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Of Men and Mice: An ERP Case Study

CFO Lee Wilbur explains how Jackson Laboratory is dealing with the challenges of installing its new ERP system.

In the end, that didn’t happen. Jackson ended up modifying certain fields in the OPM product not originally intended for such a purpose to accommodate the information about the processes of raising and distributing the mice.

Seeking Fixed Fees

Besides managing the internal human and technological risks, Jackson has also sought to minimize the risk that the action—or inaction—of the software provider would hinder the project.

Wilbur tried, for instance, to negotiate a fixed-fee contract with Oracle rather than the more commonly used time-and materials contracts.

Jackson had sought the contract in connection with exploring the idea of buying a surety bond from Gladwyne, the risk management consulting firm.

Gladwyne, which is performing a risk assessment of the Jackson project and providing ongoing audit services, is pushing the idea of protecting IT projects with surety bonds. (While the firm hasn’t yet completed a surety-bond deal, it has 10 currently in the pipeline.) For more on IT project surety bonds, Gladwyne, and Jackson, see an earlier story. In the case of Jackson Laboratory, the contract it ultimately signed was one that covered time, materials, and other expenses. “We didn’t get a satisfactory fixed-price contract out of Oracle,” says Wilbur. The CFO noted that the lack of a fixed-price contract made the purchase of a surety bond untenable. A fixed-price agreement provides benchmarks needed to frame a fixed price, he explains.

“It was just a mess to negotiate a fixed price,” he says, noting that Oracle had produced one by “throwing on 25 percent of everything” to its estimate.

Tim Meehan, a group vice president for Oracle Consulting in Boston, responds that “the 25 percent contingency is standard in the industry, depending on the nature of the work.”

Negotiations involving fixed-price contracts, he says, “tend to be very complex because there has to be a much clearer definition of roles and responsibilities between client and services provider.”

Not that Jackson has complaints about its software supplier. “In all fairness, Oracle’s done a great job,” Wilbur says.

Despite the challenges Jackson has faced, the project is moving briskly ahead now. To date, the first part of the first of two phases of the ERP went live at the start of February. That part includes the management of production capacity, accounts receivable, some general- ledger functions, and the purchasing of manufacturing material.

Slated for an April launch, the second part of the first phase will include accounting for research grants, the rest of the general-ledger functions, accounts payable, and fixed assets.

The second phase is expected to go live on June 1. That phase will include human resources, payroll, the distribution of labor, and the information involved in filing a grant, the CFO says.

Jackson will use “a brand-new module” created by Oracle for the latter function, which includes information on budgeting and the backgrounds of researchers. Jackson will also trot out a newly created module for order management as part of its second-phase launch.

Asked what overall lesson he’s learned from the endeavor of Jackson’s ERP installation, Wilbur says: “You need to build in a lot of buffer in your time for a project like this.”

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