Getting IT right. Part 2

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  • GETTINGRIGHT (PART TWO)

    In his concluding article, John Sellers, senior managing consultant withNolan, Norton & Co., explains how his fictitious company, Process

    Manufacturing, went down the IT path with a description of how PMLapproached the planning and implementation of the new DRP/MRP system.

    In the first article (June issue), we learned howthe 40M turnover Process ManufacturingLimited (PML) organisation linked InformationTechnology (IT) investments to its businessvision and then established an IT strategy. Theagreed IT strategy was to implement newManufacturing Resource Planning (MRP) andDistribution Resource Planning (DRP) packages onnew hardware to support the company's twomanufacturing operations and ten sales distributionpoints. The process by which the new MRP and DRPsystems were selected and implemented is nowdescribed.

    The process involved four steps: the establishment of a core PML project team to

    run this part of the project and the preparation of adetailed statement of requirements

    preparation of a request to tender document selecting a short list of six suppliers evaluating supplier responses and selecting the

    preferred supplier

    The Steering Committee was in fact the PMLBoard, the Project Director was the ManagingDirector and the project coordinator was the FinanceDirector. The commercial managers from thesouthern and northern manufacturing plants wereresponsible for coordinating activities both withintheir plants and between all the PML operationalunits.

    The statement of requirements is a user-orientateddescription of the required IT systems. It concen-trates on what is required rather than how it is to bedone. It should be prepared without any preconceivedbias towards any particular hardware or softwaresolution. It is intended to represent what PML ideallyneeds - possible solutions will be compared laterwith this target.

    In the case of PML, the same senior managers(the project sponsors) who were involved in theearlier vision and business modelling workshops andwho had contributed to establishing the benefits offuture investment in new IT systems were involved in

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    Figure 1: The implementation project structure provides the framework

    preparing a detailed statement of PML's systemsrequirements. In addition, their departmental staffmade significant contributions. The work took severalweeks to complete and, at the end of the exercise, acomprehensive statement of requirements for each ofthe main application areas in MRP/DRP systems wasprepared covering: inputs to and interfaces between each application processing rules reports/enquiry screens data to be maintained integration requirements processing timescales hardware and communication considerations data volumes performance criteria

    The use of manufacturing consultants from PeatMarwick McLintock helped each project sponsor inpreparing the statement of requirements and indiscussing alternative procedures, particularly theopportunities arising from using IT to reorganiseexisting functions. The final document was formallypresented to the senior managers and their staff ateach manufacturing location. This was important fortwo reasons: first, the new integrated systems wouldchallenge the existing functional organisation ofPML. Therefore the senior managers had to be awareof the new opportunities available to PML from suchpotential reorganisation. Second, because eachapplication was looked at separately, an overview ofhow all areas would fit together was necessary. Thedocument was also agreed by the PML Board.

    Awareness of the new organisational forms thatPML would need to adopt to get the best fromadvanced IT was beginning to dawn on the seniormanagers. This had been raised in the earlier ITstrategy work. Exposure to consultants familiar withsuch organisational changes was also assisting themanagers in thinking through the implications in theirown functional areas. (This change of organisationalfunctions that IT can enable is a fundamental issue andwill be addressed later in this article).

    The request to tender (RTT) document wasprepared using Peat Marwick McLintock's standardtender document suitably modified for PML'srequirements. Although this was relatively straightforward, it was important to involve the seniormanagers in this step by presenting the mainsections in the RTT and principles behind the tenderdocument to them. The short list of six suppliers was

    MANUFACTURING ENGINEER 39 JULY/AUGUST 1989

  • chosen from a long list of about 20 potentialsuppliers known to PML and the consultants. Againthere was strong user participation in this process.

    The RTT document was issued to the six potentialsuppliers. After discussions with each supplier aboutPML's requirements, the tenders were receivedseveral weeks later, evaluated, and a short list of twowas established by the project team. The nextactivities included visits to reference sites to see asmuch of the proposed systems in action by otherusers, further meetings with each supplier to clarifycertain issues, running some test data through thesuppliers' MRP/DRP systems, phone calls toreference sites and eventually a formal presentationto PML by each of the two suppliers. The formalpresentation was to the PML Board and the PMLsenior managers involved throughout the project -about 20 people in total. After this event a preferredsupplier was chosen.

    A letter of intent was then sent to the preferredsupplier as certain areas where bespoke programmingwas required needed to be defined in detail andhardware sizings needed to be more thoroughlyevaluated. A small payment was made to the preferredsupplier to undertake this work. This work, referred tousually as a 'Package Fit Study', involved a lot of hardwork, again involving the key senior managers of PML.For example real data from PML was put through thesystem over a four day off-site workshop.

    The outcome of this work was successful,contracts were signed, and implementation started.

    Strong user involvement in all the project steps togain user commitment and consensus had been themain feature of PML's approach to the project so far.This involvement now intensified for the key seniormanagers who are the chosen project sponsors forparticular application areas.

    In essence, these project sponsors were nowcharged with re-organising PML to use theDRP/MRP IT systems in an effective manner.Awareness of this important task had been growingwithin all of PML ever since the project started -fostered and encouraged by the external consultants,self education, visits to reference sites, discussionswith the chosen systems supplier and by puttingsome live PML data through the suppliers' packages.

    To undertake this work, and to provide PMLmanagement frameworks to control it, the implemen-tation project structure shown in Figure 1 was set up.

    The project structure is similar to the one describedfor the selection part of the project, but has beenexpanded to include a project manager and the ITmanager on the project team. The project manager was auser who was well respected throughout PML and whowas previously in charge of the largest PML regionalwarehouse/sales operation. He would be 100%dedicated to the project - the other key people on theproject team would spend 50% of their time on theproject. External consultants were also used tosupplement the project team to provide coordination andexpertise in encouraging and promoting the newprocedural opportunities made possible by the newgeneration of IT systems. While this was going on, thecomputer and the applications packages were installed.

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    Figure 2: Don't let the software hold you backthe time saved by working from a well-thought outbusiness plan can be significant

    PML had decided to approach implementation as atotal business driven concept rather than implemen-ting each software application area one at a time (seeFigure 2). The disadvantages of implementing oneapplication area at a time is that opportunities forchanging the way business is done are missed in thesheer pressure of implementation. And it is verydifficult to backtrack change, especially after thetrauma of implementing new systems. Otheradvantages for the total business driven conceptapproach versus the traditional software drivenapproach include:

    a shorter overall project cycle less project expense enhanced probability of total success business benefits delivered faster a business driven approach rather than an

    applications software driven approach problem areas are highlighted before full

    implementationIn order to simulate the new organisational

    environment, PML decided first to model and then toagree at all management levels what the changedorganisation was to be. Implementation of systemswas then going to move towards this goal. Thisapproach involved the following sequence steps: generic education on DRP/MRP concepts training in the use of the new software packages building up a small set of real PML data for each

    application area modelling, in a business design sense, the total

    PML operation with the new DRP/MRP packagedsystems

    establishing the new organisational forms requiredto derive full benefit from the new systems

    agreeing the organisational changes with thePML Board

    defining and documenting the new operationalprocedures

    agreeing a detailed implementation planEach project sponsor and his team went through

    the education and training programme and then built

    up their own comprehensive application area data.Then the project team modelled the whole PMLbusiness operation closely involving the projectsponsors. These people then together defined thenew organisational forms of PML and agreed thesewith the PML Board. The process involved indetermining how IT could assist in new organisatio-nal forms included: removing work activities simplifying work processes and integrating activities

    Such work directly challenged the existingorganisational forms and so it was essential to haveall Board members and the project sponsors involvedin the project from the start. The involvement of allPML Company staff in the above approach was alsoimportant and PML estimated afterwards that about80% of all its employees had some sort ofinvolvement in the project.

    In order to proceed quickly, PML set up specialfacilities to enable the teams of people to work on thesystems. They divided their existing training roominto two separate areas so that two project sponsorapplication teams could be trained and work oncomputer systems at the same time.

    The whole business driven planning activitiesdescribed above took about four months to complete,the detailed implementation planning about threemonths, although there was some overlap with theearlier business modelling stage. The actual detailedimplementation of the systems took about a year.Overall, the total project from the initial businessvision creation to the final review of the totalimplementation took about three years.

    And the final outcome? All the business benefitsdefined at the start of the project were realised. Thefinance director who was project co-ordinator said:'As a result of all this our profits to turnover ratio willdouble in 18 months. Overall, our use of IT hasfundamentally changed the company to one with amuch larger company outlook. We are now lookingfor substantial growth over the next few years.' iili

    MANUFACTURING ENGINEER 40 JULY/AUGUST 1989