Page 113 -

Chapter 4 • Development Life Cycle 89

CASE 4-1
Opening Case
Of Men and Mice: An ERP Case Study

Source: Based on the article by Katz, D. (2001). Of Men and Mice: An ERP Case Study, CFO.com, March 21.

Jackson Laboratory is a nonprofit, independent, world-renowned genetic research institute
founded in 1929. Located in Bar Harbor, Maine, it had a budget of $80 million and 1,200
employees, including 32 in IT. Jackson Laboratory decided to install an ERP system with
a $5 million budget and a one-year time frame. Despite the installation challenges, the
project’s actual cost was close to the budget and took only about six months longer than
expected.
Jackson Lab’s major installation challenge was the integration of its unique
mouse-development functions into Oracle’s ERP system. One of the problems faced by
Jackson stemmed from an internal HR issue (i.e., the risk that the action or inaction
of the software provider would hinder the implementation). Jackson Lab coped with
these challenges by modifying the ERP system to accommodate its business process,
placing special emphasis on training, seeking a fixed-fee contract with Oracle, and
purchasing a surety bond to reduce project risk. The surety bond was issued by an
entity on behalf of a second party, guaranteeing that the second party would fulfil an
obligation or series of obligations to a third party. In the event that the obligations are
not met, the third party would recover its losses via the bond. Every year about $3 billion
worth of surety bonds are generated by construction projects compared with a mere
$8 million for IT (mostly for governmental contracts); however, there is insufficient
commonality and standardization in the IT industry on the bonds. A surety bond works
well only for a fixed-fee contract because it provides the benchmarks needed to frame a
bond price.
Jackson Lab selected an integrated ERP suite from Oracle rather than a best-of-breed
option. The Oracle applications suite included modules for process manufacturing,
accounting, e-procurement, and HR, among others. Their biggest challenge was modifica-
tion of the Oracle Process Manufacturing (OPM) module to accommodate the lab’s unique
business processes of raising and distributing mice. The OPM module was designed for
companies that mix ingredients together to produce such products as bread or beer, not for
a lab environment.
The implementation team chose a phased-implementation approach instead of a big
bang approach. The first phase initially went live in February, including the management of
production capacity, accounts receivable, some general-ledger functions, and the purchas-
ing of manufacturing material; in April, they launched other modules including accounting
for research grants, the rest of general-ledger functions, accounts payable, and fixed assets.
For the second phase, which began in June, the remaining modules including process
management, human resources, payroll, labor distribution, and a grant filing application
were installed.
Jackson faced personnel problems during ERP installation when the best and
brightest employees were involved in the implementation process, leaving them short-
handed to do the everyday work. In addition, Jackson’s IT staff lacked experience with