Learning From a Failed ERP Implementation

Learning From a Failed ERP Implementation

About the Presenter Bob Burchfield CIO Hearthside Food Solutions www.hearthsidefoods.com bburchfield@hearthsidefoods.com 630.967.3618

About Hearthside Foods Contract Manufacturer to the World s Greatest Food Companies Snack and Grain Based Foods Private Equity Based Acquisition Driven Today, 13 Plants in 6 States 5000+ Employees Five of Those in Grand Rapids

ERP Failures Too Common 2 Out of 3 Projects Overrun Cost or Time Over Half Fail to Deliver Expected Results Source: Krigsman, Michael, 2011 ERP survey: New IT failure research and statistics, March 2011

Why This Presentation? We Experienced ERP Failure We Made Common Mistakes We Learned from Them We ve Developed a Successful, Repeatable Process I Will Share 8 Keys to Our Success

What s Not at Fault?

OUR STORY

Our Story Begins Hearthside Started in April, 2009 Four Plant Carve Out from Local Company Six Months to Select an ERP System and Integrator Seven Months to Implement And

Selected Go Live Issues Technical Issues Duplicate Pallet ID s Ingredient Consumption Failures Pallet Labels Randomly Failed to Print Broken EDI Relationships Unable to Recognize Receipts at 3PL Overwhelmed 3PL EDI System Bad/Missing Data in Customer EDI

Selected Go Live Issues Process & Training Issues Users Not Equipped to Problem Solve Insufficient Support Resources Users Stopped Sending Customer Reports

Root Causes Failure to Formally Map Business Processes Inadequate Testing Inadequate Training Ineffective Expert Resources Insufficient Resources

The Rest of the Story Three Months to Reach Stability Post Mortem Conducted 5 Key Design Changes Reduce Customization/Complexity Change Management Emphasis Project Management Emphasis

The Rest of the Story Realignment Project Kick Off Highly Successful Go Live Successfully Repeated in 3 More Plants

KEY LEARNING #1 CHANGE MANAGEMENT MATTERS!

How Can Gains Be Realized Faster? How Can The Duration Be Reduced? How Can The Severity Be Reduced?

KEY LEARNING #2 MANAGE EMPLOYEE FEARS

The Three Questions Employees Want to Know Three Things Will I Still Have a Job? Will I Be Able to Use the New System? Will I Get Training?

Communication Strategies Emphasize What Won t Change Emphasize What Will Improve Develop Consistent, Positive Message with Location Management Communicate the Why

Communication Strategies Visit Existing Implementations with Select Employees Interview/Quote Users from Existing Locations Be Honest About Negative Changes Start General, Progress to Targeted

Sample Message The SAP Implementation will help us make better business decisions by putting much more useful information at our fingertips. This will make our organization more efficient and profitable and give us greater job security. We expect there to be some challenges and we are going to make sure people are supported through the transformation. This means taking advantage of existing Hearthside SAP users and training the right people on the right transaction, at the right time. 23 We need you to have a positive, confident, and enthusiastic attitude. We also need your support and commitment to help get others there as well.

KEY LEARNING #3 DEVELOP LOCATION SUPER USERS

Super User Strategy Dedicate a Group of Location Users to the Project 4-5% of Total Users Key Functional Roles Give Them Train-the-Trainer and Presentation Skills Training Use the Testing Process to Give Them Advanced Training Have Them Deliver the End User Training

Super User Strategy Use Them to Influence End Users Use Them for Go-Live Support Use Them for Front Line Support Use Them for Ongoing Training Program

KEY LEARNING #4 MAP BUSINESS PROCESSES

Mapping Processes Time Consuming Potentially Expensive To Develop To Maintain One of the Most Valuable Contributions to an ERP Project

Mapping Processes Two Primary Tools BPM: Business Process Model BPP: Business Process Procedure BPM Swim Lane Diagram Process Flow Combined with Ownership BPP Specific Instructions to Execute Process Screen Shots Specifics on Field Level Information

Example BPM

Example BPP

Mapping Processes Basis for Test Scripts Basis for Training Documents Basis for User Documentation Basis for Process Improvement Checkpoint for Business Agreement on Ownership Unearths Small Details

KEY LEARNING #5 TESTING STRATEGIES

Testing Strategies Use Business Process Models to Design Testing Design Scenarios to Account for Process Differences Perform End-to-End Testing Do Three Rounds of Testing Incorporate Negative Testing

Testing Strategies Incorporate Your Business Partners Formalize Test Scripts and Results Tracking Use Code/Config Freezes to Minimize Regression Testing Stress Test

KEY LEARNING #6 TRAINING STRATEGIES

Training Strategies Consider Adult Learning Methods As Is => To Be Tell, Show, Do Max Class Size of 8 2 Trainers Everyone Gets a PC Make It Modular One Module = One Process Taught in <30 Minutes Plug Modules Into Needed Business Functions

Training Strategies Delivered by Local Super Users Influence Answer Location-Specific Questions Skills Checks Employee Performs 5-10 of the Actions Being Taught Confirms Training Effectiveness Ingrains the Process Builds Confidence! Requires Prep and Data Creation Take Care with Positioning

Training Sizing Position Estimated Trainees Approach Length (Hrs) 4/6 Hour Slots Trainers Needed Forklift 58 Classroom 4 11 2 T&W Office 22 Classroom 12 12 Core + 2 CSR 4 S2S NA NA Core Crème Mixer 30 Classroom 2 5 4 Mixer/Scaler 133 Classroom 6 24 4 Machine Operator/Dumper 80 Classroom 2 12 4 Supervisor/Manager/Leads 61 Classroom 12 25 4 Skid Loader 70 Classroom 4 11 4 QA Hold/Release 8 Classroom 3 2 Core + 1 QA Office/Lab 4 Classroom 4 2 Core + 1 QA Master Data 1 S2S NA NA Core Planners 3 S2S NA NA Core Procurement 6 S2S NA NA Core Food Safety - Schedules Prod Orders 1 S2S NA NA Core Food Safety - Open/Produce/Close Orders 10 Classroom 2 2 Core Food Safety - SO Load/Bin2Bin 30 Classroom 2 5 4 Inventory Control 10 Classroom 12 6 Core + 1 Totals 531 117 Key Inputs to Number of Training Rooms and Trainers Required!

KEY LEARNING #7 EXPERT RESOURCES

Project Resources

Expert Resources Use a 3 rd Party To Review Project Design Configuration Go Live Readiness Get Your Own Project Manager Experienced with Your System Accountable to You, Not Integrator Use a Solution Architect Expert Knowledge of Multiple System Areas Technical Team Accountable to SA

Expert Resources Hearthside Avoids Offshore and Landed Consultants Not Familiar with Operations Unable to Provide Functional Leadership and Best Practices Language Barriers Requires Extreme Precision in Communication Exception: Clearly Definable Technical Tasks Organizational Change Consultant

KEY LEARNING #8 GO LIVE STRATEGIES

Go Live Strategies Stabilize the Business Master Data Freeze Production Schedule Freeze Halt Trials and New Product Intros Establish Hypercare Utilize Super Users Immediate In-Person Response Establish Supportable Startup Plan Ramp Up Operations Schedule Based on Lower Efficiency

Go Live Strategies Build a Technical Cutover Plan Incorporate into Testing 20 Build 0.58 days 55.65 hrs 7/23/2012 9:00 7/24/2012 10:50 21 Configuration 0.04 days 2 hrs 7/23/2012 9:00 7/23/2012 10:00 22 Transports 0.03 days 1.17 hrs 7/23/2012 9:00 7/23/2012 9:40 23 System Build Configuration 1 Transport Run 1 30 mins 1 hr 7/23/2012 9:00 7/23/2012 9:30 24 System Build Basis Transport Core Team Acquisition Role into PRD 23 10 mins 0.17 hrs 7/23/2012 9:30 7/23/2012 9:40 25 Manual Config 0.02 days 0.83 hrs 7/23/2012 9:30 7/23/2012 10:00 26 System Build Basis Assign Acquisistion Role to Core Team 23 10 mins 0.17 hrs 7/23/2012 9:30 7/23/2012 9:40 27 System Build Configuration 1 Configure IM - WA03 for 2040 (QM config) 23 5 mins 0.08 hrs 7/23/2012 9:30 7/23/2012 9:35 28 System Build Configuration 1 Activate ML 26 5 mins 0.08 hrs 7/23/2012 9:40 7/23/2012 9:45 29 System Build Configuration 1 Configure RF profiles for Core Team @ 2040 26 10 mins 0.17 hrs 7/23/2012 9:40 7/23/2012 9:50 30 System Build Configuration 1 Create Activity Types 26 20 mins 0.33 hrs 7/23/2012 9:40 7/23/2012 10:00 31 System Build CheckPoint Sign Off - Configuration Complete 28,29 0 days 0 hrs 7/23/2012 9:50 7/23/2012 9:50 32 Master Data 21 0.46 days 48.15 hrs 7/23/2012 10:00 7/24/2012 9:00 33 2040 Customer/Vendor Link 0.02 days 1 hr 7/23/2012 10:00 7/23/2012 10:30 34 System Build Master Data 1 Create Vendor Master record for 2040 20 mins 0.33 hrs 7/23/2012 10:00 7/23/2012 10:20 35 System Build Master Data 1 Create Customer Master record for 2040 20 mins 0.33 hrs 7/23/2012 10:00 7/23/2012 10:20 36 System Build Master Data 1 Link Customer to Vendor for 2040 34,35 10 mins 0.33 hrs 7/23/2012 10:20 7/23/2012 10:30 37 Load Warehouse Locations 0 days 0.65 hrs 7/23/2012 10:00 7/23/2012 10:07 38 System Build Master Data 1 S/T - 005 Bins 2 mins 0.1 hrs 7/23/2012 10:00 7/23/2012 10:02 39 System Build Master Data 1 S/T - 100 Bins 2 mins 0.1 hrs 7/23/2012 10:00 7/23/2012 10:02 40 System Build Master Data 1 S/T - PRD Bins - xxxfin 2 mins 0.1 hrs 7/23/2012 10:00 7/23/2012 10:02 41 System Build Master Data 1 Interim Bins (S/T - 9xx) - Copy from 1010 2 mins 0.1 hrs 7/23/2012 10:00 7/23/2012 10:02 42 System Build Master Data 1 Validate Warehouse Bins 38,39,40,41 5 mins 0.25 hrs 7/23/2012 10:02 7/23/2012 10:07

Go Live Strategies Establish a Business Cutover Plan Link Key Points into Tech Cutover Plan Activity Decsription Responsible Support Completion Date Completion Time Notify Key Customers of SAP Cutover Dates Brian M Sales Team Mon, Dec 03 EOD Complete End to End Testing Bob B Andrew / Robb Mon, Dec 10 EOD Publish End User Training Schedule Bob B Mike J / Brian A / Lauren VH Mon, Dec 17 EOD Complete Training Materials - End User Training Bob B Mike J / Brian A / Lauren VH Fri, Jan 04 EOD Friday, January 11, 2013 Validate Sufficient Raw/Pack/WIP Inventory for Locked Schedule Tim R/Jeff L Rob D/Jeff/Connie Fri, Jan 11 EOD Lock Production Schedule for 2 Week Prior and 1 Week After Jeff L. Fri, Jan 11 EOD Complete User Acceptance Testing Bob B Core Team/Plant Testing Team Fri, Jan 11 EOD Complete Pending Master Data Changes to Prism John A Lois S Fri, Jan 11 12 noon Lock Master Data Changes John A Lois S Fri, Jan 11 EOD Training Test Data Ready Bob B Mike J / Brian A / Lauren VH Fri, Jan 11 EOD Training Materials Copied/Ready - End User Training Bob B Mike J / Brian A / Lauren VH Fri, Jan 11 EOD Get PO's from Kraft to Ship All Possible Product to Findlay Jeff L. CSR's Fri, Jan 11 EOD Determined Detailed Startup Schedule Rob D Planners Fri, Jan 11 EOD January 16, 2013 - Start Go Live Go / No Go Decision Rich S. SLT Fri, Jan 11 EOD Execute Transports,Configuration, and Master Data Loads Bob B Core Team Mon, Jan 14 8:00 AM Begin 2 a Day Cutover Meetings Bob B / John A Mon, Jan 14 EOD Finance Review of Cost Estimates Sheryl J Wed, Jan 16 5:00 PM Execute and Confirm all GOLDEN Transactions Bob B Core Team Fri, Jan 18 7:00 PM

Questions