SUEK: Our HRM project was unique for Russia and in terms of the scope of, both on approaches, and on terms

TAdviser: What premises to start the project were? How project objectives were formulated? How the choice of the platform was performed?

Andrey Voyna: The SUEK company exists since 2001. It expanded, generally due to buying up of assets – the coal mines extracting and processing enterprises, the energy companies, the auxiliary directions (motor transportation and railway carriers, etc.). To 2004 the company became very large, global. Its enterprises are located in many regions of Russia (from Moscow to Vladivostok). The state contained it about 45,000 people, and in the amount of the enterprise extracted annually more than 90 million tons of coal. But at such scale all companies of holding remained substantially separate, both at the level of business processes, and at the level of information technologies. And to make the correct management decisions, the management needed up-to-date and reliable data, in other words - the reporting.

In 2005 in holding process of internal reorganization began. The company began to build and arrange the business processes. For support of these changes and as a basis for further development it was necessary to create a common information space. At first it was necessary to decide on the platform, and the purpose was to find uniform, complete ERP solution which as much as possible covered different aspects of accounting. The set of different tenders was held, representatives SUEKA went to other companies on reference visits. In September, 2006 finally were defined that SAP will be the tool for automation.

TAdviser: Why implementation of the HRM block was decided to select in the separate project?

Andrey Voyna: Is HRM block in terms of SAP ERP independent. But here it should be noted that the coal industry is followed by capacious, profound collective agreements in which all subtleties of relationship with workers make a reservation. At the same time it is necessary to consider that in addition to the federal legislation in different regions there are, local standards and acts.

All these problems were imposed on the fact that it was necessary not only to collect information, but also to compare among themselves. Therefore the HRM project solved at once two purposes – to unify business processes both to build a personnel management system, and to provide payroll and operational submission of booking data (for the fourth or fifth day). In general for the ERP project the task to provide closing of accounting records for the seventh working day of reporting period was set. But as on some activities product cost is significantly determined by labor costs, without the working HRM block it could not be made.

Satellite tasks were at the same time solved – to estimate efficiency of personnel processes, to reduce costs for document creation, to exempt workers from routine work "with papers" and to give them the chance to be engaged more directly in personnel. And centralization of business processes and a common information space allowed to interact more effectively with regions, to reduce costs for data collection.

Sergey Nikitin: When SUEK just formed, each mine came to the company actually with the unique business processes, with the methodology of calculations. From here - such initial "loskutnost", separation of data. The implementation project of ERP and, in particular, the HRM block thought not only for increase in efficiency. It was necessary for creation of conditions for development of the company because without this unification further growth would be extremely difficult.

Within the global ERP project all blocks began to implement at the same time. But the specifics of the HRM module are that it usually is implemented enough irrespective of ERP. Therefore the situation when its implementation is selected in the separate project is quite justified, the project office is created, the contractor – the partner in implementation is looked for. It cannot implement all global ERP project in such scale what requires SUEK (HCM SAP ERP), perhaps, any of the commands existing now in the market.

Andrey Voyna: At the same time the global ERP project is based on the data from the HRM block. That in the ERP system could calculate data at cost, data on compensation were necessary. Besides, it was necessary to use a single system of NSI (normative reference information). Of course, the ERP project was connected by certain terms and therefore for implementation of the HRM block terms were even more tough – we could not bring, "stop" all global ERP project, and we felt this heavy moral responsibility.

TAdviser: The fact that a system "western" did not confuse? As far as it was applicable to the Russian conditions?

Andrey Voyna: Yes, a SAP system "western", but in it is solutions for Russia. All Russian legislation in a system is fulfilled, continued support of the current changes is conducted. If we revealed any inaccuracies or we had additional wishes, then we sent requests to SAP and they rather quickly were implemented. There was a full-time work on improvement of the standard SAP solution.

SUEK (HCM SAP ERP) integrates in itself many different types of business. These are mining operations on working off of fields by the opened and closed method, transport (\d and a car), drilling operations, sinking, power, mechanical-repair, enrichment, works on recultivation of soils. Besides, as I already spoke, there are still distinctions on regions. It is possible to tell that thanks to the project in SUEKE in SAP could double-check and "clean" implementation in the system of all legislation.

TAdviser: What main difficulties of the project were, in your opinion? It is no secret that implementation of automation systems and especially personnel systems affects, as a rule, all staff of the enterprise. And often people are afraid and try to counteract the carried-out changes. What it is necessary to make to avoid sabotage from employees?

Andrey Voyna: The main complexity of the project is a diversification of business, regional distribution and what is connected with it. Now it is possible to tell that we completely solved basic problems – payroll, personnel records, time (organic) accounting and also input in the system of all necessary data for compensation calculation. It is the base, a basis, from it, likely, any implementation of HRM begins. The tools allowing to analyze number, the wages fund, performance are involved in a system. For this purpose in a system there are all necessary data now.

Sergey Nikitin: Implementation of basic functionality - the most difficult process. As it consisted SUEK "of pieces", all these data and processes should be unified at first. Additional, "beautiful" settings – the management of career, training, etc. – do not require approvals neither of labor unions, nor of the local legislation. And here changes of basic processes require very serious approval in terms of business. These are big organizational changes, and not only.

First, the project should be carried out so that to avoid a personnel turmoil. All, likely, remember speeches of miners on Gorbaty Bridge near the White House in Moscow. These miners worked at those enterprises which were included then into SUEK. On a pilot project we managed to reach certain positive effects to which we could refer then, proving correctness and operability of our methods and approaches. We can fairly tell that in our system the salary to all workers and at all stages of the project was calculated correctly.

The second moment – crisis. All companies began to reduce costs. With wage fund it was necessary to hit a certain acceptable nail. Therefore in addition to processes of unification hard work with collectives was conducted – new regulations were discussed and adopted. According to requirements of shopping mall it was necessary to warn all personnel in two months about the future changes. HR departments were explained to employees that their salary does not decrease, but new schemes, new collective agreements, internal local acts will work. As a result payroll calculation did not cause any complaints from labor unions.

TAdviser: How serious training was required at system implementation?

Sergey Nikitin: Training became a separate and big task on the project. And here we developed two separate directions. First, this training of end users, and secondly – training of specialists of SUEK, those who participated in implementation and support a system.

In the first direction together with consultants from Molga company the special training program was developed. The task list was created, under them roles were developed, and on the basis of roles training programs were created. Training was conducted in three training centers – in Moscow, Krasnoyarsk and Leninsk-Kuznetsk. Two more small local platforms were required to be organized in remote branches as because of a difference in time zones (7 hours) it was difficult for employees to leave for study.

On a pilot project got access for 120 users to a system, at a stage of replication 340. Now in a system more than 600 users work. However the much bigger number of employees because some of them though do not work in the program directly were necessary to train, but should understand as when for what and what data are entered there. For example, were trained the chief OTIZA, the HR director. In total less than in two months works on training in volume of 7,000 man-hours (a replication stage) were carried out.

At the end of training employees took part in integration testing which included complete passing of all functionality on their specific role. They wrote the comments which were analyzed then and some of them were considered in a system. At the end of training in all in the employees who successfully passed the test the personal login and the password with which they at once upon return on the jobs began to work in a system was issued. Two months they worked in the mode of trial operation, i.e. in parallel in two systems – SAP and historical. It is clear, that it is double loading, at the same time all successfully coped with this task. After training, and it is very important issue, users had to at once begin to work in a system and to set the gained knowledge and skills, the gap between the end of training and the beginning of work was minimum.

Therefore one more important point - it was necessary to plan works so that by the end of training settings in this direction that it was impossible so that taught one were fully completed, and it is necessary to work in a different way. It was important to know that business processes will not change any more. At first trained personnel officers, then timekeepers who keep time account, then payroll calculation specialists, and in conclusion - accountants.

At the same time, while there was user training, loading of historical data was executed. It is also separate big task. The correctness of payroll calculations depended on that purity with which information was transferred to a system. After a pilot stage it was decided to select data migration in a separate subproject. During this project approach to data migration was developed, tools and means are developed.

For this purpose project implementations, and in particular for work on migration, the command was specially created (partially from representatives SUEKA, partially from more experienced specialists of "Molgi"). Representatives SUEKA there was approximately twice more. Before works approximately within a month in Moscow they were trained in the center of training of Molgi company ("MOLGA-academy"), conditionally speaking – told what is SAP as as in a system is called that where is, trained business parts (the project solution), told about the principles of migration, trained in work with tools on migration.

TAdviser: How the project team was organized?

Andrey Voyna: In terms of approach and terms of the project, team building and requirements to it were unique. In the market of personnel of the employees implementing these solutions in the coal industry no. Understanding that employees can block each other in the directions of the project, for the purpose of risk reduction on settings and input in commercial operation was the basic. The project team consisted about 40 people - it is methodologists, adjusters, developers, and about 200-250 more people were actively involved in project activity from business - it is those people who discussed, approved, signed.

Sergey Nikitin: For successful project implementation the decision on creation of regional groups of implementation was made. They had to resolve issues on data migration, training of end users. After the end of these works gradually all these employees began to perform functions of maintenance of a system. Such structure was conceived initially, for a project planning stage.

On big projects (as at space launch) the psychological compatibility is very important. The settled good business relations. The beginning of work in a new system for each user is always a big stress, even when it was trained and so forth. Especially, when information entered by it influences payroll calculation to the employees. It is heavy responsibility, the moment of strong psychological tension. The fact that employees of regional groups successfully contacted to users from the very beginning of the project concerning data migration trained them, helped to overcome successfully this moment, to break a psychological barrier. They had normal human relations, the confidential atmosphere. Users were tried to be helped quickly, to routinely remove a part of questions, to overcome some difficulties. All this helped to adjust work qualitatively.

Afterwards employees of a regional group of implementation helped maintenance of a system, revealed possible errors, analyzed the reasons. And thanks to it information in the center rose already "cleaned". On the one hand, it unloaded on the central office which differently just would choke in a huge flow of the data arriving from everywhere. On the other hand – such job sharing allowed to dispose of the resources selected for the project effectively. If the project office at which highly qualified specialists work had to resolve all issues, it would be considerably more expensive. Such pyramidal system helped to distribute resources more effectively. Correctness not in that to do everything by the hands, and in correctly to organize works, to distribute them on the available employees according to their qualification, and even whenever possible to do them far off.

TAdviser: How careful was project planning?

Andrey Voyna: Project planning was very thought over, qualitative. At first specialists from "Molgi" outlined to us the vision of the project, project office SUEKA gave "picture", and then two of these representations were brought together and imposed on financial opportunities.

Processes were discussed, optimized. We defined launch of a system and "turned off" from it back. If saw that in the normal mode we do not manage to execute everything - paralleled tasks, and it partly increased project risks. So, five regional groups of implementation, on number of production sites were initially planned. Then their number was reduced to two groups on 10 people in everyone.

Sergey Nikitin: Uniqueness of the project - in very deadlines of its implementation. Everything was very accurately planned, and the diagram was very strictly observed. Also it is necessary to pay tribute to project board from SUEK. We as the implementation, i.e. project company, understood all subtleties of project work. If such understanding is and from the customer is a great advantage for the project, and it quite seldom meets. An active position, the involvement of the management of SUEK, understanding of all interrelations allowed to implement the project in a short time and in the planned volume.

Andrey Voyna: It is very important to distribute ability of the head responsibility, to make decisions. It is necessary to understand at whom what competences are more developed. For example, at a stage of replication of the project it is necessary to realize who on places, in regions, can make everything who needs support, who has no it at the disposal of the necessary people and it is necessary to send employees from the center.

Sergey Nikitin: It is not without reason said that cadres are the key to everything. When regional groups, project board were created and in general the management of SUEK understood that without qualified personnel, of course, nothing can be made. Therefore the decision on training of a project team from SUEK was made. And it is very important that on it did not regret financing.

Artem Akopov: There were several possible options how to organize training. As a result it was decided to provide training "ground" under the specific project. Molga provided training of employees of these regional groups of implementation, in particular the group under the leadership of the architect of the project developed a training course, employees of "Molgi" carried out it, all were satisfied. All understood that money was not wasted. It is such "counter" which is owned by "Molga" – training of project teams, the training "ground" under the specific project, specific objectives.

TAdviser: How were interaction of employees within the project is organized?

Andrey Voyna: A separate subject – the system of communications on the project. First, our solution is completely documented. And it not just the description of what is made, a post factum. Documentation was carried out strictly along with execution of works.

Artem Akopov: It is not the system of documentation, but a documentary management system. It is the tool on which we lived. Without it it would be impossible to agree with 50 enterprises.

Sergey Nikitin: We had a schedule that should be made in what terms. And we had a choice - or ourselves should control a form and structure of results continuously, or to issue complete documentation. Then all will work according to it as it is necessary and to achieve the set results.

Andrey Voyna: Still it is possible to note active use of modern technologies in the course of project communications. It is e-mail, video conferences.

Sergey Nikitin: Each of project managers during implementation received approximately about 10 thousand electronic messages. If such correspondence was conducted "in the old manner", in paper form, the whole office would be required. 40 video conferences were carried out. Since some moment to us special time, two times a week was selected, and we held such regular meetings. These working meetings allowed to save seriously resources as they did not require either business trips and flights, or absence someone from the management in the workplace.

TAdviser: How do you estimate project payback periods?

Andrey Voyna: Initially we planned that a system will pay for itself in five years. Now we think that we will keep within three years.

Sergey Nikitin: The payback of a system is obvious as the ERP project created SUEKU real competitive advantage – understanding of product cost almost in real time (for the seventh day). As a rule, such large companies and holdings collect the reporting within a quarter and only upon termination of reporting period understand as as they made.

Andrey Voyna: Now I can, being in Moscow, using different means of the reporting to look what is already entered and calculated on places. And it is very important that this reporting is authentic for all 100% as it is received directly, but it was not shifted "from hand to hand".

Sergey Nikitin: During crisis the survival of the company is especially relevant. When speak about a payback period, it is very important to live up to this term at least. And in those conditions which developed now it is very important to have the complete information at cost, on a cost structure. We can tell that the project not only quickly enough will pay for itself, but also allows the company to survive. Regarding compensation the management now accurately knows what it pays money to the workers for. How many goes for compensation, how many social obligations how many leaves on different programs.

Andrey Voyna: It is possible to estimate efficiency of investments at mining works, and not only to receive assessment, but also to compare it on regions and work types. Mining operations are conducted at us in different parts of Russia, different methods, and now it is among themselves rather simple to compare their cost. In view of the fact that the algorithm of payroll by the worker is unified for all enterprises, it is possible to understand why in one part of the country of work are conducted more effectively, than in another.

TAdviser: The main part of works fell on creation of the solution or on its replication?

Sergey Nikitin: Both a pilot, and drawing part of the project were unique for Russia and in terms of the scope of, and on approaches, and on terms. The pilot stage, 8 months - replication took 4.5 months. So all system was implemented approximately in a year, with a small break.

Actually circulation represented full-scale implementation, now I will explain why. Usually in circulation start already ready-made solution, at us was not so. At the beginning of a replication stage three months were conducted methodological works when the solution received at a pilot stage was improved with representatives of all enterprises. The unified solution was jointly received in Moscow.

At a stage of circulation other types of activity (mines), other algorithm of payroll calculation were added. As circulation passed in conditions of the working pilot, it was necessary to add the available solution, without having destroyed it. It was necessary to compare it to what is already implemented, to find out why salary at these enterprises is considered quite so and to solve whether to adjust the pilot solution or to change calculation models at the enterprises.

2.5 thousand additions and changes became result of such concord work. Then they were consolidated up to 600. One more structural division in the project – interregional task force which resolved methodology issues (about 60 people) was created. The description the solution was processed for 30%. It is possible to tell that a half of the project solution was made at a pilot stage, and a half - already at a circulation stage.

TAdviser: Whether it is possible to tell that the implementation project of HRM is fully completed? What perspectives of development?

Andrey Voyna: Now we started basic functionality and now should receive from it the maximum return. Here carrying out several small projects, for example expansion of reporting system is possible.

Most likely, one more structural reorganization as now not all resources (including on personnel) are up to the end effectively used will be carried out after a while. Selection of certain processes on outsourcing is possible.

Payroll calculation is already selected for outsourcing. In Krasnoyarsk the uniform settlement center where from all enterprises data for payroll are flown down is created. At the expense of it the efficiency of process already at an initial stage increased three times. Further such centralized payroll calculation will be extended to other types of activity. The task of outsourcing was born in the middle of the first stage of the project when we understood that we will be able to make it. There are subtleties. To be engaged in outsourcing, it is necessary to find and train people, to resolve issues with the organization of communications. To collect data from all divisions, it is necessary to build the system of communications: as in what sequence to enter and when "press the button", i.e. start calculation. At a pilot stage, since January 1, 2008, we started payroll calculation on 12,000 people, then at a circulation stage, since January 1, 2009, - on 30,000 people.

Of course, we are not going to be satisfied with what has already been achieved. Many different options of further development of a system are considered, them it is necessary to think over, estimate requirements and priorities.

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