So, welcome back to another session of Enterprise Systems. My name is Jason Chan. In our previous session, we have talked about some of the managerial considerations to factor in when choosing and buying an enterprise system. In today's session, we'll be building on top of that to look at some of the additional managerial considerations needed during the implementation of ERP systems. So, let us begin today's session by looking at a real-live example. So, let's start off our session today by talking about a real case, in which wrong decisions were made in terms of implementation. This is a case that is focusing on the company target, target as a large retail business in the US. So, let's put that down, US retailer. What it did was that, they tried to expand their operations into Canada in the early 2000's. So, with the expansion of business into a new location, one of the things that they needed to do was to buy and use a ERP system. But the decision actually was wrong from the beginning. They decided to implement the ERP systems with a very aggressive timeline of two years. While in fact, what we know in the space was that, the competitors little [inaudible] and [inaudible] operating also in the retail business in Canada took up to four to five years to implement the recipe. This is the standard timeline, and the reason why target was pursuing such an aggressive timeline was that, they spent a lot of money on acquiring the physical stores and they decided that they do not want to wait as long of a time. So, that they will not losing money on the either stores. Hence, they put a very sharp timeline for the implementation team to finish implementing SAP. So, this actually was a wrong decision right from the beginning, because it led to a whole line of different issues for the business. So, the first thing that happened to target as a result of this bad decision, was that on the first day of opening, in fact for the next few weeks, they found that lots of the stores did not have the right stocks in place. In fact, customers walked into the stores and they find them to be empty. So, what actually happened over here, could be traced all the way back to data entry issues in a system. In order for the goods that are stored in a warehouse to be shipped to the target stores, they had to fit into specific cases, and these cases have to be loaded up into delivery trucks. However, when the system was being populated, this was not properly done. Upon further investigation, they found that the data was entered wrongly into ways. They were entered wrongly, because the wrong sets of units are used. Instead of using centimeters which was used in Canada, the staff that came from the US side were actually entering this units in terms of inches, which is the common units used in the US. Another area in which they made mistake, was that the order in which the dimensions of the product has been entered into the system was wrong. So, for instance, they have to enter things in this order of length by width by height, but they did not actually put it in this order. As a result, when the delivery truck comes, they found that the cases that they had previously prepared couldn't quite fit into the delivery truck. As a result, that delayed the logistics of delivering the goods to the stores. All right. Part of the reason why there's data entry issue actually happen, was because the staff that was in charge of entering this data, a lot of them were young graduates that came fresh out of school. They did not have the experience to challenge and to know that some of this dimensions that they enter into the SAP system were wrong, right? So, that's one of the major reasons why things were not working out for them. Second major reason that actually made the first issue even worse was that's, when populating the number of products that they would be selling, they utilize numbers from the US side of things. So, I can put that as wrongly predicted sales figures. So the staff, they were populating how much to order from manufacturers. They took a template set of numbers from US-based stores. However, the fact that they are now operating in a new location in Canada, much of the names are actually not as well-known compared to that in US. As a result, they over-ordered, and lots of the stock are just simply sitting in the warehouse. Couple by the fact, that the goods are not properly and successfully shipped to the stores. As you can imagine, the combination of this two things led to an increase in cause of the products that they're buying and this products are not being converted into actual profit. So, as a result of this mess up in the way they manage their logistics, they are having a lot of financial pressure, right? A final thing that we see happening in Targets case was that, also due to the system wrong decisions being made over here, is that the checks and balances are not being properly done. Checks and balances not well done. This happened within the SAP system, where there is a specific feature that is known as the auto-replenishment feature. So, this feature was actually turned off by the store managers, right? The reason why this was turned on was that, the store managers are being evaluated by how well their stores are being stocked up. Every time the auto-replenishment feature was sort of making a warning, that irritated them. They didn't want to be seen as incompetent. So as a result, they turn off this feature, which is suppose to order the goods from the warehouse whenever the stock in the store is low. So, as a result of this feature being turned off, we find that lots of the stores are having very low counts of stock and customers when they do come in to Target. They could not find what they need within Target. So, as you could see, all of these issues are pretty much related to the main decision that was made in the beginning, where the top management has a very aggressive timeline that ultimately led to things not being properly entered. The sales team that is supposed to produce the right figures, wasn't experienced as well. Hence, the wrong set of data is also used in predicting. Then, finally, on the last part over here, the managers, in order to show a good impression of themselves to the managers, actually turn off a feature that is very crucial. So, what we see over here can be further read in the article that I have provided in URL link too, within the slide. This is a pretty elaborate reading that lasted about 30 minutes of your time. But if you wish to get more details of this case, I would strongly encourage you to read the full story on the website itself. So, having seen this case on why implementation decisions are very important, let us move forward to look at some of this change management techniques that managers could actually use when it comes to the implementation of large-scale ERP systems like SAP. So, hope that through Targets case, we recognize the importance of making the right sets of implementation decisions, so that the ERP systems will be successfully run. In fact, in targets case, because of the wrong decisions that they have undertaken, business in Target within the Canadian zone has to be pulled out because they went bankrupt. Today, we'll be walking through some of these techniques that you could utilize within change management, to allow ERP systems to be smoothly implemented in your organization. So, what is change management? In simple words, change management reflects the people side of technology project. It's not just confined to be used in implementation of ERP systems, but as long as a company experiences substantial change in its business, they could utilize the toolkits within change management. So, in a very general sense, change management reflects the systematic approach to dealing with change, both from the perspective of an organization and at the individual level. Within the context of enterprise systems, change management usually involves activities of communication. Training of its users, so, that they are well-equipped to use the new system and this whole process change within the company. So, a nice framework to help us visualize what is needed to be changed during an ERP implementation, is the PPT framework. PPT stands for people, process and technology. So, after selecting a ERP system that aligns with the business needs for your company, there's also a need to engage to people who are actually using the system. If the people are actually not well-equipped to adopt this system and to use it in an effective fashion, then, the money that we have spent on a multi-million ERP system would simply be wasted. Because people are just simply not using it in the right fashion. At the same time, there's a need for companies to realign the business process, so that it fits with the way how the ERP system works. So, in a case where technology and process has been aligned, but the company did not get a good amount of buy-in from it's workers and did not give them proper training, then we end up with the problem of alienation. Similarly, if the technology is bought and if the people are bought-in and are well-trained, but the business process are not being well-aligned with the new technology, we get into the situation of automated chaos. So, the right spot that companies should be looking at, is right in the middle of this diagram, where technology, people and process are all well-aligned, so that when the introduction of the ERP system is made, all these three element could move and sync, to allow the best results to be seen in a company.
