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Erp Implementation Case Study
Erp Implementation Case Study
Abstract
Economic globalisation and internationalisation of operations are essential factors in integration of suppliers,
partners and customers within and across national borders, the objective being to achieve integrated supply chains. In
this effort, implementation of information technologies and systems such as enterprise resource planning (ERP)
facilitate the desired level of integration. There are cases of successful and unsuccessful implementations. The principal
reason for failure is often associated with poor management of the implementation process. This paper examines key
dimensions of implementation of ERP system within a large manufacturing organisation and identies core issues to
confront in successful implementation of enterprise information system. A brief overview of the application of ERP
system is also presented and in particular, ERP software package known as SAP R/3, which was the ERP software
package selected by Rolls-Royce plc. The paper takes an in-depth look at the issues behind the process of ERP
implementation via a case study methodology. It focuses on business and technical as well as cultural issues at the heart
of the Rolls-Royce implementation. The case study also looks at the implementation time scales and assesses the
benets from the project both tangible and intangible.
r 2003 Elsevier B.V. All rights reserved.
Keywords: ERP; Information systems; Implementation; Success factors; Rolls-Royce
1. Introduction
The global nature of modern marketplace
requires active players to internationalise their
operations. In the past, companies were used to
competing based on one or two competitive
performance objectives such as price and quality.
However, present markets demand both price and
*Corresponding author. Tel.: +44-1486466933; fax: +441482466216.
E-mail address: yahaya.yusuf@hull.ac.uk (Y. Yusuf).
0925-5273/$ - see front matter r 2003 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2003.10.004
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3. Implementation of ERP
ERP when successfully implemented, links all
areas of a company including order management,
manufacturing, human resources, nancial systems, and distribution with external suppliers and
customers into a tightly integrated system with
shared data and visibility (Chen, 2001). Potential
benets include drastic declines in inventory,
breakthrough reductions in working capital,
abundant information about customer wants and
needs, along with the ability to view and manage
the extended enterprise of suppliers, alliances and
customers as an integrated whole (Escalle et al.,
1999).
The term ERP stands for enterprise resource
planning, however it is not good enough to just
plan resources required to run the enterprise, they
need to be managed as well. An organisation must
assess itself, to see if it is ready for ERP. It must
determine if it is ready for the competitive business
environment of today and then strengthen its
position for tomorrows changes. Some of the
companies that implement ERP systems do not
realise the full benets that the system offers
because most organisations are not organised in
the correct fashion to achieve the benets. Many
companies that attempt to implement ERP systems run into difculty because the organisation is
not ready for integration and the various departments within it have their own agendas and
objectives that conict with each other (Langenwalter, 2000).
While companies such as Cisco Systems, Eastman Kodak, and Textronix have reaped the
expected benets of ERP systems, many businesses
are discovering that their ERP implementation
is a nightmare. FoxMeyer Drug, a $5 billion
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pharmaceutical company, recently led for bankruptcy (Al-Mashari and Zairi, 2000; Chen, 2001).
Dell Computers spent tens of millions of dollars
on an ERP system only to scrap it because the
system was too rigid for their expanding global
operations (Trunick, 1999). ERP implementations
involve, in truth, broad organisational transformation processes, with signicant implications to
the organisations management model, organisation structure, management style and culture, and
particularly, to people (Wood and Caldas, 2001).
ERP software is very adaptable but not very
malleable and companies that wish to use them
correctly have to change their working practices to
t the software. The key factor of an ERP
implementation is the way in which the software
is congured. The most important issue to identify
before an implementation is the core of the
business, which can be identied by the use of the
business model (Chung and Snyder, 2000).
One original motive for buying an ERP system
was to automate business processes, but the
modern view has shifted to the quick access of
up-to-date and timely management information.
The majority of difculties experienced by ERP
implementations have been the costly development
of additional software to help bridge or retrieve
information from legacy systems. Before ERP
management reports can be generated and distributed to managers, the data has to be created
rst which can be a costly and inefcient process.
In an attempt to improve the timeliness and
accuracy of management data, many software
vendors are making end-users responsible for
updating their own information rather than
relying on IT resources.
ERP software consists of a number of modules
that link together to form a complete business
solution, however the main difculties experienced
by ERP users have been in manipulating the data
stored within the system. Software developers have
begun to address the need for additional information tools. Some of these tools include the need for
detailed and advanced planning and advanced
scheduling and customer relationship management. Abdinnour-Helm et al. (2003) discussed
the pre-implementation attitudes and organisational readiness for implementing an ERP system.
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5. Rolls-Roycecase study
In this section, a case study conducted at RollsRoyce investigating the implementation of ERP
(SAP) is discussed. The case study starts with
introducing the company and its background,
presenting the status of IT before and after the
implementation of SAP, and giving the detail
chronological phase of the implementation of SAP
in Rolls-Royce. Also, the research methodology is
discussed. The implementation of SAP in the
company and project risks is presented.
5.1. Company background
Rolls-Royce returned to the private sector in
1987 and acquired Northern Engineering Indus-
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Build
Customer
Relationship
Create
Customer
Solutions
Plan the
Business
Resource the
Business
Satisfy the
Shareholder
Manage
Cash
257
Resolve
Customer
Problems
Generate
Orders
Fulfil
Orders
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Q2
Q3
Q4
Q1
Q2
Q3
2000
Q4
Q1
Q2
2001
Q3
Q4
1
SAP
Go Live
2
Phase
2
3
Phase
3
6
Key
Phase 1
Early Deployment
Wave 1 Pilot
Phase 2
Phase 3
Q1
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Suite 1
Master Schedule Key
Programmes
Suite 2
Schedule the Shop
Suite 3
business principles;
processes;
procedures;
role denitions and behaviours;
software, hardware and data transfers.
We initially looked at over 1000 part numbers,
identied which ones had a schedule against
them, its the ones that have a schedule that we
did the data clean up on, which came down to
280 part numbers. If we had to do it across the
1000 part numbers we would never have got it
nished. For each part number there are
around about 30/40 operations, there had been
7 of us working full time on it, thats included
MRP controllers;
Capacity owners.
We had to go through symmetric tests,
aptitude tests, interviews, it was quite daunting
really, I mean to think that here I am, quite
settled but Ive got to make these moves. Im
told that Ive got to spend X amount of time
around a PC, its a bit strange as I must spend
around 80 percent of my time on the shop oor
to day, and thats going to change dramatically.
I will own the men and machines, the capacity
yCore Implementation Team Member (b).
An MRP Controller is going to be in charge of
the inventory, and getting the raw material in,
and talking to the supplier and the customer.
But theyve also got to release the material to
the shop oor, and then release the material
when its nished as a component to the
customer.Core Implementation Team Member (c).
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Financial
Consolidation
(Hyperion)
Bill of
Materials
Product Data
Management
(Metaphase)
Product
Structure
Finance
Core Organisation & Finance
Structure
Asset Management
Accounts Payable
Accounts Receivable
Product & Inventory Accounting
Profitability Analysis
As-built
Data
Programme Management
Research & Development
Series Production
Spares & Other
Profit & Cost Accounting
Staff Work Booking
Human Resources
Resourcing
Compensation & Benefit
Payroll
Health & Safety
Organisation Development
Employee Development
Pensions
Routings Work
Launch
Order Management
Sales Order Administration
Service Management
Work Status
Manufacturing
Execution (SFDM)
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A second pilot was also carried out for nonproduction purchasing. The second pilot ran
executively, covering Derby-based purchasing of
ground support equipment. A third pilot also
was run by the Airline Business. The third pilot
was non-executive, but designed to specically
explore the interplay between Metaphase PDM
and SAP.
5.7. The Go Live
As the main Go Live of the new system was
planned, the most difcult part of the cut over
process was in transferring the data from legacy
systems. The shear volume of data that has to be
transferred is far greater than any normal transaction load that will be carried out by the system
thereafter. In order for this process to be successful
the data must be kept in a stable state for a
period of roughly 10 weeks. The initial data to be
transferred includes some transaction data and
master data, for example, lists of suppliers. If any
changes occur to the data on the old systems after
the transfer, they are logged and then passed
through to the new system. The remaining data
was loaded in after the Go Live.
The next step during the Go Live process
involved running the MRP system to initialise the
whole system. Purchase orders and purchase
requisitions was not transferred from the old
system, instead the MRP run should create them
fresh. The whole Go Live process took roughly 2
weeks to complete, and during this time the new
system was off the air.
Immediately after the Go Live the existing
legacy systems was switched to view only mode.
The view only mode enabled comparisons to be
performed between the old and new systems.
However, the legacy systems ceased to be executive.
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become just another IT system. The core implementation teams have taken into account the
needs of both the managerial and end-user. The
following list contains just some of the problems
encountered:
*
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*
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Acknowledgements
The authors are very grateful to two anonymous referees for their constructive and helpful
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