Transcript Year 2000 Update

Information Systems
Enterprise Software Recommendation
Durakon Division
Enterprise Software
Recommendation
JBA System 21, 5-26-98 Board Meeting
Information Systems
Enterprise Software Recommendation
Viable options considering Year 2000 risk and timing

JBA System 21 with new AS400.
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
Cost: $1,311,500
JBA Business 400 with new AS400.
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Cost: $997,500
Durakon Management recommends JBA System 21 with a new AS400 and selection of FYX, Inc. for
implementation consulting and training, with technical support from JBA.
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Information Systems
Enterprise Software Recommendation
Cost Detail
Already Expensed
System 21 Software Upgrade
System 21 Software Maintenance
AS/400 620 Purchase
AS/400 620 Maintenance
JBA Mentor Training Software
NT Server
AIMS Reporting Software
LAN hardware & software upgrade
PC hardware, op system & office upgrade
ERP software Implementation
Coopers & Lybrand
Estimated Consultant Travel Expense
Total
System 21
New AS400
(50,000)
202,000
112,000
255,000
109,000
20,000
35,000
82,500
19,000
80,000
390,000
27,000
30,000
(50,000)
1,311,500
997,500
Estimated 1999 Expenditure
Y2K certified software
Implementation
Recalculated Total
Business 400
New AS400
255,000
109,000
20,000
35,000
82,500
19,000
80,000
390,000
27,000
30,000
350,000
100,000
1,311,500
1,447,500
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Information Systems
Enterprise Software Recommendation
System 21 to Business 400 Comparison
- Year 2000 certified thus providing less risk for year 2000 issues. If there is a year 2000
problem with the Business 400 version, JBA will not be providing support (all support ends
12/31/99).
- Any changes (i.e., regulatory, accounting, taxes) that necessitate software changes would
have to be done by Durakon after 12/31/99. This could conceivably generate substantial
increases in programming costs at a later date. With System 21, JBA will keep the product
up-to-date with the latest industry and business requirements needed for Durakon to stay
competitive.
- Graphical (Windows) interface would provide Durakon with the ability to re-introduce
JBA. Successful implementation should eliminate many of the homegrown systems
(spreadsheets) that have cropped up, due to user dissatisfaction. To the user, the software
will appear to be a new system, while retaining much of the familiarity of the old product
(thus reducing implementation costs versus a non-JBA system).
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Information Systems
Enterprise Software Recommendation
System 21 to Business 400 Comparison
Features:
System 21
Business 400
Year 2000
Year 2000 Problem Support
Support
Upgrades
Bug Fixes (PTF's)
New Business Acquisitions
User interface
Certified
Yes
Into 21st Century
Through ESSA Contract
Through ESSA Contract
Available for purchase
GUI
Allows re-implementation
of the software as a new product.
Yes
Compliant, Not warranted
No
Ends 12/31/99
Ends 12/31/99
Ends 12/31/99
Not available
Green Screen
Yes
Will utilize newer improved
technology
No
Deadend - Old Technology
Platform for Internet (www)
Integrate with latest, lower cost,
programming languages
Technology Growth
No
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Information Systems
Enterprise Software Recommendation
Advantages of new AS400

100% performance increase.
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More than 100% data storage (disk) space increase, current system is at maximum capacity and could hinder the
implementation if done on that system.
Room for acquisition growth. The current system could not handle anything other than a small acquisition; thus the
acquired company could not be integrated on the Durakon system.
Includes Year2000 compliant operating system, current operating system requires upgrade (this is the last upgrade
for current AS400, IBM has discontinued ongoing support).
Latest operating system provides support for open environment.
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New software and added processing for manufacturing could reduce performance of current AS400.
Assist in eliminating monthend bottlenecks, allowing quicker financial close.
Supports newer, more powerful programming languages which should translate to lower ongoing programming costs.
Supports internet capabilities, which could provide improved communications with employees, customers and vendors.
Safer implementation, reduced risk of interrupting business during the new system implementation. If a business
interruption occurs, the savings of keeping the old system would evaporate quickly.
Lease on current AS400 expires next year, system would need to be purchased.
Hardware maintenance on current AS400 expires next year, a maintenance contract would need to be purchased.
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Information Systems
Enterprise Software Recommendation
Implementation Options
JBA International
JBA has provided separate quotes for software, consulting, training and technical work. Allowing Durakon to
utilize their staff where appropriate. Durakon used their services for the Version 1 to Version 3.2 upgrade.
Advantages
Their software
UK support
Disadvantages
Less experienced people
Resource shortage
Expensive consulting rates
FYX, Inc.
FYX is a consulting company that specializes in JBA software. They only hire technical staff and people from
business that have been through a JBA software implementation. We have utilized their services as experts in JBA
over the past few years while communications with JBA International were severed.
Advantages
Highly competitive rates
Experienced staff
Disadvantages
JBA views as competitor
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Information Systems
Enterprise Software Recommendation
Implementation References
Durakon Industries
AS400 310
AB Dick
250 Million Sales
AS400 320
Omron Systems
300 Million Sales
AS400 530
JBA
FYX
Version 1 to Version 3.2
Unresponsive. Lack of value for money spent. Slow help desk
response. Billing for every little expense (last week, billed
$100 for JBA employee to pick up computer tape on the way
to work). Promises not delivered. Withdrew prepaid support
due to billing issues.
Has love/hate relationship with JBA. Not happy with most
JBA consultants – they have a few very good people.
Concerned that they could not get the few good consultants for
a large project. Not responsive. Would never turn the project
over to JBA.
Past experience pretty rough. Don’t communicate well
internally. Lack of knowledge outside UK. Quality problems.
Expectations not met. Did not deliver what was promised.
Billed every time they pick up a pencil.
Used for Clinton Implementation, Manufacturing
Implementation Planning and Company Consolidation
Tech Support.
Excellent support. Extremely instrumental in the success of
the implementation. Consultant has taken follow-up calls
and returns calls within 1 day. On time, on budget.
V2.2 to V3.5 with additional modules added.
6-7 FYX people. Knowledgeable staff. On budget. Off
timeline due to system problems at AB Dick. End users
have high confidence in consultants. Works well with other
resources.
S38 J.D.Edwards to AS400 JBA 3.51.
JBA experts. Apply themselves better. Quick. Went live
with no problems. Handled entire project. No surprises.
Missed timeline by 1 week (due to another software
supplier). Don’t know anyone else who does JBA as well.
No problem that JBA does not support FYX.
8-10 FYX people used over the past year. They will be
back this Fall for V3.3 to V3.51 upgrade (320 hours
budgeted). Fantastic results. Consultants add value instead
of just putting in time. Got answers from FYX people.
Users feel FYX people are experts.
Has not used third party consulting.
Borroughs
50 Million Sales
AS400 300
Marginal return on JBA consultants. Used Borroughs as a
profit center. Horrible results. Some projects never got
completed. All aspects did not go well. Promises were not
kept. Quick to blame customer for problems.
The Hoover
Company
250 Million Sales
AS400 530
Implemented JBA in ’94 from mainframe. Uses JBA annually
for version upgrades. Few modifications. No AS400 technical
resources on staff. Helpdesk has been responsive. Don’t like
having to pay to have someone on call during uplift weekend.
Don’t let them drive the project, keep track of it yourself.
Installed Version 2, upgraded to 3.2, upgraded to 3.5. Used
Has not used third party, money wasn’t an issue.
JBA less on last upgrade, sales down. Uses JBA exclusively.
Have had really good people from JBA, hard to always get
them though. Implemented last upgrade right on time.
Rex Air
200 Million Sales
AS400 310
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Information Systems
Enterprise Software Recommendation
Implementation
Factors for Success
= JBA
= FYX
Cost
Expensive
Reasonable
Responsiveness
Low
High
Adherence to
Estimate
Seldom
Consultant Software
Knowledge
Low
High
Consultant Business
Knowledge
Low
High
Low
High
Low
JBA would probably use
Outside contractors for implementation.
High
Often
Cooperation
Consulting
Resources
Durakon User
Opinion
Low
High
Meets Expectations
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Information Systems
Enterprise Software Recommendation
Project Methodology
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There will be 3 formal teams working on this implementation, as well as involvement from users in
all areas of the business.
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System Integration Team:
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Meets monthly to review project status.
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David Wright, Jim Smith, Joe Mawhinney, Durakon Project Manager, Randy Lhowe (FYX), Coopers & Lybrand.
Project Management Team:
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Meets weekly to review project status.
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Joe Mawhinney, Durakon Project Manager, Manufacturing Representative assigned to implementation, FYX
Project Manager, JBA Project Manager.
IS Steering Committee:
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Meets as required by the project management team.
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Joe Mawhinney, IS Business Analyst, Customer Service, Engineering, Finance, HR, Marketing, Materials,
Production, Purchasing, Quality, Sales.
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Information Systems
Enterprise Software Recommendation
Project Timing
ID
1
T ask Name
Assess Year 2000
2
Present Recommendation
3
Finalize Quotes
4
Upgrade Software & System
5
Software Fami liarization
44 days
6
Software T raining
26 days
7
Conference Room Pilot
21 days
8
User Signoff
11 days
9
Conversion
10
New System Live
Duration Mar
43 days
2nd Quarter
3rd Quarter
4th Quarter
1st Q
Apr May Jun Jul Aug Sep Oct Nov Dec Jan
1 day
22 days
154 days
2 days
1 day
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Information Systems
Enterprise Software Recommendation
Financial Summary
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Current system (AS400 and JBA software) was financed through an operating lease with a
monthly payment of $22,684. The lease expires in March, 1999.
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JBA System 21 software and new AS/400 could be financed as follows:
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Buy out the current lease, and extend a new lease for 5 years.
Estimated, at the current prime rate, a new lease would provide monthly payments of
$1,000 per month less than the existing lease.
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Implementation cost of $390,000 would be expensed during 1998 and is covered in the 1998
profit plan. Potential option of including in operating lease.
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With the purchase of JBA System 21, Durakon Division would maintain an Information Systems
department cost level of less than 1% of sales for the next 5 years assuming current
sales levels. Industry ratios indicate that companies spend between 1% - 2% of sales
on information systems.
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