Bombardier - Large Scale ERP Implementation

ERP Best Practices

Below are several best practices for ERP implementation

Understand business processes and key requirements

The first step in executing any business system is to gain a thorough understanding of the processes that comprise business operations. This is especially true for ERP implementations, because they are often intended to be the core management system for company operations. A complete understanding of corporate business processes is essential to selecting the right ERP vendor and to planning the implementation. Once business processes are understood, the next steps are to define and prioritize key business requirements. Because they are the basis for evaluating and selecting ERP software and, ultimately, determining how much customization is needed, definition of requirements should begin as early as possible.

A better strategy is to develop priorities based on satisfying immediate business needs, the ones that affect normal business process, followed by longer-term strategic objectives. Moreover, defining business requirements is not a one-time activity, resulting in a static set of requirements for vendor selection. Instead, it should be viewed as an ongoing process that can be refined on a regular basis to reflect the changing needs of the organization.

Finally, make sure that the ERP software's technical capabilities match the defined business requirements. Many companies concentrate more on the technical aspects of ERP software, rather than on what requirements are most important to the business. Software features or functionality that don’t align with the company’s business needs often lead to an unnecessary waste of implementation resources, time, and money that might be better spent on other activities such as software customization or training.

Build a business case for ERP with a positive ROI

Building a comprehensive business case will help justify the acquisition of an ERP system. A good one will present tangible business benefits based on defined requirements and include key performance metrics; in business, facts are always harder to dispute than opinions. A business case that anticipates potential problems or objections can also be a powerful tool to sell the project in the organization. Involving key stakeholders in the development of a business plan can also be a strong way to build organizational support for the new system. A compelling business case will assess current system performance against expected post-implementation performance. Establishing key performance indicators (KPI) allow quantifiable measurement of progress during implementation and ensures a tie to real changes in performance.

Ensure proper project management and staff resource commitment

Another characteristic that distinguishes best-in-class ERP implementations is how well the implementation is managed and has its resources properly staffed. A prerequisite for a successful ERP implementation is a dedicated project manager who is involved in both planning and ongoing management. In addition, the company must also be willing to commit sufficient resources to the project before, during, and after implementation. However, it is important for the internal organization to be actively involved in implementation because they will own the project once the implementation phase is completed.  For ERP team members, companies should reassign or remove some of their normal job duties so they have enough time to concentrate on the task at hand. Identify a team leader with strong project management skills who can facilitate team communication, address any issues that may arise, and keep the implementation on schedule. A formal risk management and mitigation plan should be developed in advance. It should include ongoing reviews of project phases throughout implementation, with full participation of all inside and outside resources. A combination of project management skills, resources, and methodologies are vital to a successful ERP implementation.

Gain executive and organizational commitment

A distinguishing trait of best-in-class ERP implementations is that they have the full support and commitment of the company’s executives. Getting buy-in from company executives means more than just getting a signature to approve investment in an ERP solution; it means educating leadership about what ERP implementation means for the company. More than just software, ERP technology can transform the business, an idea that executives must support before moving forward with any deployment effort. Frequent communication from executives about ERP implementation plans and changing processes are vital to helping build consensus and even excitement within the company .These people are responsible for setting corporate business strategy and direction, so they should be making higher-level decisions about how the ERP system will be involved in running the business. The broad scope and duration of most ERP implementations can also cause changes in familiar workflows or business processes for people throughout the organization, whether they are directly involved in the implementation or not. For this reason, it is important to gain broad organizational support during all phases of an ERP implementation. Finally, the establishment of regular project reviews with the executive team or the project steering committee will keep them informed about project progress. It will also provide a forum so that the appropriate decision makers can deal with issues that arise.

Recognize the value of early planning

In any ERP implementation, there is no substitute for careful planning; in fact, planning should begin during the earliest project phases. Remember that 54 percent of companies complained that their ERP implementation took longer than expected, some of which can be attributed to poor planning. Companies get excited about the benefits of implementing ERP and tend to want to “dive in” without a fully developed plan. The project plan should have time built into it for activities associated with requirements definition, key performance measures, and vendor evaluation and selection. The best plans have buffers built into the schedule to account for activities such as testing, data migration, and unforeseen events that occur in every implementation. Companies that invest in comprehensive, up-front planning often experience shorter implementation times and spend less money overall than their peers.

Focus on data migration early in the implementation process

Many companies tend to focus on software testing and configuration and put off dealing with data migration until late in the implementation process. An attribute of successful ERP implementations is that data migration is put into the project plan as early as possible. A company’s data is one of its primary assets and issues with migrating data between legacy systems and a new ERP system can have a sizeable negative impact on business operations, especially those that are exposed late in the process. Once the scope of the data to be migrated is determined, activities such as data scrubbing and mapping can be performed independent of the larger implementation process. Similarly, work on forms and reports can be conducted without relying on the rest of the implementation. It’s also a good idea to incorporate a data component into conference room pilots and testing processes, so that data is tested within the software along with business processes.  Another important decision is how much historical data should be brought into the new system. Many companies have a policy of saving everything rather than make decisions about what data should be saved and what should be put in long-term storage.

Invest in training and change management

ERP implementations don’t just affect systems and business processes; they also involve people who may find it difficult to change roles, processes, and behaviors that they may have learned over many years of work. It’s unreasonable to expect employees to change their behavior during the relatively short duration of an ERP implementation. Kimberling notes that managing change is a constant, ongoing

process that needs to start from day one and continue throughout the implementation to the end-user training at the close of the project.

Change management is crucial to the success of an ERP initiative. Employees need to be introduced to new processes and job roles over a period of time so that they can accept and internalize these developments. Neglecting this aspect of implementation or putting it off until late in the project may result in organizational resistance to the new system, even to the point of operational risk. To be most effective, training should concentrate on business workflows and how these changes affect job roles and the people who do the work.

Know why you’re implementing the ERP

Successful ERP implementations are characterized by a clearly defined purpose and a set of attainable goals. These companies have done the work of defining requirements, establishing metrics, and building a business plan that clearly articulates what benefits the company expects from an implementation. Some companies have a tendency to look at what others or their competitors have done with ERP, especially if corporate executives have prior experience with an ERP system at another enterprise. This isn’t to say that companies shouldn’t learn from others’ experience; but it should be clear from the preceding discussions that a successful ERP installation is based on a clear vision and articulation of the needs that are unique to each firm

Bombardier and Best Practices

What Practices did Bombardier Excel?

Bombardier understood its business and knew that their silo organization needed to be restructured due to their acquisition strategy. This created problems and inefficiencies, as systems did not communicate with each other effectively. It was difficult to share data between manufacturing facilities, labor mobility suffered due to the fact that the skills required to operate information systems were not transferable between facilities, and the cost of information systems ownership was multiplied by the number of systems maintained. These included process delays, sequential activities, low inventory turns, supplier proliferation and price inconsistency, and multiple bills of material. Bombardier Aerospace believed the biggest problem it faced was low visibility of inventory and lack of integration between its legacy systems.

One of the primary objectives of the BMIS implementation was to reduce the clerical tasks

performed by Bombardier Aerospace’s employees. It was anticipated that the automation of manual tasks would give their jobs a more analytical focus. It was also expected that an automated and highly integrated system would dramatically reduce the amount of paper used, the ultimate goal being a paperless workplace. The amount budgeted to implement the BMIS across all facilities was $363 million. Once completed, it would support 9,500 users over seven sites. Its development required 400 people.The SAP enterprise system was selected. It would have to interface with 63 other systems, some of which were developed during the project. Bombardier Aerospace estimated that the successful implementation would result in savings of $1.171 billion, including a one-time reduction in material inventory of $219 million.  In regards to best practices, Bombardier was clear in having a vision, goal, and identifying their problem, and realized a positive ROI.  

Another practice area that Bombardier did well in was planning of the ERP system.  After the initial ERP implementation in 2000 was discontinued after $130 million had been spent. Bombardier knew they needed to create a new plan to realize their project goals. A BMIS steering committee chaired by the Project sponsor was put in place in order to focus the project within the wider context of the business. At monthly meetings, the committee would make decisions on the direction of the project, review the status of the implementation and resolve issues that had been brought to its attention.  Councils were formed these councils consisted of senior employees who represented the core functions at each of the company’s main production facilities across the world. These councils were to determine the role and direction of their respective functions within the proposed organization participate in the review of processes and make rapid decisions on issues that affected their functions. Five functional councils were established: Methods, Quality, Production, Work and Material Planning, and Procurement. Functional councils were an important means of achieving what the Project Sponsor termed ‘inclusivity.’ This entailed a large commitment by management and ample opportunity for all of Bombardier’s facilities to express their opinions and ideas. Once the project had received approval, the SPM asked each of the functional councils to undertake a visioning process in which different functions could propose their prospective form in an ERP environment and outline the benefits they expected from the BMIS

implementation.

The output of this process was a visioning document that defined a model organization and that identified the key performance indicators required to successfully run the business and the skill set required for the functions to realize their proposed vision. Visioning workshops were conducted with the functions to facilitate this visioning process. The value management lead facilitated workshops and coached Business Project Managers (BPMs) on how to develop business cases, what benefits to expect and how to assess those benefits. BPMs acted as process owners and were responsible for decisions regarding processes.  All levels of management were responsible for passing on to their staff information regarding the project vision and progress.

Bombardier Aerospace was wary of employing too many consultants to assist in the project. The failure of a previous large-scale ERP system implementation was partly attributed to having too many third-party consultants employed on the project and those consultants having a limited knowledge of the business. The ratio of employees to consultants was reversed from 1:10 on the previous failed implementation to 10:1 on the BMIS project. The project team was established which focused on the preparation and deployment of BMIS. Members of the BTS team made up the majority of the project team. The remainder of the team consisted of employees from the business who were recruited as business analysts. The BMIS project team requested that the business provide them with its most experienced employees. They were selected to represent their function’s point of view and to provide hands-on knowledge about the business. Employees who were recruited from the

businesses were relocated so they could work full-time with the BMIS project team. A stand-alone team was established to handle change management activities. At its peak, this team consisted of 50 people. Their responsibilities ranged from assisting in the preparation of functional business cases to managing project communications and training users.

Bombardier developed a scorecard system throughout the implementation to track project statuses. Monthly status report scorecards were completed by the project team and submitted to the Vice-President of ERP and the company’s Project Review Board. These scorecards presented information on key activities completed, key upcoming activities, project risks and high-level issues. Important project indicators were allocated a status of green, yellow or red according to the urgency of the problem and the attention required by management to resolve any issues. As the Go Live date loomed closer, senior project management requested that the project team include more detail in these reports. This process helped to keep Bombardier always aware of the project and could react accordingly to changes.

What Practices did Bombardier Fall Short?

One department Bombardier fell short was in the design phase of the system to meet the business requirements. The ‘to-be’ processes were designed by the project team and presented to the relevant functional councils for approval. It was intended that the project would be organized according to major processes. However, this was abandoned during the blueprint phase and the project reverted to a functional organization. An integration team was formed to validate the design carried out by the various functions and, as the Senior Project Manager put it, to “cut a line through the processes horizontally". Their role was to identify integration points where a process crossed functional boundaries, and independently resolve integration points that could potentially cause disagreements. High-level decisions regarding the design of the project were made by the functional council responsible for the area of the business affected by a particular issue. More specific design issues were dealt with in design workshops that were held during the design phase. Managers from the business were invited to participate in these workshops. Scheduling difficulties and pressure in the business environment meant that attending workshops was not always possible for some managers. In some instances, they either did not show up or they delegated a lower-level manager; hence making it difficult for the project team to confirm the appropriateness of their design decisions and whether the business agreed that the proposed processes were aligned with their functional visions. The BMIS Project Manager was concerned that there was a lack of strong business employees involved in the design of the project.

While implementing the ERP system, Bombardier decided mid-project that restructuring the Procurement function would help to achieve the objectives of global strategic sourcing, elimination of clerical activities, and automation of as many processes as possible and improve supplier compliance. The restructuring ran parallel with the implementation of BMIS which resulted in changes to the processes and employees roles and responsibilities. Employees in the post-BMIS Procurement function would become sourcing agents or logistics agents. Sourcing agents concentrated on centralized and strategic sourcing of inventory for all internal customers. This involved negotiating contracts that would minimize the total acquisition cost and overall procurement costs. Several buyers were joined by planners in the role of logistics agent. This role would oversee the acquisition process. It was necessary to bring these buyers up to speed on planning processes, as this was not part of their previous role. his effectively substitutes a lot of the work previously done by planners in the legacy environment, creating more time for analytical activities. It was difficult to explain the changes to users when exact details were still being defined in the final months of the project.

Data management was another parallel project comprised of data cleaning and preparation. Data cleaning was identified as a major risk at the outset of the project. Users from Procurement spent the first few weeks following the Go Live cleaning data relating to the buyers and parts they were responsible for maintaining. In the first week following Go Live, one user had to begin cleaning data on 20 suppliers and 1,200 parts. This involved reorganizing and cleansing data from hundreds of separate files using a system with which the sourcing agent was not familiar. The Mirabel Plant Manager said, “Because some of the quality of the work that was done during the data cleanup was questionable, we had to redo a lot of the data clean up. We just finished three months ago, nine months after the Go Live.”

One of the main practices for proper ERP implementation is training; Bombardier fell short in this practice area. Bombardier Aerospace hired a third-party to prepare training material. Power users and employees who received training expressed dissatisfaction with the training material produced by the consultants. It relied on tables and descriptions instead of relying on screen shots of the system. The training material did not reflect an understanding of the business and it was not user-friendly. Users found the descriptions and exercises too detailed and difficult to follow. Several power users and super users made significant efforts to adapt the training material in order to bring it to a satisfactory standard.

Trainers often provided the first real contact between the users and the project. Users were generally satisfied with the trainers. However, they expressed reservations about the timing, material and focus of the training. There were a few cases of training sessions being cancelled due to users not understanding why they were attending. Some Procurement employees were given inadequate notice by their managers that they would be attending training. Presentations explaining the purpose of the system and its anticipated effects had been delivered prior to training, but many of the users who attended these meetings left more confused and bewildered than when they arrived. Users felt that the e-learning module gave a good overview of high-level processes, but that there was no tool supporting a detailed view of the processes (linking the high-level view and related transactions). There was too much focus on exceptions and details. For many users, training provided too much information in a short period of time. They mentioned that some of the exercises were too complicated and detailed. The training documentation was not specifically targeted to the work users had to do on a regular basis (or on their first day of work on the new system).

Training focused primarily on transactions, not on the roles. In some cases, roles were still being defined as training was being delivered. A small amount of background information on the concepts of ERP and MRP was communicated to users through e-learning tools prior to training sessions and was reviewed briefly by some power users during the training sessions. The process flows were not explicit and trainers were unable to explain changes to business processes to the users. Several trainers commented that the focus of the transactional training was too broad. Rather than focusing on the most common transactions, the training material attempted to include all of the transactions a user would be required to complete. There were no tools supporting the detailed view of processes (linking the high-level view and the transaction). This meant that users were not fully aware of the impact of their tasks on those of other people.

Some users felt that their new roles and responsibilities might be less prestigious than they were previously. Some users resisted the new system because they were experts in the old system and would become regular users in the new one. Other users thought that the new system would make their tasks easier (or faster to complete). This was not necessarily the case. Tasks were different, sometimes more analytical, but not necessarily easier.

Data preparation and conversion had not been completed when training began. The data used in the training environment was not always correct and complete. Actual production data were not always available, so manually created data were used as a substitute. Trainers found it difficult to present a realistic experience of the system without production data.

Initial Results

From the first implementation there were many things that Bombardier learned from their pilot run at Mirabel. The projects number one critical success factor of not disrupting production schedules was met. It had also contributed to the reduction in inventories of $1.2 billion. Initial training was supplemented with additional courses and training material. One-day refresher courses were provided for several users. The change management team developed ‘Day in the Life’ training documents following the GoLive. These documents provide a walk-through of a typical day for a particular role and focus on the most commonly executed transactions. They were well received by users, who often found it difficult to retain all of the information transmitted to them during the initial training sessions. Some system functionalities were de-scoped in order to deliver the system for the August 4 deadline. Users were disappointed when they realized that some of the functionalities that had been promised were not delivered at the first Go Live. A lot of the finance functionalities were de-scoped and a portal for interacting electronically with vendors was not implemented. Functionalities that had been promised to Procurement after the Go Live were postponed twice. Several users who considered themselves to be specialists in their own processes complained that they were not involved in design, implementation or validation activities. This was especially frustrating for users when the system was deployed and they had to face problems they believed could have been avoided had they been consulted during the design phase.

2^nd Implementation

In the 2^nd implementation Bombardier focused on leadership and change management. They first started with leadership from the top. The VP made sure the message was conveyed across the organization by holding meetings, active role in project kick offs and progress meetings, conducting education sessions, and attended training. These were all very strong signals to the employees. He charged the manager to adapt similar practices to pass the message throughout the organization.  Even power and super users fulfilled change leadership roles among their peers. The vision was communicated through different media to ensure that the message was understood by everyone.

               

Education and training were tailored to the specific needs of the different hierarchical levels. The trainers had gained experience and their credibility with the users was good. When surveyed, the majority of users mentioned they appreciated the quantity and quality of the training. Users also thought that the timing of the training was appropriate. Employees were given the time required to attend training and management made it clear that attendance was a priority. Changes in the various roles and responsibilities were implemented before the deployment of the new system. Users felt that having these changes in place before the introduction of the system facilitated the change, because they had time to adapt to the new roles before having to adapt to the new system. This way, they were better able to cope with the changes

The project team members were able to use the valuable skills and expertise they had acquired to ensure the project was developed according to high standards. The project team used the SAP methodology and employed certified SAP developers. The project was still organized by functions and not by processes. However, the project team had gotten used to the structure and roles were clear. Any issue raised could be dealt with and technical problems were assigned clear contact points in the help desk or the SAP Competency Centre.

The project deliverables were planned with an aggressive – and perhaps even, according to some members, unrealistic – schedule. Consequently, overtime was an intrinsic part of the schedule and plan. This pressure on delivery meant that there was very little slack in the utilization of human resources. There were no buffers in place for potential contingency events. This created a situation in which several key individuals had no shadows – i.e., people who could replace them in case of emergencies or who could share some of the workload.

The specialized knowledge was concentrated in a few individuals. However, it was not simply a question of hiring more people. The knowledge transfer to new team members was not simple and required the availability of key individuals who were already working intensively on the next deliverable and who felt that the time investment required for knowledge transfer would jeopardize the project schedule. This created a vicious circle. Since they were in limited supply, there was strong pressure for these knowledgeable people to spend all their time on project activities. If they stepped back to transfer their knowledge to colleagues, they felt they were slowing down the project’s progress. However, failure to transfer this knowledge threatened the continuity and sustainability of the project. It was acknowledged that no project should be overly dependent on a few key resources.

The Go Live for this project went as planned without any significant disruptions to the normal operations. Despite some contract management complaints and users wanted all of their activities to be supported through SAP, the majority of users considered the new system important and would make their lives easier.

Performance Grade

Based on the best practices criteria laid out in the beginning, here are the grades for how well each of the implementations performed.

 

Practices to Keep

All of the best practices for an ERP are there because the serve a vital role in implementation. For an organization like Bombardier, there are a few practices that should remain part of the ERP process moving forward. Training, planning, KPI scorecards, and leadership.  Adequate training provides employees with confidence that they can perform the job and less fear of a steep learning curve. Employees can then train others or become subject matter experts.  Some users mentioned that they would have preferred to receive less training before the Go Live and more advanced training shortly after the Go Live to learn about some of the advanced SAP functions once they were familiar with the tool. A thorough and adaptable training program can always evolve based on the needs but having proper process and troubleshooting documents, training, webinars, and staff support will equip Bombardier for success.

Having a proper project plans that has contingency plans will always benefit the business. It allows for the planning for the unknown, anticipate and budget costs, determining additional needs, development timelines, and helps to keep everyone align and well communicated throughout the process. In the second implementation was very successful in this effort.  

KPI scorecards are a good way to showcase if the implementation is profitable. Bombardier would be able to compare the KPI’s for each of the locations implementations to analyze any trends, differences, or even confirm their estimations for the implementation.  In Bombardiers case, users did not have many ways to measure their contribution to the realization of the objectives. Some KPI’s had been developed, but they were not used often. Once Bombardier aligns on which KPIs to measure, this will be an important best practice to keep.

As we saw Bombardier put leadership at the forefront of their approach for their 2^nd implementation. Having the executives of Bombardier on board with the implementation and getting into the “trenches” with employees instills a trusting and transparent culture. One where employees will not shy away from change and will work to help streamline the process. Having a leader who realizes the problems of the first implementation and knowing how to make changes for the 2^nd and subsequent implementations is beneficial for the organization.

Practices to Modify

These few practices are also crucial to the success of Bombardier, but will need modifications as they go through the process. In regards to sound business’s case, once all the systems have been migrated, the initial business case will disappear but Bombardier should already been thinking about what next business problem to they need to solve for. It is also important to note that there are inherit trade offs within the organization of which things to focus on (i.e. finance not being in scope). In the future Bombardier will need to determine which things will need to be in scope based on short and long term goals.

Another practice to modify is around the idea of talent. Bombardier ran into an issue with their knowledge transfer. Knowledge transfer to new team members was not simple and required the availability of key individuals who were already working intensively on the next deliverable and who felt that the time investment required for knowledge transfer would jeopardize the project schedule. Since they were in limited supply, there was strong pressure for these knowledgeable people to spend all their time on project activities. If they stepped back to transfer their knowledge to colleagues, they felt they were slowing down the project’s progress. However, failure to transfer this knowledge threatened the continuity and sustainability of the project. Bombardier needs to figure out a way to keep the talent, but share the wealth in time effective way. It could be in giving users more time to explore the full capabilities of SAP to become experts in the systems and be able to pull out innovative solutions in the future.

Due to the fact that all practices can be modified to fit the business model for Bombardier, there are no practices at this time they should remove.

Reflection

The consulting group provided 10 top implementation practices for an ERP system.  They listed 5 practices that were important to future implementation: ensure senior management support, create clear implementation plan and timeline, choose the right software, ensure effective communication to all users, and invest in change management training.  In the practices to keep above section, training, planning, KPI's, and leadership were the top mentions as things to keep.  After listening to their reasons for their choices, I am aligned with their practices as being top priorities as some of them are the same as mine – training, senior management support/training, implementation timeline/planning. They are very important to the success future implementations at Bombardier. Choosing the right software is also an interesting choice as a best practice. The emphasis of the right software (not the most or least expensive) is a very good approach to thinking long term and about proper efficiencies for the company. Another factor the consulting group raised was effective communication to users. Through good leadership (promoting transparency from within) and planning, the communication of status updates will easily flow.

 

The consulting team also mentioned practices that need to be improved: designate qualified project team, identify & define clear objectives, set realistic expectations, provide ERP training before and after training, and establish KPI’s. While some of these practices I believe to be practices for future implementation vs. practices to be improved, the framework that was presented by the team gives a sound argument as to why they could be improvement practices. For example, I think having measurable KPI’s will be essential to the business moving forward as a way to benchmark success. The team presented that this a modification based on the fact that Bombardier had not adequately determined what their KPI’s will be. In most organizations there are overall company KPI’s and individual team KPI’s that are cascaded down from the top and implementing a similar approach would be of benefit. One thing that was not mentioned by the consulting group was around employee talent as an area concern. It was talked about I terms of training, however, I think figuring out a way to retaining talent in the organization needs to be incorporated into the best practices. I also agree the most important best practice for improvement is identifying and defining clear goals and objectives. Knowing what you are trying to solve for or understanding the full scope of needs will definitely drive the purpose behind any project. While the goals can change, having a clear action plan from the goals are very important for success.