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Presentation to Business Management Association October 12 th 2007

Presentation to Business Management Association October 12 th 2007. Agenda. Introduction – Doug Bennett. Masco Builder Cabinet Group – Managing Director of bt 2 Joined the BCG in May of 2004 as Director of Finance, Quality Cabinets

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Presentation to Business Management Association October 12 th 2007

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  1. Presentation to Business Management AssociationOctober 12th 2007

  2. Agenda

  3. Introduction – Doug Bennett • Masco Builder Cabinet Group – Managing Director of bt2 • Joined the BCG in May of 2004 as Director of Finance, Quality Cabinets • Heavily involved in integration activities and responsible for Accounting functions for BCG • Joined the Business Transformation Team in February 2007 • Elbit Systems of America (EFW) - VP of Finance and Contracts • Developed Finance organization through time of dramatic growth • Led forensic effort to uncover years of significant financial misstatement • Engaged in implementation of BaaN ERP • Slim-Fast - Master Planner / Materials Manager • Greenfield manufacturing environment • Led project to redeploy business systems (BPCS) • Led team to design standardized product roll-out strategy / project plans • The Dannon Company – Site Controller • Major turn-around project • Key drivers of success were Pay for Performance and training and development (funded through state grants) • Responsible for site IS organization and supported the implementation of Oracle • TCBY / Americana Foods – Cost and Materials Accounting Supervisor • Developed within the company during a major growth cycle followed by sharp decline – increased focus on contract manufacturing • Financial support for retail product line introduction • Education • MBA – LeTourneau University • Bachelors of Science in Management – LeTourneau University

  4. Agenda

  5. Change Management – “Engineered for Success” Critical Success Factors

  6. Vision BCG in 1 of 2 New Homes in the USA “Combined” vs. “Consolidated” High Complexity Simplification of processes BCG as One Company Manufacturing Inflexibility Any brand in any plant Manual Control Environment Automated Controls Lack of Attribute Model Attribute focused model Limited Acquisition Capability Ability to grow organic/ acquisition BCG Transformation Decision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Barriers to Achieving the BCG Vision The BCG cannot move past these hard stops without a Business Transformation

  7. Business Divisions 4 Locations 29 Countries 1 Site Operations 42 Functional Process Groups Information Technology Function Areas 13 Business Processes 146 Process Instances 611 BCG Users 1,700 Supported Instances 826 Unique Apps 100+ External Users 1,300 Portal (Est.) 2,500 BCG Transformation: Current View The business and IS model currently at BCG operates as two unique companies with two distinct brands. • Multiple operating models • Corporate - Adrian and Duncanville • Component – Merillat and Quality • Assembly – Merillat and Quality • Branch – Merillat, Quality, Both • Multiple Application Instances • 100+ Applications • 800+ supported instances of applications • Process instances are localized versions of processes

  8. Business Systems Architecture – As-Is MS Access JD Edwards Friedman Excel Friedman Q20E M2OE JD Edwards MS Access MS Excel Data Warehouse EZ- CAB txnotes Pre Order Management EZPrint Masco MBA RightFax Intelli-Quote AOC Friedman Istatus Friedman-Parrish Friedman JD Edwards Pro Engineer Macro Express Inventor Excel Excel UNIX Shipping Friedman Concur EPM APC – Flex Automation JD Edwards Built To Track Time & Attendance MS Access Masco-SRM Excel BTT Minitab Data Warehouse Friedman MS Access Bar Code Scanning Data Pak Data Warehouse MRP Spreadsheet Server MBIZ CAR Works Active Pay Mini MRP XES Excel Friedman At Road Williams Excel Quick Book Rform SAM Track-IT JD Edwards Friedman AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy FAS Global CAR Dataware House MS Access Spreadsheet Server Oracle Applications/Tech Other Office Apps Custom Developed App Business Systems Architecture – To-Be “ We need a foundation on which we can grow our business ” “ Our business model has evolved but systems have not caught up ” Market to Prospect Quote to Cash 20 / 20 Metreo PlanIT Fusion MapInfo MBIZ DocLink Design to Release Demand to Ship Procure to Pay AutoCAD Auto EDMS Yield Optimization Forecast to Plan Micro Main/MP2 Transportation / Logistics Schedule to Install Rfile Finance / Human Resources PeopleSoft Hyperion Legacy or Package High Cost – High Risk! High Value – Low Risk!

  9. BCG Business Process Flow Operational process areas included within scope for our transformation Design to Release Market to Prospect Quote to Cash Procure to Pay Finance & HR Transportation/ Logistics Schedule to Install Demand to Ship Forecast to Plan Information Services

  10. Design to Market to Quote to Procure to Forecast Release Prospect Cash Pay To Plan Key Business Process Areas Demand Schedule Financials Transportation to Ship /Logistics to Install /HR BCG Transformation: Future View The future enables BCG to operate a “One Model” concept with common business and Information System models. External External Future Future BCG BCG Focus Focus Synergies Synergies New New Merillat Merillat Quality Quality Businesses Businesses New New Acquisitions Acquisitions Design to Design to Market to Market to Quote to Quote to Procure to Procure to Forecast Forecast CABINET & CABINET & Release Release Prospect Prospect Cash Cash Pay Pay To Plan To Plan Customers Customers RELATED RELATED PRODUCTS PRODUCTS Key Business Process Areas Key Business Process Areas PLATFORM PLATFORM Demand Demand Schedule Schedule Financials Financials Common Common Transportation Transport. Suppliers Suppliers to Ship to Ship /Logistics /Logistics to Install to Install /HR /HR Process Process Vision Vision Portal Portal Common Application Platform Common Application Platform Carriers Suppliers (Oracle + Few Key Applications) (Oracle + Few Key Applications) Masco Masco Corporate Corporate Other Other IS Vision IS Vision One Technology Platform One Technology Platform External External (High Availability) (High Availability) Users Users • Common Operating Model • Easier integration of new businesses • Support growth • Ability to support the current manufacturing models for Merillat and Quality brands • Common System Platform • One application platform • Key supporting applications • “High Availability” infrastructure

  11. Building the Business Case 11 Executive Interviews 150 Personnel 10 Workshops • Key Strategies • Quick To Market • Eye Of The Customer • Common Platform • Vertical Integration • Operational Efficiencies Opportunity Validation Meetings • 100+ Opportunities • Scope By Process Area touching 100% of the business • “Top 18” Identified • Nine Key Process Areas • Functionality verification BUSINESS CASE • “Fact Finding” • Brainstorm Sessions • Additional Benefit areas not fully quantified • XXX Benefits Analysis Cost Validation Meetings Identify Detailed Costs Costs Analysis Define Detailed Cost Categories • Program Structure • Deployment Approach • Future Architecture • Cost Validation • Program Structure • Vendor Meetings for Hardware/ Software • Training Plans • Detailed Current IS Analysis • Capital Vs. Expense • Resources • Software/Hardware • Hosting vs. in-house • Training/Other Costs A rigorous process was used to identify benefit opportunities and gain executive commitment Payback: 6 Years

  12. SCOPE FOR BUSINESS CASE ProcessTransformation Design to Release Market to Prospect Quote to Cash Procure to Pay Forecast to Plan Demand to Ship Schedule to Install Transportation/Logistics Finance/HR IS and Business Application Transformation Infrastructure Application Architecture Organizational Transformation SCOPE DRIVERS (Planning Phase) Process Focus on high benefit areas Focus on compliance and controls Information Systems Elimination of the AS/400 Platform “Vanilla” implementation of Oracle software, where possible “High Availability” Platform Scope of the Transformation An initial “unconstrained” view was taken for the transformation scope, to capture all the costs and benefits. Manage Scope to Maximize Benefits

  13. SG&A Labor Leverage “ We need to reach $2B revenue with the same people we have today ” Process Champion: Doug Bennett Executive Champion: Karen Strauss

  14. Sales & Operations Planning “ We have “data everywhere” but no good forecasting information, just ‘Excel on steroids’ “ Process Champion: Bob Winterhalter Executive Champion: Bob Terhune

  15. Strategic Sourcing Process Champion: Doug Bennett Executive Champion: Bob Terhune

  16. Sales Force Productivity Hardware & Software Decommissioning Scan From Pick Vendor Managed and Consigned Inventory Quote to Cash Efficiency & Effectiveness Transportation Management Material Management Practices Builder Price Effectivity Supplier Quality Days Sales Outstanding Accounts Payable Consolidation WIFI OE Efficiency & Effectiveness Deduction Management SOX Compliance Additional Quantified Benefits

  17. Benefits Not Quantified “ If we acquire a new business today we have to decide ‘what bad system do we put them on?’ ”

  18. Agenda

  19. Software Selection • BCG established a cross-functional team to evaluate JD Edwards and Frontier (Friedman) in 2006 • Team performed a thorough analysis and determined that neither solution would measure up to our business requirements • Field was opened up to Oracle • Oracle owns JD Edwards • Oracle and SAP are the primary ERP solutions worldwide • Major project was underway at another Masco division • Oracle was selected as the software platform to use as a critical component in the business transformation

  20. Agenda

  21. System Integrator • Selecting a partner to implement solutions is one of the most important decisions a project team will make • The integration partner brings key resources and experience to the project team and must: • provide knowledgeable consultants within the scope of the project from both a functional and technical perspective • work effectively within the culture of the business • bring an effective methodology to manage the project and to address change management components • transfer knowledge to the internal business resources so that they can become self-sufficient • The consulting costs are typically the highest single cost element for a transformation project

  22. System Integrator Evaluation Criteria Provided proposal External reference Internal criteria

  23. System Integrator Selection • Evaluated over one thousand pages of RFP responses from five vendors • Responded to 137 formal inquiries from competitors • Spent six hours with each bidder • 2 hours initial Q&A • 4 hour presentation from each • Down-selected two bidders based on consensus decision • Vendor A - cost and team coordination • Vendor B - approach and quality of resources presented • After several additional rounds of discussions and on-site visits Deloitte was selected

  24. Agenda

  25. Business Transformation TeamOfficial Kick-off 7/16 at MIS

  26. Implementation Approach: Guiding Principles • Global Design • End-To-End Process Driven • Cross Functional Internal Resource Teams • Best Practice – Internal or External • Design Outcomes • Performance measurement – What are the common performance metrics? • Policy and procedures – What are the rules of doing business? • Roles and responsibilities – Who will be responsible for each action? • Data design – What global standards will be used to define our data? • Knowledge Transfer • Partner BCG and External Experts from the onset • Roll Off external as soon as possible • Rollout • Preliminary roll out plans compared – each yielded a duration of 36-39 months • Will be accomplished using primarily BCG resources

  27. Business Transformation Timeline We are here Q3 2007 Q4 2007 Q1 2008 – Q4 2009 Finance Go Live, April 2008 – Operations Pilot, May 2008

  28. Steering Committee Role • Lead senior management and ensure commitment to the project • Set strategic priorities, guidelines and scope for the project • Provide overall leadership and responsibility for the project • Make major decisions, including changes in project direction and priorities • Review and approve project status at regular intervals or at key milestones • Demonstrate visible commitment to the transformation process • Ensure linkages with other business/systems initiatives. Approve key deliverables • Allocate project resources and budgets for project success • Focus on business strategy • Direct policy and procedures • Create and support the environment for change • Represent final authority for business decisions • Act as first level of escalation for issue resolution • Evaluate working team recommendations • Validate high-level requirements • Liaison back to the business as required

  29. PMO - Integrated Project Management Processes The PMO has developed a suite of integrated project management processes:

  30. PMO – Sample Process and Procedures

  31. Change Management Elements Org Readiness • Change Readiness • Leadership Alignment • Knowledge Transfer • Change Impact • Role Mapping • Workforce Readiness Org Design • Org Hierarchy • Position/Job Design • Skills/Competencies • Policies & Procedures Training Deployment • Pre-requisite training • Course material development and online support • Training delivery • New processes and policies • Implement pre-deployment process changes • Deployment activities HR • Retention and severance planning • Employee assessment and selection • Employee redeployment • Job descriptions • Workforce Transition Communications • Develop and distribute end user communications (website, All Hands on Deck, etc.) • Evaluate communication effectiveness

  32. PMO - Implementation Strategy • Our deployment strategy is based on the following key aspects: • Finance & Indirect Procurement in April, 2008 • Implement by Brands • First Plant deployment is a component plant in May, 2008 (Target Quality locations first) • First Assembly/Branch deployment in August, 2008 • Eight weeks required between major deployments (Six weeks of onsite plant activities plus two weeks to support) • Use parallel teams to speed deployments and ensure knowledge transfer by pulling 1-2 resources forward from two plants to participate • Will require waivers for June and September deployments (last month of the quarter and year end) Finance Deployment First Plant Deployment

  33. PMO - Implementation Key Decision Factors The following factors were prioritized and reviewed to determine the optimal implementation strategy: NOTE: Other Consideration taken into consideration during the analysis: Architecture Project, Timing based on SOX Criteria, Extensions and Complexity, and Configuration and Data Requirements

  34. PMO - Implementation Sequence ** Bolded location denotes previous deployment

  35. 1 2 3 BT2 Executive Status 10-09-2007 Release Status “Green” Phase Vision/Plan Design Build Deliver Operate Release Status “Green” Vision/Plan Phase Design Build Deliver Operate - -

  36. BT2 Executive Status – 10-09-2007

  37. Bt2 Internal Scorecard Scale of 1-10, with 10 being the best

  38. Agenda

  39. Comments and Questions

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