MG-Rover has projected 40% savings in IT costs as a result of
rationalising its legacy systems following its departure from the
BMW Group.
The savings are expected to be delivered by the end of 2004
following the completion of the project, which involves migration
of business systems from a vast number of legacy and bespoke
systems to a unified client-server environment based on Compaq,
Windows 2000, Oracle and IFS ERP software.
Steve Walton, MG-Rover's business systems manager, said, "The first
module to be fully implemented was purchasing. We have reduced
support costs from about £220,000 per annum to about £30,000. We
expect a reduction in costs from £200,000 to £20,000-£25,000 per
year in the [ongoing] finance module implementation.
"Overall, we expect total savings of about 40%."
The company plans to roll out IFS modules for warranty, payroll,
bills of materials, human resources and administration, and similar
savings are expected.
MG-Rover's IT department faced a massive task in rationalising the
legacy environment at six sites and coping with a history spanning
various incarnations of the company from the nationalised British
Leyland, through the Rover Group and the later takeover and
subsequent disposal by BMW.
When MG-Rover emerged from the BMW Group, the IT department first
had to clone data for the successor companies, renegotiate software
licences and then set about unifying what remained.
Walton said, "The systems that supported the business were clumsy
and cumbersome, were up to 20 years old and included every kind of
database and operating system you could think of."
ERP systems are being standardised around IFS modules to minimise
costs arising from fixing interface faults, which Walton said
previously accounted for 60% of IT department costs.
Simon Bragg, an analyst with ARC Consulting, said, "Many say that
there is no return on investment on ERP. However, many users do not
appreciate what would have been the extra costs of maintaining a
landscape of disparate, hand-crafted bespoke packages.
"That the ERP market is in decline is not because 'it doesn't
work', it is just that the ERP suppliers have already replaced most
of the legacy systems."