Korea Telecom 2007Olson: ERP5 ERP Training. Korea Telecom 2007Olson: ERP5 Organizational Benefits...

Korea Telecom 2007 Olson: ERP5

ERP Training


Organizational Benefits

• Cost reduction

• Cycle time reduction

• Productivity improvement

• Quality improvement

• Customer services improvement


Managerial Improvement

• Improved resource management

• Better decision making– Hard to prove

• Better planning

• Performance improvement


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


IT Infrastructure Improvement

• Build business flexibility– ??? ERP inherently a rigid system

• IT cost reduction– The main reason CEOs adopt ERP

• Increased IT capability


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


Organizational Change from ERP

1. Productivity decline• Jobs redefined, new procedures established, ERP

fine tuned, organization learns to process new information streams

2. Productivity gain• Develop new skills, structural changes, process

integration, add bolt-ons

3. Payoff– Transform organizational operations to efficient

level


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


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


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


P&WC 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


P&WC Implementation

• Five sites• Minimal business change• Project June 1996 to January 1999

1. Scoping & planning 7 months

2. Reengineering (very little)

3. Process redesign (600 activities) 7 months

4. Configuration (SAP options) 10 months

5. Testing & delivery Aug-Dec 1998

• Big-bang– Knew it was risky, prepared carefully


P&WC Project Team

• P&WC: 7 groups (345 employees across company)– Represented main processes of the company– 168 IT analysts & change managers– STRONG DESIRE TO ENSURE

EMPLOYEES REPRESENTED


P&WC Knowledge Transfer

• 110 employees from the 6 most affected departments trained to be internal trainers

• 1998 P&WC 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


P&WC 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


P&WC Lessons Learned

• Mounting environmental uncertainty & turbulence increased pressure for change

• P&WC executives very positive about ERP

• Openness to employee involvement helped– Studied prior successful implementations

(systems failure approach)


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)


Managing Change Process

• CIO of Nestle: No major software implementation is about the software – it’s 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.


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


Communications Model

• Gain commitment– Initially raise awareness– Shift to help move to deeper levels of

understanding– Gain commitment only after understanding


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


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– Don’t know how much is true, but sounds

great


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


Castle Cement

• UK company, 1200 employees

• Needed to replace legacy systems

• SAP imposed by owner (German cement giant)


Castle ERP Team

• Small team pulled from permanent jobs

• 1: Customize system to Castle’s needs– Lots of business process redesign– During massive upgrade to SAP 4.6C

• Initially implemented at 2 sites


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


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


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

Korea Telecom 2007Olson: ERP5 ERP Training. Korea Telecom 2007Olson: ERP5 Organizational Benefits...

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