ERP Training

1. ERP Training Olson: ERP5

2. Organizational Benefits • Cost reduction • Cycle time reduction • Productivity improvement • Quality improvement • Customer services improvement Olson: ERP5

3. Managerial Improvement • Improved resource management • Better decision making • Hard to prove • Better planning • Performance improvement Olson: ERP5

4. Strategic Improvement • Support business growth • Support business alliances • If they have the same system • Build business innovations • ? System can be constraining • Build cost leadership • Generate product differentiation • ?? Over time, only if you customize • Build external linkages • ? If they have the same system Olson: ERP5

5. IT Infrastructure Improvement • Build business flexibility • ??? ERP inherently a rigid system • IT cost reduction • The main reason CEOs adopt ERP • Increased IT capability Olson: ERP5

6. Organizational • Support organizational change • FORCE organizational change!! • Facilitate business learning • BPR does a good job of this • Empower employees • Within the system!! • Build common vision • FORCES common vision Olson: ERP5

7. Organizational Change from ERP • Productivity decline • Jobs redefined, new procedures established, ERP fine tuned, organization learns to process new information streams • Productivity gain • Develop new skills, structural changes, process integration, add bolt-ons • Payoff • Transform organizational operations to efficient level Olson: ERP5

8. Change Management • ERP often viewed as threat to job • May well change how job is done • New skills, new requirements • May lead to layoff • Difficult to make transition • Some firms are secretive • Attempt to avoid sabotage • Some firms are open • Seems best Olson: ERP5

9. Recent Cases • Pratt & Whitney Canada • Tchokogue et al., International Journal of Production Economics, 2005 • 1996-1999 • Marathon Oil • Stapleton & Rezak, Journal of organizational Excellence, Autumn 2004 • 1999-2002 • Castle Cement • Lloyd, ITTraining, April 2004 • 2002-2003 Olson: ERP5

10. Pratt & Whitney Canada • June 1996 began process • Canadian manufacturer of large engines • 1993 installed SAP R/2 • Also had 35 legacy systems • Wanted greater transparency to customers worldwide, greater agility • Lower customer response time, reduce WIP, increase inventory turnover, identify inventory & operating costs • Selected SAP R/3 Olson: ERP5

11. P&WC System • SAP • Financial accounting, Controlling, Sales & distribution, Materials management, Production planning, Quality management, Business information warehouse • Hardware: Hewlett-Packard • Operating System: HP/UX • Database: Oracle • 5 sites Olson: ERP5

12. P&WC Implementation • Five sites • Minimal business change • Project June 1996 to January 1999 • Scoping & planning 7 months • Reengineering (very little) • Process redesign (600 activities) 7 months • Configuration (SAP options) 10 months • Testing & delivery Aug-Dec 1998 • Big-bang • Knew it was risky, prepared carefully Olson: ERP5

13. P&WC Project Team • P&WC: 7 groups (345 employees across company) • Represented main processes of the company • 168 IT analysts & change managers • STRONG DESIRE TO ENSURE EMPLOYEES REPRESENTED Olson: ERP5

14. P&WC Knowledge Transfer • 110 employees from the 6 most affected departments trained to be internal trainers • 1998 P&WC became a gigantic classroom • Massive involvement of internal resources • Used external consultants as well • 150 manuals adapted to diverse requirements • 3,000 employees involved • Technical: basic navigation & task training • Business-oriented: processes & tasks Olson: ERP5

15. P&WC ERP Benefits • TANGIBLE • About $1 million in reduced costs in 2000 • Productivity 11% greater than planned • Receivables days outstanding reduced 6% • ROI in 30-40% range • INTANGIBLE • Increased inventory cost visibility • mySAP.com provided e-commerce capability • More flexible reporting system Olson: ERP5

16. P&WC Lessons Learned • Mounting environmental uncertainty & turbulence increased pressure for change • P&WC executives very positive about ERP • Openness to employee involvement helped • Studied prior successful implementations (systems failure approach) Olson: ERP5

17. Marathon Oil • Houston, TX • Over 28 thousand employees worldwide • 1999 evaluated fit of ERP • Wanted better linkage to oil & gas technical systems • Formed cross-functional team • Rigorous internal assessment of business processes • Developed business case • Studied failures of others (systems failure approach) Olson: ERP5

18. Managing Change Process • CIO of Nestle: No major software implementation is about the software – it’s about change management. • SAP changes the way people work, challenging their principles, their beliefs, and the way they have done things for many, many years. Olson: ERP5

19. Deconstructing Ownership Transfer • Goal: transfer ownership from project team to end users • KNOWLEDGE TRANSFER • Ensure employees know what to do • RESPONSIBILITY TRANSFER • Ensure employees participate • VISION TRANSFER • Help employees translate new tools & processes into superior business results Olson: ERP5

20. Communications Model • Gain commitment • Initially raise awareness • Shift to help move to deeper levels of understanding • Gain commitment only after understanding Olson: ERP5

21. Communication Tools • One-way channels • Newsletters, web site, road shows, town meetings, personal appearances • Interactive • Workshops, issue-tracking meetings, conference calls, collaborative web sites • Hands-on • Validation sessions with experts, sandbox to learn applications, workshops Olson: ERP5

22. Marathon Experience • Went live worldwide in 13 months • 8 major modules • Claimed industry record • Leveraged skills & commitment of employees as key resource • THIS COMES FROM A COMPANY USER, & TRAINING CONSULTANT • Don’t know how much is true, but sounds great Olson: ERP5

23. MARATHON Lessons • Software simply the tool • Strong project management critical • Involve people • Staff adequately • Need CEO support • Change management integral discipline • Treat scope creep like a virus • Minimize customization • Reward success • Transfer ownership Olson: ERP5

24. Castle Cement • UK company, 1200 employees • Needed to replace legacy systems • SAP imposed by owner (German cement giant) Olson: ERP5

25. Castle ERP Team • Small team pulled from permanent jobs • 1: Customize system to Castle’s needs • Lots of business process redesign • During massive upgrade to SAP 4.6C • Initially implemented at 2 sites Olson: ERP5

26. Castle Training • Originally planned training in-house • Soon apparent beyond their capabilities • Hired outside trainer • Initially looked at key end-user training • Selecting who to train saw wide disparity in computer literacy • Brought people up to speed at a local college • ECDL qualification • Then SAP training Aug 2002 (105 users) • SAP basics • Navigation • Job specific Olson: ERP5

27. Castle Results • Initial phase on-line November 2002 • June to December 2003 150 more users trained (cumulative total 398) • Project proceeding well • Simplicity of approach credited • Next stage: train all 1,200 staff • Expand the way SAP is used Olson: ERP5

28. Summary • Training crucial to ERP success • Consistent tendency to underbudget • But important in getting system used • Need to convince users • If you are laying them off, that is hard • Maybe even unethical • Need to reconcile this matter Olson: ERP5