ERP at Vandelay Industries

Why ERP at Vandelay?: Top Mgmt. End the existing fragmentation of its system

Elimination of duplication Allow process standardisation Widespread business practice changes

‘Best way’ (80-20 distribution in the beginning): ‘pouring liquid concrete’

‘one best way’ ‘Gaining visibility’ over data from anywhere Facilitate and speedup decision-making at

higher levels

Technology Enabled Change SAP determines business processes

“you must be willing to do things the way the ERP application requires” (Laughlin, 1999)

Package of strategic change What is the overall objective of ERP

implementation? Systemic change Structural change Cultural change

Context of Change High degree of independence

Profit centre Divisional structure

Stimulating work environment Tinkering is encouraged

Tight market conditions downsizing

Quick response through integration Cutting down information processing and

information transfer time

Why ERP at Vandelay?: Middle Mgmt.

Getting rid of the old mainframe Will help the tinkerers overcome

some of the current roadblocks ‘start experimenting with it’

How do you reconcile the expectations of top mgmt. and middle mgmt.?

What about the lower levels?

Cost-Benefit Analysis 18 months 50 people

Part time involvement of many $20 million cost: very aggressive

budget Hardware Software Consulting fees Salaries and expenses of employees

Cost-Benefit Analysis (Contd.)

Training costs for 2/3rd people For R/3 skills For adapting to new business practices

Losing R/3 change agents Why do we underestimate costs? Can we monetise the benefits?

How?

Implementation Eight mfg. sites, four order entry

locations Simultaneously/ serially?

Extensive training Two-thirds of all Vandelay employees From one day to two weeks depending upon

R/3 usage What happens to picking up and adapting to

new business practices?

Implementing ERP Can you modify the system? How much of Vandelay’s specificities

will be taken care of? 80-95% through configuring of tables (SAP

estimate) Interfacing with legacy systems Interfacing with other ‘point solns.’ Custom software Modifying the R/3 source code

Software will determine business processes or vice-versa?

Change Agents: Internal Steering committee

Division VPs Project team

Operations level Project champion What qualities should look for the

change agents? Technical skills Political skills

Change Agents: External

Expertise of consultants Previous engagements: ‘what had

worked, what hadn’t’ 50% less than two years experience

of SAP Vandelay as a training ground!

Outcomes Who controls what changes would

be made? SAP? D&T? Top mgmt.? Middle mgmt.?

Inevitability of change Response?

Approaches to Standardisation

Processes that create database entries Part numbers across plants

External interface Customers, suppliers, etc.

Consistency of internal interfaces Between plants

Standardise best practices

Centralisation vs. Autonomy

Involvement of people at the ground level Second guess/ alter? Tinkering?

“Input by many, design by few” What happens to the continuous

improvement?

Popularity of ERP

Packaged as part of a broader business strategy

Why is it that audit and tax firms have moved into ERP implementation?

If everybody is doing it, to what extent do you get an advantage? Competitive advantage or leveller?

Issues

What happens when uncertainties increase?

What happens to orgn.’s learning capabilities?

What happens to ‘tacit knowledge’? If ERP is an episode what happens

to continuity?

Business Process

Technical Political Cultural

Issues (contd.)

Credibility of change agents? In-group vs. out-group

Where does larger orgn. come in the picture? Client-consultant alliance

Information is power How people actually use information?

Reengineering of Pacific Bell’s Centrex Provisioning Process Design may be radical but

implementation incremental Reengineering assumes clean slate

“Reengineering ignores what is and concentrates what should be.” (Hammer & Champy)

Union (70% employees) Time it would take regions to understand

and accept Time it would take to select and train for

new roles Lead time for IT applications

Reengineering of Pacific Bell (Contd.)

Focusses on end-to-end process Implementation focusses on the

perceived most broken pieces Top-down

Implemnt. must be owned up & bottom-up

Time commitment of the senior executives in implementation

Why ERP Today? Institutional theory

Orgns. as myths and ceremonies Mimetic processes ‘badge of progressiveness’: a symbolic

resource Cycles of managerial fads

BPR: too close to the type of stop-watch management

Economic recession Commercial pressures on the consultant

Whittington on Strategy

“Strategy is a way in which managers try and simplify and order a world which is too complex and chaotic for them to comprehend. The regular procedures and precise quantifications of strategic planning are comforting rituals, management security blankets in a hostile world.”