Who says it doesn't pay to rip and replace? Not Home Box Office Inc. (HBO).
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Four years ago, the television programming subsidiary of Time Warner Inc. embarked on a strategic initiative to better integrate its financial and operational systems in order to simplify reporting and increase transparency. It had a patchwork of siloed software systems spread across the company. Executives in the corner offices realized that if they were going to achieve this objective, the company would have to rip and replace its systems.
"We were springing up these independent silos, and so there was redundant data all over the place, which was causing reconciliations. So, yes, there was a lot of ripping and replacing," said Greg Fittinghoff, senior vice president of application development at HBO.
HBO decided to take out its collection of legacy systems, a mix of homegrown and purchased products, and replace them all with Oracle's E-Business Suite Release 12 ERP system. The implementation project took 15 months to complete, which was just about the amount of time that was budgeted for it.
"We definitely have a solid foundation and have a lot more transparency into our numbers now than ever before," said Marie Mahony, vice president of financial operations and reporting for HBO. "There is a lot more detail housed in one place, so it has worked out really well."
Mahony, along with Fittinghoff, was responsible for coordinating the efforts of some 200 people involved in the project, which included technical support teams from IBM and Oracle, and other outside contractors.
Ripping out the legacy systems and replacing them was hardly done with wild abandon, however. HBO's initial review process began four years ago. After two years of careful analysis of the costs and benefits of replacing the old enterprise applications systems, executives determined that the company needed an ERP system that would serve as a foundation for future growth.
"From there, we looked specifically at what ERP system we needed and talked with SAP, Oracle and PeopleSoft. We decided Oracle was big enough to meet our needs but not so big it would be hard to implement in a reasonable time frame," Mahony said.
HBO then had to choose between versions 11 and 12 of Oracle's E-Business Suite. They voted for 12, for fear that 11 would grow outdated relatively quickly. The company didn't want to go through a second upgrade.
"We also wanted to take advantage of some of the new HTML look-and-feel stuff, which was the direction we were headed in anyway," Mahony said.
HBO decided not to go with SAP, even though its sister organizations Warner Bros. and AOL both standardized on that company's product.
"We had extensive conversations with them [SAP]," Fittinghoff said. "While it was robust enough, it was more complex and involved more than what we needed to do with it. [E-Business Suite] was a much better fit for us."
The collection of systems HBO was using before it implemented E-Business Suite 12 included Computron's general ledger and accounts payable; Lawson's financial system, used only for the home video business; a number of internally developed databases used as reporting repositories; Peanut, a purchasing system; and Microsoft's Excel, which was used extensively for analysis and reporting. HBO still uses Excel for some of those duties.
From E-Business Suite 12, HBO has decided to use 10 of the product's modules: Oracle General Ledger, Oracle Subledger Accounting, Oracle Payables, Oracle Receivables, Oracle Assets, Oracle iProcurement, Oracle Discoverer, Oracle Project Costing and Billing, Oracle Inventory, and Oracle Order Management.
Some of the specific functional advantages HBO has gained from version 12, according to Mahony and Fittinghoff, include: capturing information at more granular levels, as well as seeing categories previously not viewable, thanks to version 12's project accounting capability; and the ability to more efficiently manage accounts payable and receivable, and payments to vendors and suppliers, thanks to version 12's transaction management features.
Both Fittinghoff and Mahony were pleased with the level of technical assistance IBM Global Services and Oracle supplied, handling a number of unexpected technical problems. They were also pleased that the two competing organizations worked cooperatively to achieve the shared goal.
"IBM was our primary implementation partner and Oracle the secondary. But every time we came up against something, they stepped right up and found the right solution," Fittinghoff said.
"There was never a point where either party wanted to throw the other one out."
With E-Business Suite 12 firmly planted in all the key departments involved in HBO's financial operations, the company is moving on to the next phase. Phase 2 largely involves getting users to exploit the new features, according to Mahony, but that has not stopped users from flooding the IT department with requests for new internally developed applications and services.
"We have folks coming in saying, 'OK, you have the foundation in, so now here is some stuff we want on top of that,'" Fittinghoff said. "We are experiencing the problem of a rich man, in that we are getting too many requests, not too few."