It was a calculated risk, upgrading a 1,200-user PeopleSoft system from HP 9000s to less expensive servers from Dell Computer Corp. and from a Sybase Inc. database to Microsoft Corp.’s SQL Server. But Damien Bean, vice president of corporate systems at Hilton Hotels Corp. in Beverly Hills, Calif., came out on top, getting the lower cost and higher performance he wanted. To do it, Bean says he had to convince his end users and vendors that “they could not afford to let a global brand name like ours fail.”
Corporate IT managers are struggling with lengthy and expensive supply chain management projects that rely heavily on enterprise resource planning (ERP), says Jennifer Chew, an analyst at Cambridge, Mass.-based Forrester Research Inc. A Forrester survey of 124 senior executives at North American companies that was conducted in August and September 2002 showed that they are spending an average of US$6.8 million and 1.6 years to complete such projects.
To speed ERP installations, Chew suggests that customers follow process road maps provided by the vendors, use industry templates that spell out how to configure ERP systems for vertical markets and use those templates to develop proof-of-concept applications to gain buy-in from business users.
Whatever the problems, a report last year from Boston-based AMR Research Inc. predicted that ERP spending will remain steady at about US$16 billion per year between now and 2006, and Computerworld’s Premier 100 IT Leaders ranked ERP systems as their top project for 2003. Here, several Premier 100 honourees who have survived these implementations offer their advice for success.
Starting with everyone on board
At the time of the Hilton upgrade in late 2001, no company had run such a large application on such comparatively modest platforms. Rather than using contracts to force the vendors to perform, Bean says he stressed how good it would be for them to prove that their products could handle the needs of a $3 billion global company. (All figures in U.S. dollars)
“Michael Dell promised me face to face it would work,” in addition to providing $100,000 in funds to help get the project going, says Bean. He says he sold users on the project by explaining how the “re-platforming” could save the company money while boosting performance.
When users feel that they’re being forced to comply, Bean says, “you’ve got to drag everybody behind you,” which creates friction. But if you get everyone on board upfront, “you’ve eliminated most of the friction points,” he explains.
The result? Hilton cut $4.5 million to $5 million from its IT budget while boosting performance and adding “enormous” functionality, Bean says.
Working on bite-sized pieces
Patience and prototyping helped Fredrick R. Pond, director of information services at recycling company Schnitzer Group in Portland, Ore., get 80 per cent through a complex, five-year ERP implementation.
The project involves a transition from a legacy Digital VAX to J.D. Edwards & Co.’s OneWorld software for financial, distribution and manufacturing, plus software from PeopleSoft Inc. for human resources and payroll. So far, the work has come in on schedule, or close to it, and under budget; the final work will wait until the economy improves.
Pond says he broke the project – which has cost $4.3 million so far – into manageable chunks, listened to users’ concerns, compromised when he could and used prototypes to prove that ERP wasn’t the end of the world.
Pond says he got agreement on most changes by working with management and demonstrating the new features and lower support costs the system would bring. The changes he made were mostly to reports generated by the system, rather than to the core database. “Over the three- or four-month period, we had acceptance – but maybe not excitement – for how things would change,” he says.
“Listening is the No. 1 thing,” says Pond. “You’ve got to gain an understanding” of users’ fears and concerns and then demonstrate how ERP can make their lives better, Pond advises.
Schnitzer now closes its quarterly books in 11 days rather than 26 and can instantly update labour costs.
Keeping communication flowing
At George Washington University, CIO David Swartz’s goal was to improve services for students, staff and suppliers by transitioning off mainframe applications. The new environment uses SCT Banner from SCT Corp. in Malvern, Pa., for student, financial aid and human resources data, and Oracle Corp.’s Financials suite for general accounting and financial tracking.
Swartz says his success is the result of an early plan to split responsibility for the ERP implementation among several departments at the 19,000-student Washington-based campus. Each department got control over its data and the interfaces its users would see, as well as a data warehouse so users could create their own reports without customizing the core ERP system. The IT organization keeps the system up and running and provides security and the corporate help desk.
The two systems, which together cost about $27 million, haven’t saved the university money, but they have made life easier. Travel reimbursement times have dropped from weeks or months to days, and students can register for courses and order books online. With users creating their own reports, IT’s report backlog has been cut from as long as two years to “almost nothing,” Swartz says. The ERP system also paves the way for new applications to track potential donors.
Swartz says he agreed to a “handful” of customizations. But he adds that he was usually able to win compliance with the new ERP workflow by communicating “the advantage of moving towards the enterprise model . . . keeping the lines of communication open and keeping [users] involved in the project, not just dumping it down on them.”
Backing from top university leadership was sometimes needed to make the most drastic changes in workflow stick. But, says Swartz, “I think it’s well worth it if you can get through it.”