Khalil cotran

A Story of Change

“HR Role in Implementing Change”

Khalil, Cotran

November 13, 2009

Slide 2

Who is JTI ?

• JTI is the world‟s third largest manufacturer of tobacco

products.

• In 1999 Japan Tobacco acquired the international

operations of the American tobacco giant RJ

Reynolds.

• JTI has 12,000 employees from 90 different

nationalities in 40 locations worldwide.

• JTI markets and factories spread over 100 legal

entities

Slide 3

• JTI has great brands, great people and great

facilities but has nothing binding them together

• Key competitors are doing a better job

• Need to coordinate efforts across all regions

• Need to increase speed to market

Change is a matter of urgency

Slide 4

Enterprise Resource Planning (ERP) is the glue that

brings together processes, systems and people

Change is a matter of urgency

Slide 5

What is ERP ?

• Enterprise Resource Planning is a term derived from

material resource planning.

• ERP Systems typically handle the manufacturing,

logistics, distribution, inventory, shipping, invoicing and

accounting for a company.

• ERP are “back-office systems”. Customers and the

general public are not directly involved.

Slide 6

Develop

new

products

Market

Products

Sell

Products

Perform

Order Mgt.

Procure

Materials &

Services

Manufacture

Products

Manage

Logistics

Provide

Customer

Support

Operational Processes

Plan and

Manage

Business

Manage

Capital

and Risk

Manage

HR

Manage

IT

Manage

Plant,

Equip. &

Facilities

Manage

Accoting

& Control

Data

Manage

Programs

Provide

Decision

Support

Manage

Support

Services

In Scope

Out of Scope

Infrastructure Processes

What is ERP ?

Slide 7

Why ERP?

• To position JTI for growth by bringing all locations

together with common systems and processes.

• To introduce new global processes built on one of the

most complex ERP systems – SAP

• To launch process redesign and Change Management

Slide 8

What is SAP?

The software program SAP R/3

Is the system that will deliver ERP

Will provide a single technology to streamline the sharing of data and information, replacing our multiple systems:

Flexible

Scalable

Expandable

Simple installation

SAP is the largest inter-enterprise software company in the world:

Market leader in ERP software

Representatives in more than 50 countries

10 million users worldwide

Slide 9

Highlights of the ERP Project

• The project was launched in early 2002

• The project was launched in three waves and involved

resources from JTI, Deloitte and SAP.

• The team was a truly multi-disciplinary and integrated

global team which incorporated 700 JTI employees,

100 Deloitte and SAP consultants over the four years.

Slide 10

Project Roll Out (Three Waves)

Markets

Factories

R&D, SRA

Global & HQ

Export Hubs

Wave 1 – Russia

Russia

Wave 2 – CIS

UkraineRomaniaKazakhstan

Wave 2 – APAJapanChinaMalaysiaTaiwanThailandPhilippinesSingaporeKoreaWave 3 – Americas

Latin America

USACanada

Wave 1 – Europe + HQ

Switzerland

SpainGermanyFranceBenelux

Andorra

Greece

Czech

Italy

Wave 2 – Africa

South Africa

Tanzania

Jordan

Saudi Arabia

All

MoroccoTunisia

Slide 11

J F M A M J J A S O N D

2003


2002


2004

Russia

GL

Europe + HQ

CIS

GL

Ukraine, Romania, Kazakstan

AmericasGL

Geneva HQ, Switzerland, Spain, Germany France,

Benelux, Italy and Andorra

APA

GL

Japan, China, Malaysia, Taiwan,

Thailand,Philippines and Singapore

Africa

GL

Tanzania, South

Africa and Jordan

GL

GLTurkeyPilot

Canada, USA

Project Time Line

Slide 12

Project Governance

Transformation

Steering Committee

Quality and Risk

Management

Executive

Sponsor

Regional Steering Committees to facilitate

implementation

ERP Program Leadership

IT Leadership

for infrastructure

Global Service DeskERP

Program Team

Key Related

Enabling Areas

Geographic &

Functional LeadershipReporting Direction

Extended Transformation

Steering Committee Quarterly

Monthly

Slide 13

Change Management – Key Pillar to ERP Success

ERP IMPLEMENTATION

Global Processes

&

SAP System

CHANGE MANAGEMENT

Business adoption

&

Organization fine tuning

BENEFIT REALIZATION

Qualitative &

quantitative

TRANSFORMATION

SUCCESS

Slide 14

Project Team

Effectiveness

Project Team Effectiveness

Training

Communication

Organization

Change

Executive

Alignment

ChangeabilityChangeability

Benefits !

Vision

Strategy

Process

Systems

Organization

Structure

People

Change

Management

Focus

Success Means Empowering People

to Realize the Benefits Deriving from Processes and Systems

Slide 15

Change Management Approach -

Five Major Components

Change Components

Leaders demonstrate consistent behavior, set direction, mobilize individual commitment and align operations

Main Objective

Harmonize roles & responsibilities and organization structure in accordance with the new processes

Inform our employees about benefits and sacrifices deriving from ERP

and engender their buy-in to contribute to the project goals

Assure all impacted colleagues acquire the skills and capabilities

needed to successfully operate in the new work environment

Address project team dynamics and enhance performance Project Team

Effectiveness

Training

Communication

Organization

Change

Executive

Alignment

Slide 16

Why was it needed?

Assure timely roll out

Involve the whole organization

Mitigate risks

How did it happen ?

Clear project governance (organization structure, roles & responsibilities)

Efficient reporting process

Decision making through Steering Committees

Video Conferences with Project Owner

Leaders involved in project work

Local Leaders taking an active role in project communication

Leadership Alignment Meetings where appropriate

Guidelines provided in Leadership Manual

How did it happen?Executive

Alignment

Slide 17

Organization Change Work Streams

Role & Job MappingAllocation of future roles to jobs and jobs to individuals

in the organization

Organization Fine-TuningIdentification of the local impacts and adaptation of

Organization structure

TransitionAction plan and execution to transition organization and

people from old to the new work environment

Impact Assessment Description of new processes, key operational and

organizational changes and impacts per process area

Future Role

Identification

Identification of future roles and related work steps

from Business Process Master List

OrganizationChange

OrganizationChange

Slide 18

The importance of Communicating ERP

• ERP is an all encompassing programme of change.

Effective communications are critical to its success.

• The key messages we wish to communicate on ERP

have been defined by JTI senior managers, we now

need to ensure that these messages are effectively

transmitted & received throughout the organisation.

• A JTI wide ERP communication strategy & supporting

“communications kit” have also been developed.

Communication

Slide 19

Team

Effectiveness

Areas

Content

Project

Framework

Communication

Perspective

Processes

A Prerequisite for Performance

• Knowledge to perform

• Roles & Responsibilities

• Working in a virtual Team

• Capability Transfer DC/JTI• Infrastructure & Facilities

• Resources quantity

and quality

• On-boarding of new members

• Top Down and Bottom up project communication

• Negotiation and conflict resolution

• After Project Career Plans

• Personal Development

• Effort Recognition & Rewards

Project Team

Effectiveness

Slide 20

Training Work Streams

Training LogisticsSet up of Training System and End User Training

Schedules

Train-the-TrainerTraining of SAP End User Trainers (identified by

markets)

End User TrainingRole based End User Training (focused on process

and transactions)

Market Assessment Analysis by market of training scope, number of

employees, location, training facilities

Course Design, Update and

Documentation

Development and adaptation of Training Material

(process and transaction focused)

TrainingTraining

Slide 21

It is about PEOPLE

ERP implementation at its core

is a people project

The biggest challenge

before and after implementation

is not TECHNOLOGY, but PEOPLE

Slide 22

Letting Go:

Existing practices. Well known current systems

Commit:

New skills Experiences with better software

Transition

HR Role

“The Change Management Team”

Slide 23

The Team‟s Five Objectives

Manage the transition from the old to the new ways

of working

Define the global organization‟s new structure

Attend to the Project team

Help the people in the organization embrace change

Transfer SAP knowledge and train end-users on the

new global system

Slide 24

Manage the change to a new way of working

• The change management team was built on a concept of

“Key Stewards”

• In each wave, a regional “Transformation Steward” led the

change management activity, working alongside a

“Training Steward” and a “Communication Steward”

• The stewards brought business expertise, valuable local

knowledge and contacts.

• The personnel in the global change management team

remained the same all through the project.

Change Management Governance ModelR

egio

na

l Te

am

sG

lob

al

Cha

nge

Ma

na

ge

ment

Regional

Transformation

Stewards

ERP

Project Lead

Local

Regional

Training

Stewards

Local

TS

Local

Transformation Steward

Regional

Communicators

Change Management

Consultant Team

LocalLocal

Local

Training Steward

HR/Change/Training Team Communication Team

Local

Local

TS

Local

Communicator

Trainers

Slide 26


• Once the new processes were defined, the business and functional

experts identified all “Areas of Change”

• The Change Team consolidated these and extracted the 20 key

Change Areas

• “Impact Assessment Tool” was developed which allowed each location

to analyze how the changes would effect their area.

• Each location was asked to review the key changes in order to

determine their impact in terms of:

Slide 27

Structure

Roles

Responsibilities

Span of control

Decision-making

Reporting lines


Slide 28

• 200 new global SAP roles were identified.

• Roles had to be fit to jobs in the business, and then to people

ENSURE THE RIGHT PEOPLE IN THE RIGHT PLACE

AT THE RIGHT TIME

• Intensive workshops were set up to map SAP roles to jobs in the local

organization

• The workshops brought together functional and business experts, HR,

process owners and system security experts in order to ensure that the

new roles were correctly mapped to jobs in the new business.


Slide 29

• Workshops were held during each wave and lasted between two and

three weeks.

• Workshops were a major communication event and an important step

in bringing the project to the business

• At a later stage, local HR, working with the transformation stewards

matched people to jobs


Slide 30

ERP

Operational

and

Organizational

Impact Assessment

Process

Manage Procurement

Change Area IA Tool Reference

Introduction of a Professional Purchasing Organization P2P 2

Description of the Change (compare future and present state)

Introduction of an organizational structure - Professional Purchasing Organization (PPO) to support the implementation of the procurement

strategies for production and non-production spend.

This organization will be dedicated to execute buying activities for services and materials in a professional and standardized way.

The PPO activities includes the Management of supplier relations and related purchasing activities, such as:

Consolidation of requirements.

Bidding.

Contracting.

Performance tracking of vendors.

Ordering.

Shipping and proper invoicing for full range of spend categories.

Master Data maintenance.

Post-Purchase activities.

Expected Benefits

Enhanced supplier management.

Increased buying power as a result of consolidation of purchasing requirements which leads to cost, quality or service improvements.

Leverage current internal procurement best practices.

Significant saving through reduced maverick spending.

Harmonization of purchasing activities throughout the company.

Optimized control of spending.

Operational Implications for markets/factories

(what does the change mean for markets and factories in terms of

operations, processes, procedures, the way of doing work)

Organizational Implications for markets/factories

(What does the change mean for markets and factories in terms of

Organization Structure, Jobs, Decision Making and Reporting)

Compliance with corporate purchasing policy, operating

guidelines, code of conduct.

Management of JTI supplier base and commercial

agreements.

Coordinate cross-geographic procurement activities and

address local procurement issues with respective functions.

Execution of transactional activities as identified in Procure to

Pay Mega-Process, from processing of purchase requests,

purchase order creation, to order acknowledgement.

Acting as a bridge between JTI Business Service Center

organization and vendors for issue resolution.

Monitoring suppliers‟ performance and taking timely actions.

Leading local supplier bidding and negotiation processes in

close cooperation with respective departments to ensure best

combination of quality, cost and service parameters/conditions

for products and services to be attained.

Assurance of on-time and complete deliveries from suppliers

to requesting parties including accurate documentation.

In-depth analysis of key performance indicators while taking

necessary actions for improvement areas.

Every location (markets/factories/functions) is expected to establish a

formal Professional Purchasing Organization

PPO needs to be established where currently not existing, and

increase of scope where currently existing.

Size and makeup of PPO varies from market to market

depending on the complexity of the purchasing process and

the number of transactions to be performed.

Appropriate staffing of Purchasing Organization (if required

shift from other departments/functions), may result in

headcount optimization.

In markets, PPO reports to country CFO.

In markets and factories, a single country PPO reports to

Manufacturing Services Lead, with a dotted line reporting to

country CFO.

Geneva Headquarters PPO reports to Global Procurement.

Change in the transactional roles and responsibilities of Global

Procurement, Finance, Planning, and Local Purchasing

organizations as they relate to purchasing activities.

Training requirements to be defined according to market

needs.

ERP Impact Assessment – Change Area

Details

Process

Change Area

Description of

Change

Expected

Benefits

Organizational

Impact

Operational

Impact

Slide 31

ERP Impact Assessment Tool

Slide 32

Current Job

Future position

Future

position

Future

position

Future

position

Future

position

Future

position

Future role mapped to

job and then to individual

Individuals

Future

roles

Role Mapping

Slide 33

Role Mapping Workshops

Transformation Stewards/

Functional Coordinators are

responsible for coordinating the local

Mapping Process.

In particular they will:

•populate the required fields of

the “User Analysis” Data Base

•complete the column “current job

label” on the Role Mapping

Template

•prepare and facilitate the roles

mapping sessions (incl.

appropriate working tools and

processes)Process Experts

will provide information about

the role content, the activities to

be performed, the changes with

the actual processes.

PSI

will draw attention to

security, authorization

guidelines and

segregation of duty.

GMs, ExComs, HR and Line Managers

Give guidance and provide knowledge about current jobs

content, individuals and organization structure. These people

will have the responsibility to map future roles to job label. HR

will have to update the job label description.

Slide 34

Caring for the Project team

• It was vital to meet the personal needs of the team in

terms of

career management

employment conditions

motivation

emotional disruption of being away from home and

family

Slide 35

(The Golden Rule)

• All team members, except those who wished to further

their careers elsewhere, had to be re-integrated to the

business

• The process of re-integration started early on

• The process required strong executive management

support and proactive HR effort


Slide 36

Employment Conditions

• People from different countries assigned to the project

had differing employment conditions

• Each person‟s financial situation was protected, with their

net income remaining the same as if they were working in

their home location


Slide 37

Emotional needs and wok-life balance

• The geographical scope created difficulties

• Project Team worked from a regional hub (Campus) , of which there

were two for each wave.

• Most of team members were away from their home and family for

long periods, putting them under great social and emotional

pressure.

• The project work – with its long hours and complexity – was often

more demanding than the jobs they had come from.


Slide 38

Emotional needs and wok-life balance

• Anyone assigned to a hub away from his/her home country was put

on a “three-week-on”, “one-week-off”‟ works schedule

• Team members were allowed to invite his/her partner to join them

during the three weeks on, rather than the project team member

returning home for a visit.

• This made life much easier and more fun

• There were also some ERP Marriages during the life span of the

project


Program Rollout : By Region and Registered Country

Wave 1

Russia

(Hub in St. Pete)

Wave 2

Asia(Hub in Shah- Alam)

Wave 3

Americas(Hub in Toronto)

Wave 1

Europe + HQ

(Hub in Trier)

Wave 2

Eastern Europe

(CIS), Africa &

ME+ Greece(Hub in Trier)

Russia

Russia

Europe & HQ

Andorra

Cyprus

Czech Republic

Finland

France

Germany

Ireland

Italy

Luxembourg

Mauritius

Spain

Switzerland

The Netherlands

United Kingdom

Asia

China

Hong-Kong

India

Japan

Korea

Malaysia

Phillipines

Singapore

Taiwan

Vietnam

Eastern Europe

Estonia

Kazakhstan

Latvia

Lithuania

Romania

Serbia (Scope extension)

UkraineAmericas

Brazil

Canada

Puerto Rico

USA

Africa & Middle East

South Africa

Tanzania

Europe

Greece

Slide 40

ERP Hubs – The Campus

Slide 41


• we needed to help ensure that people in the

business were open to change

• This role we shared with the communications

team.

People do not fear change, but uncertainty

Slide 42

• Through the huge and complex communications effort,

the project gained a very strong identity and

expectations were well managed

• We put such importance on communication that it was

embodied in the governance model

• we drew up a set of guiding principle for local HR to

assist them in helping affected employees to deal with

change, particularly the emotional aspect.


Slide 43

It was important to give employees emotional

support, allowing them to „mourn‟ the passing

of the old ways.


Slide 44

Transfer SAP knowledge and train end-users

• Training was provided for almost 5,000 new end-users.

• We used the „Train the Trainer‟ concept, which is well

known and proved effective for us

• There were 200 trainers, selected for their business

expertise.

• Each underwent a month-long program including „soft

skills‟ and SAP training.

Slide 45

• The rigor of the “Train the Trainer” program had ensured

the job could be done.

• Using this approach, knowledge was kept in the

company and continuous support was available to end

users.

• Trainers performed another vital role in adapting the

training materials to local needs.


Slide 46

• SAP knowledge was passed on through informal

channels as well as training courses.

• The project started out with 80 consultants, but it

was planned to transfer knowledge to JTI by

informal coaching.

• This was achieved, and only 20 consultants

remained in Wave 3.

F2SR2R

P2P

O2C

Non-Critical Users

Critical

UsersPriority

Users


Slide 47

• The ERP project at JTI had a well defined roadmap, was

a success and a major accomplishment.

• A dip in performance is inevitable after such a project.

• The „dip‟ became less disruptive as the project moved

through its three waves

• The tangible and intangible benefits exceeded

expectations.

• A cultural change is taking place as people grow in

confidence from facing the huge challenges of the ERP

transformation.

CONCLUSIONS

Slide 48

2. From Mega Process to SAP Role

In the BPML all Megaprocesses in OneERP

scope are broken down following a standard

process hierarchy. On the lowest level a

logical grouping of worksteps are summarized

under an SAP role name.

3. From SAP Roles/SAP Profile to

Job Label

During Mapping Workshops business experts

from impacted markets & factories link SAP

roles to existing job labels/SAP profiles.

Mapping decisions are based BPML, SAP Role

Workbook, Role Directory and verbal

explanations by ERP process experts.

4. From Job to Individual

Each market and factory links job labels/SAP

profiles to individuals in the organization. This

process should be separated from the role

mapping in order to optimize the organization

structure.

Roadmap for Organization Change

O2C

SAP ROLE: „O2C ORDER“

Receivecustomerenquiry

Determine type of

quotation

Process

quotation

Receive customer enquiry

TasksDetermine

type of sales document

Process export

quotation

Process

domestic sales

order for key

account

Scenarios

Core Process Order Management

Worksteps

Process Manage Sales Orders

Sub process Process Presales activities Process sales order

O2CO2C

SAP ROLE: „O2C ORDER“SAP ROLE: „O2C ORDER“


Determine type of

quotation

Process

quotation


TasksDetermine



Determine type of

quotation

Process

quotation


TasksReceivecustomerenquiry

Determine type of

quotation

Process

quotation


TasksDetermine


Process export

quotation

Process

domestic sales

order for key

account

ScenariosProcess export

quotation

Process

domestic sales

order for key

account

Scenarios

Core Process Order ManagementCore ProcessCore Process Order Management

WorkstepsWorkstepsWorksteps

Process Manage Sales OrdersProcess Manage Sales Orders

Sub process Process Presales activities Process sales orderSub process Process Presales activities Process sales order

To-be Job 1

To-be Job 2

New Job 5

To-be Job 1

To-be Job 2

New Job 5

The role variants mapping process is the

activity who inks each end users to the role

variants based on the SAP enterprise

structure. This activity is key in giving access

to transactions into SAP.

6. From End User to Training Class

Based on the role and job mapping result, all

identified end users are allocated to training

classes. End user training to be hold during

the month of May 2004. Prior to the end user

training the local trainer will be trained during a

one month train the trainers workshop.

7. From Organization Fine-Tuning to

Transition

Organization Fine-Tuning focuses on the

adjustment of the local organization structure in

order to achieve objectives set in the new business

process model. The transition phase ensures that

the organization and its people are smoothly

transferred from the old to the new work

environment.

5. From Global SAP Role to SAP

Role Variants

AB

C

Zz_O2C_Order

Zz_O2C_Ord

er CH45

Zz_O2C_Ord

er CH4

Zz_O2C_Ord

er CH9

SAP

Profile

“…”SAP

Profile

“…”SAP

Profile

“…”

1. From Process Redesigns to

oneERP Impacts

The OneERP Impact Assessment describes

the level of change and business impact in

moving from today‟s operations to the new

way of working.

ERP

Operational

and

Organizational

Impact Assessment

Slide 49

What to expect right after Go-Live?

Performance

Dip

Further

Process and

System

Improvement,

Knowledge

Transfer

Stabilization

&

Benefit Realization

Go LiveMonths

Performance

ORGANIZATION FINE-TUNING

• Smooth Go Live

• The right people at the right place

• Adequate skills and competencies

• Correct authorizations

+3 +6 +9

ORGANIZATION (RE)DESIGN

• Process efficiencies

• Further improvement of Organization

Structure

• Benefit Realization

Slide 50

CONCLUSIONS

The project was a success

This success was due to many factors.

Efforts of every single person involved

The strong executive support and governance

The positioning of the ERP project as vital to JTI‟s

transformation into a modern multinational.

Slide 51

Key Learnings

Management should devote senior resources and

considerable effort to change management, training

and communication

HR should take the lead in change management in a

complex, long-term and demanding ERP project.

HR should provide dedicated HR support for those

working on a large project to take care of their day-to-

day and long-term concerns

Slide 52

Key Learnings

Perhaps the most important lesson was that companies

must plan for HR involvement in ERP projects from the

beginning.

It is essential for HR to be proactive and lead from the

front with other senior management involved.

HR has a responsibility to deliver its part of the

transformation process, and be passionate about what

it can do.

Slide 53

Change Management

is the process

of turning project intentions

into business practice.

……Final Parting Message……

Slide 54

Any Questions

Thank you

Documents

Khalil cotran