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ERP Implementation What is it really like

ERP Implementation What is it really like. Barry J. Brunetto CCP Vice President Information Systems Blount International Oregon Cutting System Group. A Troubling Survey. % companies. 70%. 30%. Failure. Success. Taken from Succeeding with ERP , Hammer and Company.

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ERP Implementation What is it really like

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  1. ERP ImplementationWhat is it really like Barry J. Brunetto CCP Vice President Information Systems Blount International Oregon Cutting System Group

  2. A Troubling Survey % companies 70% 30% Failure Success Taken from Succeeding with ERP, Hammer and Company

  3. The State of ERP Projects Huge costs and enormous overruns Ongoing temptation of “best of breed” approach Long delays in obtaining results and payoff Yawning gap between business model and system tables requires enormous effort to bridge Sponsors oscillating between ecstasy, despair, and indifference High degree of difficulty in obtaining needed resources Interminable waits for critical decisions Terrible chaos and confusion arising from system modifications Taken from Succeeding with ERP, Hammer and Company

  4. The State of ERP Projects Huge costs and enormous overruns Ongoing temptation of “best of breed” approach Long delays in obtaining results and payoff Yawning gap between business model and system tables requires enormous effort to bridge Sponsors oscillating between ecstasy, despair, and indifference High degree of difficulty in obtaining needed resources Interminable waits for critical decisions Terrible chaos and confusion arising from system modifications Taken from Succeeding with ERP, Hammer and Company

  5. Conventional Wisdom The usual suspects the software is too complex the software is too flexible the software isn’t flexible enough the vendor is unresponsive the consultants are incompetent the CIO is an incarnation of Satan The Tomashevsky Syndrome better consultants a new and improved 4GL just a little more functionality just a few more choices just another layer of software a better-run user group meeting The problem is the misperception of the problem Taken from Succeeding with ERP, Hammer and Company

  6. The Functional Organization Engineering Sales Production Distribution Service Billing Taken from Succeeding with ERP, Hammer and Company

  7. The Functional Organization - Automated Engineering Sales Production Distribution Service Billing Taken from Succeeding with ERP, Hammer and Company

  8. The Problem with Functional Systems • They sub optimize the business • They generate non-value adding work (data reentry and transfer), with attendant errors and delay • They prevent an integrated view of the business • They constrain flexibility • They cement functional organizations in place • They focus on the wrong kind of problem Taken from Succeeding with ERP, Hammer and Company

  9. What Should Happen in an ERP Implementation? • Processes are defined • as the organizing elements of implementation • Non-value-adding work is eliminated • by eliminating the interfaces and handoffs where it breeds • Jobs broaden • via expanded information access • Organizational boundaries dissolve • as processes dominate functions • Authority moves to the front lines • along with information • Processes are standardized • by embedding them in software In other words, ..... Taken from Succeeding with ERP, Hammer and Company

  10. The Key Insight “ERP implementation equals forced reengineering” Taken from Succeeding with ERP, Hammer and Company

  11. Quotes Taken from a Fortune Article • “About 80% of the benefits come from what you change in your business. The software is just an enabler” • Everyone’s going to want exceptions; everyone’s going to say they don’t take orders in the same way you do. But that’s going to kill the Project” • It’s like mapping out the entire genetic structure of a Human Being” Taken from Fortune Magazine, February 2, 1998

  12. An example of success - Other Companies • Fundamental attitude... • Benefits ONLY result from changing the way we work • Focus on the external customer ... not internal • All business activity should add value not cost • Challenge everything ... make bold changes • Don’t be afraid to fail ... learn by doing • Don’t seek approval ... we all have permission to do our jobs! • Outcomes must be world-class! Taken from Succeeding with ERP, Hammer and Company

  13. To prepare for real change “... We told the Division Presidents ...we’re going to piss off a lot of people, but it is more important that systems work for the whole company then to have all the bells and whistles everyone wants ...” Michael Radcliff Forbes - June 19, 1995

  14. An Example of a project heading for Failure Sensormatic Electronics

  15. Our Mission Was Implement BaaN Globally (we need GUI systems)

  16. The Path to Failure • Consultants were given to much control • Consultants were new to Baan • The methodology used was based on typical SDLC used by the Big “5” for software development • The “Spin Zone” was in full force. • The CIO had no guts. • If the whole company used the same system around the world then you have a global system

  17. What we are getting for requirements • Different ways to handle margin control • Different ways to handle our customers • Different ways to handle pricing • Different ways to handle costing • Different ways to handle credit • Different ways to handle commissions • Separate systems to handle all contracts • Make BaaN look like what we have today

  18. What we were being asked to build Customer EXPORT COMPLIANCE SHIPPING EDI QUOTAS Hierarchy PDM / Manufacturing ORDERS Invoicing Deliveries COMM SALES TAX INVOICE CONTRACTS FACTOR Manual Cash G/L A/P A/R Invoice Mgmt Standard BaaN FRANCHISE ESCROW ROYALTY CUSTOMER INVENTORY NSC FSMS Customized BaaN Not Used BaaN In-House Written Add-ons Purchased Add-ons WINFIELD SERVICE

  19. The Functional Organization - Automated with BaaN(where we were headed) Engineering Sales Production Distribution Service Billing Taken from Succeeding with ERP, Hammer and Company

  20. How we changed course for success

  21. Step One • Take control of the Project • Re-evaluate our consultants • Switch to an ERP Methodology • In this case “Target” • Based Deployment on a Global Template • Refocus the Project

  22. What Our Mission Became To Eliminate the Non-Value-Adding Processes Throughout the Corporation This project is not about a software implementation Its About Change

  23. Our ObjectiveBecame To create Simple, Common, and Global Processes enabled by the BaaN Software

  24. Don’t Change the System, Change the Process • Margin Control • The Way we handle our customers • Pricing • Costing • Credit • Commissions • Contracts • Others, Forecasting, Inventory Mgt, Service.... One Simple Process that works best with BaaN

  25. The ERP Organization - One Heartbeattie together with Simple, Common, Global Processes Engineering Production Sales Distribution Service Billing

  26. Step Two • New Project Management Structure • Develop the 50 week plan (WIP) • Develop Global Data Standards • Mobilize the whole corporation • Concentrate on how BaaN does it • Be innovated in meeting the business objectives • Have one focus - New Processes and BaaN

  27. Project Management Structure BaaN Steering Group BaaN Process Owners Ireland Team Latin America Team PR Team Asia Pacific Team VPD Team European Team N.A. Team

  28. BaaN Steering Group • Supply Chain Operations • Finance • C/I • NAR • Service • Engineering • ISS • EAS • Quality • International • MIS

  29. BaaN Steering Group • Set Corporate Vision • Communicate Vision to Process Owners • Validate/Approve Global BaaN Strategy • Final Approval of Organizational Changes • Conflict resolution

  30. Process Owners • Manufacturing • Logistics • Planning & Scheduling • Procurement • Finance • Order Processing • Service • Engineering • Q3

  31. Process Owner Role • Receive corporate vision from Steering Group • Set Business Objectives based on vision and communicate to Project Management • With Project Mgmt, formulate BaaN Implementation Strategy based on business objectives • Communicate to BaaN Steering Group; obtain support and commitment on BaaN Strategy • Validate new business processes as recommended by the teams • Support change management initiatives; drive organizational change • Ensure the right people resources are available and committed • Address potential corporate disruptions

  32. Project Teams • Receive direction from Project Management on business objectives and BaaN Implementation Strategy • Develop Business Processes to support objectives and present for validation to the process owners • Run all possible business scenarios through the processes for validation • Recognize and communicate organizational impact of new processes to process owners • Project Management to track and report progress to Process Owners • Carry out the tasks and activities required to prepare BaaN for implementation • Execute the BaaN Implementations

  33. Implementation Strategy • Simple, Common, Global Processes • Eliminate Non-Value Adding Processes • Change the Process to Fit BaaN • Business Objective Gaps Will Be Addressed With 3rd Party Add-Ons, when possible • No Customizations, that will affect future releases • Always Build for the Future!

  34. Implementation Strategy - Details • Total Global Rollout on 4.C • Start with Global Kernel • Supplement current weakness with in-house add-ons. i.e... Service • Concentrate on “Back-Office” • Redeploy Europe and Asia on Global Kernel

  35. BaaN Implementation - 50 Week Plan (WIP) Jan Mar May Jul Sep Dec GDS WKSP PDM - (ECS) Full PDM Implementation Redeploy Int’l VPD - Manuf, Distr, Service, Finance CSD - Distr, Service, Finance ACD - Distr, Service, Finance NAR - Distr, Service, Finance Contract Sys G/L, A/P, Consolidations, Corporate Reporting * NAR will implement with current contract system New Contract System will be implemented in Sept. NAR includes Canada Manufacturing - Ireland Manufacturing - PR Manufacturing - Boca NSC - Manuf. Module Mexico Colombia Argentina and Brazil Redeploy Europe PDM will replace ECS/AMAPS System Redeploy Asia / Pacific Order Processing includes Orders, Logistics, A/R, Cash Mgt and Service Latin America are full Implementations

  36. SensormaticGlobal Data Workshop Setting Standards to Achieve Success Boca Raton, FL

  37. Global Data Standards Workshop Objectives Five Fun Fill Days in Sunny Boca Raton (Going through 2000 BaaN Tables)

  38. Workshop Objectives • Set the standards for all critical information items • Build on the work that was already done • Build a global team of experts • Limit the number codes • Lets stop confusing ourselves • Eliminate BaaN Functions that do not add value for Sensormatic

  39. Workshop Results • Declared over 50% of the tables as Global and under central control • Item Master Codes, Central Global Item File • Supplier Codes, Global Supplier File • Customer Codes • Order Types • Finalized Logistics Strategy and BaaN’s Transaction Flow • Realized the need for a Global Service Strategy • Realized the need for a Global Pricing Strategy • Had representation and received input from Europe, Asia Pacific, Canada, Mexico, ACD, VPD, CSD and all the various units based at Boca • Created a list of 100 action items, assigned with due dates • Brought the various areas up to the same level • Moved us closer to the single Heartbeat

  40. Where we were heading Customer EXPORT COMPLIANCE SHIPPING EDI QUOTAS Hierarchy PDM / Manufacturing ORDERS Invoicing Deliveries COMM SALES TAX INVOICE CONTRACTS FACTOR Manual Cash G/L A/P A/R Invoice Mgmt Standard BaaN FRANCHISE ESCROW ROYALTY CUSTOMER INVENTORY NSC FSMS Customized BaaN Not Used BaaN In-House Written Add-ons Purchased Add-ons WINFIELD SERVICE

  41. The Final Product EXPORT COMPLIANCE EDI Quotas Interface PDN / Manufacturing Deliveries Orders Comm Invoicing SALES TAX Cash Service G/L A/P A/R Mgmt Leasing Module Financing Module Winfield Franchise Escrow Royalty Standard BaaN Minor Customizations BaaN In-House Written Add-ons Purchased Add-ons

  42. Final Results • All manufacturing plants implemented in nine months • Total re-focus plan took 2 years instead of a year, however in the first year our goal of share services; Finance, Order Processing, and Customer Service was achieved • Company was acquired by Tyco and today Tyco is using the Sensormatic BaaN Model in its other companies

  43. Case TwoIn Progress Blount International Oregon Cutting System Group

  44. Key Facts • Selected SAP as solution of choice • Global Implementation • Create a foundation to optimize the company • Expect a 4.5 to 1 return.

  45. Project Approach • SAP Global ASAP Methodology • Track 1 Global Template (Feb. 2003) • Track 2 Portland and Guelph (Aug 2003) • Track 3 Brazil (Jan 2004) • Track 4 FMC and Windsor (June 2004) • Track 5 Europe 6 countries (Feb 2005) • Track 6 Japan (Mar 2005) • Timeline 30 months (Oct 2002 to Mar 2005)

  46. Issues • Consulting firm did not fully used the SAP Methodology and implementation tools • Project management from the consulting firm is poor • Track 1 was finished on time • Quality is questionable • Global Data Standards were not fully set • Track 2 could be two months late • Company culture is causing a problem

  47. What are we doing right • We did this for the right reasons • Senior Management Commitment • PMO is made up of three Vice-Presidents • Project Team Members are the best functional people we have • Spending over a million dollars in training • Staying close to our objective of using the vanilla system

  48. Where we went wrong • Wrong consultants for our company • Gave the consultants too much control • Global Design was too high level • Ignore the early warning signs • Slow to react to critical issues • “Those who do not remember the past, are condemned to repeat it”

  49. How do we get back on course? • Management is learning that a Big Name and paying a premium does not mean instant success. • Making more demands on our implementation partner • Holding our implementation partner accountable for quality • Bring in third party consultants to audit where we are • Work the project plan

  50. Prognosis • If we make our course corrections now we can complete the project within our original timeframe • High probability that we will incur cost overruns • Some key re-engineering is not being done could affect our benefits

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