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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