"Overtaking the engine": how to implement the ERP system at the enterprise which is absent yet?

TAdviser: Can seem that implementation of the ERP system at the enterprise which is only created, - not such a difficult task. However practice shows that it not always so (if at all so). Most likely, similar projects can be under construction on one of two schemes: use of the "best practices" which are initially put in the selected ERP system or design of necessary business processes and "adjustment" under them the implemented software product. What option was preferred on GM-AvtoVAZ? How did the specifics of the Russian business influence this solution?

According to us, it is difficult to implement each of the designated approaches in pure form in practice. ERP system implementation usually assumes some compromise between implementation of the advanced processes put in design of the ERP system, and requirements of the existing or projectible business processes taking into account their specifics. In our case, the problem of creation of the modern automated control system arose from the moment of the birth of the enterprise, and its creation went at the same time with construction of the plant. System implementation in the conditions of the developing business processes was a certain advantage, but did not save us from such problems as the alerted relation of employees to their role as SAP of users. At the same time system implementation prior to production of cars allowed us to implement ideology of use of the standard funktsionalnost offered by the system of SAP to the maximum and also to make a number of completions based on use of a system at a stage of "pilot" production. 

TAdviser: Whether  the approach selected for GM-AvtoVAZ can be considered, In Your Opinion, as universal for similar projects? Whether there are some standard solutions for CIO or CFO participating in similar, "overtaking the engine" projects?

According to us, it is hardly possible to call implementation of the ERP system in parallel with establishing production and formation of business processes universal. As well as any other approach, it has several advantages and shortcomings. On the one hand, if the enterprise makes the decision to implement a system after the beginning of production and stabilization of processes in the company, then before it there is a question of alternative accounting of business activities of the company at once - in Excel or involvement of the third-party companies. As a result of it if the company wants to have historical data for the last periods, in the future there can be a question of entering of the saved-up data in the implemented system. Also system implementation in the conditions of lack of the resisted processes increases the probability of considerable completions after the beginning of operation. Especially in case of insufficient studies at a stage of conceptual design.

On the other hand, system implementation in this situation has also several advantages. First, lack of the implemented earlier diverse management systems and, as a result, lack of need of integration of already existing systems with the implemented ERP system. Secondly, because at the initial stage of formation of the enterprise business processes of the company become complicated gradually, their implementation in a system also becomes complicated gradually that in some way facilitates to users the period of "accustoming". Thirdly, system implementation in parallel with construction of the enterprise gives chance to design and implement the most integrated solution, considering requirements key business of users, IT specialists and a system capability.

As for recommendations about implementation of similar projects, we consider it expedient to implement the project on the following principles:<>

• the maximum use of fixed functions of a system without considerable modifications;
• involvement without fail in the project of employees who are experts in the corresponding business processes;
• following of a standard implementation methodology of the ERP system offered by SAP company;
• strong support of the project from the company executive and the sponsor of the project.

As the general recommendation it is possible to add that, from our point of view, when choosing the version of a system by the most justified use of the latests version of the SAP applications is. It, on the one hand, gives access to the greatest number of functionality, and, with another - allows to avoid as long as possible updating of a system in connection with the termination of its support.

TAdviser: How coordination between development of the ERP project and construction and equipping of the plant was performed?

Because at our ERP-sistema enterprise it is not used for management of a production equipment, by and large implementation of ERP-sistema was not directly interconnected with the diagram of commissioning of the plant. The diagram of construction of the plant and the beginning of production first of all influenced date of productive start of an implementation project of a SAP system and terms of the beginning of preparation of IT infrastructure.

TAdviser: Whether you were faced the need of making changes in the ERP project (perhaps, in already implemented functionality of an enterprise management system) in connection with changes in construction plans of the plant (for example, change of supplier of the equipment can lead to changes in the scheme of production and/or change of the used CAM and MES systems, and thus to influence ERP processes)? How to minimize similar risks?

In our case all changes made to a SAP system after productive start were caused by five basic reasons:

• change or complication of business processes;
• requirements of the Russian legislation;
• requirements of external audit or internal control;
• improvement of a system according to the official recommendations of SAP;
• requests of users for implementation of additional funktsionalnost.

Making changes in design of the implemented ERP system is the normal process called by support of a system. From our point of view, the procedure of support of a system should be developed and approved before productive start of the project that all further changes of a system were properly approved, authorized and documented. It is also necessary to notice that it is impossible to implement all available Enterprise resource planning functions at once in principle therefore add-on modules are implemented gradually, proceeding from priorities of the company and requests of users. In this regard it is also necessary to develop the corresponding procedure regulating an order of portfolio construction of the projects aimed at the development of a SAP system. In our company the similar list forms on an annual basis.

TAdviser: What specifics of the ERP project in automotive industry and what lines can be considered as universal or characteristic of most branches of the economy?

The automotive industry imposes a number of specific requirements to the ERP system. On the basis of our experience it is possible to note the fact that the basic functionality of SAP R/3 almost completely covers standard business processes (for example, accounting and purchases), but does not consider all specific requirements of the automobile building enterprise that causes the necessity of own developments. Implementation of the special SAP solution for automotive industry (Automotive Solution) or the additional SAP system, for example, of SAP Advanced Planner and Optimazer can act as the main option of a covering of functional deficit (a part of SAP SCM now). During SAP implementation of R/3 on "Dzhi Em AVTOVAZ" in Russia there were no specialists, aware and also capable to implement and support above-mentioned additional applications therefore the decision on their implementation within the second project phase was made.

TAdviser: What caused the greatest difficulties in the project progress? Whether it was connected with features of business in Russia, or these are common problems for all countries?

SAP implementation of a system on "Dzhi Em AVTOVAZ" was performed in record-breaking short time – 7 modules in 9 months that demanded considerable efforts from a command throughout all project therefore unambiguously to select its most "difficult" part is rather problematic.

Of course, in conditions when the implementation project of the ERP system was implemented in parallel with construction of the enterprise, one of the main problems was the lack of accurately certain business processes and procedures, including a lack of knowledge of processes of GM which were used as a standard. And considering that owing to specifics of our company, processes should combine both international standards of management, and the Russian practice, it created considerable difficulties at a stage of conceptual design.

Some complexity was caused by a project dvuyazychnost. Because at a stage of implementation of the project almost all executive positions were held by foreign specialists, official languages were two languages at once – Russian and English. At the same time not only documentation and settings were kept in two languages, but also the majority of project meetings.

It is also necessary to note that we lacked almost all project resources, beginning from office and finishing system implementation specialists. Despite the large volume of the modules implemented within the first project phase, number of group fluctuated from 15 to 20 people depending on solvable tasks.

Other considerable problem was functional deficit of basic system modules of SAP R/3 regarding satisfaction of specific requirements of the automobile building enterprise. For example, there was no possibility of formation of a template of the supply requisition of materials, the interchangeability of parts was not maintained, there was no interrelation between the engineering list of parts and the specification of cars. A number of specific requirements which implementation demanded especially close attention were caused by the fact that "Dzhi Em AVTOVAZ" - joint venture. In particular, strict requirements to closing of accounting reports under international standards for the 3rd working day demanded special attention to implementation of the module "Special Registers" based on which reporting of GAAP is constructed.

In conclusion it would be desirable to note that irrespective of all difficulties which "Dzhi Em AVTOVAZ" met in the course of SAP implementation of a system SAP is a powerful tool which is able to provide the strategic value of our work and competitive advantages of the company. The implemented SAP solutions provide continuous improvement of all business processes of the enterprise, allow to organize accurately financial and material flows, give opportunities of flexible management by production, cost reduction and avoidance of losses and also a possibility of an exception of any hitches in work and efficiency of acceptance of management decisions.