Enterprise information systems project implementation: A case study of ERP in Rolls-Royce

1. 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 Moir Bus550 June 3, 2013

2. The rise of Enterprise Resource Planning systems • The global economy requires internationalization of operations • Requires flexibility • Decentralized operations • Managing globally

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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?

9. 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

10. Business Process Model

11. 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)

12. Release Strategy

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. System overview

23. 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

24. Questions What conditions let to the rise of the ERP? • Global marketplace • Decentralized operations • Business flexibility • All of the above What is the biggest risk associated with ERP? • Costs • Implementation • Strategy • None of the above

25. Final Question Which of the following was not identified as a key problem • Cultural • Business • Procedural • Technical

26. Thank you