376 Part Three Key System Applications for the Digital Ape Vodafone: A Giant Glo

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376 Part Three Key System Applications for the Digital Ape Vodafone: A Giant Global ERP Implementation CASE STUDY The company spent a year sdentifying and cd ing its new bus scope of this project. toli es odafone Group PLC is the largest mobile service provider by revenue in the world, with 400 miltion the Middle Fast, Africa, Asia Pacific, and iness processes and establishin the The management tea customers across Europe, mit risks to non-customer-faci the United States. In 2013, it had revenues of $646 billion a in over 30 countries Since its founding nearly 30 ex years ago, the business has ex enal growth, largely by establishing local operating companies that provides products and services to cesses to bet were nevertheless important sources ot value for uded fiom the first phase of the rollout to perienced phenom- the transformation more ma t was targeted as the first set of ransformed using the new ERP sys. tem. Vodafone had been allowing each of its local companies to manage its own procurement, which prevented it from leveraging the mass their local markets As a result, the company was very decentralized comimon practices arious operating compa operating compa ing power the company could obtain by managing es. Most of Vodafone's mobile subsidharres operated independent companies with their own business cesses. Vodafone was a network of individual relationships with material and service suppliers from a single entity. By gencrating savings from would he able to quickly show a return.on invest- ment and win further support. Vodafone did not establish a centralized procurement department but instead created a centrali based in Luxembourg that uses the SAP ERP plat- form. Most of the company's spending goes through this central organization. Suppliers benefit because businesses, but it wanted to function more like a egot firm to better deat with competitrve pressures Management called for a major business transformation to make this happen. procurement company In 2006, Vodafone's board of directors approved the Evolution Vodafone" Business Transformation Program (EVO) designed to refashion Vodafone into system helps them plan their sales to Vodafone and they only need to work with a single purchaser instead of many. This new way of doing business included a new purchase-to-pay process in which invoices are approved automatically for payment by resources, a ement for all of the operating companies. (Shared services refers to the consolida- tion of business operations that are used by multiple matching them with purchase orders and receipts parts of the same organization in order to reduce costs Once the new procurement process and organi- zation were running, Vodafone started creating a centralized shared services organization based o and redundancy.) A common SAP ERP system would technology platform fhor these changes by haring and common busithe rocesses that would simplify and speed Redwood, HP, and Remedy that could integrate with Vodafone's system turned out to be one of the e SAP ERP system. It selected Budapest, Hungary as the pilot location for this new arrangement. Vodafone Hungary is a mid-sized company with 2,000 employees with a small IT platform based on Oracle software. This made Vodafone Hungary more receptive to changing its information system software ntext, Readsoft, Sabrix, SAP were added to the mix. biggest SAP ERP implementations in the world. tions in larger countries, and Hungary had atready processes than Vodafone organiza- ll tof? First of all, Vodafone's been using Oracte systems. There, Vodafone built realized the company lacked tise and resources to mana the exper- a an entire shared services organization from scratch while simultaneously implementing the SAP ERP system. Vodafone then set up two more shared ser on its own. It enlisted the consulti Accenture and IBM to this ambitious project requir skills and services that vices organizations in India running on SAP inside After Hungary, Vodafone implemented the new procurement process and SAP software for it

Explanation / Answer

9-13 The problem discussed the diversified cultural and operational aspect of the organization. As Vodafone grew to a large global corporation, each division (regional and functional) became operating as an individual entity. This distributed management system gave rise to issues in management because similar policies could not be applied across organization. This also gave rise to organization growth and the technology used by the company was also not unified.

9-14 Vodafone wanted to bring a spine of operation and/or strategy. The distributed management system has its benefits but causes too much confusion and often mis-management within the organization. Also it becomes difficult to align each division’s strategy and tactics with the corporate goals unless there is a unified process within organization.

9-15 ERP system forms the backbone of traditional business. ERP systems can cover wide range of business operations from procurement, processing, sales, billing and other operations as well. Choosing an ERP system across the organization would compel Vodafone to create a common process and practice across the entire company.

9-16 Vodafone had to implement the ERP system in phases. Phases across functions and across geographies. They started with procurement in few countries. Then spread that across the entire company. This also made them face resistance from teams from different countries, face various technology based challenges and process related challenges (as different countries have different laws).

9-17 The global transformation caused an annual cost savings of $719 million. It also helped different department across countries to think in a similar way and execute plans with similar processes.

9-18 Reasons to implement ERP systems are

The reasons why ERP systems may not be suitable is

9-20 Analytical CRM systems source their data from customer information. Such as name, age, organization, purchase record, expiry date of products etc. These data are collected, stored, processed and the output is usually an action based on insights. For example, send an email to customers whose account is about to expire in 30 days, notify a customer about an available upgrade offer, etc.

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