WELLCO Investment Business Case

Evaluate the business and technology requirements for an integrated system that will support several lines of business

Sponsor: Kate Jarvis: DMC Chief Operating Officer (COO), and Jim Gorman: DMC Chief Financial Officer (CFO)

New Requirement:

An integrated system that will support several lines of business. This requirement is driven by two recent capital investment requests. A request by Kate Jarvis, the Chief Operating Officer (COO) for a new sales and inventory tracking system and a request by Jim Gorman, the Chief Financial Officer (CFO) to invest in a new cost accounting system.

Existing Solution Check: The legacy IT systems do not have sufficient ability to integrate.

New Solution Business Case

• Business Need:
  A new information system that is scalable and will provide integration across lines of business.
  In support of DMC Strategic Goal #2 to increase market share, Operations is looking to integrate the tracking of sales orders and inventory status data across the four primary corporate lines of business (consumer, industry, medical, and space products).
  Finance also requires a cost accounting system that would replace the current accounting system. This system would provide the ability to more readily see spending and profit generation within each line of business which will help to manage the budget more effectively.
• 
  Impact if Not Resolved:
  Operations will experience a loss of market share due to sales staff ‘s inability to provide on-the-spot quotes, check inventory, check production schedules, and provide current pricing.
  Lack of ability to see spending and profit generation, creating insufficient management of the budget.
• Alternative Analysis:
  • Sales and Inventory Tracking System (SITS) extended
  • WELLCO Suite
  • SITS (Sales and Inventory Systems) and WELLCO (Finance Systems)
• Cost-Benefit Analysis:
  • Sales and Inventory Tracking System (SITS) extended:
    • Cost:
      • Software $3.3 million (Sales and Inventory module $3 million, Finance module $.3 million )
      • Conversion from existing systems to SITS and integration of operations, data, and processes estimated in excess of $500k
      • Infrastructure costs TBD
      • Software training, business process and work process documentation and training $180k
    • Benefit:
      • Integration information exchanges across lines of business
  • WELLCO Suite:
    • Cost:
      • Software $2.275 million. (Finance module $.6 million, Sales and Inventory module $1.675 million)
      • Conversion from existing systems to WELLCO and integration of operations, data, and processes estimated in excess of $500k
      • Infrastructure costs TBD
      • Software training, business process and work process documentation and training $120k
    • Benefit:
      • Integration information exchanges across lines of business
      • The WELLCO enterprise resource planning (ERP) product provides further integration across lines of business through its many plug and play modules, all of which use a common data formats
      • Potential preferred supplier relationship
  • SITS (Sales and Inventory Systems) and WELLCO (Finance Systems)
    • Cost:
      • Software $3.6 million.
      • Conversion from existing systems to SITS, WELLCO and integration of operations, data, and processes estimated in excess of $750k
      • Infrastructure costs TBD
      • Software training, business process and work process documentation and training $200k
    • Benefit:
      • Integration information exchanges across the sales, inventory and production lines of business (SITS)
      • Integration may be possible across lines of business through an interface with WELLCO system. Cost not determined at this time.
• Return on Investment :
  • Sales and Inventory Tracking System (SITS) extended: The lifecycle for SITS should be seven years, with positive ROI seen in years three through seven, and an average of about twelve percent per year.
  • WELLCO Suite: Positive ROI seen in eighteen months, with an average of about sixteen percent during the subsequent years.
  • Independent SITS (Sales and Inventory Systems) and WELLCO (Finance Systems): The ROI will be seen for each product as listed above.

Business Case Evaluation

The WELLCO Suite is the recommended system for implementation of a new sales and inventory tracking system, and cost accounting system. This recommendation is motioned by the Capital Planning (CPWG) and Architecture (AWG) Working Groups.

Business Case Approval

The Capital Planning Board (CPB) has reviewed and approved this business case.

Implementation

This business case has been approved for implementation. The project plan will be reviewed by the CPB periodically as part of the capital planning process’ oversight.