| This article is also available on our | | | | benefits of the project was the training of a |
| website: PROACTION - Generating Best | | | | cadre of people prepared to run a formal |
| Practices. It is an excerpt of a paper | | | | business system. Now they're ready to do a |
| originally written by George Miller, Founder | | | | great 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, |
| INTRODUCTION | | | | they are addressing customer service and |
| | | | inventory issues effectively. |
| This case study describes lessons learned | | | | |
| from the ERP implementation at a leading | | | | Effective training is needed at all levels. |
| metal container products company. It is a | | | | |
| $200MM, 53-year-old company, headquartered in | | | | The first priority of key project people is |
| the USA, with facilities in multiple states | | | | to be familiar with the overall principles of |
| and in Europe. It is a leading producer for | | | | ERP and the applications in their specific |
| the wholesale, retail, OEM and industrial | | | | areas, so that they can demonstrate the |
| markets. The company was in the midst of a | | | | system 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 team | | | | Next, 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 also | | | | the big picture and how their own areas will |
| transitioning to focus factory management, | | | | work and interface with other areas. |
| flow manufacturing, product rationalization | | | | Executives need to understand the big |
| and reorganizing business units, all this in | | | | picture, what systems can and can't do and |
| the midst of a major facilities | | | | what are the priorities and tradeoffs. |
| consolidation. In spite of all this, the | | | | |
| project was probably in the top 10% of ERP | | | | Finally, 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 and | | | | implementation that additional training was |
| competition for mindshare. Due to inevitable | | | | needed for effective utilization of the |
| time and resource constraints, the phase I | | | | system. Management was quite serious about |
| implementation consisted only of replacing | | | | rectifying the situation. The Human Resources |
| legacy systems and the most urgent partial | | | | Dept. managed this effort. Standards of |
| reengineering of at-risk processes. The | | | | performance for each employee were developed. |
| company was successful in transitioning to | | | | The employees, trainers, supervisors, |
| the improved system and initiating follow-on | | | | managers, and ultimately, executives, were |
| process reengineering. Currently (mid-1999), | | | | held accountable for employee competence. |
| system implementation in other North American | | | | Formal 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 present | | | | and it showed in the results. |
| owners in 1996, who faced a number of | | | | |
| challenges to bring the company up to their | | | | One notable shortcoming in training |
| expectations: | | | | resources: nobody-company personnel, Oracle |
| | | | or third party person-seemed to know the |
| • Need for more emphasis on quality | | | | entire system well enough to provide the big |
| | | | picture. We had to spend an inordinate amount |
| • Debt load to service initially | | | | of time and money consulting with all kinds |
| inhibited capital appropriations | | | | of people to get cross-functional, cross |
| | | | "module" answers. We still have more work |
| • Difficult facilities consolidation | | | | required to fully develop such people. |
| project | | | | However, the company does have a couple of |
| | | | excellent "generic" business systems gurus |
| • Aging, obsolete and unresponsive | | | | available, which has proved invaluable. We |
| business systems, with a Y2K problem | | | | recommend spending the time and money to beg, |
| | | | borrow, steal or develop cross-functional |
| • Product development | | | | experts to know your business and |
| | | | applications systems. |
| • Competition | | | | |
| | | | Our Superusers and Project Leaders must have |
| In that context, the company was attempting | | | | really been good, because a lot of them have |
| to modernize, rightsize and streamline for | | | | already been promoted/moved on to better |
| the future, but nearly lost the race with | | | | jobs. We have realized this and are working |
| time. About six years ago, the company | | | | to develop a better ongoing training |
| engaged a major consulting firm to study | | | | successorship approach. |
| major improvement opportunities. One of the | | | | |
| chief recommendations was to upgrade ERP | | | | Any organization needs a comprehensive |
| systems, but due to many other priorities, | | | | generic business systems education program to |
| the company only started moving on the | | | | ensure that people are aware of the state of |
| recommendations in mid-1997, with a looming | | | | the art. An APICS trainer is providing |
| Y2K deadline. Therefore, schedule and | | | | overview education for the company. Some |
| implementation priorities were somewhat | | | | seminars 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 their | | | | Thorough Conference Room Pilot, testing, |
| new team of high quality professionals, | | | | simulation are needed, including stress |
| including key valued members of the existing | | | | testing |
| team. Fortunately, the former management had | | | | |
| the presence of mind to initiate the ERP | | | | When all is said and done, the team must |
| project and to staff it with mostly excellent | | | | thoroughly exercise the system In order to |
| people. The new management's major initial | | | | know and assess its strengths, weaknesses and |
| challenges and priorities involved dealing | | | | different ways they can solve problems with |
| with a difficult plant consolidation, product | | | | it, in order to iron out bugs, procedural |
| shortages, customer issues, and that little | | | | weaknesses, 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 in | | | | months before implementation, beefing up the |
| inventory, purchasing and production. | | | | conference room pilot activities, making them |
| Practices and procedures were in need of | | | | a centerpiece of the effort. This paid off in |
| updating. Much training was needed. Existing | | | | building a good implementation model, testing |
| systems tools were not even fully | | | | it and helping in documentation and training |
| implemented. There were philosophical | | | | efforts. |
| differences between the way the business was | | | | |
| run and how the systems were designed to | | | | Two highly realistic stress tests exercised |
| work, not an atypical situation in many | | | | the system not long before the go-live date. |
| companies. | | | | Minor defects, which might have caused major |
| | | | problems, were quickly identified and |
| THE ERP PROJECT | | | | corrected. 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 the | | | | If You Insist on a "Big Bang" Implementation, |
| old ADP Payroll system. These were all pretty | | | | then do it right |
| good products in their time, but hadn't been | | | | |
| kept up to date, although vendors did offer | | | | The author is not in favor of this |
| newer versions, but required customization | | | | implementation 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 of | | | | arrival, so we all pitched in to minimize the |
| this paper, the company chose a very | | | | risk. The most important things to accomplish |
| expensive but good set of platforms, | | | | for that were: thorough testing, testing, |
| including Oracle applications and systems | | | | testing, exhaustive conference room piloting, |
| software, Hyperion Pillar budgeting, ADP | | | | sound technical execution, testing, training |
| PC-based payroll, ADP HR systems, HP hardware | | | | and a good contingency plan. Did I mention |
| and HP-UX operating system and other mass | | | | testing, also? The accountants were a little |
| storage, networking and data warehousing | | | | more 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 (from | | | | DBA (Database Administration) capabilities |
| Engineering!), and project leaders from | | | | are needed, at least for a system as complex |
| middle management and 10 "Superusers," mostly | | | | and 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 of | | | | and security to set up and maintain software |
| Oracle technical and applications | | | | versions and patches to control, for various |
| consultants, as well as third party contract | | | | system and database "instances." A good DBA |
| programmers, database administrators and | | | | is also a consulting resource to IT, Users |
| business consultants. | | | | and management. |
| | | | |
| There was a fair amount of personnel | | | | Conventional wisdom says that modern software |
| "churning," until the company got the right | | | | packages take most of the technical risk out |
| combination of Oracle and other outside | | | | of an implementation. Conventional wisdom is |
| consultants. Several internal team members | | | | incorrect. Unless we tackled technical issues |
| fell by the wayside, principally due to | | | | head-on, such as system setup, multi-site |
| operational workloads or people moving on. | | | | definition, library/version control, |
| The team leaders were especially vulnerable | | | | conversion, etc., it would have meant |
| to their heavy departmental workloads and | | | | trouble. Technical factors became a non-issue |
| some were not able to devote sufficient | | | | precisely because we did apply the resources |
| energy and time to the project success. To a | | | | to deal with them. |
| significant extent, the Superusers, outside | | | | |
| consultants and IT personnel picked up the | | | | We 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 initial | | | | continue to broaden the skills base to ensure |
| months, even requiring a rededication at one | | | | that multiple in-house employees can handle |
| point. But the company and the team never | | | | critical technical tasks, a common aspiration |
| gave up and ultimately progressed to a | | | | in 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 OBJECTIVES | | | | technical capability, scaled appropriately |
| | | | for maintaining a "vanilla" version of the |
| A. Due to the aforementioned issues, project | | | | system. It took more people than we would |
| scope and objectives were limited to the | | | | have 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 financials | | | | prior to implementation. Even though our |
| | | | outside auditor "blessed" our overall numbers |
| • Closed loop MRPII | | | | prior to implementation, these still did not |
| | | | meet our far more rigorous internal |
| • Strong IT infrastructure for future | | | | standards. We are only now approaching world |
| growth, flexibility, integration, stability | | | | class standards in most areas, but actually |
| and profitability | | | | slipped 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 Reengineering | | | | and look at other areas as well. We are |
| | | | simultaneously trying to reduce dependency on |
| • Automated Data Collection/bar coding | | | | formal data accuracy by moving to more visual |
| | | | control approaches and quick reaction |
| • Freight/Warehouse system | | | | systems. |
| | | | |
| • Flow Manufacturing | | | | Minimize software modifications |
| | | | |
| • Full ERP | | | | Everyone we knew in other companies making |
| | | | major changes to a software package ended up |
| • Supply Chain Planning | | | | spending 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, Accounts | | | | problems. |
| Payable, Accounts Receivable, and Financial | | | | |
| Planning/Budgeting | | | | Control the scope |
| | | | |
| • Manufacturing: Master Production | | | | Although 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, Capacity | | | | control helped to get the job done cheaper |
| Requirements Planning, Engineering | | | | and faster than it would have otherwise. It |
| Bill-of-Materials, Costing | | | | would 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), Human | | | | After seeing and hearing about others' past |
| Resources (ADP), Aggregate Inventory | | | | disasters, we developed a contingency plan |
| Management (IQR System), Returns and | | | | for: what to do if the implementation failed; |
| Warrantee (homegrown), Quality (Homegrown and | | | | what 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 relatively | | | | We did it and are glad we did. We waved off |
| painless, some didn't come so easily. To | | | | the implementation date twice, because we |
| save time, only the ones deemed most | | | | wanted 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 to | | | | was 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 where | | | | team. A couple of months' delay is |
| we failed to engage executives, results | | | | insignificant compared to years of pain from |
| usually suffered. When engaged and informed, | | | | a failed implementation. Never implement |
| they usually improved the situation. Notable | | | | until your people are confident and ready. |
| examples: | | | | |
| | | | Other |
| • When it became apparent that training | | | | |
| was seriously deficient, several VP's and the | | | | A few additional hints-Don't put up the |
| CEO took decisive steps to alleviate the | | | | latest 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 contingency | | | | new releases. Let others debug it for you, |
| planning was potentially deficient, the CEO | | | | even if it means waiting a little longer for |
| made it a personal crusade and insisted upon | | | | some bells and whistles. We took the |
| a plan before he would approve the | | | | conservative 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 tool | | | | all and paid the price. Make sure a critical |
| employed for executive engagement. All of the | | | | mass is trained in report writing. We didn't, |
| executives whose departments were most | | | | but 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 the | | | | Don't scrimp on hardware resources. You'll |
| Project Manager) and an outside business | | | | get punished more for bad system performance |
| consultant. As it inevitably happens in | | | | than for spending too much on hardware. Once |
| situations where busy people have multiple | | | | we eliminated a few bottlenecks in testing, |
| priorities, it was a chore to get everyone to | | | | performance became a non-issue. Establish |
| show up at meetings, do critical reviews and | | | | specific systems performance objectives, get |
| make decisions. When it was successful, which | | | | commitments to them in writing. |
| it wasn't always, several people had to get | | | | |
| together in advance to push an agenda and | | | | Reward contributors any way you can-with |
| line up participation. Thankfully, the new | | | | praise, training, coveted team assignments, |
| CEO, once he got on board and saw how | | | | promotions, etc. Your good people are your |
| important this project was, proved invaluable | | | | finest asset. |
| with his support when it was most needed, | | | | |
| although we had to carefully choose our | | | | EPILOGUE |
| battles. | | | | |
| | | | The new system went live on 4 January 1999 |
| BPR (Business Process Reengineering) should | | | | and 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 was | | | | Better testing and documentation of results |
| primarily attributable to budget and schedule | | | | would 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 about | | | | problem resulted in a number of blanket |
| just from installing it. Some minimal | | | | vendor purchase orders not being put on the |
| reengineering was done where time permitted | | | | system for weeks, screwing up purchasing and |
| or where the old procedures were almost | | | | inventory records for the duration. |
| totally unworkable. Now, we're going back and | | | | |
| working on the processes with the best | | | | We had our first major system crash in March, |
| improvement potential, but not as fast as | | | | 1999. 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 the | | | | system. |
| project. | | | | |
| | | | We have lost some key trained talent and are |
| Budget and schedule drove this project and it | | | | trying to improve our successorship and |
| showed. Metrics were developed, but, key | | | | training management. |
| performance reports are still being brought | | | | |
| on-line. In the instances where the | | | | The reengineering effort seems to be more of |
| objectives were stressed, improvements were | | | | a gradual, continuous improvement approach. |
| made. Examples: the CEO and Finance stressed | | | | It needs to move faster. This will take more |
| 1)- Pricing rationalization. Margin | | | | emphasis and rededication. There are lots |
| improvements and simplified order processing | | | | more things that we can do to improve. Other |
| have already resulted. 2)- Inventory accuracy | | | | important projects seem to present even |
| was stressed as a prerequisite to system | | | | better 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 business | | | | system is working and helping to provide a |
| issues drive the project, towards the end, as | | | | firm foundation for the new century! |
| their expertise developed. One of the main | | | | |