CASE 1.2 Real-World Case
Rolls Royce’s ERP Implementation
Source: Based on Greg Sumner, Case Study Report, U Mass Lowell, 2006.
Rolls Royce (RR) is a global company with several divisions in more than 14 countries. Itoperates in four global markets: civil aerospace, defense aerospace, marine, and energy.9 In 1996, Rolls Royce outsourced 90 percent of its IT functions to a contractor called Electronic Data Services (EDS), which meant that EDS was responsible for overseeing the existing IT structure as well as providing adequate IT solutions for the future prosperity of the company.10 RR used more than 1,500 legacy (mainframe) systems that were inaccurate, expensive to operate, and difficult to maintain.
9 Rolls-Royce Web site. www.rolls-royce.com/index_flash.jsp (accessed October 2010).
10 Kelly, L. (December 2003). Outsourcing Case Study: Rolls-Royce. Computing.
A need for an enterprise resource planning (ERP) system was noted during the late 1990s at RR to handle the volume of data being produced and processed from the new acquisitions and overall growth experienced by the company. In 2001, RR decided that SAP/R3, an ERP platform consisting of 12 functional modules, would be implemented at its aerospace division. There were multitudes of challenges that RR had to overcome in order for a successful implementation to occur.
To conquer the challenges presented, RR had to have an excellent IT team in place with a viable implementation strategy. The ERP project consisted of a management team of specialists from EDS who in turn hired SAP consultants to provide specialized technical help with the implementation. Within the project team there were subject matter experts (SMEs) and staff that had vital knowledge of cross-functional business relationships and experience of the old legacy systems. In conjunction with this team there were operational business units (OBUs), each with its own ERP change management team, which was responsible for implementing working changes and training.11 The ERP team at RR could be classified into three categories: cultural, business, and technical.
11 Yusuf, Y., Gunasekaran, A., and. Abthorpe, M. S. (February 13, 2004). Enterprise in Formation Systems Project Implementation: A Case Study of ERP. International Journal of Production Economics, 87.
The cultural team’s challenge was to overcome the problems that stemmed from whether or not SAP (1) would be accepted by users throughout the company and (2) would provide similar functionality as the prior legacy systems. The cultural team decided to illustrate the benefits to the company as a whole in order to quell concerns. They did so by training individuals throughout RR. Specialist users were trained, and they, in turn, trained expert users. Along with meetings and presentations, they allowed users fully to understand and utilize functionality.
The business team had to overcome the problems that stemmed from the fact that SAP required a rigid business process structure that necessitated a vanilla implementation. This meant that working practices at RR would have to change in order to meet the functional demands of SAP. The business team used process mappings of current procedures and remapped them to show how they would have to be changed organizationally in order to meet the demands of SAP. Overall, expensive modifications to the SAP software were avoided.
The technical team had to overcome problems mainly to avoid the possibility of inaccurate data. Their main challenge was cleaning data during the migration. Mr. Uwe Koch, the technical lead at RR, says: “We didn’t achieve all our targets and still haven’t finished cleaning the data. We are in a stabilization period. Making enough people available for these tasks has been difficult.”12 Data had to be screened and stored while avoiding duplication—a major concern for RR. RR built interfaces with the old legacy systems for some special circumstances, so some legacy systems weren’t taken offline immediately. Interfacing required that data be retrieved from the prior legacy systems, which of course meant that it had to be accurate after being run into SAP. This was so because the reports generated from SAP had to be precise. This was accomplished by validating the data before putting it into the SAP data warehouse. The system required multiple weekly “runs” via a UNIX server, which bridged the data from the legacy systems.
12 Adshead, A. (May 13, 2003). Cheaper Field Staff Tracking Services. Computer Weekly.
The system rollout was another technical challenge. The ERP was designed in three phases, of which the third stage was actually the “implementation.” The implementation was done in two waves. The first wave was focused around the replacement of the legacy systems. The second wave was done in order to implement such leftover elements as logistics and human resources that were not converted until wave one was completely successful.
The implementation team at RR, including EDS personnel and SAP consultants, identified problems that would be pertinent to the implementation of SAP as the ERP for the company before they could develop into issues that would impede and possibly cause the implementation to fail. Hence, a sound implementation strategy made the endeavor possible. This case is surely proof positive that having a solid and knowledgeable ERP implementation team that can anticipate problems during an implementation, while putting forth a solid strategy, is the key to success. RR continues to look into the future to adopt new technologies, methodologies, and processes to take them to the next level.
Case Questions
What do you think of RR’s ERP implementation project? Did they select the right implementation strategy?
Discuss the critical success factors of RR’s implementation strategy and the role of SMEs in the project.
What advice can you give to RR’s technical team on their approach of migrating legacy system with the SAP software?
