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Erp Implementation Lessons Learned

This article is also available on ourbenefits of the project was the training of a
website: PROACTION - Generating Bestcadre of people prepared to run a formal
Practices. It is an excerpt of a paperbusiness system. Now they're ready to do a
originally written by George Miller, Foundergreat  job  on  the  next  implementation!
of PROACTION. It has been modified and
updated  by  Paul  Deis,  PROACTION  CEO.Management is driving needed improvements and
forcing the system to adapt. For example,
INTRODUCTIONthey are addressing customer service and
inventory  issues  effectively.
This case study describes lessons learned
from the ERP implementation at a leadingEffective  training  is needed at all levels.
metal container products company. It is a
$200MM, 53-year-old company, headquartered inThe first priority of key project people is
the USA, with facilities in multiple statesto be familiar with the overall principles of
and in Europe. It is a leading producer forERP and the applications in their specific
the wholesale, retail, OEM and industrialareas, so that they can demonstrate the
markets. The company was in the midst of asystem and train others, as well as
successful turnaround during the project,effectively determine implementation approach
which was initiated primarily to deal with(with consulting help), priorities, etc.
the Y2K problem, as a new management teamNext, IT people need to be ready to perform
provided  new  direction.technical work and ongoing support. Project
leaders/middle management need to understand
During the project, the company was alsothe big picture and how their own areas will
transitioning to focus factory management,work and interface with other areas.
flow manufacturing, product rationalizationExecutives need to understand the big
and reorganizing business units, all this inpicture, what systems can and can't do and
the midst of a major facilitieswhat  are  the  priorities  and  tradeoffs.
consolidation. In spite of all this, the
project was probably in the top 10% of ERPFinally, end users need to be as comfortable
efforts.as possible with their new tools BEFORE going
live. It became apparent 2 ½ months before
There was a constant personnel shortage andimplementation that additional training was
competition for mindshare. Due to inevitableneeded for effective utilization of the
time and resource constraints, the phase Isystem. Management was quite serious about
implementation consisted only of replacingrectifying the situation. The Human Resources
legacy systems and the most urgent partialDept. managed this effort. Standards of
reengineering of at-risk processes. Theperformance for each employee were developed.
company was successful in transitioning toThe employees, trainers, supervisors,
the improved system and initiating follow-onmanagers, and ultimately, executives, were
process reengineering. Currently (mid-1999),held accountable for employee competence.
system implementation in other North AmericanFormal knowledge assessments were conducted
and  European  sites  is  underway.and remedial action taken. The vast majority
of employees were ready on the "go live" day,
The founders sold the firm to the presentand  it  showed  in  the  results.
owners in 1996, who faced a number of
challenges to bring the company up to theirOne notable shortcoming in training
expectations:resources: nobody-company personnel, Oracle
or third party person-seemed to know the
•  Need  for  more  emphasis on qualityentire system well enough to provide the big
picture. We had to spend an inordinate amount
• Debt load to service initiallyof time and money consulting with all kinds
inhibited  capital  appropriationsof people to get cross-functional, cross
"module" answers. We still have more work
• Difficult facilities consolidationrequired to fully develop such people.
projectHowever, the company does have a couple of
excellent "generic" business systems gurus
• Aging, obsolete and unresponsiveavailable, which has proved invaluable. We
business  systems,  with  a  Y2K  problemrecommend spending the time and money to beg,
borrow, steal or develop cross-functional
•  Product  developmentexperts to know your business and
applications  systems.
•  Competition
Our Superusers and Project Leaders must have
In that context, the company was attemptingreally been good, because a lot of them have
to modernize, rightsize and streamline foralready been promoted/moved on to better
the future, but nearly lost the race withjobs. We have realized this and are working
time. About six years ago, the companyto develop a better ongoing training
engaged a major consulting firm to studysuccessorship  approach.
major improvement opportunities. One of the
chief recommendations was to upgrade ERPAny organization needs a comprehensive
systems, but due to many other priorities,generic business systems education program to
the company only started moving on theensure that people are aware of the state of
recommendations in mid-1997, with a loomingthe art. An APICS trainer is providing
Y2K deadline. Therefore, schedule andoverview education for the company. Some
implementation priorities were somewhatseminars are being attended on things like
mandated  by  the  situation.forecasting, JIT, etc. A wider-reaching
program  is  still  needed.
The owners brought in new management in the
summer of 1998 and they began building theirThorough Conference Room Pilot, testing,
new team of high quality professionals,simulation are needed, including stress
including key valued members of the existingtesting
team. Fortunately, the former management had
the presence of mind to initiate the ERPWhen all is said and done, the team must
project and to staff it with mostly excellentthoroughly exercise the system In order to
people. The new management's major initialknow and assess its strengths, weaknesses and
challenges and priorities involved dealingdifferent ways they can solve problems with
with a difficult plant consolidation, productit, in order to iron out bugs, procedural
shortages, customer issues, and that littleweaknesses, needed organizational changes,
Y2K  ERP  problem  also.documentation and training requirements.
Realistic  scenarios  and  data  are  needed.
The unresponsive business systems weren't
solely attributable to ancient software.The company got real serious about this a few
There were also data integrity problems inmonths before implementation, beefing up the
inventory, purchasing and production.conference room pilot activities, making them
Practices and procedures were in need ofa centerpiece of the effort. This paid off in
updating. Much training was needed. Existingbuilding a good implementation model, testing
systems tools were not even fullyit and helping in documentation and training
implemented. There were philosophicalefforts.
differences between the way the business was
run and how the systems were designed toTwo highly realistic stress tests exercised
work, not an atypical situation in manythe system not long before the go-live date.
companies.Minor defects, which might have caused major
problems, were quickly identified and
THE  ERP  PROJECTcorrected. Conversion programs were also
tested again and again to avoid unpleasant
The company had a "legacy" system, consisting"Day  1"  surprises.
of Data 3 MRPII, HFA Order Entry/Accounts
Receivable, S2K (Infinium) Financials and theIf You Insist on a "Big Bang" Implementation,
old ADP Payroll system. These were all prettythen  do  it  right
good products in their time, but hadn't been
kept up to date, although vendors did offerThe author is not in favor of this
newer versions, but required customizationimplementation approach, of putting the whole
made  some  impractical.new system on-line at once. But, it had been
decided to go that way long before his
For a variety of reasons, beyond the scope ofarrival, so we all pitched in to minimize the
this paper, the company chose a veryrisk. The most important things to accomplish
expensive but good set of platforms,for that were: thorough testing, testing,
including Oracle applications and systemstesting, exhaustive conference room piloting,
software, Hyperion Pillar budgeting, ADPsound technical execution, testing, training
PC-based payroll, ADP HR systems, HP hardwareand a good contingency plan. Did I mention
and HP-UX operating system and other masstesting, also? The accountants were a little
storage, networking and data warehousingmore conservative, bringing up the general
products.ledger first and running in parallel three
months  earlier  than  everyone  else.
The company set up an implementation team
consisting of an executive steering• Strong technical, systems programming
committee, project manager (fromDBA (Database Administration) capabilities
Engineering!), and project leaders fromare needed, at least for a system as complex
middle management and 10 "Superusers," mostlyand  flexible  as  Oracle.
high potential administrative people, to
become their departments' experts in the new• There are numerous tables, parameters
system. In addition, there were a number ofand security to set up and maintain software
Oracle technical and applicationsversions and patches to control, for various
consultants, as well as third party contractsystem and database "instances." A good DBA
programmers, database administrators andis also a consulting resource to IT, Users
business  consultants.and  management.
There was a fair amount of personnelConventional wisdom says that modern software
"churning," until the company got the rightpackages take most of the technical risk out
combination of Oracle and other outsideof an implementation. Conventional wisdom is
consultants. Several internal team membersincorrect. Unless we tackled technical issues
fell by the wayside, principally due tohead-on, such as system setup, multi-site
operational workloads or people moving on.definition, library/version control,
The team leaders were especially vulnerableconversion, etc., it would have meant
to their heavy departmental workloads andtrouble. Technical factors became a non-issue
some were not able to devote sufficientprecisely because we did apply the resources
energy and time to the project success. To ato  deal  with  them.
significant extent, the Superusers, outside
consultants and IT personnel picked up theWe relied heavily upon outside resources in
slack.the beginning and gradually tapered these off
as we built the skills in-house. We need to
Progress was relatively slow in the initialcontinue to broaden the skills base to ensure
months, even requiring a rededication at onethat multiple in-house employees can handle
point. But the company and the team nevercritical technical tasks, a common aspiration
gave up and ultimately progressed to ain mid-sized Information Technology
successful and fairly smooth implementation,departments.
but not without a struggle during the
preparation.The company was successful in building an
effective Oracle RDBMS/UNIX/Oracle Apps,
SCOPE  AND  OBJECTIVEStechnical capability, scaled appropriately
for maintaining a "vanilla" version of the
A. Due to the aforementioned issues, projectsystem. It took more people than we would
scope and objectives were limited to thehave  liked.
following:
Ensure  data  accuracy
• Y2K compliance (actually the main de
facto  schedule  and  objectives  driver)Formal ERP systems are very sensitive to data
accuracy. We had to make big improvements
•  Timely,  accurate  financialsprior to implementation. Even though our
outside auditor "blessed" our overall numbers
•  Closed  loop  MRPIIprior to implementation, these still did not
meet our far more rigorous internal
• Strong IT infrastructure for futurestandards. We are only now approaching world
growth, flexibility, integration, stabilityclass standards in most areas, but actually
and  profitabilityslipped in one area after a reorganization,
spurring a rededication to data accuracy. In
B. Not  included,  but  desired:the future, we will conduct rigorous
quarterly internal inventory accuracy audits
•  Business  Process  Reengineeringand look at other areas as well. We are
simultaneously trying to reduce dependency on
•  Automated Data Collection/bar codingformal data accuracy by moving to more visual
control approaches and quick reaction
•  Freight/Warehouse  systemsystems.
•  Flow  ManufacturingMinimize  software  modifications
•  Full  ERPEveryone we knew in other companies making
major changes to a software package ended up
•  Supply  Chain  Planningspending huge amounts of money and time and
often had maintenance and operational
C. Applications  addressed  were:problems. We learned from their experiences,
made minimal changes and had minimal
• Financial: General Ledger, Accountsproblems.
Payable, Accounts Receivable, and Financial
Planning/BudgetingControl  the  scope
• Manufacturing: Master ProductionAlthough there were people who wanted us to
Scheduling/Material Requirements Planning,do a lot more, most of us agree that scope
Inventory, Work-in-Process, Capacitycontrol helped to get the job done cheaper
Requirements Planning, Engineeringand faster than it would have otherwise. It
Bill-of-Materials,  Costingwould have really stretched things out and
jeopardized the results if our plate had been
• Order Management; Order Entry,even  more  full  than  it  was.
Invoicing
Have  Contingency  Plans
Addressed separately: Forecasting (Smart
Forecast), Payroll (ADP PC version), HumanAfter seeing and hearing about others' past
Resources (ADP), Aggregate Inventorydisasters, we developed a contingency plan
Management (IQR System), Returns andfor: what to do if the implementation failed;
Warrantee (homegrown), Quality (Homegrown andwhat to do when the system crashes- for an
PC  packages),hour, a day, a week, longer? This was
addressed. There is also an alternate backup
OADW  (Oracle  Applications  Data Warehouse).site in place. We can always improve with an
ongoing  readiness  audit.
LESSONS  LEARNED
Have  a  Go/No  Go  decision  point
The company learned some important lessons
during this project, some relativelyWe did it and are glad we did. We waved off
painless, some didn't come so easily. Tothe implementation date twice, because we
save time, only the ones deemed mostwanted additional preparation. By the third
important  are  listed  below.time, we knew what to look for, knew what we
needed, and to some extent, even knew what it
Major executive involvement is crucial towas we didn't know. We made a list of the
success.outstanding issues that had to be resolved
before we would "go live" with the
Executives control the staff, budget,implementation and worked them hard, as a
punishments and rewards. In the cases whereteam. A couple of months' delay is
we failed to engage executives, resultsinsignificant compared to years of pain from
usually suffered. When engaged and informed,a failed implementation. Never implement
they usually improved the situation. Notableuntil  your  people  are confident and ready.
examples:
Other
• When it became apparent that training
was seriously deficient, several VP's and theA few additional hints-Don't put up the
CEO took decisive steps to alleviate thelatest version of the vendor's software, no
problem.matter how they praise its virtues. Major ERP
packages are never perfect-ESPECIALLY major
• When we noticed that contingencynew releases. Let others debug it for you,
planning was potentially deficient, the CEOeven if it means waiting a little longer for
made it a personal crusade and insisted uponsome bells and whistles. We took the
a plan before he would approve theconservative route and avoided much agony.
implementation  go-live  date.Make sure you have key management reports in
place before going live. We didn't have them
The Steering Committee was the principal toolall and paid the price. Make sure a critical
employed for executive engagement. All of themass is trained in report writing. We didn't,
executives whose departments were mostbut when offering training the second time
affected were on the steering committee,around, classes were "sold out" immediately.
along with the CEO, IT Mgr. (who was also theDon't scrimp on hardware resources. You'll
Project Manager) and an outside businessget punished more for bad system performance
consultant. As it inevitably happens inthan for spending too much on hardware. Once
situations where busy people have multiplewe eliminated a few bottlenecks in testing,
priorities, it was a chore to get everyone toperformance became a non-issue. Establish
show up at meetings, do critical reviews andspecific systems performance objectives, get
make decisions. When it was successful, whichcommitments  to  them  in  writing.
it wasn't always, several people had to get
together in advance to push an agenda andReward contributors any way you can-with
line up participation. Thankfully, the newpraise, training, coveted team assignments,
CEO, once he got on board and saw howpromotions, etc. Your good people are your
important this project was, proved invaluablefinest  asset.
with his support when it was most needed,
although we had to carefully choose ourEPILOGUE
battles.
The new system went live on 4 January 1999
BPR (Business Process Reengineering) shouldand we never looked back. There were only
be  done  up  front.two  serious  problems.
The company elected to put the system up• Bugs in order entry slowed us down.
first and reengineer later. This wasBetter testing and documentation of results
primarily attributable to budget and schedulewould  have  mitigated  this  problem.
reasons. The downside is that the system, as
implemented, tends to perpetuate the status• In addition, an administrative
quo, although certain improvements came aboutproblem resulted in a number of blanket
just from installing it. Some minimalvendor purchase orders not being put on the
reengineering was done where time permittedsystem for weeks, screwing up purchasing and
or where the old procedures were almostinventory  records  for  the  duration.
totally unworkable. Now, we're going back and
working on the processes with the bestWe had our first major system crash in March,
improvement potential, but not as fast as1999. Recovery procedures took nearly a day,
we'd  like.but restoration resulted in zero lost data,
using the task level recovery features of the
Objectives/metrics/issues should drive thesystem.
project.
We have lost some key trained talent and are
Budget and schedule drove this project and ittrying to improve our successorship and
showed. Metrics were developed, but, keytraining  management.
performance reports are still being brought
on-line. In the instances where theThe reengineering effort seems to be more of
objectives were stressed, improvements werea gradual, continuous improvement approach.
made. Examples: the CEO and Finance stressedIt needs to move faster. This will take more
1)- Pricing rationalization. Marginemphasis and rededication. There are lots
improvements and simplified order processingmore things that we can do to improve. Other
have already resulted. 2)- Inventory accuracyimportant projects seem to present even
was stressed as a prerequisite to systembetter  opportunities  at  this  time.
performance- improvements are gradually
occurring.More importantly, "the vision thing" is back
and sales and profits have been great. The
The team did do a good job making businesssystem is working and helping to provide a
issues drive the project, towards the end, asfirm foundation for the new century!
their expertise developed. One of the main



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