Successfully Navigating the Turbulent Skies of a Large-Scale ERP Implementation
Bombardier started in the year 1942 and went on to become a key player in the transportation industry. It entered the market of rail transportation in 1974 and 8 years later its desire to diversify led it to enter the Aerospace Industry. By January 31, 2007 Bombardier Transportation posted revenues of $ 6.6 Billion of which 55% came from Aerospace division. The Aerospace division has headquarters in Montreal and is the 3rd largest designer and manufacturer of commercial aircraft in the world.
Bombardier Aerospace believed that regional jet is necessary to compete with the range of 1000 seat planes that its nearest rival Embraer in introducing the market. The detrimental impact of 9/11, war in Iraq have led to reduction of passenger numbers for large carriers which gave Bombardier a firm position in the airline industry. Business Problem
As the company grew over the years, Bombardier’s strategy of growth by acquisition turned the firm into a “textbook silo organization”. This created problems as systems did not communicate with each other effectively. This inefficiency generated additional costs because the firm had to maintain all the different systems.
Another problem, related to the operation of the aerospace division, was the low visibility of inventory and lack of integration between the old computer systems. This caused process delays, low inventory turns & price inconsistency from suppliers. The Bombardier Manufacturing System (BMS), the group of information technology applications that had been supporting Bombardier Aerospace’s manufacturing activities, had not evolved to cope with the fast changes. The BMS
capabilities had become limited.
We can assume that Bombardier was not a fully integrated company at that time because there was a clear lack of coordination and unity. An example would be how employees would create numerous stand-alone databases throughout the company on operations specific to their function.
Solution for the business problem
Enterprise Resource Planning (ERP) system was considered by Aerospace as best way to realize the strategic vision.It was realized early on by senior management that if the many assorted clerical process could be organized under one overarching system, the resulting efficiency would enable a savings of 1.71 billion dollars. First ERP Implementation
Wasted approximately 130 million dollars due to an improper alignment of IT and business strategy. Accordingly, this time around there existed great imperative to ensure that the new project team created a blue print that “cut a line through the processes horizontally”. The design of the P&C term project is based on similar principles diverging perhaps only on how Bombardier insourced rather than outsourced its development. Nonetheless, like how the consulting group P&C contracted has also overpriced its services to the tune of $6,000 dollars yearly (See Cost-Benefit Analysis), the innumerable consultants Bombardier originally hired delivered a product whose quality was out of proportion to its price.
Another parallel lies in how for both Projects, meetings with the senior management needed to be conduct so as to ensure that the proposed and design project appropriately captured the company’s business strategy. The case presents the implementation of an ERP system in Bombardier, along with all the major changes the corporation undertook for a successful transition. The problem that Bombardier is facing is the ability to find out how to implement an ERP system that will contribute to the large inherited data and processes from other sectors of the company.
At this point Bombardier is facing compatibility issues with their systems. An answer was needed to enable and establish a better way of communication between systems or establish an alternative to become a better centralized system and find a solution to the
lack of integration of their legacy systems.
The problem presented by Joseph-Armand Bombardier is the upcoming third round of ERP implementation in his organization. Even though a big improvement over the efficiency and success of execution between the first ERP round (Mirabel plant) and second round (Saint-Laurent plant), there is still room for improvement.
The focus is to identify the practices vs. the best of the best practices in the industry in relation to ERP implementation and offer specifics on how to make this third round provide a higher success rate. Main Problem: The rollout of ERP at the Mirabel plant and then followed by the Saint-Laurent plant did improve, but still had their fair share of challenges. Our area of improvement will be from the results given after ERP went live at Saint-Laurent. The main problem appears to be still be a disconnect between the business vs. project team and properly communicating and training those who will be using the new ERP system (SAP in this situation).
While the overall response was positive, not every issue from the Mirabel plant has been corrected and resolved. Symptoms: A few symptoms mentioned was that specialized knowledge was concentrated in a few individuals, embellishing the scorecards to mask some of the issues, gaps in understanding of priority between project team and actual business, and finally some feedback on wanting SAP to have done more for an individual’s current job.
The scope of the problem involves the next plant/location of Bombardier that will have ERP implemented to replace their legacy system. It is vital to establish “best of best” practices to provide a seamless transition with positive short and long-term results. We do not want to take a step backwards with loss of productivity, dissatisfied employees, and weak communication within the organization.
The context of the problem is based primarily on improvements over the last ERP implementation from the Saint-Laurent plant as well as looking at the best of best industry practices for successfully rolling out ERP in a large size corporation. We, as the consultants, must look at what’s been done both internally and externally, and develop strategies to help guide Bombardier into a smoother process. Again, with looking at the symptoms that Bombardier is currently experiencing post-Saint Laurent plant, the company has a clearer vision on how to proceed. The decision criteria to consider include: Greater active involvement with management, stronger communication, closer link between business and support group, and increase in productivity and output.
List of Plausible Alternative Courses of Action and Evaluations The alternative courses of actions would be to adopt key best-of-best practices that have led to a positive ERP implementation. Based on a study down by Panorama Consulting (Link# 1), we see that five key findings found in ERP implementations done in 2010 include the following: ERP implementations take longer than expected
Software as a service (SaaS) implementations take less time than on-premise ERP implementations, but deliver less business value Companies do not effectively manage the organizational changes of ERP Based on these five problems, I would recommend that Bombardier adopt/continue to strengthen the following best practices (Cite #1): 1. Executive management should endorse the ERP project and remain active throughout implementation. – As was seen with the Saint Laurent plant, management was very active in meetings, progress reports, and being a pro-voice for ERP. Even the Vice-President could be seen at the location promoting the new software. Moving forward, this model should be continued and strengthened.
By having upper management communicate (see item# 5) the feedback and updates to all personnel, it will show that every employee has a role to play and is vital to the success of this rollout. 2. Project manager should be assigned full-time to the implementation. – By not having to separate one’s time from work and ERP preparation, you can ensure that focus and attention is being given as a high priority. This will trickle down to show employees that this is not a haphazard process, but one that takes time and is meant to have a lasting effect on the organization. 3. Employees should receive training on how to work as a team on a project before implementation begins. – With SAP, departments are connecting in a way that may be unfamiliar to those who were used to having their own system and methodology for working.
For that reason, I would recommend having these team building exercises to make everyone aware and comfortable with sharing information. Aside from that, it is important for everyone to know how their work in the new system can directly (and indirectly) affect others in different departments. For instance, knowing what happens when a wrong route code is entered and the effect it has on logistics can help to prevent these errors and eliminate this “me” mentality.
4. Employees should receive training before and after implementation. – One key area that was improved from the Mirabel implementation was that not a lot of training should be given before vs. after ERP is live. Instead, it is wise to have the employees aware of the changes coming, but to also provide more in depth training sessions and refresher courses after those employees have had time to use the system. As stated in the case, a lot of unknown problems/issues originated after the system went live and the company would do well to retain a support staff on location (or easily accessible via phone/computer) if questions do arise. 5. Communication must be maintained throughout process and in an efficient manner. – By holding department meetings, producing a newsletter, or just having impromptu updates, employees will be kept in the loop and will see the importance of ERP implementation.
While management would not want to communicate any issues during these phases, it would be wise to be honest with employees and to offer a forum for feedback and suggestions. This is important as the employees will be the ones using the system more than anyone else involved in setting up ERP and when employees concerns go unheard, it can lead to disengagement and resentment. I am not too concerned about budget costs, mainly because Bombardier is already familiar with the process and as they continue to bring SAP over to their other facilities, there is a positive network effect of sharing information from the other locations and even bringing those “power users” over to assist. Whereas other companies looked at in other case studies may have had experienced far greater risks with ERP implementation, this is because the organization was not ready for change.
Case Study Conclusions
While viewing the quality and logical recommendation, it is right to say that Bombardier should allow the ERP process to take place once more and finish what was once started. With the BMIS team created, training and support would be available to be present during future implementations which would create a positive influence on all the employees who are new to it all. Having training before and after the implementation would allow those who were never working on the same systems integrate and have familiarity working together.
During the implementations, the upper management should always be present along with the BMIS team. The presence with upper management influences not only the employees but the consultants also. Also, the divisions would also need support while the entire company is being implemented because they are also in the loop . With ERP, Bombardier would allow their vision to become “One Company” and allow all their divisions to share and become centralized as a whole.