Valentina Ivanova: Effective implementation of a "heavy" ERP system is possible only at careful study of the project

TAdviser: What were the most important incentives which induced the enterprise to begin so labor-consuming project? Whether it is possible to tell that the used earlier information systems completely exhausted the value, or the Russian and foreign partners of BELZAN began to impose such requirements which could be executed completely only by means of the ERP system, or the enterprise just moved to that level at which without ERP effective work is impossible?

Valentina Ivanova: I will describe the general situation with the automation equipment of data processing which developed by the beginning of work on the project. By 2005 at the plant ASUP which was constructed on technical and technology base of fifteen-year prescription was still used. The last large upgrade of computer aids and technology of data processing took place in computer center in the late eighties – the beginning of the 90th years.

At the plant about 250 problems of management of 12 functional subsystems which covered all main fields of activity of the enterprise from the design specification of a product before medical care were solved. More than 80 automated workplaces worked at the enterprise. Part of them – the purchased software, a part – own developments some of which was about 15 years.

Developments were executed on FoxPro using "flat" dbf-files. There was no single database and uniform DBMS. Some purchased software was essential us is processed therefore transfer it on new versions could cause vital issues, up to installation of new versions and new implementation.

The current status of the IC could be characterized as good in terms of understanding of requirements of the enterprise, tasks, their systematization and structurization at the local level. A number of problems was at the same time in full shown. The weak integration of information environment which became the duplication reason at information input, the multistage planning, accounting and control leading to excess and unproductive loading of personnel, inaccuracy and low efficiency was one of them. Mismatch of level of an information system to current demands of the enterprise, the most sharply shown in lack of a possibility of operational monitoring and exact information analysis for acceptance of effective and timely management decisions was other problem. Besides, the used information system needed updating for implementation of continuous operational planning, high-quality external and internal summary financial accounting, cost analysis.

TAdviser: From where the initiative about ERP system implementation proceeded: "from below", "on top" or along with two parties?                                             

Valentina Ivanova: "On top"! At that time need of urgent reengineering of an information system ripened. The management of the enterprise headed by the Chairman of the board of directors Alexey Vladislavovichem Sabadash came to a conclusion that it is necessary to create such information system which would be capable to make business steady and productive.  In one of the performances it, in particular, noted: "the market requires from us accurate and fast solutions which would be based not on approximate, and on exact data, … strict control  of the movement of material and financial flows in the enterprise... Only in the unified information environment having the high level of relevance and efficiency we can have exact data on all resources, predict the future, select and make the objective and weighed management decisions".

TAdviser: And why the ERP system was selected from your case? Some market participants claim that in some cases it is possible to manage, for example, the MES system integrated with an accounting financial system and a HRM system. There are in the market and separate program implementations of MRPII.

Valentina Ivanova: Solving an assigned task, we could choose two ways. The first - to buy a license packet of management of the integrated databases, to purchase tools for development of application programs, to provide training of programmers in new programming methods, to develop interfaces for consolidation of the existing subsystems and to start implementation by own efforts. It was the economical way in terms of one-time costs, but very long. But the main thing, department of IT would still continue scrappy automation on those problem definitions which would be put by functional services of the plant.

The second way - to purchase and implement a modern enterprise management system based on methodology of ERP of solutions as it bears in itself standard control algorithms. We understood that it will demand radical reorganization of a management structure by the enterprise. But production should work as well debugged mechanism, including all communications with the outside world, supply of materials, their quality, etc.  We selected the second way and we consider it correct. The future behind ERP systems.

TAdviser: What sources of information were used at assessment of systems and integrators? Whether the preference in relation to foreign solutions why such domestic systems how Galaktika, Compass, Alfa System which have quite developed functionality (including with implementation of MRPII) and quite "worthy" history of successful projects were not considered was initial?

Valentina Ivanova: In the third quarter 2004 together with consultants of ADDITI CONSULTING company the careful analysis of the existing business processes, audit by the existing ASUP was carried out and it is developed by terms of reference on implementation of the integrated management system based on solutions of the class ERP.

At that time we were faced by very difficult task of the choice of software supplier and consulting firm which would agree to implement together with us a system in one year. In the world market the set of the systems of the class MRPII/ERP is also now offered. Now at Russia there are about ten western systems and three-four domestic systems. The Russian systems such as Galaktika, "1C: Manufacturing Enterprise Management 8.0", Parus, "BOSS Corporation"  were not considered by us in view of the fact that there are no implementations of these systems at the enterprises of our type. The western systems are offered  for all types of the enterprises.

Investigating possibilities of use of the ERP systems presented at the market, specialists of department of IT BELZAN attentively studied such foreign solutions as MAX, MS Dynamics AX, Oracle e-Business Suite and some other. Also, they visited the enterprises where there was an experience of implementation of these systems.

TAdviser: What were key selection criteria of software solutions, suppliers? Whether such indicators how total ownership cost by the solution and return on investment were considered? How important for the project was the choice of integrator?

Valentina Ivanova: As a result of the carried-out preliminary information analysis we came to a conclusion that as selection criteria of solutions it is necessary to use the following:

• the term of implementation of ERP-sistems (terms from 2 to 4 years, and at smaller functionality, than it was necessary for us, we were categorically not suited);
• implementation cost;
• presence of competent gen. contractor on implementation of the specific software product.

Proceeding from the voiced criteria we made primary selection of solutions. Then requirements to the ERP system were detailed and applied to the offers which remained after the first stage of selection. As a result we stopped on the solution of the German company SAP AG.

From a set of the firms offering the consulting services, our choice after additional studying of a situation and specific proposals, dropped out on ASAP Consulting company headed by Valery Anatolyevich Vorobyov. We were lucky:  consultants were same obsessed as well as the staff of department of IT in aspiration of improvement of schedule system and the cost accounting, accounting, optimization of information flows and t. item.

TAdviser: The ERP solution of SAP was selected, because of prestige, on functional filling, "for all occasions" or for some other reasons? What when choosing it was more important?

Valentina Ivanova: At the last stage of the choice of an information system the main criteria became:

• functionality of future system (they had to provide business process automation, covered by an old information system, but with new quality and expansion of opportunities);
• possibility of further scaling of a system;
• sales opportunity of perspective tasks within the information strategy of the enterprise, including cardinal changes of business, structural and organizational changes, changes of strategy of planning and so forth;
• high integration scale of a system, possibility of its combination with already used applications;
• flexibility of information environment, possibility of its completion under standards of the enterprise.

To all above-mentioned criteria the SAP ERP system also most fully answered the purpose of creation of the integrated and transparent information environment within all enterprise.

TAdviser: Now in the company only the ERP system is used or also some specialized solutions of independent developers are implemented?

Valentina Ivanova: Planning and management of the main and instrumental production, accounting, tax accounting, logistics, the cost accounting and formation of actual cost, control of course of production, sales management at the enterprise is exercised based on the software of mySAP ERP.

Personnel management and calculation wage plans are performed in the Lexema system, management of fixed assets – in own developments on FOXPRO.  Unloading from external systems in SAP is performed once a month when closing reporting period. 

TAdviser: What can be "reckoned" as project deliverables? Whether future economic effect of the implemented solution was estimated? Whether forecasts came true? What contribution of transition to work on methodology of MRPII to economic results of implementation?

Valentina Ivanova: It is conditionally possible to separate the received results into technical and economic. "IT shniki" as a result of implementation received, first of all, a new technology platform, the new environment for developments. Considering a uniform data structure, we significantly reduce time for development of the new applications and modification which are earlier made that is important if to consider that in department of 15 programmers, and are covered by a system all of functionality of the enterprise.

In the agreement the condition of the invariance of the standard code was initial. Thereby we protected ourselves from excessive problems, and strictly observed integrity of a DB. However, change of the standard ERP SAP software code is also not required, a system is rather flexible and is configured under conditions of business of the enterprise.

As for economic aspect of the received results, I want to provide the expression of the director of economics and finance Svetlana Stepanovna Skvortsova. According to her, "implementing solution of SAP allowed the enterprise not only to qualitatively improve key business processes, but also to increase knowledge and interest of staff of divisions, to make their interaction approved and effective". In particular, she notes that "responsibility of personnel of the main production for the end results of activity of the enterprise at the expense of authority delegation on the operational level of management increased...", and "implementation … allowed to determine the level of professional potential of employees of the enterprise, to estimate once again and to correctly use this potential".

TAdviser: What features of project organization, in your opinion, played the most important role in a project success and to "hit in terms"? What could lead to a project failure, "if not …"?

Valentina Ivanova: First, very positively interest of the management of the enterprise in project implementation, understanding that ISUP is implemented not for service IT, and for ensuring controllability of business, timely determination of its key indicators affected project deliverables. We felt permanent attention to the project, control of its implementation, belief of the management in unalterability of the truth: "to a system – to be and shares of doubt in a positive project deliverable".

Secondly, consultants and personally the CEO of ASAP Consulting company took the most active part in project implementation. Using, a case I want from a name of staff of project office  to thank them and to wish them good and interesting projects and in the future.

Affected success also our joint work with consultants: the project team accumulated the knowledge base about a system. Consultants leave, and we remain in private with the problems.

But huge work and devotion of all project team members was the most important factor of success of implementation.

Summing up the implementation results, it would be desirable to warn against possible errors if someone after all decides on implementation of ERP systems of such class as SAP ERP. As much as possible to reduce risks of the similar difficult project, it is necessary to adhere to the following principles:

• Careful modeling. It is necessary to approach business process modeling seriously.  It is guarantee of the correct setup of a system.
• Clear boundary of the project. At the time of project development there is permanent desire to cover automation as much as possible processes. In this case the project can become  impracticable.
• Inevitability of implementation.  Belief of the management of the enterprise and a project team that the project  should end with commercial operation.
• Strong team of the project. The project team should be rather competent and work with complete devotion.
• Command psychology. The spirit in a command should be the worker.
• "There are no small questions". Questions should not be divided into "important" and "not important". Any arisen issue should be resolved timely.

Only at such approach it is possible to finish the project successfully.