ERP Training
Korea Telecom 2007
Olson: ERP5
Organizational Benefits
•
•
•
•
•
Cost reduction
Cycle time reduction
Productivity improvement
Quality improvement
Customer services improvement
Korea Telecom 2007
Olson: ERP5
Managerial Improvement
• Improved resource management
• Better decision making
– Hard to prove
• Better planning
• Performance improvement
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
IT Infrastructure Improvement
• Build business flexibility
– ??? ERP inherently a rigid system
• IT cost reduction
– The main reason CEOs adopt ERP
• Increased IT capability
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
P&WC Implementation
•
•
•
Five sites
Minimal business change
Project June 1996 to January 1999
1.
2.
3.
4.
5.
•
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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)
Korea Telecom 2007
Olson: ERP5
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)
Korea Telecom 2007
Olson: ERP5
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.
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
Communications Model
• Gain commitment
– Initially raise awareness
– Shift to help move to deeper levels of
understanding
– Gain commitment only after understanding
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
Castle Cement
• UK company, 1200
employees
• Needed to replace legacy
systems
• SAP imposed by owner
(German cement giant)
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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
Korea Telecom 2007
Olson: ERP5
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 2007
Olson: ERP5