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