Implementing Information Systems

• Western Digital faced the challenge of integrating three different legacy ERP systems. Describe how WD used cloud-based ERP solutions to address this issue, and discuss the challenges and benefits they encountered during this transition. How did the move to the cloud reflect current trends in information systems?
• WD’s migration process cost $40 million more and took a year longer than estimated. What factors may have contributed to this underestimation, and what lessons can be learned about the planning and execution of such a complex integration? How does this reflect the complexities in managing IS within large organizations?
• Explain how the ERP upgrade simplified WD’s business processes, reducing tasks that initially required 17 or 18 steps to just four or five. What does this reveal about the potential for IS to enhance efficiency within an organization? Provide examples of how ERP systems can be tailored to specific organizational needs.

Your submission must be between 750-1500 words in length in APA format, including a title page, and please use at least two academic resources.

Western Digital Acquires Companies and Merges Systems

The Business Problem

Western Digital (WD; www.westerndigital.com) is an American computer hard disk drive manufacturer and data storage company. It designs, manufactures, and sells data technology products, including storage devices, data center systems, and cloud storage services. In 2011 WD began a series of acquisitions to expand their products across the data storage sector.

The firm first acquired Hitachi Global Storage Technology (HGST) for $4.3 billion. Initially, Chinese government regulators mandated that Western Digital and HGST operate as two separate companies. However, in 2015, the Chinese government lifted the restrictions, and WD folded HGST into the WD brand. WD then acquired SanDisk in 2015 for $19 billion and began formalizing plans to create one entity from the former three under the parent name of Western Digital.

WD planned the integration of the three companies in three phases. First, they would consolidate the communication and collaboration tools within their organizations. This consolidation meant moving to a single platform for office tools, cloud storage, and online meeting capabilities. Second, they would integrate internal information systems through a single enterprise resource planning (ERP) system. Finally, they would move the company to uniform, standard reports. This case focuses on the second part of this transition: integrating the three internal information systems into a single ERP.

Typically, when one business acquires another, a natural order emerges for the integration of systems. If a larger company acquires a smaller one, it is standard to default to the larger company’s systems. If two companies are similar in size, information systems personnel test each firm’s systems and determine which one is best. However, Western Digital was trying to integrate three similar-sized companies and there was no clear path forward for systems integration

Each of the three companies had a different legacy, on-premise ERP system. WD could have chosen one of the three ERP systems and begun a 3- to 5-year process to migrate the other two systems into the one selected.

Fortunately, WD was beginning its integration process in 2016 when many ERP systems were becoming available as services in the cloud. As a result, WD decided to move to the cloud.

The IT Solution

In fact, WD had to integrate more than 3,000 applications from the equivalent of three Fortune 500 companies in a single technology platform and ERP system. As soon as WD decided to implement a cloud ERP solution, the project team began investigating the three firms’ systems for similarities and differences. They quickly discovered that the three companies managed data differently. All three lacked mature data standards across systems and functional areas, resulting in significant data quality and interoperability issues.

It became apparent that the migration would require more than systems upgrades. It would also be necessary to streamline business processes and data management.

WD considered many providers but chose to implement the Oracle ERP Cloud. WD hoped to create consistency in several operations across the following:

Cost center management

Information technology

Human resource management

Payroll processing

Streamlined systems for forecasting business analytics and forecasts

Workforce planning

Comprehensive dashboards and automated reporting

Improved customer relationship analysis

WD seriously underestimated the cost and time for the migration process. The process cost $40 million more than the estimate and took more than one year longer than the estimate to complete.

Sadly, this kind of estimation error is not uncommon. Unforeseen process integration—particularly data migration—can add costs and complexities to companies merging or migrating technologies. Despite the potential difficulties, WD proceeded with its ERP migration because the company really had no other choice. WD simply could not continue to operate with three independent and non-communicating systems.

The Results

The ERP upgrade had a direct impact on process improvements. Tasks that took 17 or 18 steps before the ERP implementation now required only four or five steps.

Further, the implementation of a cloud-based ERP solution meant that WD benefited from seamless and continuous upgrades. Upgrades no longer required system downtime that upgrades to locally hosted systems require. WD deployed the first phase of the ERP migration in July 2017. Since that time, the company has successfully implemented another nine system upgrades. Significantly, WD has completed each upgrade during a typical working day with minimal interruption to business operations.