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ERP: Gaming Company Hits Jackpot

By Doug Bartholomew  |  Posted 2006-10-02 Print this article Print

International Game Technology, a maker of slot machines, uses an enterprise resource planning system to tilt the odds in its favor by cutting production turnarounds and streamlining staff access to company information.

In 2002, International Game Technology (IGT), a leading manufacturer of slot machines and lottery machines, depended on several different systems to manage its sales, customer orders, manufacturing and accounting. When an executive, sales manager or production staffer wanted to learn the status of a particular order, there was no single system he or she could go to—each functional area had its own system that contained a different piece of information about that order.

This dependency on a host of applications by different functional groups was common among large manufacturers until the mid- to late 1990s. Keeping all of these systems connected and talking to each other was an onerous, if not Sisyphean task for those assigned to information systems.

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By 2000, many companies had begun scrapping these older systems in favor of a single core, or "backbone," information management system. Evolving out of what had once been called material requirements planning (MRP), this new software package was dubbed enterprise resource planning (ERP). It consisted of a set of core business applications, including finance, manufacturing, distribution and human resources, all linked together for the first time.

While not exactly a silver bullet, ERP caught on with the big manufacturers that had been laboring under too many unconnected "silos" of functional business information.

"In many ways, ERP has made manufacturing companies more responsive to their markets," observes Julie Fraser,

principal and industry analyst at Industry Directions, a manufacturing information-technology research firm in Cummaquid, Mass. "ERP provides a consistent backbone for business data, allowing a more coherent I.T. infrastructure for a company. And with ERP, it's much easier to manage processes across departments, which was difficult to do with just an MRP system."

Although it was a little late to the ERP party, IGT was in many ways typical of companies that adopted the enterprise technology. For one thing, the company desperately needed a more cohesive information technology infrastructure that would allow for growth. And, similar to many manufacturers, IGT had lots of business information contained in applications that lacked smooth integration. "What got all of this started was that we had very disparate systems," says Rayleen Cudworth, vice president of information systems at the $2.4 billion Reno, Nev.-based manufacturer. "Our I.T. group was constantly trying to keep all the pieces together through the writing of interfaces."

IGT's accounting department squealed the loudest over what Cudworth terms "a mishmash of software. They said it was a mess. They wanted one system to do all the accounting, if only for greater efficiency in closing the books, which took about 2 _ weeks."

But if Accounting went out and bought a new system on its own, Cudworth recalls worrying, how about Manufacturing and Engineering? "They would all want to buy a new system," she says. "We decided what was best would be to get a full ERP system."

Emphasizing that the project was undertaken for business reasons and not simply to upgrade the technology, Cudworth says the company assigned a project team that established a set of desired business functionality. The team then looked at competing ERP packages from JD Edwards, Oracle and SAP.

At the end of the day, SAP won out. "SAP was the best fit with the least amount of business gap," she explains. "The finance and accounting system of SAP covered a gap we had. The financial-consolidations and foreign currency modules were much better than [those in] the other ERP systems."

In 2003, following a 2_-year implementation effort, IGT converted to a SAP enterprise resource planning system. Cudworth prefers not to disclose how much the company spent on its ERP system, but analysts say most manufacturers with sales of $1 billion or so can expect to invest $10 million or more in a typical project, including software, computer hardware and implementation costs.


Doug Bartholomew is a career journalist who has covered information technology for more than 15 years. A former senior editor at IndustryWeek and InformationWeek, his freelance features have appeared in New York magazine and the Los Angeles Times Magazine. He has a B.S. in Journalism from Northwestern University.
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