ERP ImplementationWhat is it really like Barry J. Brunetto CCPVice President Information SystemsBlount InternationalOregon Cutting System Group

A Troubling Survey% companiesFailureSuccess70%30%Taken from Succeeding with ERP, Hammer and Company

The State of ERP ProjectsHuge costs and enormous overrunsOngoing temptation of best of breed approachLong delays in obtaining results and payoffYawning gap between business model and system tables requires enormous effort to bridgeSponsors oscillating between ecstasy, despair, and indifferenceHigh degree of difficulty in obtaining needed resourcesInterminable waits for critical decisionsTerrible chaos and confusion arising from system modificationsTaken from Succeeding with ERP, Hammer and Company

The State of ERP ProjectsHuge costs and enormous overrunsOngoing temptation of best of breed approachLong delays in obtaining results and payoffYawning gap between business model and system tables requires enormous effort to bridgeSponsors oscillating between ecstasy, despair, and indifferenceHigh degree of difficulty in obtaining needed resourcesInterminable waits for critical decisionsTerrible chaos and confusion arising from system modificationsTaken from Succeeding with ERP, Hammer and Company

Conventional WisdomThe usual suspectsthe software is too complexthe software is too flexiblethe software isnt 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 meetingThe problem is the misperception of the problemTaken from Succeeding with ERP, Hammer and Company

The Functional OrganizationSalesServiceBillingDistributionEngineeringProductionTaken from Succeeding with ERP, Hammer and Company

The Functional Organization - Automated

SalesServiceBillingDistributionEngineeringProductionTaken from Succeeding with ERP, Hammer and Company

The Problem with Functional SystemsThey sub optimize the businessThey generate non-value adding work (data reentry and transfer), with attendant errors and delayThey prevent an integrated view of the businessThey constrain flexibilityThey cement functional organizations in placeThey focus on the wrong kind of problemTaken from Succeeding with ERP, Hammer and Company

What Should Happen in an ERP Implementation?Processes are definedas the organizing elements of implementationNon-value-adding work is eliminatedby eliminating the interfaces and handoffs where it breedsJobs broadenvia expanded information accessOrganizational boundaries dissolveas processes dominate functionsAuthority moves to the front linesalong with informationProcesses are standardizedby embedding them in softwareTaken from Succeeding with ERP, Hammer and CompanyIn other words, .....

The Key InsightERPimplementationequals forcedreengineeringTaken from Succeeding with ERP, Hammer and Company

Quotes Taken from a Fortune ArticleAbout 80% of the benefits come from what you change in your business. The software is just an enablerEveryones going to want exceptions; everyones going to say they dont take orders in the same way you do. But thats going to kill the ProjectIts like mapping out the entire genetic structure of a Human BeingTaken from Fortune Magazine, February 2, 1998

An example of success - Other CompaniesFundamental attitude...Benefits ONLY result from changing the way we workFocus on the external customer ... not internalAll business activity should add value not costChallenge everything ... make bold changesDont be afraid to fail ... learn by doingDont 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 change... We told the Division Presidents ...were 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 heading for Failure Sensormatic Electronics

Our Mission Was

Implement BaaN Globally(we need GUI systems)

The Path to FailureConsultants were given to much controlConsultants were new to BaanThe methodology used was based on typical SDLC used by the Big 5 for software developmentThe 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 requirementsDifferent ways to handle margin controlDifferent ways to handle our customersDifferent ways to handle pricingDifferent ways to handle costingDifferent ways to handle creditDifferent ways to handle commissionsSeparate systems to handle all contractsMake BaaN look like what we have today

What we were being asked to buildCustomer HierarchyPDM /Manufacturing ORDERSDeliveriesG/LA/PA/RManual Invoice QUOTASEDIInvoicingNSCFSMSCash MgmtStandard BaaNCustomized BaaNNot Used BaaNIn-House Written Add-onsPurchased Add-onsEXPORTCOMPLIANCESHIPPINGCOMMSALES TAXCONTRACTSINVOICEFACTORCUSTOMERINVENTORYFRANCHISEESCROWROYALTYWINFIELDSERVICE

The Functional Organization - Automated with BaaN(where we were headed)SalesServiceBillingDistributionEngineeringProductionTaken from Succeeding with ERP, Hammer and Company

How we changed course for success

Step OneTake control of the ProjectRe-evaluate our consultantsSwitch to an ERP MethodologyIn this case TargetBased Deployment on a Global TemplateRefocus the Project

What Our Mission BecameTo Eliminate the Non-Value-Adding Processes Throughout the CorporationThis project is not about a software implementationIts About Change

Our ObjectiveBecameTo create Simple, Common, and Global Processes enabled by the BaaN Software

Dont Change the System, Change the ProcessMargin ControlThe Way we handle our customersPricingCostingCreditCommissionsContractsOthers, Forecasting, Inventory Mgt, Service....One Simple Process that works best with BaaN

The ERP Organization - One Heartbeattie together with Simple, Common, Global ProcessesSalesServiceBillingDistributionEngineeringProduction

Step TwoNew Project Management StructureDevelop the 50 week plan (WIP)Develop Global Data StandardsMobilize the whole corporationConcentrate on how BaaN does itBe innovated in meeting the business objectivesHave one focus - New Processes and BaaN

Project Management StructureBaaNSteering GroupBaaN Process OwnersPRTeamVPDTeamN.A.TeamEuropeanTeamAsia PacificTeamLatin AmericaTeamIrelandTeam

BaaN Steering GroupSupply Chain OperationsFinance C/INARServiceEngineering ISSEASQualityInternationalMIS

BaaN Steering GroupSet Corporate VisionCommunicate Vision to Process OwnersValidate/Approve Global BaaN StrategyFinal Approval of Organizational ChangesConflict resolution

Process OwnersManufacturingLogisticsPlanning & Scheduling ProcurementFinanceOrder ProcessingServiceEngineeringQ3

Process Owner RoleReceive corporate vision from Steering GroupSet Business Objectives based on vision and communicate to Project ManagementWith Project Mgmt, formulate BaaN Implementation Strategy based on business objectivesCommunicate to BaaN Steering Group; obtain support and commitment on BaaN StrategyValidate new business processes as recommended by the teamsSupport change management initiatives; drive organizational changeEnsure the right people resources are available and committedAddress potential corporate disruptions

Project TeamsReceive direction from Project Management on business objectives and BaaN Implementation StrategyDevelop Business Processes to support objectives and present for validation to the process ownersRun all possible business scenarios through the processes for validationRecognize and communicate organizational impact of new processes to process ownersProject Management to track and report progress to Process OwnersCarry out the tasks and activities required to prepare BaaN for implementationExecute 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 - DetailsTotal Global Rollout on 4.CStart with Global KernelSupplement current weakness with in-house add-ons. i.e... ServiceConcentrate on Back-OfficeRedeploy Europe and Asia on Global Kernel

Jan

GDS WKSPG/L, A/P, Consolidations, Corporate ReportingMarMayJulSepDecVPD - Manuf, Distr, Service, FinancePDM - (ECS)CSD - Distr, Service, FinanceNAR - Distr, Service, FinanceManufacturing - IrelandManufacturing - PR Manufacturing - BocaNSC - Manuf. ModuleMexicoArgentina and BrazilRedeploy EuropeRedeploy Asia / PacificContract Sys* NAR will implement with current contract systemNew Contract System will be implemented in Sept.NAR includes CanadaOrder Processing includes Orders, Logistics, A/R, Cash Mgt and ServicePDM will replace ECS/AMAPS SystemLatin America are full ImplementationsBaaN Implementation - 50 Week Plan (WIP)Redeploy IntlACD - Distr, Service, FinanceFull PDM ImplementationColombia

SensormaticGlobal Data WorkshopSetting Standards to Achieve Success

Boca Raton, FL

Global Data Standards Workshop ObjectivesFive Fun Fill Days in Sunny Boca Raton(Going through 2000 BaaN Tables)

Workshop ObjectivesSet the standards for all critical information itemsBuild on the work that was already doneBuild a global team of expertsLimit the number codesLets stop confusing ourselvesEliminate BaaN Functions that do not add value for Sensormatic

Workshop ResultsDeclared over 50% of the tables as Global and under central controlItem Master Codes, Central Global Item FileSupplier Codes, Global Supplier FileCustomer Codes Order TypesFinalized Logistics Strategy and BaaNs Transaction FlowRealized the need for a Global Service StrategyRealized the need for a Global Pricing StrategyHad representation and received input from Europe, Asia Pacific, Canada, Mexico, ACD, VPD, CSD and all the various units based at BocaCreated a list of 100 action items, assigned with due datesBrought the various areas up to the same levelMoved us closer to the single Heartbeat

Where we were headingCustomer HierarchyPDM /Manufacturing ORDERSDeliveriesG/LA/PA/RManual Invoice QUOTASEDIInvoicingNSCFSMSCash MgmtStandard BaaNCustomized BaaNNot Used BaaNIn-House Written Add-onsPurchased Add-onsEXPORTCOMPLIANCESHIPPINGCOMMSALES TAXCONTRACTSINVOICEFACTORCUSTOMERINVENTORYFRANCHISEESCROWROYALTYWINFIELDSERVICE

The Final ProductOrdersCommDeliveriesG/LA/PA/RServiceQuotas EDIInvoicingFranchise EscrowRoyaltyWinfieldCash MgmtStandard BaaNMinor Customizations BaaNIn-House Written Add-onsPurchased Add-onsLeasingModuleFinancingModulePDN / ManufacturingEXPORTCOMPLIANCEInterfaceSALESTAX

Final ResultsAll manufacturing plants implemented in nine monthsTotal 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 achievedCompany was acquired by Tyco and today Tyco is using the Sensormatic BaaN Model in its other companies

Case TwoIn ProgressBlount InternationalOregon Cutting System Group

Key FactsSelected SAP as solution of choiceGlobal ImplementationCreate a foundation to optimize the companyExpect a 4.5 to 1 return.

Project ApproachSAP Global ASAP MethodologyTrack 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)

IssuesConsulting firm did not fully used the SAP Methodology and implementation toolsProject management from the consulting firm is poor Track 1 was finished on timeQuality is questionableGlobal Data Standards were not fully setTrack 2 could be two months lateCompany culture is causing a problem

What are we doing rightWe 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 wrongWrong consultants for our companyGave the consultants too much controlGlobal Design was too high levelIgnore the early warning signsSlow to react to critical issuesThose who do not remember the past, are condemned to repeat it

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 partnerHolding our implementation partner accountable for qualityBring in third party consultants to audit where we areWork the project plan

PrognosisIf we make our course corrections now we can complete the project within our original timeframeHigh probability that we will incur cost overruns Some key re-engineering is not being done could affect our benefits

Key PointsERP Projects must be done for the right reasonSoftware replacements have low returnsEliminating Non-Value Adding Processes yield high returnsUse ERP to enable the businessUse the right Implementation Partner for your businessUse a good methodology, usually the one that comes with the solutionGood project management is criticalDont be risk adverseManagement commitment is needed for successDont skip on training

Questions