Case Study: Information Systems SAP Project at NIBCO, Inc.

The roadmap to SAP implementation is shown below in Figure 5-5. The key functions include project preparation, business blueprint, project realization, and go-live. The purpose of the project preparation activity is to start detailed planning for the project. There are basic issues to be resolved at this early stage to ensure the projects success. The principal elements that will determine how the project will be accomplished are established as well. These activities set the basic foundation for project kickoff and provide an information baseline that may be used as a reference throughout the implementation of the project.

Figure 5-5 Roadmap to SAP Implementation

NIBCO established all project standards and procedures to make sure that project team members operate in an effective manner during the implementation. Project planning continues during the entire implementation and should be constantly refined. NIBCO also defined end-user training methods and documentation along with the overall implementation strategy. The SAP planning process at NIBCO resulted in:

Project plan; Project management standards and procedures; Implementation strategy; Project organization; Configuration standards; End-user training and documentation strategy; Testing strategy; Post-implementation support strategy; Design of the companys system landscape, including its setup and maintenance strategy; Official start of the project, presentation of the input mentioned above, and explanation for any issues or questions about the project from the kickoff meeting participants; All project team members trained in introduction to SAP, navigation skills, and knowledge of major integration points of the system; and The formal sign-off of Phase 1.

Project Plan

The NIBCO team selected an implementation partner, a third-party consulting firm that can support NIBCOs decision to implement a big bang approach that is viewed in the industry as high risk. NIBCO chose IBM and Cap Gemini as the two finalists after considering several potential consulting partners. NIBCO picked IBM as its SAP implementation partner. IBM was also chosen because of its strengths in technology and infrastructure consulting. When we hired IBM, we hired them with the agreement that they were going to help us to do a big bang in the timeframe we wanted. As far as I know, IBM had not done a successful big bang up to that point, said Jim Davis, project co-lead, Change Management.14

A project plan was completed by a team composed of NIBCO employees and IBM project leaders. The joint team collected and reviewed data from policies, procedures, organizational charts, financial information, survey data, and existing re-engineering work products. They conducted interviews, gathered key business processes, and reviewed business issues and information technology applications in the company to define initial scope and definition. The initial scope and definition took about 2 weeks. The management at NIBCO reviewed and accepted the scope. Once the scope was approved, the team performed a gap analysis to identify the areas of fit and non-fit between existing business processes and SAP. The gap analysis focused on technology and process fits and developed the functional solutions for all non-fit processes. This activity took place for nearly 3 weeks. The last activity was to refine the project plan and team structure as required, which took a week. NIBCO management approved this process. The project plan consisted of the following:

Detailed project plan; Risk management plan; Migration plan; Communication plan; and Change management plan.

NIBCOs project plan was aligned to its strategy. The project scope as well as the project plan reflected the strategy, and the organization wase very much focused on achieving its strategic objectives:

Increase product development capability; Transition from exporter to global organization; Become a customer responsive organization; and Develop supply and demand chain capabilities.

The project focus was to implement SAP R/3 in a big bang approach with a target completion time of 15 months. NIBCO was to utilize predefined business processes in R/3 as a good enough business model. NIBCO was to engage the SAP consulting group of IBM to work with the NIBCO process team in a collaborative manner to maintain good chemistry with, coach, and mentor NIBCO staff. The expected result was skill and knowledge transfer to NIBCO employees so as to enable NIBCO to reach its strategic objectives.

IBMs consulting practice for NIBCO consisted of three major solutions integrated to

Figure 5-6 Project Management at NIBCO

provide services in order to implement SAP: people, business process, and technology (as shown in Figure 5-6). The people solution was to assist NIBCO in preparing the staff effectively to understand their role in the organizational change and add value through their active participation. To assist NIBCO to take advantage of SAPs business solutions, business processes were designed. The technology part of the integrated solution was to assist NIBCO in setting up the SAP infrastructure in order to satisfy business requirements. IBMs view of the project was to have a balanced formal project methodology approach between the new technology and the new organizational change. IBM recommended that NIBCOs core team assist IBM in the SAP implementation. The project was planned to be built in two phases:

Phase 1 (approximately 6 weeks duration): Preparation: Initial scoping and definition;

and

Phase 2 (approximately 13 weeks duration): Analysis, design, and implementation.

Infrastructure and change management consultants were to build the transition to SAP R/3. Both training and organizational change management were planned to continue through the two phases. IBMSs philosophy toward the project planning was that the key to a successful SAP project is to manage the application and infrastructure changes as part of an integrated project plan. They wanted to correctly identify the roles and responsibilities of each team as early in the project lifespan as possible, thus mitigating potential schedule overruns.

The organizational change plan consisted of four components: managing communications, building teams, securing organizational commitment to change, and transferring skills. These four working components were geared toward facilitating the development of a sustainable organization, the business process, and technology changes. A training and education plan was also developed to provide ongoing educational reinforcement to the core, IT, functional, and extended staff.

The initial WBS was broken into an initial scoping and definition phase as well as an implementation phase. The final project budget was estimated to be about $17 million, 30 percent higher than the previous estimate. One of the major reasons for the increase was the inclusion of change management costs including training. About one-third of the final budget was for technology infrastructure costs, including the R/3 software. The cost summary and budget are shown in Table 5-7.

Table 5-7 Cost Summary and Budget

Phase	Description	IT	Business
		Days	Amount	Days	Amount
1	Organizational change management			80	$ 200,000
	SAP infrastructure	100	$250,000
	SAP implementation			100	$150,000
	Hardware, software, and infrastructure		$5,000,000
	Phase 1 total	100	$5,250,000	180	$350,000
2	Analysis, design, and implementation
	Organizational change management			200	$4,300,000
	SAP infrastructure	177	$400,000
	SAP implementation			3,000	$5,000,000
	Phase 2 total	177	$400,000	3,200	$9,300,000
	Total Phase 1 and Phase 2	277	$5,650,000	3,380	$ 9,650,000
	Total IT and business				$15,300,000
	Grand total cost with 10% contingency				$16,830,000

1.Using the information in this section, write a project plan for NIBCO.