ERP Training

1
ERP Training

2
Organizational Benefits

• Cost reduction
• Cycle time reduction
• Productivity improvement
• Quality improvement
• Customer services improvement

3
Managerial Improvement

• Improved resource management
• Better decision making
• Hard to prove
• Better planning
• Performance improvement

4
Strategic Improvement

• Support business growth
• Support business alliances
• If they have the same system
• Build business innovations
• ? System can be constraining
• Build cost leadership
• Generate product differentiation
• ?? Over time, only if you customize
• Build external linkages
• ? If they have the same system

5
IT Infrastructure Improvement

• Build business flexibility
• ??? ERP inherently a rigid system
• IT cost reduction
• The main reason CEOs adopt ERP
• Increased IT capability

6
Organizational

• Support organizational change
• FORCE organizational change!!
• Facilitate business learning
• BPR does a good job of this
• Empower employees
• Within the system!!
• Build common vision
• FORCES common vision

7
Organizational Change from ERP

• Productivity decline
• Jobs redefined, new procedures established, ERP
  fine tuned, organization learns to process new
  information streams
• Productivity gain
• Develop new skills, structural changes, process
  integration, add bolt-ons
• Payoff
• Transform organizational operations to efficient
  level

8
Change Management

• ERP often viewed as threat to job
• May well change how job is done
• New skills, new requirements
• May lead to layoff
• Difficult to make transition
• Some firms are secretive
• Attempt to avoid sabotage
• Some firms are open
• Seems best

9
Recent Cases

• Pratt Whitney Canada
• Tchokogue et al., International Journal of
  Production Economics, 2005
• 1996-1999
• Marathon Oil
• Stapleton Rezak, Journal of organizational
  Excellence, Autumn 2004
• 1999-2002
• Castle Cement
• Lloyd, ITTraining, April 2004
• 2002-2003

10
Pratt Whitney Canada

• June 1996 began process
• Canadian manufacturer of large engines
• 1993 installed SAP R/2
• Also had 35 legacy systems
• Wanted greater transparency to customers
  worldwide, greater agility
• Lower customer response time, reduce WIP,
  increase inventory turnover, identify inventory
  operating costs
• Selected SAP R/3

11
PWC System

• SAP
• Financial accounting, Controlling, Sales
  distribution, Materials management, Production
  planning, Quality management, Business
  information warehouse
• Hardware Hewlett-Packard
• Operating System HP/UX
• Database Oracle
• 5 sites

12
PWC Implementation

• Five sites
• Minimal business change
• Project June 1996 to January 1999
• Scoping planning 7 months
• Reengineering (very little)
• Process redesign (600 activities) 7 months
• Configuration (SAP options) 10 months
• Testing delivery Aug-Dec 1998
• Big-bang
• Knew it was risky, prepared carefully

13
PWC Project Team

• PWC 7 groups (345 employees across company)
• Represented main processes of the company
• 168 IT analysts change managers
• STRONG DESIRE TO ENSURE EMPLOYEES REPRESENTED

14
PWC Knowledge Transfer

• 110 employees from the 6 most affected
  departments trained to be internal trainers
• 1998 PWC became a gigantic classroom
• Massive involvement of internal resources
• Used external consultants as well
• 150 manuals adapted to diverse requirements
• 3,000 employees involved
• Technical basic navigation task training
• Business-oriented processes tasks

15
PWC ERP Benefits

• TANGIBLE
• About 1 million in reduced costs in 2000
• Productivity 11 greater than planned
• Receivables days outstanding reduced 6
• ROI in 30-40 range
• INTANGIBLE
• Increased inventory cost visibility
• mySAP.com provided e-commerce capability
• More flexible reporting system

16
PWC Lessons Learned

• Mounting environmental uncertainty turbulence
  increased pressure for change
• PWC executives very positive about ERP
• Openness to employee involvement helped
• Studied prior successful implementations (systems
  failure approach)

17
Marathon Oil

• Houston, TX
• Over 28 thousand employees worldwide
• 1999 evaluated fit of ERP
• Wanted better linkage to oil gas technical
  systems
• Formed cross-functional team
• Rigorous internal assessment of business
  processes
• Developed business case
• Studied failures of others (systems failure
  approach)

18
Managing Change Process

• CIO of Nestle No major software implementation
  is about the software its about change
  management.
• SAP changes the way people work, challenging
  their principles, their beliefs, and the way they
  have done things for many, many years.

19
Deconstructing Ownership Transfer

• Goal transfer ownership from project team to end
  users
• KNOWLEDGE TRANSFER
• Ensure employees know what to do
• RESPONSIBILITY TRANSFER
• Ensure employees participate
• VISION TRANSFER
• Help employees translate new tools processes
  into superior business results

20
Communications Model

• Gain commitment
• Initially raise awareness
• Shift to help move to deeper levels of
  understanding
• Gain commitment only after understanding

21
Communication Tools

• One-way channels
• Newsletters, web site, road shows, town meetings,
  personal appearances
• Interactive
• Workshops, issue-tracking meetings, conference
  calls, collaborative web sites
• Hands-on
• Validation sessions with experts, sandbox to
  learn applications, workshops

22
Marathon Experience

• Went live worldwide in 13 months
• 8 major modules
• Claimed industry record
• Leveraged skills commitment of employees as key
  resource
• THIS COMES FROM A COMPANY USER, TRAINING
  CONSULTANT
• Dont know how much is true, but sounds great

23
MARATHON Lessons

• Software simply the tool
• Strong project management critical
• Involve people
• Staff adequately
• Need CEO support
• Change management integral discipline
• Treat scope creep like a virus
• Minimize customization
• Reward success
• Transfer ownership

24
Castle Cement

• UK company, 1200 employees
• Needed to replace legacy systems
• SAP imposed by owner (German cement giant)

25
Castle ERP Team

• Small team pulled from permanent jobs
• 1 Customize system to Castles needs
• Lots of business process redesign
• During massive upgrade to SAP 4.6C
• Initially implemented at 2 sites

26
Castle Training

• Originally planned training in-house
• Soon apparent beyond their capabilities
• Hired outside trainer
• Initially looked at key end-user training
• Selecting who to train saw wide disparity in
  computer literacy
• Brought people up to speed at a local college
• ECDL qualification
• Then SAP training Aug 2002 (105 users)
• SAP basics
• Navigation
• Job specific

27
Castle Results

• Initial phase on-line November 2002
• June to December 2003 150 more users trained
  (cumulative total 398)
• Project proceeding well
• Simplicity of approach credited
• Next stage train all 1,200 staff
• Expand the way SAP is used

28
Summary

• Training crucial to ERP success
• Consistent tendency to underbudget
• But important in getting system used
• Need to convince users
• If you are laying them off, that is hard
• Maybe even unethical
• Need to reconcile this matter