The CIOs of Convergence 2013 customer excellence award winners CEDA International and Revlon have each led complex ERP replacement programs recently with successful outcomes. And they credit their commitment to avoiding ERP customizations as a key success factor that has allowed them to help contribute to the business objectives of their organizations.
Planning for major change
At oil and gas services provider CEDA International, CIO Jerome Beaudoin was facing an initiative to migrate and consolidate from multiple ERP systems across the group’s sixteen companies down to a single ERP system of record for all the companies. Beaudoin joined the firm about two years ago with multiple ERP implementations under his belt, but none quite as complex as what CEDA was facing. Under his leadership, CEDA used three guiding principles in their ERP selection process: the ERP had to be able to handle the company’s field services needs (which they achieved with AX using Hitachi’s FSA solution); it had to be able to fit the new unified business processes that CEDA planned to roll out in all its companies; and the company would accept zero ERP customization – configuration only – to get it done.
Given the scope and speed of change at CEDA to re-engineer and unify processes, Beaudoin knew that an ERP implementation had to happen quickly to keep pace with the rest of the transformation efforts. The overall process re-engineering discussion and technical assessment started in the first quarter of 2011, and by the second quarter Beaudoin was rolling out the first series of Dynamics AX 2012 modules to implement the unified changes to the company. The first steps included the Dynamics AX CRM module, safety elements, and field ticketing.
For Revlon CIO David Giambruno, moving from 21 ERP solutions a single instance of Dynamics AX 2012 was part of his team’s massive overhaul of both the company’s IT architecture and its disconnected business data. Giambruno’s team was also involved in moving all systems into a private cloud infrastructure and launching a master data management initiative that collapsed the data sprawl and primed the organization for a move to a single ERP solution. “It’s about literally changing the way Revlon operates,” he explained.
Revlon started with a Dynamics AX 2012 instance with no customizations and began the process of selling the business on it as a mechanism for executing on a set of unified global processes. Many departments had such antiquated systems in place for typical ERP functions that asking them to explain their requirements may never have lined up with modern ERP options, Giambruno believed. Instead, he opted to show the business owners how quickly he could spin up an example of the latest and greatest, based on his own research into ERP options.
“The easiest way to get people on board is to let them see it, let them feel it, touch it,” he said. “If you have green screens, your ability to contextualize is limited. The challenge is not the technology, that’s easy. We’re going through transformation. I’m a crawl-walk-run person. One thing about AX is it is very pretty. And it also works. We’re going from green screens to WYSIWYG. Our approach is a guerilla ERP approach – to bring our entire system online, take our master data and pump it into AX and show people.
Avoiding the temptation of customizing
Trying to eliminate customization in ERP is nothing new. Most consultants and CIOs understand this concept in theory. Yet according to recent research, few businesses can stick to the principle. Panorama Consulting’s 2012 ERP Report found that only 11% of its survey participants implemented ERP without customization. As managing partner Eric Kimberling explains:
“[S]omething strange happens during implementation. Inevitably, the business identifies one or more things that the software doesn’t do quite right, so they request to make just one minor change to the way the software is designed. Of course, this is a slippery slope, and one minor change to the software code typically leads to several more. ”
For Dynamics AX director of product management Kees Hertogh, a good CIO adds huge value for any ERP implementation by optimizing IT’s role in the business. “As part of the leadership team they can help drive the success of the business,” says Hertogh. “In the industry it’s been a discussion of customization vs configuration, but even Dell, Revlon, CEDA, those types of successful implementations go in with the mindset that they’re going to think about it in layers. So normal finance processes, billing, inventory. Something that isn’t differentiating compared to the competition. Then they will look at tweaking in some way – BI or Partner IP. Then they’ll think about innovation.”
Deploying out of the box AX 2012
At Revlon, after the business was sold on AX 2012, the next step was to execute a deployment strategy. As a global manufacturer, they developed a three stage plan that could be deployed separately to each country, starting with sales and distrbution, then moving on to warehousing, and finally manufacturing. The first country on the system took 377 days to implement the company’s globalized processes. The deployment involved technical challenges like condensing 53 general ledgers into one and resolving hundreds of issues after the go-live. The second country went live in only 14 days, and the third went live in six hours, according to Giambruno. And improvement happened quickly: the issue queue in the first country dropped from 800 issues in the first month to just eight in the second. They recently demonstrated their improved Dynamics AX skills by upgraded on their own to AX 2012 R2 in one week.
CEDA’s Beaudoin brought on stakeholders from across the organization to share in the technology and process changes. He got fifteen full time employees dedicated to his Dynamics AX deployment for two years. “These team members understood the operational aspects and they were tech savvy,” he explained. “They needed to address the business and assure us that they were speaking for one CEDA.”
But adoption to the “One CEDA” vision was even more difficult than expected on a global basis. Beaudoin credits his CEO’s consistent, long-term support for the ERP initiative as critical to overcoming resistance. And even with the challenges, Beaudoin still feels that pushing for a quick rollout was the right thing to do.
Moving forward – areas of investment
While both Revlon and CEDA have committed to limiting their ERP deployment to standard features that can be configured, they are not necessarily against other kinds of customization that bring strategic value to the business. For example, CEDA has plans to build out business intelligence (BI) and decision support capabilities using a combination of custom reporting with SQL Server Reporting Services (SSRS), SharePoint, and probably a third party BI tool. They were also comfortable bringing in Hitachi’s FSA solution, as well as integrating some other cloud-based point solutions.
Revlon’s Giardino is also not against customization if it delivers differentiated value to his business. “My job is to wield technology throughout the organization. I take the mentality that I’m here to help. I’m here to make it work for people, to make it consumable.”
Kees Hertogh of Microsoft also sees the benefit of introducing customization that is strategic in nature, especially if it can help the company operate more innovatively. “Where can they push a piece of innovation? That’s where they put their focus,” says Hertogh. “The basis of implementation stays untouched. They look in 3 layers – what to adopt, what to bring in 3rd party IP, where do I innovate based on the biz process. They need a CIO who’s connected to the business processes internally.”