Case Study Analysis: Erp Implementation for Nibco

unit of mea indisputablement 6 Case instruct NIBCOs Big Bang An sucker Implementation Professor Richard Yellen Student Vo Ngo Lan Phuong Course overact 23 ID 217496 Professor Richard Yellen Student Vo Ngo Lan Phuong Course act 23 ID 217496 Hanoi, 11/2012 CASE STUDY Table of Contents I. Overview3 II. NIBCOs instruction execution of ERP solution3 III. Pros and Cons of BIG-BANG approach for ERP4 IV. ERP project implementation lessons and recommendations6 incline of Reference9 Case Study NIBCOs beat Application Implementation I. OverviewThe case shows the implementation of SAP ERP solution in NIBCO, a shaper of pipe and fittings, a mid-size manufacturer with ab give away 3,000 employees and revenue over 460 billion USD. The fraternity has utilize triumph mounty the full package of ERP solution, completelyow ford by SAP, the leading solution provider below the consultancy of Boston Consulting Group. NIBCO has gained the success by good circumspection and project police squad understanding, determination and experiences. The method of implementation of NIBCO for this ERP solution is running all in cardinal day, this brings the company to a kinda risky situation if something ill-treat happens.But the company has run the corpse successfully, with positive results. The implementation succeeds because of all the planning, personnel, dressment and the cooperation with application providers and consultants. NIBCO has over 3,000 employees and operates 10 plants, and 17 centers for dispersal over US. The databases and development arrangings ar non mingled in that respectfore rumpnot communicate and collaborate effectively, which causes prison term and efforts wasting. Also, over the years of development, the business organisation demonstratees modification, the information data sum up, the old governing body tail endnot meet the demands of cross functional operations.With the consultants from BCG, NIBCO has developed a plan for implem entation of bargon-assed-fangled ERP schema, using professional solution from a leading provider, SAP. The labour of NIBCO is to set up a new, large, integrated information system to replace the old system, connecting and integrating all the IS from factories, plants and dispersal centers all over the country. With the initial project duration estimated as over 3-5 years, the forethought and project squad has implemented the whole system in only 18 months, and successfully. II. NIBCOs implementation of ERP solutionUsing the consultancy services from BCG, the information system of NIBCO was very weak and poor. The system do not contain the provision of information for manager timely, did not support process of conclusion making, especially for functional departments as accounting, purchasing, selling, merchandise and customer supports. Due to the lack of realistic time data share the management and manufacturing meets difficulties to improve quality and efficiencies. Ove r the years of operation, factories and departments have implemented their own staffs or application such as order entry, manufacturing, dispersal and accounting.Because of the non-systematic application and implementation, in separate factory and department, each user whitethorn have their own software, different version, and separate database. Therefore it is difficult to integrate and cooperate among factories and distri plainlyion centers. To implement the new system, NIBCO has utilise professional consultancy services, buy leading software application from head vendor, and assigned top managers to manage project team, system development, and IS staff for planning, and integrating, designing, installing the new system.Although the BCG determined that there is a bespeak for a change in information system of NIBCO, the current system is poor and needed cut loose to promote the company and become to a greater extent(prenominal) global. The BCGs suggestion for three to phoe be bird years implementation should be too long, somehow, this washbowl cause more cost and efforts for NIBCO than actual need (Brown, 2012, p. 491). III. Pros and Cons of BIG-BANG approach for ERP NIBCO used the approach called BIG-BANG for ERP implementation, or cutover accepting to put the whole information system to run in the alike(p) day, at all the factories and distribution centers, especially for common and key modules.All the business units, most of employees pass on be affected by the new systems at the equivalent time. In fact, the other approach can be doing a pilot implementation at a factory or distribution centers, or only implement for only a few commonplace units. But this way can cost more time, efforts and cannot test the capacitance of the whole system. Also, with the investment in consultancy and purchasing the leading solutions from top ERP vendors, the NIBCO aim to get the new system run for all the business unit, and the real time running can excessi vely test the performance of the new system, in any case save cost and time for implementation.Running all at the equivalent time can also serve the testing of integration and cooperation among factories and distribution centers. The big-bang or cut over approach requires the good skilled personnel, and also training for the new systems, working processes and running, maintenance the new system. The productivity was inform a reduction in the first month after the new system running, but improves gradually in the later months. The accounting reports can be done in two or three day, quite than two to three weeks when using the old systems.Also, with the new system, sharing and quislingism helps reduce inventory, as oftentimes as 25%, and also increase the fulfillment ratio from 80% to 95%, service quality has change to 98%. Source http//www. nibco. com/ The BCG consultants noticed that the bequest environment and databases are out of control, which cause IS and IT staff too bu sy with fixing the issues more than counseling on developing supporting system for functional activities.The company used professional consultancy services from BCG but does not follow the suggestion from BGC, the cutover or big-bang approach was implemented because the management leaders do not support multi years plan also the fund for the project was 17 million USD, and exit take one fourth of the companys members to contract in implementation for the project. The shorter time the project takes, the better and more effective it pull up stakes be. IV. ERP project implementation lessons and recommendations 4. 1. Human resource for ERP projectProject was leaded by the CEO, as the project Champion, Rex Martin, who acted as the project leader and project champion. The top manager plays the key role to the ERP project, because this type of project will relate and affect all people and departments and units of company. With CEO in charge, the project will be supported by all the Vi ce Presidents in decision making and raising the resources for the project. The CEO set up the Executive leaders Team to act as the screening and monitoring committee, this team plays a key role in managing the project because it help to get down sure that all decisions are made at the highest level.The CIO, and also the Vice President, Scott Beutler was amenable for the ERP package, it means that the VP of IT and IS will be accountable for the functionalities of the software application, during process of project. The learning system managers, Gary Wilson, together with all the IS staff (about 30 people), will be involved in project, support the operations and implementation, development, maintenance. The CIO, IS leaders and IT staff will the support of top leaders will play key roles in assessment of ERP packages, testing, demonstration and operating the systems.The key modules of ERP package for NIBCO, SAP R/3, includes finance, supply chain, material, warehouse management, p roduction planning and management, sales and distribution. Also, the HR module was purchased but will be implemented later. The leaders have compete key roles in running the project, for example, Beutler manage the business process Wilson for engineering science and software packages, and Davis for managing project activities. Because of the scale of project, and it potential effects, one fourth of the company directors have been listed to the project management board.This shows the commitment of the managers and also provide enough human resource for project to make sure that it can cut time from 3-5 years to 18 months. The participant of leaders and managers will make the project decisions faster and it may be the key causality for shortening the duration of project. 4. 2. Working with solution vendor ERP project requires some(prenominal) software, hardware, networking partners to involve in implementation. NIBCO has selected IBM as third party provider for the systems nucle otide, SAP as the software solution provider.For the experts and engineer support, NIBCO and partners appoint six consultants for functional and business processes, who work regularly with the project team. Also, the maximum personnel can be raised to as many as 50 consultants at high time. The other personnel are also provided for training, reporting, programming, technical assistance, friendship management All the supports are officially verbalize in the contract with solution providers and partners. In fact, Wilson has an IS department and personnel way out up to 30, also he had mainframe application, HP and IBM platforms.The NIBCO has four legacy systems for order entry, manufacturing, distribution and accounting, but the problem is they are bought separately, with separate databases, which make integration difficult or very hard to implement. NIBCO has studyed and evaluated seven ERP packages in depth and in details. With the experts and business from functional departmen ts involving in assessment process by testing the modules, from several vendors. They are also sent to hollo the previous or typical customers to get the feedbacks from real users.The key link was the finance and supply chain management modules, using the shared database, and should be able to connecting and integrating all the modules together. 4. 3. Project management team The cathode-ray oscilloscope of the project is decided for all the factories and distribution centers, the operation was stared on the same day for ten plants and all distribution center. This decision for scope was quite risky but saving time and cost for NIBCO. The project team was released sooner than planned, the productivity was down a little bit but improve gradually, the project cost was a little under budget.All these factors are because of good experience and collaboration in project management. The key to success may be the Tiger triad, which was led by Wilson and Beutler, who was working full time with ERP project. The Martin was added by CEO appointment to joint Beutler and Wilson as a third co-lead project. David with experience in total quality management could help project focus on change management and maintaining quality. 4. 4. Training in spite of appearance specialist For ERP project, training and technology transfer is key to success.Core companionship and skills need to be transferred to IS department and all the functional departments for operation and maintenance. Source http//www. sap. com/solutions/bp/enterprise-resource-planning/solutions-overview. epx cardinal director leaders and two business system analysis were selected for survey roles, working with other leaders from sales and distributions. One fourth or seven out of twenty eight directors of NIBCO have been selected for project as full time. These people must have good business knowledge to see the potential issues and settle conflicts. 4. 5. Project team assignmentThe project managers are assigne d for specialized teams, including sales and distribution, financial, material management, and production management. Each team work together with experts from solution vendor. Business member will consider process, business functions, power users, business process analysis. IS and IT engineers will be responsible for technical sides, including infrastructure, programming, testing, installation and running. Each team has their supporting IBM consultants, with their technical knowledge to that they could make joint decisions, and also transfer the knowledge to NIBCO core team at the same time.Consultants from solution vendor, SAP, also work together with the team. The net project cost was 17 million USD, and one third for infrastructure cost, including the solution software. One anther third for education, team work and the last one third for consulting (Brown, 2012, p. 501). 4. 6. Experience in change management The cutover approach or big-bang implementation of ERP package as NIBC O used requires a good change management in all business functions and department. Because business processes are changed, much or little depends on the nature of business, therefore all the link staff will be affected.Also, the application in wide range, all ten first factories and distribution centers will be affected same day, same time. The key to success of NIBCO implementation can be the studious planning and actions. The analysis and design, communication and management effectively, as well as the good coordination with consultants and vendors experts. The support and direction from top management to departments heads involving the implementation of ERP can also contribute to the success. Big bang implementation requires change management that was not key strength of IBM.Training was used widely to increase skills and knowledge of users, with 450 different business activities in 15 locations. Open communication by provision of information to project teams, over 1,200 hours of training, over four months in front going online or Go Live. The grace period was used for more scenario training, with more focus on business processes. After intensive, effective and just training, the company could be ready to operate R/3 on its own without solution or partners expert working on site. List of Reference 1. Brown, 2012, Information Technology Management 7th Edition, Prentice planetary house