ERP Implementation and Change Management
September 9, 2009 by Raj Sheelvant
SearchCIO-Midmarket.com article by Christina Torode titled “ERP case study: Implementing ERP to manage growth, fix legacy issues” reports ERP Implementation Strategy for Peet’s Coffee & Tea Inc. Peet’s is a specialty coffee roaster and marketer of fresh-roasted whole-bean coffee and tea with 2008 revenue of $284 million. The company’s growth rate was 96% between 2004 and 2008. Tom Cullen, was hired as the CIO in 2006 to revamp an IT infrastructure that was stressed to the max due to Peet’s torrid pace of expansion. He successfully executed a big-bang implementation of enterprise resource planning (ERP) system.
Peet’s multiple sales channels spanned a call center, a website, licensed partners, corporate offices and 1,500 grocery stores with a fleet of delivery trucks — each with a different homegrown or off-the-shelf system that handled order inputs differently. Not only that outdated systems running core business functions such as financials, order management, inventory management, fulfillment procurement and manufacturing was not keeping up with the growth of the company. As this small company grew, these disparate and multiple systems instead of aiding the business, was impeding growth. This is typical of a small business which experiences growth faster than the IT systems can keep up. Most of the SMEs (Small and Medium Enterprises) get to this tight spot because infrastructure system like ERP is an afterthought. When competing for limited capital, IT infrastructure always looses out to sales and marketing. In fact management main attention is tactical – keep the business running. Strategic view of a mature organization needs ERP as a backbone for continuous growth.
Implementing ERP at this juncture of SME growth without impacting the business during implementation is crucial. According to the article, Tom Cullen decided to start fresh, to really get the systems on par with Peet’s current business needs and expected growth. He decided on a ‘big bang’ implementation of ERP system. Big Bang implementation of ERP applications rarely work. It’s not Engineering Change Management but People Change Management that is more challenging. Automating Business Process by itself is not difficult. But to do that in the face of resistance from not only the management but all the employees needs strong leadership skill – change management skill.
courtesy David Reece @Flicko
The first step was to convince the management team — which historically cringed at the thought of how an ERP project would disrupt day-to-day business operations — that in the long run, implementing ERP was its only choice. Instead of trumpeting that ERP system was a way to speed up business processes, Tom focused instead on the lack of visibility across the supply chain, including the fact that without a central platform the company could not see the true state of its inventory, work orders or costing information. With an ERP system, business processes could be handled from order to cash on one platform with visibility all the way across the business lifecycle. He highlighted how growth would slow down due to IT infrastructure bottleneck. By framing the ROI of ERP implementation for Peet’s in this fashion, Tom was able to convince the management that ‘business as usual’ is bound to fail. He was thus able to tackle the People Change Management before taking on the task of Engineering Change Management. This is where I think, everyone can learn from Pete’s ERP implantation. People change management is hard and it’s wise to expend upfront energy to rally everyone behind the goal of Engineering Change Management. Individuals and departments needs to be transitioned to a desired future state before implementing ERP. I think this is the only way to successfully implement ERP for SME organization.
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