Siemens bucks conventional wisdom by planning—and executing—large-scale IT project
by Jim Fulcher, contributing editor -- Manufacturing Business Technology, 11/1/2004 12:00:00 AM MST
In recent years, it's been conventional wisdom that embarking on a large-scale IT project is the sure road to disaster. But Siemens Energy & Automation has proven that conventional wisdom isn't always correct.
The Alpharetta, Ga.-based division of Siemens AG is rolling along quite nicely on a project that calls for replacing 14 legacy systems with a single ERP platform that will serve more than 9,000 employees at 31 manufacturing and distribution facilities, and 100 sales offices.
Peter Bernshaus, VP of business process redesign at Siemens Energy & Automation, cites two reasons for this project's success: meticulous upfront planning, and selecting the right implementation partner.
The project was launched to give management more control over both the division's business processes and its IT resources. "We've grown significantly through acquisitions, and consequently ended up with 14 legacy systems," Bernshaus explains. "It was time to standardize business processes on a comprehensive solution so we could focus on profitable growth and IT cost reduction."
Siemens Energy & Automation chose SAP's mySAP ERP suite largely because its parent company has designated that system as the corporate standard, although Bernshaus says the package also has the functionality his division needs. The implementation partner, SAP SI America, a systems integrator recently purchased by SAP, was chosen for its expertise at installing the mySAP suite.
Bernshaus says a comprehensive approach to analysis, planning, and execution of the project—and the fact that SAP SI agreed that the preplanning phase, which lasted nine months—were critical.
"Complex companies like Siemens need to take a measured approach to both planning and deploying IT solutions," says Rick Ogburn, an executive VP with SAP SI America. "Siemens' success shows that its executives took the time up front to analyze the business and create the optimum roll-out plan."
The business analysis started by weighing the risks associated with installing the new system at each site against the potential benefits. That led to a list of priorities for both the systems to be installed and the locations that would get those systems first.
This exercise also uncovered critical issues—like the need to redesign some business processes—that often go overlooked in the early stages of system implementation projects. "If we needed to restructure a plant to become more efficient, we planned to do it before implementing [the mySAP suite] at that site," Bernshaus says.
Siemens began deploying mySAP last spring, rolling out the financial components. Phase two, completed in July, involved implementation of operations-related modules—order-entry, procurement, production, and logistics—at selected sites.
The next phase calls for installing operational systems at three to four sites a year over the next three years. Even with that much left to do, this project already is delivering bottom-line benefits.
Headcount in finance is down 30 percent, but the division closes its books faster each month; overall IT costs are down, and order cycle times are shrinking.
"We're pleased with initial improvements, but plan more," concludes Bernshaus. "We're setting up key performance indicators so we can continue improving after the deployment is complete."
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