Transition from Project to Functional Organization

Transition from project to

functional organization

The IKEA journey by Peter Larsson and Peter Diekmann

Agenda

• IKEA facts & figures

• OTM turning into ITM – the STMS program

• Receiving ITM in functional organization – the top five

challenges

• Lessons learned and Q&A

3

Agenda




challenges


4

IKEA – our vision

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Our vision“To create a better everyday life for

the many people.”

•Our business idea

“We shall offer a wide range of well-designed,

functional home furnishing products at prices

so low that as many people as possible will be

able to afford them.“

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IKEAs ambition...

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To reach €50 billion

in sales and 1,5 billion

visitors by 2020

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25 material areas36 categories

1002 suppliers in 52countries

50 million m3 transported1.5 million shipments

> 14.5 million customer deliveries

>700 million customers

370 stores in 40 countries

32 DCs in

17 countries

33.000 routes

400 carriers

13 CDCsIn 9 countries

IKEA SUPPLY CHAIN

Distribution center 1

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Supplier 1

LAND FLOWSStore 3


Supplier 2CP/ Cross-dock

Store 4

Supplier 4


Port 1

Port 2

IMT 1

Store 2

Store 1

Multi-leg mid-receiver delivery

Direct sender-receiver delivery

Combined delivery options

Direct multi-leg ocean delivery

Multi-stop & mid-receiver delivery

OCEAN FLOWS

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…fit flat packages… …optimized for pallets…Products developed to…

…optimized to load into equipment that can… …be unloaded directly to the point of sales

Transport – a vital part of the IKEA concept –low prices also means low costs

Agenda




challenges


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OTM turning into ITM – the STMS program

• STMS (Supplying Transport Management Solutions)

started in 2010, ending mid 2017 (consisting of seven

different projects)

• ITM (IKEA Transport Management) is the IKEA name of

the configured OTM standard software

• One of the biggest IT connected projects at IKEA

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IKEA want OTM to support…

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• Increased product availability for customer

• Lower costs

• Reduced environmental impact

... and enable

• Growth

OTM turning into ITM – the STMS program

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PERFORMANCE

FLEXIBILITY

SCALABILITY

MAINTAINANCE

EXPAND

BUSINESS

FRAMEWORK

ORACLE

Around 15 bigger and conceptual

changes identified and being

implemented

Over 200 integrations

25 raise-the-base activities

identified and being implemented

Align solution capabilities and

business decisions in design

Extensive legacy IT landscape

Hardware improvements

Manage business expectations

Changing from “home-grown” to standard system

Limited flexibility in adjusting in business

Master data maintenance

Advanced logistics network and business dynamics

Demanding business requirements and multiple goals

STMS scope

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Need

planning

Transport Network

Management

Optimise Transport NetworkTransportation Sourcing

Purchase order

LogisticOrder

Management and

DeliveryPlanning

Contract Management

Buy against contract

Consignment & Shipment Management

Service Settlement

Delivery Event Management, Track & Trace

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Delivery planning live in ITM July 2015Baltic cluster

31 suppliers

138 receivers

19 countries

1.390.000 m3

Scandinavia

10 suppliers

13 receivers

8 countries

115.000 m3

Shanghai

7 suppliers

5 receivers

1 country

170.000 m3

Italian cluster

10 suppliers

87 receivers

10 countries

617.000 m3

Royal Leerdam (NL)

1 supplier

10 receivers

10 countries

73.000 m3

North America

12 suppliers

22 receivers

2 countries

130.000 m3

Pacos (PT)

2 suppliers

10 receivers

7 countries

20.000 m3

DP Pilots ongoing

Praha (CZ)

Ocean (6 relations)

Other Pilots ongoing

Visibiliy

Document mgt

Events mgt

OTM turning into ITM – the STMS program timelines

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Delivery planning #1


R1.2

Sept 2013

R2.0

Feb 2014

R2.1

May 2014

R3.0

Sept 2014

R3.1

March 2015

R4.0

July 2015

R4.1

April 2016

R4.2

Jan 2017

Global rollout

Ending Feb 2018





PilotPilot

Service Settlement & Visibility #1Service Settlement & Visibility #1

PilotPilot

PilotPilot

Service Settlement & Visibility #2Service Settlement & Visibility #2Pilot & RolloutPilot & Rollout

PilotPilot

PilotPilot

Global rollout

Close Legacy

NOW

PilotPilot

Consignment & Shipment mgmt #1




Move of Integrations

Agenda




challenges


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Move from projects to functional

organization at IKEA

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Project Management

• Running all programs and

projects

• Defined scope, time and

budget

• Practical Project Steering with

decision points

• Formal handover to

functional organization at

Decision Point 7

Service Management

• Receiving new IT services

from programs and projects

• Running Business –

Application Maintenance &

Support and Enhancements

• ~350 IT services

• Robustness and

maintainability focus

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Manual effort

need in the ITM

solution

Solution and

Technical

documentationChoice of

functional run

partner

Agile project to

waterfall

functional

organization

Incident and problem

management

ITM in Functional organization- Top five challenges

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ITM in Functional Organization – Top five challenges

1. Incident and problem managementProject problematic Project Solution

• OTM new tool at IKEA

• User feedback needed

• Parallell development

• Pilot and coordination meetings

• Direct communication into project

• Problem implementation by project

Functional problematic Functional Solution

• More than 10k users

• Extensive amount of incidents expected

• 24/7 Support

• Defined way of handling problems at IKEA

• Defined owner of solutions in both business and IT

• Global Helpdesk

Functional mitigation and lessons learned

Functional organization

from start


from start

• Reduce person dependency

• Conscious decisions

• Service Level Agreement

• Stakeholder Management

Use of Service

Transition

Use of Service

Transition

Accept project approach, require

long term plan

Accept project approach, require

long term plan

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Project problematic Project Solution

• Scope – time constraint

• Limited effort on backlog

• Master data

• Acceptance of manual work for end users

• Acceptance of workarounds by AM&S

• Some system support for master data


• Maintainable solutions and risk avoidance

• Resolve dependency from AM&S

• Avoid time consuming manual work in solution

• Focus on problem root cause correction

• Define process around solving problem

• Provide solution with needed support for master data

Functional Mitigation and lessons learned


from start

• Identify and analyze problems based on facts and figures

• Total cost of ownership perspective

Service Transition

Dedicate time for problem correction in

project

Importance of Master Data


2. Manual effort in the ITM solution

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• Limited time in project sope

• Constant pressure on delivering on time

• Underestimating of documentation effort

• Business value over documentation

• Focus on document design and requirements


• Outsourced AM&S –need of similar WoW

• Reduce person dependency

• Needed information should be available for all stakeholders

• Document solutions in a streamlined way

• Identify and prioritize the documentation

• Involve run partner in implementation stage



from start

• Functional organization support creating documentation

• Clear requirements on documentation

Service Transition

Make sure that the documentation level is agreed as early

as possible


3. Solution and technical documentation

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• Need of extensive OTM expertise

• Core knowledge at the implementation partner

• Implementation partner involved in incident handling


• Outsourced AM&S

• Works for the many, but not all solutions

• Strategic partner and niche competence

• Participate in project to develop the competence

• Identify and secure critical competence



from start

• Staff AM&S team with resources from implementation partner

• Clear requirements on knowledge transfers and documentation

• Ensure long term partnership with

Service Transition

Total cost of ownership perspective

implementation partner

Secure inhouse functional expert

role


4. Choice of functional run partner

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• Time to market

• Leadtime of handling test environment, deployments and infrastructure support

• Integrate setup of test environments, deployment capability and OTM infrastructure competence in project


• Enable involved functional actors to perform as per the processes

• Need to align to legacy solution release cycle

• Clear responsibility and onboarding of functional actors

• 24 well defined processes



from start

• Scale up functional organization for transition

• Try to reduce project integration of other actors responsability

• Involve functional actors in project

Service Transition

Anchor roles and responsibilities of each actor in both project and functional

organization

Agile when a lot of dependencies?


5. Agile project to waterfall functional organization

Overall lessons learned and Q&A

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Support project

approach, and secure

long term robustness at

the same time

Put your requirements

early in Service

Transition and follow up

regularly

As a receiver: Be there

from the start!

As a project: involve the

receiver from the start!

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Home is the most important place in the world

Contact details

Peter Larsson, [email protected]

Peter Diekmann, [email protected]

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Technology

Transition from Project to Functional Organization