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Winning the Bet International Game Technology (IGT) is a leading manu- facturer of slot machines and lottery machines for casi- nos and government lotteries. Headquartered in Reno, Nevada, with sales headquarters in Las Vegas, the com- pany also maintains sales, manufacturing, and service sites in Africa, Australia, Europe, and South America. Its Reno site alone produces 140,000 machines annually. It has been profitable for many years. In 2005, it had a profit of $437 million on revenue of $2.4 billion, appar- ently a situation that would lull executives of other com- panies to think "If it ain't broke, don't fix it." Not IGT managers. Until 2002, each business function had its own infor- mation system. IGT had different systems for handling sales, customer orders, manufacturing, and accounting. When managers wanted to receive information about a specific customer order, they had to go to each func- tional unit to receive a different piece of the information: customer details from the sales department, status of the machines being manufactured from the manufactur- ing units, and payment status from accounting. The accounting department itself had several software appli- cations that handled different books, such as accounts receivable, accounts payable, and the general ledger. As business was growing, managers complained that they could not get comprehensive information on orders. The IT department developed interface software to connect the systems, but there were still complaints that information was not coherent. The IT specialists admitted that they were maintaining a mishmash of software. The loudest complaints came from the accountants. Every year it took them two weeks "to close the books." The accounting department pressured management to purchase a new system that would make their work more efficient. The CIO understood their plea but was afraid that satisfying this department's request would trigger similar requests from other units, such as engi- neering and manufacturing. The result might be a bet- ter information system for each department, but disparate systems that still were not connected to each other. On the CIO's advice, IGT management decided to implement an ERP system. SAP won the contract, and IGT embarked on a two- year effort. In 2003, the company switched to using the R/3 ERP system. IGT did not disclose the cost of the project, but analysts estimate it was well over $10 million. When the system was ready, three functions were incorporated into one enterprise system: product devel- opment, manufacturing, and finance. Like other ERP systems, R/3 is highly structured even when modified for a particular customer. As often happened, the new system forced IGT to change some of its business processes. However, the company chose SAP's system because it found it less rigid than other ERP systems. This was important to IGT, because it builds machines to order. The system afforded the company several benefits. Price proposals are made based on more accurate information and estimates. Managers on the manufac- turing floor can view or print out manufacturing pro- cess sheets at their own PCs. Employees can no longer ignore specifications or "cut corners." The system does not allow a process to continue when an attempt such as this is made. The products are made more effi- ciently and with fewer errors. The system connects all of the company's sites around the globe. One of the system's modules is project management, which enables managers to monitor design changes and costs involved in new product development. The new system replaced the old MRP (material requirements planning) system, but the company still uses its internally developed factory control system, which has been successfully integrated into the SAP system. The factory control system enables managers to know which machines are built at which plant. IGT reduced the average period of order to shipping from 9-10 weeks to 7-8 weeks. When a rush order is entered, IGT can now fulfill it in four weeks instead of seven weeks. Between 2002 and 2005 the error rates in orders for raw materials decreased from 10 percent to almost 0. Inventory turn increased from 6.3 to 8.4 per- cent per year. IGT's CIO admits that the implementation was challenging. The company makes a variety of machines, which meant that many bills of materials had to be entered into the system (and new ones will have to be A steering committee and project team were assembled. Their members focused on business func- tionality rather than the technology. After the first selection, systems from three companies were considered: SAP, Oracle, and J.D. Edwards (which was later acquired by Oracle). After further consideration, entered for new products). Adapting some features to the way IGT operates was not easy. However, the imple- mentation was successful. The CIO credits the success to strong support from senior management, the estab- lishment of a steering committee with members from all Questions Analyze what problems did IGT face before the 1. implementation of the ERP system? 2. From a critical prospective how does the new system help control processes? 3. Compare to the situation in 2002, discuss what are the benefits of the ERP system? 4. IGT decided to continue operating its older factory control system. Investigate why do you think it did so