ERP systems – the perfect
Business Transformation
tool
David J White
Bulgarian Telecommunications
Programme Director, Business Solutions
Business Transformation – The Presentation
• Why business transformation?
• What can be changed?
• Why use an ERP system to drive change?
• How to make the change?
• Transformation fundamentals
• Outsourcing – the rationale
• BTC’s Payroll Outsource: a quick case study
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Why incur the cost, in real money and
internal resources, of introducing an ERP
system…..
Business Transformation – The Business Objective
Why
• Increase the Customer value
• Increase the efficiency of a Business’ operations
How
• Improve Management’s ability to manage the business
• Increase the speed of, and control over, the
implementation of changes
Simplify the Business Model
4
Business Transformation – the Change Elements
1. Business processes
2. Business controls
3. Management information
4. Organisation (People & Places)
The Business Model
But how to control change on such a large scale ?
5
The ERP Programme – ERP Definition
Enterprise Resource Planning system
• Process driven
• Facilitates the implementation of effective controls
• Provides a common framework and ‘language’ for data
design
• Is pre-integrated within itself, simplifying the flow of
data between elements of the business
• Supports accurate and flexible management reporting
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Functionality of mySAP ERP
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SAP Functional Scope – Phases I & II
Functional Scope
Management
Purchasing & Logistics Financial Accounting Technical
Accounting
Material Master Data Core Financials – Planning & SAP Basis
Purchasing GL, AP, AR, Cost Budgeting Administration
Centres, Bank, Tax
Inventory Investment SAP User
Legal Consolidation Management Maintenance
Management
Fleet Management Asset Management Project System SAP Change &
Transport System
Sales & Distribution Integration Logistics Integration Logistics
Integration Sales & Profitability Analysis System Integration
Warehouse
Management Distribution, Point- Interface
of-Sale Development
Treasury & Enhancements
Corporate Finance
Management
Business Warehouse Reporting
8
Business Transformation – The Sequence of Change
1. What is the new process model:
• Process tasks
• Controls
• Artefacts (forms, databases, etc)
• Roles
• Measurements
2. What systems will support this model
3. What organisation is appropriate:
• Organisation Design or Organisation Alignment
• Role-based
• Training
9
Business Transformation – The Transformation Roles
• The ERP system provides the tool to make the
transformation, and simplifies the systems architecture
• The Business defines the new Business Model – but leave
full scale re-engineering of the organisation until later
• The Programme Director’s role is to challenge the
rationale for all existing structures and working practices,
and to drive towards simplification
10
The ERP Programme – The Fundamentals
• It is a Business programme
• Best practice processes to speed up implementation
and reduce complexity
• Consistent and complete process design across all
functional areas - End-to-End processes
• The project covers all business units & legal entities
• Process is driven by one process owner across all
business units
• Accuracy of data is guaranteed by single ownership of
data
11
But if the ERP solution cannot meet the
Business Requirement fast enough…..
Why Outsource?
• Insufficient resource
• Insufficient skills
• Provide focus on the task
• Not a core competence of the business
• Supplier economies of scale (leverage, cost?)
• Speed of implementation
• Outsource the risk: project implementation and process
operation
13
BTC Payroll Outsource – The Rationale
• 14 regional + 8 other payrolls => support risk; poor
control & management information
• Salaries had split payments with advances on 5th and
claw back and payment on 22nd – very complex and
labour intensive
• Management & employee salaries paid on different dates
• Employee deductions handled manually with the banks
across 20+ locations
• Speed of change of legislation and short lead times
allowed for implementation
• Business’ ability to deliver yet another project
14
BTC Payroll Outsource – The Execution
What
• All payrolls outsourced to TechnoLogica
• Single payroll system - HeRMeS
• Proven Bulgarian payroll solution – up to date
How
• One team: changes synchronised
• Rigorous data cleansing
Challenges
• Moving target – repeated internal restructuring and
legislative changes
• Maintaining old structures
• Complex syndicate payments
15
BTC Payroll Outsource – The Result
Moved 18,000 people’s payroll without any errors:
• All payrolls in place and operational for January 2006
payments – 5 months from start of project
• Greatly enhanced and flexible management information
• New payroll process ensures payment of all staff on 12th
of each month, including overtime, sick leave and
holidays
• All personal deductions automated
• Compliance with legislation; production of all statutory
documents
16
Outsourcing – The Golden Rules
• You cannot Outsource a mess !
• Build the end-to-end process you are looking to address
and then go through the same logic as for any
transformation:
– Process & controls => individual tasks
– Information requirements
– Systems
– Organisation
• Outsource the desired process elements, but the
process must always start and end in the Business
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Finally - It's All About Change…..
Compliance
"I have to do it this new way" Commitment
"I want to do it this new way"
Reaction Action
"I will react to this change -if I must" "I will act to achieve this change"
Testing Testing
"I must absorb this change” "I will put myself at stake for this change"
Negative perception Positive perception
"I feel threatened by this change" "I see the opportunity in this change"
Engagement
"I see the implications for me/us"
Understanding
"I know why and what will change”
Awareness
"I am being told about something"
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Questions & Answers
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