ERP ImplementationERP ImplementationWhat is it really likeWhat is it really like

Barry J. Brunetto CCP

Vice President Information Systems

Blount International

Oregon Cutting System Group

A Troubling SurveyA Troubling Survey

% companies

Failure Success

70%

30%

Taken from Succeeding with ERP, Hammer and Company

The State of ERP ProjectsThe 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

The State of The State of ERP ProjectsERP 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

Conventional WisdomConventional WisdomThe usual suspectsthe software is too complexthe software is too flexiblethe software isn’t flexible enoughthe vendor is unresponsivethe consultants are incompetentthe CIO is an incarnation of Satan

The Tomashevsky Syndromebetter consultantsa new and improved 4GLjust a little more functionalityjust a few more choicesjust another layer of softwarea better-run user group meeting

The problem is the misperception of the problemThe problem is the misperception of the problem

Taken from Succeeding with ERP, Hammer and Company

The Functional OrganizationThe Functional Organization

Sales

Service BillingDistribution

Engineering

Production

Taken from Succeeding with ERP, Hammer and Company

The Functional Organization - AutomatedThe Functional Organization - Automated

Sales

Service BillingDistribution

Engineering

Production

Taken from Succeeding with ERP, Hammer and Company

The Problem with Functional SystemsThe 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

What Should Happen in an ERP What Should Happen in an ERP Implementation?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

Taken from Succeeding with ERP, Hammer and Company

In other words, .....In other words, .....

The Key InsightThe Key Insight

“ERP

implementation

equals forced

reengineering”

Taken from Succeeding with ERP, Hammer and Company

Quotes Taken from a Fortune Quotes Taken from a Fortune ArticleArticle

“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

An example of success - Other An example of success - Other CompaniesCompanies

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

To prepare for real changeTo 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 RadcliffForbes - June 19, 1995

An Example of a project An Example of a project heading for Failure heading for Failure

Sensormatic Electronics

Our Mission WasOur Mission Was

Implement BaaN Globally

(we need GUI systems)

The Path to FailureThe 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

What we are getting for requirementsWhat 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

What we were being asked to buildWhat we were being asked to buildCustomer Hierarchy

PDM /Manufacturing

ORDERS Deliveries

G/L A/P A/RManual Invoice

QUOTASEDI

Invoicing

NSC FSMS

Cash Mgmt

Standard BaaN

Customized BaaN

Not Used BaaN

In-House Written Add-ons

Purchased Add-ons

EXPORTCOMPLIANCE

SHIPPING

COMM

SALES TAX

CONTRACTS INVOICE FACTOR

CUSTOMERINVENTORY

FRANCHISEESCROWROYALTY

WINFIELD SERVICE

The Functional Organization - Automated with BaaNThe Functional Organization - Automated with BaaN(where we were headed)(where we were headed)

Sales

Service BillingDistribution

Engineering

Production

Taken from Succeeding with ERP, Hammer and Company

How we changed course for How we changed course for successsuccess

Step OneStep One

Take control of the ProjectRe-evaluate our consultantsSwitch to an ERP Methodology

– In this case “Target”– Based Deployment on a Global Template

Refocus the Project

What Our Mission BecameWhat Our Mission Became

To Eliminate the Non-Value-Adding Processes Throughout the Corporation

This project is not about a software implementationIts About Change

Our ObjectiveOur ObjectiveBecameBecame

To create Simple, Common, and Global Processes enabled by the

BaaN Software

Don’t Change the System, Change the Don’t Change the System, Change the ProcessProcess

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 BaaNOne Simple Process that works best with BaaN

The ERP Organization - One HeartbeatThe ERP Organization - One Heartbeattie together with Simple, Common, Global Processestie together with Simple, Common, Global Processes

Sales

Service BillingDistribution

Engineering

Production

Step TwoStep 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

Project Management Structure

BaaNSteering Group

BaaN Process Owners

PRTeam

VPDTeam N.A.

Team

EuropeanTeam

Asia PacificTeam

Latin AmericaTeam

IrelandTeam

BaaN Steering Group

Supply Chain Operations Finance C/I NAR Service Engineering ISS EAS Quality International MIS

BaaN Steering Group

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

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

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

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

Implementation StrategySimple, Common, Global ProcessesEliminate Non-Value Adding ProcessesChange the Process to Fit BaaNBusiness Objective Gaps Will Be Addressed With

3rd Party Add-Ons, when possibleNo Customizations, that will affect future releasesAlways Build for the Future!

Implementation Strategy - DetailsImplementation 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

Jan

GDS WKSP

G/L, A/P, Consolidations, Corporate Reporting

Mar May Jul Sep Dec

VPD - Manuf, Distr, Service, Finance

PDM - (ECS)

CSD - Distr, Service, Finance

NAR - Distr, Service, Finance

Manufacturing - Ireland

Manufacturing - PR

Manufacturing - Boca

NSC - Manuf. Module

Mexico

Argentina and Brazil

Redeploy Europe

Redeploy Asia / Pacific

Contract Sys

* NAR will implement with current contract systemNew Contract System will be implemented in Sept.NAR includes Canada

Order Processing includes Orders, Logistics, A/R, Cash Mgt and ServicePDM will replace ECS/AMAPS System

Latin America are full Implementations

BaaN Implementation - 50 Week Plan BaaN Implementation - 50 Week Plan (WIP)(WIP)

Redeploy Int’l

ACD - Distr, Service, Finance

Full PDM Implementation

Colombia

SensormaticSensormaticGlobal Data WorkshopGlobal Data Workshop

Setting Standards to Achieve Success

Boca Raton, FL

Global Data Standards Global Data Standards Workshop ObjectivesWorkshop Objectives

Five Fun Fill Days in Sunny Boca Raton(Going through 2000 BaaN Tables)

Workshop ObjectivesWorkshop Objectives

Set the standards for all critical information items

Build on the work that was already doneBuild a global team of expertsLimit the number codes

– Lets stop confusing ourselvesEliminate BaaN Functions that do not add value

for Sensormatic

Workshop ResultsWorkshop 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

Where we were headingWhere we were headingCustomer Hierarchy

PDM /Manufacturing

ORDERS Deliveries

G/L A/P A/RManual Invoice

QUOTASEDI

Invoicing

NSC FSMS

Cash Mgmt

Standard BaaN

Customized BaaN

Not Used BaaN

In-House Written Add-ons

Purchased Add-ons

EXPORTCOMPLIANCE

SHIPPING

COMM

SALES TAX

CONTRACTS INVOICE FACTOR

CUSTOMERINVENTORY

FRANCHISEESCROWROYALTY

WINFIELD SERVICE

The Final ProductThe Final Product

Orders Comm Deliveries

G/L A/P A/R Service

Quotas EDI

Invoicing

Franchise EscrowRoyalty

Winfield

Cash Mgmt

Standard BaaN

Minor Customizations BaaN

In-House Written Add-ons

Purchased Add-ons

LeasingModule

FinancingModule

PDN / Manufacturing

EXPORTCOMPLIANCE

Interface

SALESTAX

Final ResultsFinal 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

Case TwoCase TwoIn ProgressIn Progress

Blount International

Oregon Cutting System Group

Key FactsKey Facts

Selected SAP as solution of choiceGlobal ImplementationCreate a foundation to optimize the

companyExpect a 4.5 to 1 return.

Project ApproachProject 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)

IssuesIssues

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

What are we doing rightWhat are we doing right

We did this for the right reasonsSenior Management CommitmentPMO is made up of three Vice-PresidentsProject Team Members are the best

functional people we haveSpending over a million dollars in trainingStaying close to our objective of using the

vanilla system

Where we went wrongWhere we went wrong

Wrong consultants for our companyGave the consultants too much controlGlobal Design was too high levelIgnore the early warning signsSlow to react to critical issues“Those who do not remember the past, are

condemned to repeat it”

How do we get back on How do we get back on course?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

PrognosisPrognosis

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

Key PointsKey Points

ERP Projects must be done for the right reason– Software replacements have low returns– Eliminating Non-Value Adding Processes yield high returns– Use ERP to enable the business

Use the right Implementation Partner for your business Use a good methodology, usually the one that comes with

the solution Good project management is critical Don’t be risk adverse Management commitment is needed for success Don’t skip on training

QuestionsQuestions