Reference no: EM132866496

Answer the question based on the case below (word count does not matter as long as you answer the question specifically and in detail)

Questions:

1. Discuss the implications of Core ERP modules for Under Armour and how they can be used to make Under Armour's business operations more effective and efficient.

Case Study: Under Armour Finds a Chip in Their Armor

The Business Problem

Under Armour (www.underarmour.com) was founded in 1996 by Kevin Plank, a former University of Maryland football player who was tired of having to change his sweat-soaked cotton shirts over and over during their twice-a-day practices. From his grandmother's basement, he designed the first HeatGear® T-shirt and sold it under the company name of Under Armour, which was designed to keep players cool and dry under even the hottest conditions. Plank also designed a ColdGear® fabric that keeps athletes warm and dry in cold conditions and the AllSeasonGear® that keeps them comfortable between the extremes. He then drove up and down the East Coast selling these items from his trunk.

By the end of 1998, Plank had to find a new location. He could no longer sustain his operation in his grandmother's basement. So, he moved the company headquarters to a warehouse in Baltimore. Since this beginning, Under Armour has grown into one of the leading athletic brands of clothing, equipment, and more, successfully competing with brands like Nike and Adidas that have been around almost 50 years longer.

Fast forward to 2013, when Under Armour changed its focus from designing and selling clothing and equipment to considering the entire athlete. It acquired several popular apps-EndoMondo, MyFitnessPal, MapMyFitness-and developed its own app, UA Record. According to a March 2017 Forbes article, across its suite of apps, Under Armour had more than 200 million subscribers. This influx of data provides the company with potential insight into the physical characteristics of its entire user base of athletes (size, weight, sports, training, and eating habits, etc.), and their use of equipment.

However, having access to data and making use of those data are not the same thing. As Under Armour grew and gained access to more data it had ever seen, the organization faced significant challenges. It needed to consolidate and analyze the data and to restructure the organization to quickly adapt to the changing needs of users, to which it now has direct, real-time access.

The IT Solution

Under Armour needed a system that would allow it to integrate the multiple sources of data it had purchased, to perform real-time analysis of data, and to determine the best course of action, as quickly as possible. It determined that the best-integrated ERP solution partner to accomplish these objectives was SAP. SAP (www.sap.com) is a software corporation that makes enterprise resource planning (ERP) solutions. It is headquartered in Walldorf, Baden-Württemberg, in Germany, but it has regional offices in more than 180 countries, including more than 7 offices in Canada.

Specifically, Under Armour decided to implement the SAP HANA product, which SAP designed to reduce complexity, to run anywhere (meaning ubiquitous access across platforms and devices), and to provide real-time results. SAP HANA is intended to speed up the implementation of an ERP by allowing legacy silos to remain intact. SAP HANA will draw data from those silos and make use of these data without requiring the client to migrate everything. This sounded exactly like the solution that Under Armour needed, given that it had acquired multiple data sources.

The Results

Under Armour faced (and is facing) challenges implementing SAP HANA due to issues outside the fashion industry and the solution provider (SAP). In a conference call regarding quarterly earnings on October 31, 2017, the company's president, Patrik Frisk, admitted that Under Armour had experienced serious challenges with change management. Frisk attested, "While these enhancements are designed to enable us to more effectively and efficiently operate our business and, ultimately, enhance productivity for the long term, the implementation caused disruption in our supply chain operations during the quarter. This led to delayed shipments and loss of productivity, which negatively impacted our third-quarter results. During this system migration, we have encountered a number of change management issues impacting our workforce and manufacturing partners as they adapt to the new platform and processes."

Change management is a term that refers to techniques and methods for preparing and supporting individuals and teams throughout an organizational transition. It is not uncommon for ERP implementations to fail due to change management issues. However, Under Armour is not prepared to concede that its implementation has been a failure.

The company reported revenue of US $5 billion in 2017, with adjusted net income of US $87 million. The company's inventory did increase by 22 percent to US $1.2 billion (due to system errors and delayed shipments). The company saw improvements in service levels (meaning it was fulfilling orders more quickly and accurately). Further, it expected operations to begin to normalize in 2018 as it and its partners become more comfortable with the new system and processes. Under Armour has the potential to make effective use of the data it has acquired through digital connections with customers.