ERP and Change Management at Nestlé Case Study Assignment

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Topic: ERP and Change Management at Nestlé Case Study Assignment

Date: 2nd May, 2016

Word Count: 1994

  1. What could Nestlé have done better in implementing SAP?

Because Nestlé is switching to a new system, and it normally needs to take three to five years to implement as Dunn said (Marchewka, 2015, p.300). In order to match the different databases that Nestlé had before, they need to create a completed new system to deal with purchasing, financials, sales and distribution, accounts payable and receivable within the supply chain. When the project came out, there has been lots of bugs exist within the system. In order to make the new system perfect working across the company, they need to: First of all, extend the length of the project, and make sure there are no bugs or minimum bugs within the new system. According to the story, the project team only took eighteen months to finish the product. As I mentioned before, the new system needs to take at least three to five years to implement. The consequence of this new system is that almost nobody uses it, they familiar with their old system that they used before. Steve Pavlina (2008) stated that one of essential skills for good project management is accurate time estimation. The reason is time estimate drives the final result of the project, and also impacts other peoples. And also, time estimates could help organise and structure the project. For instance, based on the project outcome to give an accurate time estimation in order to let the new system to coordinate the various departments.

Secondly, the new system still needs to develop further functions based on the client requirements. According to the story, the purchasing department is using the new system, but they cannot integrate with other departments, like finance and sales department because every department uses their own system. The reason why the new system cannot work as expect is because less communication when promote the new system, and the business requirements is not well defined before trying to replace the old system. Good communication and better teamwork are very important when implement the change management plan, and use the proper tool (like Gantt charts) to monitor the progress is essential. Karlowitsch (2011) indicated that people can immediately see what should have been realized in a certain date and when using Gantt charts, if the project is behind schedule, action can be taken to bring it back on track.

Finally, the new system needs to install before implementation, and set up a training team within the company. When the company to carry out the SAP implementation, the new system should install first, which means the new system should consider the requirements and find the best way to fit the old system. The reason is because the customer is familiar with the previous system, and they might refuse to use the new system, especially, the new system come with lots of bugs. The company should also set up a training team to help their staffs learn and familiar with the new system in order to reduce potential mistake in the future work.

Based on the recommendations that made before, Nestlé should have a better view of the new system and implement the better consequence.

  1. What did it do right?

Although the new system needs to redesign, the manager is proposing a good idea to headquarter company. First of all, Dunn proposes a very good idea to reorganise the old system in order to make a uniform standard to all departments within the company. Before Nestlé reorganised, Nestlé was a decentralised company, which their brands operated individually. In other words, each of their brands or sub-companies has their own right to decide on every request. This led to each system used by the sub-company is not the same, or these system cannot cooperate with each other, because their system has own database structure to work with the vendor. The consequence is that the same vendor gives a different price to every sub-company, and they don’t have the standard name of the product. As a result, Dunn suggests designing a new system that every sub-company should to use in order to organise their product with the vendor. When using a common system across the company, it could save potential cost to buy the product from the same vendor, and increase the power of group buying.

Secondly, although the entire project need to start over, the team come out with a well-defined plan to let the new project start by hired a change director. The team design a new plan based on the current operating mode of the company to design a proper plan to perfectly fit the system. The manager strengthens the relationship between the project team and the decision-making group. Because many decisions need a full group of people to participation to explore the issue may have, every team member should provide their idea during the discussion in order to make the better final decision. The manager use survey to get better understand if the company switching to a new system, and how they deal with the new system. Using business survey can make a better analytical business decisions. The benefit of using survey within the company is that it can strengthen the relationship between customers. The way to meet the customer satisfaction before publish the product is that using a survey to find out the potential mistakes. And also, business survey can help discover new product or services, because it helps avoid missing out any valuable offerings. It also can evaluate employee satisfaction, which is important in order to business to develop a new product. Because the good relationship between employee and employer can help make a good product.

Finally, the final goal of develop a new system to the company is saving money. According to the story, the new system can help a company save around USD$325 million when implement SAP. The new system can also help forecast the future demand by analysing the current production process. Good demand forecasting is an essential technology in order to ensure produce good products. Winegarden (2015) indicated that good demand forecasting could help following the market: (1) matching supply to demand; (2) stimulating the new demand to match the market needs; (3) expending vendor capacity to meet the market demand, and (4) developing an efficient procurement within purchasing department.

  1. What would have been the value of having a change management plan from the beginning?

The first step when developing a project is defining the project’s goal or measurable organizational value (MOV). In other words, the manager should consider what the real value this new project could provide the company. According to Marchewka (2015), developing a project to fit the company’s vision and mission statements is needed to follow six steps: (1) identify the desired area if impact. In this case, Dunn tries to design a new system to replace all current running system, which it will impact all the departments, because the new system needs to apply to all the departments, like purchasing, financial, and sale department. When change management plan from the beginning, the manager should consider all of those areas will be affected and it might very hard to implement; (2) identify the desired value of the project. The manager should determine what desired value could bring to the company. In this case, the new system could help the company do better, faster and cheaper when operating the different departments if compared with the old system. For example, the new system could increase effectiveness, because the demand forecasting system could help purchasing department to get a better view what the demand looks like in the market. And also, it could help the company quickly response to the market, like growing demand and price changes. In addition, it can help the company reduce cost, USD$325 million could be saved by implementing a new system according to the story; (3) develop an appropriate metric. In order to develop an appropriate metric to a new project, the manager and other stakeholders should agree on a specific target. The agreed metric will provide the desired impact to the company, and it can help evaluating the project is whether successful or not; (4) set a time frame for achieving the MOV. Estimate project finishing time is an important when develop a new system. In this case, the deadline for the new system is eighteen months, which is very short consider the size of the project. If the duration of the project is too short, the final product might contain a lot of bugs and did not meet the client requirements. If it is too long, the cost of the project will increase, and could possibly difficult to fit the current system; (5) verify the MOV. In order to make sure the project is accurate and realistic, which means the project is meeting all the requirements. By achieving this step, it requires close working relationship between project manager and other main stakeholders; (6) summarize the MOV in a statement or a table. The statement or table could provide very useful information to project team and all project stakeholders. In this case, the project manager should provide information to all stakeholders to indicate the potential cost could be saving if apply the new system to the company.

  1. The primary lesson that Dunn says she gained from this project is “No major software implementation is really about the software. It’s about change management.” Do you address with her statement?

Yes, I did. The ERP system could affect everyone in the company, and the major problem is how to implement the change, not the way to develop the new system. Because there is the absence of attention to the employees in this case, which is the manager did not well communicate with their staffs when implement the new system. So when the new system try to apply to the company, no one wants to switch to the new system that they did not familiar with. A planned approach to integrating the change which the formal processes could be impact of the change both on employee and the way they do their jobs. The recent application of techniques is used to acquire acceptance and understanding of the change in order to take advantages of the new functionality. Other lessons also she learned is helping to manage the new system. For instance, get a better plan to determine the project time is could help fit the work into a new system rather than fit it into a predefined schedule. Moreover, she also learned test the integration points during the project development. For example, when the new system implementation, purchasing departments cannot integrate with other departments according to the story. The software process will involve during the integration, because the common database should be made available to every departments, and make sure the data is readable even they use different systems. To change the business process is not simply installing a new system, it more about how to change management, which means the most important is the way to change the business process.

The company try to implement the ERP applications in order to help the company to organise and standardise their software application and database across the whole company. However, the ERP application is not the final solution, it only a tool to use to change a business process. The whole business process transition should carry by the business manager, not the IT department itself. The ERP application should install before implement the system, which it no independent process and need to everyone participated in the changes. In order to promote the process change, Dunn hired a change director to help her for the remainder of the project.

As a result, Nestlé learned a very important lesson in the hard way, which is changing the business process is not simply installing software, and there have been much more like an enterprise wide rollout across the whole system.

References:

Karlowitsch, M. (2011). 8 Fundamental Reasons to Use a Gantt chart For Scheduling. Retrieved from http://blog.netronic.com/8-fundamental-reasons-gantt-chart-scheduling

Marchewka, J. (2015). Information technology project management: Providing measurable organizational value / Jack T. Marchewka. (5th ed.). Hoboken, NJ: John Wiley & Sons.

Steve Pavlina. (2008). How to Make Accurate Time Estimates. Retrieved from http://www.stevepavlina.com/blog/2008/05/how-to-make-accurate-time-estimates/

Winegard, B. (2015). Principle #3 of Capacity Planning: Matching Supply to Demand. Retrieved from https://www.rallydev.com/blog/agile/principle-3-capacity-planning-matching-supply-demand

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