Over the years, the business model has dramatically changed with the increasing pervasiveness of new technologies.
C depends on SAP to develop, make changes, and follow the trends. According to Dr. Vishal, a member of the Executive Board of SAP AG and Chief Technology Officer, new cloud computing technology will enable, through the emergence of the internet of services, setting the stage for a new era of business networks (SAP Research Report, 2010, p. 6). Equally promising for SAP is the in- memory database technology which will allow them to answer business queries in no more than a second, strengthening the vision of the real time enterprise (SAP Research Report, 2010 p. ). Now SAP is focusing on four areas of future technology development, cloud based applications, future compliances solutions, global “internet of things’ services, and service delivery framework. According to their 2009-2010 research report: Cloud computing is the generic umbrella term for flexible, IT-related services, such as storage, computing power, software development environments, and applications, combined with service delivery through the Internet to consumers and businesses.
The main innovation is that the IT infrastructure no longer lies with the user, meaning that users can access these services without special knowledge. Clouds provide major opportunities for new business models by restructuring the value chains in the information and communication industry, making cloud computing a concept that will surely change the way people work and companies operate. The Internet of Things fuses the digital world and the physical world by bringing together different concepts and technical components.
Experts predict that the Internet of Things will lead to tremendous efficiency gains in many industries, such as manufacturing and energy supply. Applications, services, middleware components, networks, and end points will be structurally connected in entirely new ways. As such, pervasive networks, miniaturization of devices, mobile communication, new models for business processes, collaboration, and lifecycle management will be made further possible. Thanks to the Internet of Services, the opportunity to create a Web-based service industry is becoming a reality.
In this type of virtual world, software providers, service providers, brokers, and users can collaborate using a service delivery platform (SDP) to build flexible and dynamically integrated applications. The SDP supports the whole lifecycle of a service offering from its creation, introduction, and redesign with incorporated user feedback. SAP Research is looking to further explore services that can be managed through IT and, being combined, lend themselves into value- added services (SAP Research Report, 2010, p. 19).
For C, future technology will definitely enable them to collaborate more freely; C can offer to its customers many values. Business process will be more efficient and cost saving. More opportunities will be available to C, customers, and its suppliers. Human Interface With approximately 38,100 employees worldwide there are bound to be human issues at C, and not just the interface kind. How they manage those issues can be a challenge to any organization. Changes in how company information is used can and does lead to new distributions of power and authority.
There can be resistance and opposition to deal with at all levels of an organization and it would smart to prepare for that challenge. As far as the effect on the systems used by the human assets, Laudon, Laudon, & Dass, (2010) complicated our RFI evaluation when they wrote the following: Enterprise application software vendors such as SAP and Oracle-PeopleSoft have developed powerful software packages that can support the primary business processes of a large firm worldwide from warehousing, customer relationship management, supply chain management, and finance to human resources.
These large-scale enterprise software systems provide a single, integrated, worldwide software system for firms at a cost much less than they would pay if they developed it themselves (p. 131). This statement puts SAP and Oracle on the same level playing field, which in reality may not be the case. They both have good products and application to offer. If C were to make the change to Oracle, or anyone else, the impact on human interface would be enormous. New applications, how they relate to other parts of IT applications could be costly and time consuming on a human level.
Whether or not Oracle has enough to offer C to make such a change is the multi-million dollar question. It certainly could add up to millions of dollars if they were to convert to Oracle or any other provider and that provider were unable to deliver the quality of product, both in IT and consumer goods, they currently enjoy. The biggest risk factor for C is maintaining and enhancing their reputation and branding. Reputation and branding are two of the easiest areas damaged by product quality, supply chain issues, customer service, employee morale, etc.
Risk assessment and risk management are both ongoing functions for companies of any size. At this point, we need to look at the risk of C making a change from SAP to any other IP service provider. Laudon, Laudon, & Dass, (2010) define risk assessment as “determines the level of risk to the firm if a specific activity or process is not properly controlled” (p. 314). They go on to write “business managers working with information systems specialists should try to determine the value of information assets, points of vulnerability, the likely frequency of a problem, and the potential for damage” (p. 314).
The sheer magnitude, cost, and complexity of a companywide IT provider change would be worthwhile only if the new company had significantly more advanced and superior product(s). We are able to determine that the SAP system and applications are working well for C and that SAP is an industry leader providing services to MNE’s. Should C decide to change to Oracle, or any other provider, for their IT they would have to ensure they had skilled project managers who have the knowledge to use the following tools: ? Risk Assessment ?Internal Integration ?Formal Planning ?Formal Control ?Gantt or PERT Charts ?External Integration
Mind you, the tools listed above are but a few of many used to ensure the success of a project and its participants. Probably the most important tool is the human one, the Project or Program Manager who has technical and administrative experience, team member who are also highly experienced, and participating in team meetings. Lest we forget, there may be outside sources able to provide their experience and team support. Someone who is not able to manage a project(s) or people will most likely have cost overruns, time slippage, technical shortfalls that can impair performance, and fail to obtain the anticipated benefits.
In this case, C needs to ask itself if the risks outweigh the benefits. Clearly, they do not. Conclusion For C to make a change to another IT interface provider, that provider would have to have a lot more to offer than the current provider SAP does. A major area where SAP has dominated is their ability and willingness to customize IT specification for C. At this time, Oracle is close but not worth the investment or risk to make a change over, they are just now beginning to offer customization for SME’s.
We do not feel that Oracle has enough advantages to offer C as an MNE and that C should remain with their current IT provider, SAP. Subsequently, we have determined that at this time a change would be low-benefit and high risk to the company. Evans recently reported in Information Week (2010): SAP makes its own case for having industry-tailored applications. The larger point, however, is that the two most-powerful enterprise software companies are now locked in direct competition to deliver to CIOs in every industry deeper and more powerful insights, new customer-centric features, and, ultimately, greater business value (p. 2). Maybe, in time, Oracle will overtake SAP as the industry leader, even until then we recommend C remain with SAP because it is a very long and costly process merging from one system to another. Unless SAP is not improving and following the trend, which from our research on SAP, they are, and have been, focused on innovation. References Annual Report. (2001). Colgate Annual Report 2001. Retrieved from http://files. shareholder. com/downloads/CL/925173196x0x236529/90A2D1BD-1300-44EE-935E-C1E8C8906458/ColgateAR_PDF1. pdf Annual Report. (2002). Colgate Annual Report 2002.
Retrieved from http://files. shareholder. com/downloads/CL/925173196x0x236520/0BE8EC61-8FAD-4C4F-ADDE-AC29921B7B0D/ColgateAR02. pdf Cavusgil, S. T. , Knight, G. , & Riesenberger, J. R. (2008). International business strategy, management, and the new realities. Upper Saddle River, NH: Pearson Prentice Hall. Colgate. com. (2010). Colgate World fact sheets Retrieved from http://investor. colgate. com/ColgateWorld/colgate_world-glance. cfm? header=fin Colgate World of Care. Code of conduct Retrieved on May 24, 2010 from http://www. colgate. com/app/Colgate/US/Corp/LivingOurValues/CodeOfConduct. cvsp