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Enterprise information systems project implementation: A case study of ERP in Rolls-Royce
Case Study published in International journal of production economics (2004)
Presented by Tim MoirBus550June 3, 2013
The rise of Enterprise Resource Planning systems The global economy requires internationalization of
operations
Requires flexibility
Decentralized operations
Managing globally
What does ERP do? Increase the efficiency of an organization Integrates separate functions such as manufacturing,
finance, procurement, distribution into one system Allows standardization of information across the entire
enterprise, Information only entered once Key Benefits
Business process automation Timey access to management information Improvement in the supply chain via the use of E-communication
and E-Commerce
Implementation The biggest risk associated with a ERP is the implementation Must be managed as an organizational change rather then a
software installation The way a company operates must be changed to make the
implementation successful Organizational resistance must be managed ERP is very adaptable but not malleable Bridge software to legacy systems
Rolls-Royce Pre-ERP New acquisitions lead to dramatic increase in size Global company Facilities in 14 countries by 1995 New organizational structure in 1998 to better meet customer
needs 1500 systems, mostly internally developed Expensive to create, difficult to manage Data not accurate, consistent or accessible In 1996 IT was outsourced to EDS
Rolls-Royce Implementation Project EDS provided the management team of specialists Key – SAP Consultants Project team is broken down into smaller segments Each Operational Business Unit (OBU) has own planning
team Responsible for implementing working changes and training Problems:
Cultural Business Technical
Cultural Problems Need to ensure high acceptance across all areas of the
company Illustrate improvements made by the company as a whole Training split into two separate groups SAP specialists conducted technical training SAP specialist trained expect users Other end-users were trained internally with EDS consultants Training used demonstrations within the workplace, info
meetings, and presentations for all 10,000 employees
Business Problems In order to ensure ERP works successfully, the business
practices must fit the system The internal business process had to be redesigned Consisted of four steps (1) Mapping the current process (2) Identify issues / problems in the mapping (3) Compare the mapping and problems with ERP process to
identify issues in the new system (4) Re-mapping to bring process inline with ERP Why not make changes to ERP system?
Technical Problems Key issue has been the accuracy of data Data from Legacy systems needed to be upload Data duplication major concern Systematic process of taking old systems offline Customer user interfaces created to bridge data Nine principal business processes
Business Process Model
Release Strategy Implementation team had to define a release strategy for the
entire project Items to consider: Third party software to be accredited by SAP Business reports had to be justified and developed Data had to be identified, validated, cleaned, loaded, and
archived Additional Hardware needed (1000 new PC’s, 6000 licenses,
servers)
Release Strategy
Phase 1 – Strategy and Direction Intense Study during Q1 of 1998 Determine scope of project Outline Plan Determine Cost Steering Committee for financial guidance ERP Core Team was formed to oversee implementation
process
Phase 2 Planning Analysis & Convergence / Early Development Created a detailed plan Protégé system installed Series of “High Level Process” workshops to discuss various
business processes (involved 200 employees) Another set of workshops “Business Simulation” (involved 300
employees) to forge relationship with ERP core team Next steps included:
Preliminary design review High level review Critical design review Implementation realization Technical/Operation review Post implementation review
Project Changes Significant timing change made during Phase 2 – The
implementation phases (Wave 1 and Wave 2 were deferred for six months)
Changes due to: Allow more time to prepare, train, and clean up data Allow 5 additional months for pilot running and early
development Allow additional time for completion of projects needed for
which ERP is dependent Resolve difficulties with ERP at RR Allison division
Phase 3 Implementation The implementation phase was to large to be carried out at
once Broken into Wave 1 and Wave 2 Wave 1 involved replacing the legacy systems currently in
place with new systems End of Wave 1 involved a pilot project at one RR facility Successful Pilot project allowed full Go-Live company-wide
one year later
Phase 3 Implementation Wave 2 lasted about one year in length Not started until completion of Wave 1 Concerned engine assembly, spares, logistics and human
resources Legacy were “read-only” Once the ERP showed to work properly, old systems phased
out Changes during Implementation phases involved legacy
systems. Changes planned in a number of suites
Suites 1, 2, 3 In order to handle the adaption of the ERP from the “legacy
systems” a three step process Suite 1
Plan the supply chain Master schedule key program
Suite 2 Plan and schedule the factory Schedule the shop
Plan 3 Operate the factory
ERP Pilot
3 months Facility known a “number 4 shop” selected Only produced 280 parts Low numbers involved Used as a test of the ERP system to demonstrate:
Business principles Processes Procedures Role definitions and behaviors (including new roles) Software, hardware, data transfers Additional pilots
Pilot projects System testing and user acceptance Creating ownership of process Testing, Testing and more Testing Data verification Typical going live issues:
User authorization Processing delays Data variances System processing
Go-Live Transferring legacy data Stable environment for 10 weeks Changes in data need to add to new system Data can not be carried over and must start fresh Old systems shifted to read-only Constant monitoring of system to ensure proper operations
System overview
Project risks Possible failure to align goals within organization IT Hardware issues before or during implementation Failure to provide adequate support Resistance of change Change not properly understood Incomplete training Data load issues Project not given adequate priority Maintenance issues Financial data issues
Questions
What conditions let to the rise of the ERP?(a) Global marketplace(b) Decentralized operations(c) Business flexibility(d) All of the above
What is the biggest risk associated with ERP?(e) Costs(f) Implementation(g) Strategy(h) None of the above
Final QuestionWhich of the following was not identified as a key problem(A) Cultural (B) Business(C) Procedural(D) Technical
Thank you