1. Korea Telecom 2007Olson: ERP5 ERP Training

2. Korea Telecom 2007Olson: ERP5 Organizational Benefits Cost reduction Cycle time reduction Productivity improvement Quality improvement Customer services improvement

3. Korea Telecom 2007Olson: ERP5 Managerial Improvement Improved resource management Better decision making –Hard to prove Better planning Performance improvement

4. Korea Telecom 2007Olson: ERP5 Strategic Improvement Support business growth Support business alliances –If they have the same system Build business innovations –? System can be constraining Build cost leadership Generate product differentiation –?? Over time, only if you customize Build external linkages –? If they have the same system

5. Korea Telecom 2007Olson: ERP5 IT Infrastructure Improvement Build business flexibility –??? ERP inherently a rigid system IT cost reduction –The main reason CEOs adopt ERP Increased IT capability

6. Korea Telecom 2007Olson: ERP5 Organizational Support organizational change –FORCE organizational change!! Facilitate business learning –BPR does a good job of this Empower employees –Within the system!! Build common vision –FORCES common vision

7. Korea Telecom 2007Olson: ERP5 Organizational Change from ERP 1.Productivity decline Jobs redefined, new procedures established, ERP fine tuned, organization learns to process new information streams 2.Productivity gain Develop new skills, structural changes, process integration, add bolt-ons 3.Payoff –Transform organizational operations to efficient level

8. Korea Telecom 2007Olson: ERP5 Change Management ERP often viewed as threat to job –May well change how job is done New skills, new requirements –May lead to layoff Difficult to make transition –Some firms are secretive Attempt to avoid sabotage –Some firms are open Seems best

9. Korea Telecom 2007Olson: ERP5 Recent Cases Pratt & Whitney Canada –Tchokogue et al., International Journal of Production Economics, 2005 –1996-1999 Marathon Oil –Stapleton & Rezak, Journal of organizational Excellence, Autumn 2004 –1999-2002 Castle Cement –Lloyd, ITTraining, April 2004 –2002-2003

10. Korea Telecom 2007Olson: ERP5 Pratt & Whitney Canada June 1996 began process –Canadian manufacturer of large engines 1993 installed SAP R/2 Also had 35 legacy systems –Wanted greater transparency to customers worldwide, greater agility Lower customer response time, reduce WIP, increase inventory turnover, identify inventory & operating costs –Selected SAP R/3

11. Korea Telecom 2007Olson: ERP5 P&WC System SAP –Financial accounting, Controlling, Sales & distribution, Materials management, Production planning, Quality management, Business information warehouse Hardware: Hewlett-Packard Operating System: HP/UX Database: Oracle 5 sites

12. Korea Telecom 2007Olson: ERP5 P&WC Implementation Five sites Minimal business change Project June 1996 to January 1999 1.Scoping & planning 7 months 2.Reengineering (very little) 3.Process redesign (600 activities) 7 months 4.Configuration (SAP options) 10 months 5.Testing & delivery Aug-Dec 1998 Big-bang –Knew it was risky, prepared carefully

13. Korea Telecom 2007Olson: ERP5 P&WC Project Team P&WC: 7 groups (345 employees across company) –Represented main processes of the company –168 IT analysts & change managers –STRONG DESIRE TO ENSURE EMPLOYEES REPRESENTED

14. Korea Telecom 2007Olson: ERP5 P&WC Knowledge Transfer 110 employees from the 6 most affected departments trained to be internal trainers 1998 P&WC became a gigantic classroom –Massive involvement of internal resources –Used external consultants as well –150 manuals adapted to diverse requirements –3,000 employees involved –Technical: basic navigation & task training –Business-oriented: processes & tasks

15. Korea Telecom 2007Olson: ERP5 P&WC ERP Benefits TANGIBLE –About $1 million in reduced costs in 2000 –Productivity 11% greater than planned –Receivables days outstanding reduced 6% –ROI in 30-40% range INTANGIBLE –Increased inventory cost visibility –mySAP.com provided e-commerce capability –More flexible reporting system

16. Korea Telecom 2007Olson: ERP5 P&WC Lessons Learned Mounting environmental uncertainty & turbulence increased pressure for change P&WC executives very positive about ERP Openness to employee involvement helped –Studied prior successful implementations (systems failure approach)

17. Korea Telecom 2007Olson: ERP5 Marathon Oil Houston, TX Over 28 thousand employees worldwide 1999 evaluated fit of ERP –Wanted better linkage to oil & gas technical systems Formed cross-functional team –Rigorous internal assessment of business processes –Developed business case –Studied failures of others (systems failure approach)

18. Korea Telecom 2007Olson: ERP5 Managing Change Process CIO of Nestle: No major software implementation is about the software – it’s about change management. SAP changes the way people work, challenging their principles, their beliefs, and the way they have done things for many, many years.

19. Korea Telecom 2007Olson: ERP5 Deconstructing Ownership Transfer Goal: transfer ownership from project team to end users KNOWLEDGE TRANSFER –Ensure employees know what to do RESPONSIBILITY TRANSFER –Ensure employees participate VISION TRANSFER –Help employees translate new tools & processes into superior business results

20. Korea Telecom 2007Olson: ERP5 Communications Model Gain commitment –Initially raise awareness –Shift to help move to deeper levels of understanding –Gain commitment only after understanding

21. Korea Telecom 2007Olson: ERP5 Communication Tools One-way channels –Newsletters, web site, road shows, town meetings, personal appearances Interactive –Workshops, issue-tracking meetings, conference calls, collaborative web sites Hands-on –Validation sessions with experts, sandbox to learn applications, workshops

22. Korea Telecom 2007Olson: ERP5 Marathon Experience Went live worldwide in 13 months –8 major modules –Claimed industry record Leveraged skills & commitment of employees as key resource THIS COMES FROM A COMPANY USER, & TRAINING CONSULTANT –Don’t know how much is true, but sounds great

23. Korea Telecom 2007Olson: ERP5 MARATHON Lessons Software simply the tool Strong project management critical Involve people Staff adequately Need CEO support Change management integral discipline Treat scope creep like a virus Minimize customization Reward success Transfer ownership

24. Korea Telecom 2007Olson: ERP5 Castle Cement UK company, 1200 employees Needed to replace legacy systems SAP imposed by owner (German cement giant)

25. Korea Telecom 2007Olson: ERP5 Castle ERP Team Small team pulled from permanent jobs 1: Customize system to Castle’s needs –Lots of business process redesign –During massive upgrade to SAP 4.6C Initially implemented at 2 sites

26. Korea Telecom 2007Olson: ERP5 Castle Training Originally planned training in-house –Soon apparent beyond their capabilities –Hired outside trainer Initially looked at key end-user training –Selecting who to train saw wide disparity in computer literacy –Brought people up to speed at a local college ECDL qualification –Then SAP training Aug 2002 (105 users) SAP basics Navigation Job specific

27. Korea Telecom 2007Olson: ERP5 Castle Results Initial phase on-line November 2002 June to December 2003 150 more users trained (cumulative total 398) –Project proceeding well –Simplicity of approach credited Next stage: train all 1,200 staff –Expand the way SAP is used

28. Korea Telecom 2007Olson: ERP5 Summary Training crucial to ERP success –Consistent tendency to underbudget –But important in getting system used Need to convince users –If you are laying them off, that is hard Maybe even unethical Need to reconcile this matter