Executive summary
1.0 Overview
NIBCO is a
mid size pipe and fitting manufacturer having more than 3000 employees working
in the organization with total revenue of $460 million. NIBCO has implemented
SAP R/3 recently in organization with help of Boston Consulting group. NIBCO
has implemented ERP with one day implementation i.e. Big Bang which creates
quiet risky proposition for the organization in case anything happens wrong
while at the time of implementation.
The aim of
present report is to analyze various implementation elements for the ERP system
which has taken through Big Bang approach. Present report would analyze the
implementation strategy adopted by NIBCO, management of risk while implementing
ERP, carrying out Gap analysis, exploring change management strategy adopted.
Further present report would look into the overall effectiveness of the
implementation adopted by the company for their ERP implementation and lesson
which has been learnt through present ERP implementation. Lesson learnt section
would help the management consultants in case of future purchase for the ERP
software so that better measures can be adopted for the purchase of ERP
software.CIS 3002
2.0 Implementation strategy adopted
There are
several elements of ERP implementation process which needs to be discussed
while assessing the implementation strategy adopted by an organization for ERP
and the two important elements of implementation strategy includes ERP
implementation approach (vanilla or big bang) and team formation strategy used.
For implementation of ERP system cross functional team were selected and these
cross functional teams were responsible for entire ERP implementation process
starting for the need assessment to final go live phase. An executive
leadership team was formulated in order to develop change management in the
organization. A triad team was formed where in technology team was lead by
Wilson, business coordination was lead by Beutler and change management was
lead by Davis.
At the time
of adopting implementation strategy i.e. whether Big Bang and Vanilla several
case studies for the implementation of ERP system were referred along with
success. BCG recommended 3 to 5 years of phased implementation which was not
found suitable as per the top management analysis for the final implementation.
Further case studies used by the team formed for the ERP implementation found
that several companies which used go slow, phased approach for the
implementation were not among the successful organization for the
implementation of ERP system. Another reason which was pointing towards
adoption of Big Bang approach was the quick implementation demanded by the
business team in NIBCO. Further current implementation also included moving
from mainframe system to the client/server systems which would give due
importance to R/3 licenses required for the system. Executive leadership team
formed for the ERP implementation recommended usage of Big Bang approach
looking into the consulting cost and increase in information system cost
against the perceived benefits which would be obtained through current ERP
system.
After
formation of decision at ground level and middle management level entire
proposal for the purchase of R/3 system and Big Bang implementation was finally
presented to the Board of Directors for NIBCO from where proposal got signed
off along with the remarks that Big Bang implementation for ERP is high risk
and high reward scenario hence NIBCO need to put its best resource at work in
order to make system implementation successful. NIBCO selected two partners for
the consultation and these two were Cap Gemini and IBM. IBM was selected as
NIBCO was already a hardware shop for IBM hence supporting hardware was the
prime motive behind selection of IBM for the ERP implementation while major
objective behind selection of Cap Gemini was the strong change management
program which company has with them.
In order to
implement ERP system in the organization NIBCO used Big Bang approach which was
high risk and high reward strategy for the implementation of SAP. The issue
with Big Bang approach adopted by the organization was requirement of high
degree of change in the organizational technology and processes which has high
threat for the change fatigue to occur in the organization. Further with Big
Bang approach it was important that business initiatives in the organization
have new ideas for the implementation of ERP. Further implementation through
Big Bang approach would allow high consulting cost for the organization but
this consulting cost would sustain for over 3 to 5 years of time period.
Final
implementation for ERP system kicked off on 30th September and total
14 months time was taken in order to plan for ERP system implementation while
total ERP system implementation took 15 months of hard work from the
organization. First week of implementation was spent in order to build project
team while second week of the project implementation was spent by IBM in order
to discuss about changes which would be required for the implementation of ERP
system. Further introductory level training along with R/3 module training was
imparted through 2 to 5 days of compulsory courses.
3.0 Risk management
Risk
management is a critical aspect for the NIBCO ERP implementation and well taken
care by the management of NIBCO. Below are some of the points showing risk and
the mitigate strategy used by NIBCO in order to successfully execute ERP
implementation in the organization:
v High consulting cost: NIBCO is a mid-sized organization having revenue of $460 million while the
consulting cost was one of the most critical costs incurred by NIBCO in entire
ERP implementation plan. More than 50% of the budget was spent on consulting
cost to the two vendor hired by the company i.e. IBM and Cap Gemini. There was
an inherent risk that in case of failure of ERP implementation the entire cost
would go in vain unlike hardware cost which would still remain with the
organization despite of unsuccessful implementation. This could have been a
severe financial loss for the organization and in order to mitigate the risk of
high consulting cost NIBCO developed an integrated strategy where in vendors
were involved in the project to high extent and time to time management was
reviewing the project implementation strategy developed by vendor which lead
the overall project to success.
v Great degree of change needed and possibility of change fatigue: Implementation of ERP system in
NIBCO was challenging from the perspective of high degree of change which would
be brought in the organization and there was risk that change fatigue might
occur in the organizations due to which there are high chances of failure of
the ERP implementation project. In order to mitigate the risk of high degree of
change and change fatigue from the initial ERP system proposal top management
lead to the development of mindset for change so that processes and systems are
so flexible that high degree of change can be implemented without change
fatigue to take place in the organization. Consultants hired by NIBCO were
assigned the responsibility to design business process re-engineering in such a
way that system and processes are so well coordinated to lay down smooth path
for the implementation of ERP system in the organization.
v IBM was not able to manage a successful ERP till date: Another major risk for the
organization was with vendor hired by the organization. IBM was the major
consulting organization helping NIBCO in their ERP implementation. But the
major issue was with IBM as till the time of ERP implementation in NIBCO, IBM has
never implemented ERP successfully which was a point of risk for the
organization. In order to mitigate risk of lack of experience Cap Gemini was
included and even help of external consultants were obtained so that ERP
implementation plan can be supported for NIBCO.
v Change management
4.0 Gap Analysis
5.0 Change management
6.0 Overall effectiveness of
implementation process
7.0 Lesson learned for future ERP
purchase process
Conclusion
References
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