Dell Computers Evaluation of SAP R/3 Chose not to adopt

Need to continue project evaluation Initial project adoption –1994 Dell began implementation of SAP R/3 enterprise software suite –Spent over 1 year selecting from 3,000 configuration tables After 2 year effort ($200 million), revised plan –Dell business model shifted from global focus to segmented, regional focus

Rethinking In 1996 revised plan Found SAP R/3 too inflexible for Dell’s new make-to-order operation Dell chose to develop a more flexible system rather than rely on one integrated, centralized system

Best-of-Breed I2 Technologies software –Manage raw materials flow Oracle software –Order management Glovia software –Manufacturing control Inventory control Warehouse management Materials management SAP module –Human resources

Core Competencies Glovia system interfaced with –Dell’s own shop floor system –I2 supply chain planning software This retained a Dell core competency –Would have lost if adopted publicly available system

Points Demonstrates the need for speed –Prolonged installation projects become outdated –Need to continue to evaluate project need after adoption Tendency to stick with old decision But sunk cost view needed Demonstrates need to maintain core competitive advantage –Adopting vendor ERP doesn’t