Hi Dan,

When you implemented SAP did you have to hire new people to maintain? Or, how long before the implementation was complete, was your staff comfortable using the system on their own?

Thanks - I'll try to answer as many of them as I can tonight!

Dan

thanks for taking the time tonight to present.  i am sure that this presentation will prove more useful than all the other cases that we have read thus far put together.  i was just wondering that with the change that you made from the legacy to the new system, do you think that you would have been able to stay competitive if you were still using the old system?  it seems that the old legacy system was very adaptable, so i am wondering if it could have been used today using new adaptations to stay competitive against a new SAP system?   

Despite previously being mentioned, I was curious as to your *current* understanding of how you would go about re-training employees while stressing benefits of the change-over. 

Beyond the standard "change is important in keeping pace for our future"- what specifically would you choose to focus on now for employees coming face-to-face with this scenario?

Employees who must abandon their current understanding of a system oftentimes encounter a sense of frustration in adopting new protocols and means of conducting business- what framework do you suggest as most beneficial for introducing employees to such a change-over?

I went through a large implementation quite like this a few years ago.  It was interesting to see first-hand all of the resistance managers were facing from employees.  It ended up being a very long and difficult process to get everyone on board.  Was there a considerable amount of resistance from your employees during implementation?  If so, how did you handle the situation? 

As was mentioned earlier, it will be interesting to hear about the implementation in regards to a utility company.  Every article I read or discussion I have had about SAP was in relation to manufacturing.  Did / Will the implementation result in a reduction of IT staff?  Did SAP require additional hardware purchases?

I look forward to the discussion tonight!

Roy McCammon

tonight's presentation is going to be a nice change from the harvard case studies we've done this semester.  the case studies spell out what it is they want you to think is the problem and give you some info to work with, but that is it.  you only have to work with what it is you are given.  tonight we will have someone who can give us some personal insight and opinions on implementing SAP and why they chose to go with SAP and why now.  it should be a more engaging learning experience and we should be able to relate to it better.  this will be from one person's point of view, which i think im going to find more interesting, than from a whole company overview that the case studies give.  Dan, thank you for taking the time to give the presentation tonight.  it should be interesting.

It sounds like this was a huge undertaking, even from SAP implementation stardard.  It's amazing to think that SAP could replace all 150 legacy systems and still have all the data integrated under 1 system. 

Have you been live enough to see the benefits of using SAP?  If so, what benefits have you seen?  If not, how long until you feel you will begin to see the ROI on the implementation?

You have posted that you were assisted by 40 technical developers operating out of India.  In percentage terms what were the cost savings?  Were there any communication/cultural issues with the folks in India that slowed down the implementation?  Is there a paucity of qualified technical developers in the US?  Was any customer specific information shared with the developers in India?  If so, what measures were taken to protect their privacy?

Based on what you have said and what I have learned about SAP implementation, change management is always a piece that is mentioned and is important.  What is the most important element to managing the change, is it the employee training, executive support, etc.?  What were some examples of employee resistance to the changes?

I would like to know what were the major reasons for CE to switch to SAP from the old systems, it seems the 150 legacy systems had been operating adequately to support the business over 40 years. What were the key points in CE's decision making?

Hi Dan,

You mentioned that there were over 1,000 customizations done to SAP to make it fit your work flow.  In the future when SAP releases a new version and Consumers decides it would be worthwhile to upgrade to it, will all these customizations be easily translated into a new version or would a new version need to be completely customized from scratch?

Thanks,

Brandon McAndrew

It will be interesting to hear Dan's explanations and thoughts on the implementation of SAP at Consumers Energy.  This is an diferent case, I have personally never worked for a company that has successfully implemented an ERP.  Also it will be a different approach, as most implmentaitons that we have studied to date in class have been in a manufacturing environment. 

On a side note, I got a kick out of my Consumer's bill online, when I realized that it the header is from "SAP OnlineDirect Biller".

Best regards,  Keagan

1: What was the greatest material effeciency that has resulted from the implementation of SAP?

2: How did the implementation of SAP impact the three bottom line items of a Sustainable Business, Social, Economic and Ecological Capital resources?

3: In the long term, what impact do you believe ERP implementation will mean for the Social Capital at businesses where it is utilized? 

4: How do you see ERP fitting into smarter energy systems that Consumers may be working on in coming years?  This week DTE Michcon announced that they intend to "blanket" the upper part of the lower penninsula with wind farms.  What initiatives into renewable energy will be undertaken by Consumers in coming years?

We've discussed how important it is to have all employees on board with such a huge implementation such as the one at Consumers' Energy.  What were the attitudes of employees before, during and after the implementation?  Was there any significant change in their attitudes or approaches?

It seems SAP is the dominant players with over 70% of the market. HOwever, did Consumer Energy look at any of their competitors and have features that CE wished exsitsed on SAP?

During the implementation of SAP did Consumers prefer to match specific business processes to fit into SAP or did Consumers try to make SAP fit specific processes?

You mentioned customer service being an important aspect of the utility business, how did you maintain the voice of your end customer when making decisions?   Thanks.

You mentioned that 1,000 changes were necessary in order to implement SAP at Consumers.  What technique/approach did Consumers use when making these modifications to ensure that they wouldn't significantly hamper future SAP upgrades?

Do you continue to invest in ongoing enhancements? What is the initial implementation budget and how much is spent each year for ongoing developments? How do you determine a rate of return on the enhancements? How do you collect ideas for enhancements?

This blog is very informative.  I am very interested in knowing more about the strategy that CE followed in deciding whether to go with customization vs standard out of the box SAP functionality.

Q: Hindsight is 20/20 - looking back on it now, would you have done anything differently?

A: An undertaking like this project, especially the way we chose to do it, is a very unique experience. Therewere many issues and problems that challenged us throughout, some that perhaps could have been foreseen, as well as many that probably could not have been. As you say, hindsight is 20/20, and we feel very good that even with its many challenges, our project has been very successful. With the benefit of hindsight, though, here are some thoughts that others might benefit from:  

* Even though we did focus a lot on change management and training employees on how to execute transactions, we would take a more process-centric approach. Many areas struggled with understanding what happens upstream and downstream of their individual transactions, and in some cases there were "unintended consequences" that were a result of not fully understanding the process from end to end.

* The hardest part of any change of this magnitude is to get employees ready so that they can come up to speed as quickly as possible, with a minimum of resistance. We experienced 2 delays of 3 months each in our project, which although not welcome at the time, did provide the benefit of allowing us to involve more non-project employees in creating and delivering workshops in addition to the formal system training. These workshops brought together the skills learned in formal training with scenarios taken from typical business problems encountered on a daily basis

* With the benefit of hindsight we would have focused more on the most unique aspects of our SAP "industry specific solution", which in the case of the utility business are customer service and billing functions. SAP's core R/3 modules (Finance/Accounting, HR/Payroll, Supply Chain, and Asset Management) are more widely implemented and are more mature than industry specific functions like Utility Customer Billing or the Customer Interaction Center. There are fewer consultants in the market place with these skills. We would have increased internal staffing in these areas and focused more on knowledge transfer from the consultants to our internal staff.     

Q: How quickly did the organization become proficient with the new system?  Are there easily (or not-so-easily) identifiable performance improvements that can be credited to SAP?

A: It has been 8 1/2 months since "Go Live" and most business areas are still in the process of becoming proficient with the new system. Our implementation was much larger than  the average utility company (replacing over 150 legacy systems), and we chose a "big bang" rather than a phased implementation. In setting such challenging goals for ourselves, our expectation was that it would be roughly a 6-12 month process before employees were familiar and comfortable with SAP and would begin focusing on measurable performance improvements.

Prior to Go-Live, we identified  metrics to monitor key business processes after our conversion to SAP. We have experienced challenges in some areas (such as our call centers) that were heavily impacted by the changes. Other processes (like paying employees, paying vendors, closing the books) had initial challenges but are now working well (in some cases better than the legacy systems they replaced).

Q: How well did SAP accommodate your pre-SAP business processes?  Were significant changes needed to adapt to SAP?

A: As noted in an earlier post, we began with a standard utility "Industry Print" - a blueprint of standard processes from previous Utility industry implementations done by our System Integrator - to guide the configuration of SAP. While this proved useful as a starting point, it became apparent very quickly that a significant amount of additional configuration and development would be needed to make SAP work effectively for us. We ended up making well over 1,000 changes to adapt SAP to our business before Go Live, and that process continues today. 

* This were 2 primary reasons for this:

1) we had spent close to 40 years customizing over 150 legacy systems that we were now replacing with SAP. These legacy systems in most cases fit the uniqueness of our business processes very closely. SAP processes on the other hand are by necessity designed more generically because of the large SAP customer base (although SAP business processes do strive to embody "best practices" from many industries). So, while SAP represented a big move forward for us in terms of data integration and a more modern technology platform, in some cases processes were not as suited to our practices as the ones we had developed over many years.

2) Utilities are typically regulated by a utility commission. In Michigan, the regulatory body is the Michigan Public Service Commission or MPSC. The MPSC sets performance expectations for many Utility services which influences how we conduct business, particularly in the areas of billing and customer service. Billing rules and practices are extremely complex and unique to each Utility and require extensive configuration and testing in SAP.

* In many cases, SAP designed processes are proving more effective than our legacy processes, and the integrated SAP database along with SAP's "Business Intelligence" or BI can provide more real time information about charges, hours worked, vendors paid, or customers billed. Even in most of these cases, however, it is taking time for employees to adapt to the new system and processes, and to find or create the reports needed to extract the right information.   

Q: How much of the implementation was outsourced?  How well did outside agencies work with internal staff?

A: Consumers Energy maintained control of the project throughout, although many external resources were utilized. The project was comprised altogether of more than 400 professionals, approximately 1/3 Consumers business employees, 1/3 Consumers technical employees, and 1/3 external consultants.  (System Integrator, SAP, and others).

* All of our external consultants were extremely valuable, both for their technical knowledge of SAP as well as their prior experience implementing SAP at other companies. We could not have done the project without this external assistance and expertise.

 

* Our System Integrator utilized about 40 technical developers on our project who were located in 2 different locations in India, Bangalore and Hyderabad.

* The process of using offshore developers took longer than we expected to work smoothly. Our project was the largest Utility implementation as well as one of the largest implementations ever undertaken by our System Integrator. We had over 1,000 "extensions" to SAP (forms, reports, interfaces, conversions, enhancements, and workflows) that needed to be custom developed. These were for the most part accomplished by the teams in India. This was the largest offshore development effort undertaken by our System Integrator to that point, and it took several months for the process "kinks" to be worked out and for the process to operate smoothly. 

Derek DeLange submitted a series of questions to Mr. Russell on our SAP implementation and change management.

I thought I'd address them one by one:

Q: How were pitfalls identified prior to and avoided throughout the implementation?

A: We were aware that many companies have experienced big challenges with large software implementation projects. Common issues with these projects have often been large cost or time overruns, poor translation from requirements to the delivered solution, and poor employee acceptance of the system. We went into our project concious of some of these difficulties and determined to learn from the experiences of others. We employed several strategies including:

* Allocating a significant percentage of project resources to training, process adoption, and change management activities

* Contacting several utilities as well as other companies that had implemented SAP previously to understand and anticipate problem areas and develop mitigation strategies

* Engaging an external consultant, or "system integrator", with significant experience with large scale SAP implementations within the utility industry

* Utilizing a standard methodology recommended by SAP to guide the work through specific deliverable phases. Our system integrator brought an enhanced version of this methodology that embodied the experiences of many specific implementations

* We also started with a utility industry "process blueprint", which was based on previous implementations that our system integrator had worked on within the utility industry  

I was one of the executive sponsors for our SAP implementation which went live successfully on July1, 2008. I am currently responsible for ongoing support of the solution within our new center of expertise organization which we call Business & Technology Solutions or BTS. 

I look forward to building a strong relationship with the Seidman College of Business at GVSU to help prepare strong business graduates for opportunities within the great State of Michigan, including here at Consumers.

In addition to the SAP connection, I already have strong ties to GVSU as my daughter is a recent Seidman grad and past present of the GVSU chapter of the Delta Sigma Pi business fraternity. I've also discussed with Dean Williams getting involved with an ERP Advisory committee within Seidman so I look forward to that opportunity as well.     

Good Morning, GVSU Seidman community!

My name is Dan Wright and I am the Executive Director of Solution Management at Consumers Energy. I've been asked by John Russell, our president and chief operating officer, to interact with you as someone with recent real world experience with a large scale SAP implemention. 

I'm looking forward to it - more to follow soon.

I just wanted to say I can't wait to hear more about Change Management from John Russell. I work at Haworth and we are in the middle of an SAP implementation ourselves. I can see how change management is a hot topic!