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Khalil cotran
This document discusses the implementation of an Enterprise Resource Planning (ERP) system at JTI, the world's third largest tobacco company, to help integrate its global operations. The ERP project, using SAP software, was launched in three waves over four years involving 700 employees. It aimed to introduce common global processes and systems to help coordinate efforts across regions and speed up operations. The HR role was crucial for change management to help employees adapt to the new system and ensure business adoption and ultimate benefit realization from the ERP implementation.
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Khalil cotran
- 1. A Story ofChange “HR Role in Implementing Change” Khalil, Cotran November 13, 2009
- 2. Who is JTI? • JTI is the world‟s third largest manufacturer of tobacco products. • In 1999 Japan Tobacco acquired the international operations of the American tobacco giant RJ Reynolds. • JTI has 12,000 employees from 90 different nationalities in 40 locations worldwide. • JTI markets and factories spread over 100 legal entities Slide 2
- 3. Change is amatter of urgency • JTI has great brands, great people and great facilities but has nothing binding them together • Key competitors are doing a better job • Need to coordinate efforts across all regions • Need to increase speed to market Slide 3
- 4. Change is amatter of urgency Enterprise Resource Planning (ERP) is the glue that brings together processes, systems and people Slide 4
- 5. What is ERP? • Enterprise Resource Planning is a term derived from material resource planning. • ERP Systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing and accounting for a company. • ERP are “back-office systems”. Customers and the general public are not directly involved. Slide 5
- 6. What is ERP? Operational Processes Develop Procure Market Sell Perform new Materials & Products Products Order Mgt. products Services Provide Manufacture Manage Customer In Scope Products Logistics Support Out of Scope Infrastructure Processes Manage Manage Plan and Manage Manage Manage Plant, Accoting Manage Capital HR IT Equip. & & Control Business and Risk Facilities Data Provide Manage Manage Decision Support Programs Support Services Slide 6
- 7. Why ERP? • Toposition JTI for growth by bringing all locations together with common systems and processes. • To introduce new global processes built on one of the most complex ERP systems – SAP • To launch process redesign and Change Management Slide 7
- 8. What is SAP? Thesoftware program SAP R/3 Is the system that will deliver ERP Will provide a single technology to streamline the sharing of data and information, replacing our multiple systems: Flexible Scalable Expandable Simple installation SAP is the largest inter-enterprise software company in the world: Market leader in ERP software Representatives in more than 50 countries 10 million users worldwide Slide 8
- 9. Highlights of theERP Project • The project was launched in early 2002 • The project was launched in three waves and involved resources from JTI, Deloitte and SAP. • The team was a truly multi-disciplinary and integrated global team which incorporated 700 JTI employees, 100 Deloitte and SAP consultants over the four years. Slide 9
- 10. Project Roll Out(Three Waves) Wave 1 – Europe + HQ Wave 1 – Russia Markets All Switzerland Greece Russia Factories Spain Czech R&D, SRA Germany Wave 2 – CIS Export Hubs France Ukraine Benelux Romania Global & HQ Italy Kazakhstan Andorra Wave 2 – APA Japan China Malaysia Taiwan Thailand Philippines Wave 2 – Africa Singapore Wave 3 – Americas Korea USA Tanzania Canada South Africa Latin America Jordan Saudi Arabia Tunisia Morocco Slide 10
- 11. Project Time Line 2002 2003 2004 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D Turkey GL Europe + HQ Africa Pilot Geneva HQ, Switzerland, Spain, Germany France, Tanzania, South Benelux, Italy and Andorra Africa and Jordan GL GL Russia Americas Canada, USA GL GL CIS Ukraine, Romania, Kazakstan GL APA Japan, China, Malaysia, Taiwan, Thailand,Philippines and Singapore GL Slide 11
- 12. Project Governance Extended Transformation Quarterly Steering Committee Transformation Steering Committee Monthly Executive Sponsor Key Related Geographic & Reporting Direction Enabling Areas Functional Leadership IT Leadership ERP Regional Steering Program Leadership Committees to facilitate for infrastructure implementation ERP Quality and Risk Global Service Desk Program Team Management Slide 12
- 13. Change Management –Key Pillar to ERP Success SUCCESS ERP IMPLEMENTATION CHANGE MANAGEMENT BENEFIT REALIZATION Qualitative Global Processes Business adoption & & & quantitative SAP System Organization fine tuning TRANSFORMATION Slide 13
- 14. Success Means EmpoweringPeople to Realize the Benefits Deriving from Processes and Systems Project Team Effectiveness Vision Strategy Executive Alignment Process Organization Systems Change Organization Communication Structure Change Management Focus Project Team People Effectiveness Benefits ! Training Changeability Changeability Slide 14
- 15. Change Management Approach- Five Major Components Change Components Main Objective Executive Leaders demonstrate consistent behavior, set direction, Alignment mobilize individual commitment and align operations Organization Harmonize roles & responsibilities and organization structure in Change accordance with the new processes Inform our employees about benefits and sacrifices deriving from ERP Communication and engender their buy-in to contribute to the project goals Project Team Address project team dynamics and enhance performance Effectiveness Assure all impacted colleagues acquire the skills and capabilities Training needed to successfully operate in the new work environment Slide 15
- 16. Executive Alignment How did it happen? Why was it needed? Assure timely roll out Involve the whole organization Mitigate risks How did it happen ? Clear project governance (organization structure, roles & responsibilities) Efficient reporting process Decision making through Steering Committees Video Conferences with Project Owner Leaders involved in project work Local Leaders taking an active role in project communication Leadership Alignment Meetings where appropriate Guidelines provided in Leadership Manual Slide 16
- 17. Organization Change Organization Change Work Streams Description of new processes, key operational and Impact Assessment organizational changes and impacts per process area Future Role Identification of future roles and related work steps Identification from Business Process Master List Allocation of future roles to jobs and jobs to individuals Role & Job Mapping in the organization Identification of the local impacts and adaptation of Organization Fine-Tuning Organization structure Action plan and execution to transition organization and Transition people from old to the new work environment Slide 17
- 18. Communication The importance of Communicating ERP • ERP is an all encompassing programme of change. Effective communications are critical to its success. • The key messages we wish to communicate on ERP have been defined by JTI senior managers, we now need to ensure that these messages are effectively transmitted & received throughout the organisation. • A JTI wide ERP communication strategy & supporting “communications kit” have also been developed. Slide 18
- 19. Project Team Effectiveness A Prerequisite for Performance • After Project Career Plans • Knowledge to perform • Personal Development • Roles & Responsibilities • Effort Recognition & Rewards Perspective Content • Working in a virtual Team • Infrastructure & Facilities • Resources quantity Team • Capability Transfer DC/JTI and quality Effectiveness Project Areas Processes Framework Communication • On-boarding of new members • Top Down and Bottom up project communication • Negotiation and conflict resolution Slide 19
- 20. Training Training Training Work Streams Analysis by market of training scope, number of Market Assessment employees, location, training facilities Course Design, Update and Development and adaptation of Training Material Documentation (process and transaction focused) Set up of Training System and End User Training Training Logistics Schedules Training of SAP End User Trainers (identified by Train-the-Trainer markets) Role based End User Training (focused on process End User Training and transactions) Slide 20
- 21. It is aboutPEOPLE ERP implementation at its core is a people project The biggest challenge before and after implementation is not TECHNOLOGY, but PEOPLE Slide 21
- 22. HR Role “The ChangeManagement Team” Letting Go: Commit: Existing practices. Well Transition New skills Experiences known current systems with better software Slide 22
- 23. The Team‟s FiveObjectives Manage the transition from the old to the new ways of working Define the global organization‟s new structure Attend to the Project team Help the people in the organization embrace change Transfer SAP knowledge and train end-users on the new global system Slide 23
- 24. Manage the change to a new way of working • The change management team was built on a concept of “Key Stewards” • In each wave, a regional “Transformation Steward” led the change management activity, working alongside a “Training Steward” and a “Communication Steward” • The stewards brought business expertise, valuable local knowledge and contacts. • The personnel in the global change management team remained the same all through the project. Slide 24
- 25. Change Management GovernanceModel ERP Project Lead Management Change HR/Change/Training Team Communication Team Global Change Management Consultant Team Regional Regional Regional Transformation Training Communicators Stewards Stewards Regional Teams Local Local Local Local Transformation Steward TrainingLocal Steward Local Communicator TSLocal Local TSLocal Trainers
- 26. Define the global organization‟s new structure • Once the new processes were defined, the business and functional experts identified all “Areas of Change” • The Change Team consolidated these and extracted the 20 key Change Areas • “Impact Assessment Tool” was developed which allowed each location to analyze how the changes would effect their area. • Each location was asked to review the key changes in order to determine their impact in terms of: Slide 26
- 27. Define the global organization‟s new structure Structure Roles Responsibilities Span of control Decision-making Reporting lines Slide 27
- 28. Define the global organization‟s new structure • 200 new global SAP roles were identified. • Roles had to be fit to jobs in the business, and then to people ENSURE THE RIGHT PEOPLE IN THE RIGHT PLACE AT THE RIGHT TIME • Intensive workshops were set up to map SAP roles to jobs in the local organization • The workshops brought together functional and business experts, HR, process owners and system security experts in order to ensure that the new roles were correctly mapped to jobs in the new business. Slide 28
- 29. Define the global organization‟s new structure • Workshops were held during each wave and lasted between two and three weeks. • Workshops were a major communication event and an important step in bringing the project to the business • At a later stage, local HR, working with the transformation stewards matched people to jobs Slide 29
- 30. ERP Impact Assessment– Change Area Details ERP Operational and Organizational Process Impact Assessment Process M anag P e rocurement Change Area IA Tool Reference Introduction of a Profes ional P s urchasing Organization P2P 2 Description of the Change (compare future and present state) Introduction of an organizational structure - Profes ional P s urchasing Organization (P O) to s P upport the implementation of the procurement strategies for production and non-production s pend. This organization will be dedicated to execute buying activities for services and materials in a profes ional and s s tandardized way. The P O activities includes the M anagement of s P upplier relations and related purcha ing activities s s , uch as: Consolidation of requirements. Change Area Bidding. Contracting. Performance tracking of vendors. Ordering. Shipping and proper invoicing for full range of spend categories. M aster Data maintenance. Post-Purcha e activities s . Expected Benefits Enhanced supplier management. Increased buying power as a result of consolidation of purchasing requirements which leads to cos quality or s t, ervice improvements. Description of Levera ig ge current internal procurement bes practices S nificant saving throug t h reduced maverick s . pending. Harmonization of purcha ing activities throug s hout the company. Change Optimized control of spending Operational Implications for markets . /factories Organizational Implications for markets/factories (what does the change mean for markets and factories in terms of (What does the change mean for markets and factories in terms of operations proces es procedures the way of doing work) , s , , Organization Structure, Jobs Decis , ion Making and Reporting) Compliance with corporate purchasing policy, operating Every location (markets/factories/functions is expected to es ) tablis a h guidelines code of conduct. , formal Profes ional P s urchas ing Organization Management of JTI supplier bas and commercial e P O needs to be es P tablished where currently not existing, and Expected agreements. Coordinate cros -geographic procurement activities and s addres local procurement is ues with res s s pective functions. increas of s S e cope where currently exis P ting. ize and makeup of P O varies from market to market depending on the complexity of the purchas ing proces and s Benefits P Execution of trans ay Mega-P actional activities as identified in P roces , from proces ing of purchas reques , s s purchas order creation, to order acknowledg e e ement. rocure to ts the number of trans Appropriate s s actions to be performed. taffing of Purchas hift from other departments headcount optimization. /functions may res ), Operational ing Organization (if required ult in Impact Acting as a bridge between JTI Bus ines S s ervice Center organization and vendors for is ue res s olution. In markets P O reports to country CF , P O. Monitoring suppliers performance and taking timely actions ‟ . In markets and factories a s , ingle country P O reports to P Manufacturing S ervices Lead, with a dotted line reporting to Leading local supplier bidding and negotiation proces es in s country CF O. clos cooperation with res e pective departments to ens ure best Organizational combination of quality, cos and s t ervice parameters/conditions Geneva Headquarters P O reports to Global P P rocurement. for products and services to be attained. Change in the trans actional roles and respons ibilities of Global As urance of on-time and complete deliveries from s s uppliers Procurement, F inance, P lanning, and Local P urchas ing to requesting parties including accurate documentation. organizations as they relate to purchas ing activities . Impact In-depth analysis of key performance indicators while taking neces ary actions for improvement areas s . Training requirements to be defined according to market needs . Slide 30
- 31. ERP Impact AssessmentTool Slide 31
- 32. Role Mapping Future roles Current Job Future Future position position Future Future position position Future Future position position Future role mapped to job and then to individual Individuals Slide 32
- 33. Role Mapping Workshops GMs,ExComs, HR and Line Managers Give guidance and provide knowledge about current jobs content, individuals and organization structure. These people Transformation Stewards/ will have the responsibility to map future roles to job label. HR Functional Coordinators are will have to update the job label description. responsible for coordinating the local Mapping Process. In particular they will: •populate the required fields of the “User Analysis” Data Base •complete the column “current job label” on the Role Mapping Template •prepare and facilitate the roles mapping sessions (incl. Process Experts PSI appropriate working tools and will provide information about will draw attention to processes) the role content, the activities to security, authorization be performed, the changes with guidelines and the actual processes. segregation of duty. Slide 33
- 34. Caring for the Project team • It was vital to meet the personal needs of the team in terms of career management employment conditions motivation emotional disruption of being away from home and family Slide 34
- 35. Caring for the Project team (The Golden Rule) • All team members, except those who wished to further their careers elsewhere, had to be re-integrated to the business • The process of re-integration started early on • The process required strong executive management support and proactive HR effort Slide 35
- 36. Caring for the Project team Employment Conditions • People from different countries assigned to the project had differing employment conditions • Each person‟s financial situation was protected, with their net income remaining the same as if they were working in their home location Slide 36
- 37. Caring for the Project team Emotional needs and wok-life balance • The geographical scope created difficulties • Project Team worked from a regional hub (Campus) , of which there were two for each wave. • Most of team members were away from their home and family for long periods, putting them under great social and emotional pressure. • The project work – with its long hours and complexity – was often more demanding than the jobs they had come from. Slide 37
- 38. Caring for the Project team Emotional needs and wok-life balance • Anyone assigned to a hub away from his/her home country was put on a “three-week-on”, “one-week-off”‟ works schedule • Team members were allowed to invite his/her partner to join them during the three weeks on, rather than the project team member returning home for a visit. • This made life much easier and more fun • There were also some ERP Marriages during the life span of the project Slide 38
- 39. Program Rollout :By Region and Registered Country Russia Asia Wave 1 China Russia Russia (Hub in St. Pete) Hong-Kong Europe & HQ India Andorra Japan Cyprus Wave 1 Korea Europe + HQ Wave 2 Czech Republic (Hub in Trier) Eastern Europe Malaysia Finland (CIS), Africa & Phillipines ME+ Greece France Singapore (Hub in Trier) Germany Taiwan Ireland Vietnam Italy Eastern Europe Luxembourg Estonia Mauritius Kazakhstan Spain Latvia Wave 3 Switzerland Lithuania Americas The Netherlands (Hub in Toronto) Romania United Kingdom Serbia (Scope extension) Wave 2 Ukraine Americas Asia Africa & Middle East (Hub in Shah- Alam) Brazil South Africa Canada Tanzania Puerto Rico USA Europe Greece
- 40. ERP Hubs –The Campus Slide 40
- 41. Help thepeople in the organization embrace change • we needed to help ensure that people in the business were open to change • This role we shared with the communications team. People do not fear change, but uncertainty Slide 41
- 42. Help thepeople in the organization embrace change • Through the huge and complex communications effort, the project gained a very strong identity and expectations were well managed • We put such importance on communication that it was embodied in the governance model • we drew up a set of guiding principle for local HR to assist them in helping affected employees to deal with change, particularly the emotional aspect. Slide 42
- 43. Help thepeople in the organization embrace change It was important to give employees emotional support, allowing them to „mourn‟ the passing of the old ways. Slide 43
- 44. Transfer SAP knowledge and train end-users • Training was provided for almost 5,000 new end-users. • We used the „Train the Trainer‟ concept, which is well known and proved effective for us • There were 200 trainers, selected for their business expertise. • Each underwent a month-long program including „soft skills‟ and SAP training. Slide 44
- 45. Transfer SAP knowledge and train end-users • The rigor of the “Train the Trainer” program had ensured the job could be done. • Using this approach, knowledge was kept in the company and continuous support was available to end users. • Trainers performed another vital role in adapting the training materials to local needs. Slide 45
- 46. Transfer SAP knowledge and train end-users • SAP knowledge was passed on through informal channels as well as training courses. • The project started out with 80 consultants, but it was planned to transfer knowledge to JTI by O2C informal coaching. R2R F2S P2P • This was achieved, and only 20 consultants Critical remained in Wave 3. Users Priority Users Non-Critical Users Slide 46
- 47. CONCLUSIONS • The ERPproject at JTI had a well defined roadmap, was a success and a major accomplishment. • A dip in performance is inevitable after such a project. • The „dip‟ became less disruptive as the project moved through its three waves • The tangible and intangible benefits exceeded expectations. • A cultural change is taking place as people grow in confidence from facing the huge challenges of the ERP transformation. Slide 47
- 48. Roadmap for OrganizationChange 1. From Process Redesigns to 2. From Mega Process to SAP Role 3. From SAP Roles/SAP Profile to 4. From Job to Individual oneERP Impacts Job Label To-be J 1 ob O2C To-be J 2 ob Core Process Order Management Process Manage Sales Orders SAP Profile Sub process Process Presales activities Process sales order New J 5 ob “…” SAP ERP Process export Process Profile “…” Scenarios domestic sales Operational quotation order for key account and SAP Organizational Profile Receive Determine Receive Determine “…” Process Tasks customer type of customer type of sales Impact Assessment enquiry quotation quotation enquiry document Worksteps SAP ROLE: „O2C ORDER“ During Mapping Workshops business experts In the BPML all Megaprocesses in OneERP Each market and factory links job labels/SAP The OneERP Impact Assessment describes from impacted markets & factories link SAP scope are broken down following a standard profiles to individuals in the organization. This the level of change and business impact in roles to existing job labels/SAP profiles. process hierarchy. On the lowest level a process should be separated from the role moving from today‟s operations to the new Mapping decisions are based BPML, SAP Role logical grouping of worksteps are summarized mapping in order to optimize the organization way of working. Workbook, Role Directory and verbal under an SAP role name. structure. explanations by ERP process experts. 5. From Global SAP Role to SAP 6. From End User to Training Class 7. From Organization Fine-Tuning to Role Variants Transition Zz_O2C_Order Zz_O2C_Ord er CH45 Zz_O2C_Ord er CH4 A B Zz_O2C_Ord er CH9 C Organization Fine-Tuning focuses on the Based on the role and job mapping result, all The role variants mapping process is the adjustment of the local organization structure in identified end users are allocated to training activity who inks each end users to the role order to achieve objectives set in the new business classes. End user training to be hold during variants based on the SAP enterprise process model. The transition phase ensures that the month of May 2004. Prior to the end user structure. This activity is key in giving access the organization and its people are smoothly training the local trainer will be trained during a to transactions into SAP. transferred from the old to the new work one month train the trainers workshop. environment. Slide 48
- 49. What to expectright after Go-Live? Performance Stabilization Further & Process and Benefit Realization Performance System Dip Improvement, Knowledge Go Live Transfer +3 +6 +9 Months ORGANIZATION FINE-TUNING ORGANIZATION (RE)DESIGN • Smooth Go Live • Process efficiencies • The right people at the right place • Further improvement of Organization • Adequate skills and competencies Structure • Correct authorizations • Benefit Realization Slide 49
- 50. CONCLUSIONS The project was a success This success was due to many factors. Efforts of every single person involved The strong executive support and governance The positioning of the ERP project as vital to JTI‟s transformation into a modern multinational. Slide 50
- 51. Key Learnings Managementshould devote senior resources and considerable effort to change management, training and communication HR should take the lead in change management in a complex, long-term and demanding ERP project. HR should provide dedicated HR support for those working on a large project to take care of their day-to- day and long-term concerns Slide 51
- 52. Key Learnings Perhapsthe most important lesson was that companies must plan for HR involvement in ERP projects from the beginning. It is essential for HR to be proactive and lead from the front with other senior management involved. HR has a responsibility to deliver its part of the transformation process, and be passionate about what it can do. Slide 52
- 53. ……Final Parting Message…… Change Management is the process of turning project intentions into business practice. Slide 53
- 54. Thank you Any Questions Slide 54