Bob Mareburger Enterprise 2000 Project Director CITGO Petroleum Corporation Shannon Giacomo Amy Stit

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Bob MareburgerEnterprise 2000 Project
DirectorCITGO Petroleum Corporation Shannon
GiacomoAmy Stitt
Lessons Learned from an ERP System Implementation
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What is an ERP System?

• A software system used to integrate and
  standardize information and to manage business
  processes across an enterprise.
• SAP modules include finance/accounting, materials
  management, sales and distribution, human
  resources, plant maintenance, production
  planning, quality management and specific
  industry functions.

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Why an ERP System?

• Companies in rapidly growing markets outgrow
  existing systems and processes.
• Companies facing pressure on margins must focus
  on ways of reducing costs.
• Companies involved in mergers and acquisitions
  need to integrate multiple systems and enforce
  standard processes.

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Why an ERP?

• Need for rapid transformation in a rapidly
  changing business environment.
• The company was experiencing declining corporate
  financial performance.
• Desire to capture market opportunities by taking
  an integrated supply chain approach to creating
  value.
• Legacy systems costly to maintain and facing Y2K
  compliance issues.

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Why Cultural Resistance?

• Many did not see the necessity of change. By
  many measures, we were very successful.
• Feeling that an ERP system would invite micro
  management of the business.
• Historical autonomy of the business units made
  many unwilling to be brought into standardization
  across the company.

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Initial Steps

• Created a full-time cross-functional team of
  highly respected business and technical people
  led by a corporate officer.
• Identified process owners and subject matter
  experts to validate process designs.
• Made change management a priority and assigned
  dedicated resources.

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Initial Steps

• Cultivated executive alignment by defining a
  program of executive led initiatives.
• Committed ourselves to learning from others.
• Evaluated prospective partners carefully and
  allowed the team to have input into the final
  decision.

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Critical Success Factor 1

• Recognition that Technology is not the issue -
• PEOPLE and PROCESS are!

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People and Process
Implementing this type of software is not a
technological exercise, its an organizational
revolution. Michael Hammer SAP is not
just another software acquisition - it is a major
commitment to organizational, human resources,
time, and financial transformation. The
Conference Board
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People and Process

• An ERP implementation is all about Change and
  change is all about People and Process.
• Eliminate wasted steps.
• Capture data once as close to the source as
  possible.
• Give people the tools to make better decisions.
• Design processes with the software in mind.
• Dont start reengineering efforts with a blank
  sheet of paper, understand the capabilities of
  the software and use as a guide.
• Take advantage of built-in best practices.

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Critical Success Factor 2

• Develop a BUSINESS CASE with
• tangible BENEFITS

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Business Case

• Technology is cool, but were in business to
  create value for our owner (shareholder).
• Always ask Would my customers (internal or
  external) be willing to pay for this process?
• Planned benefits are usually strategic, but a
  tangible ROI is possible.
• Establish measurable benefit targets with
  accountability.
• Focus improvements on high return areas.

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Enterprise 2000 Annual Benefits(MM/Year)

Original Current Estimate Estimate Initiative
(MM/Year) (MM/Year)
Strategic Sourcing Support Services
Delivery Plant Performance Improvement Light
Oil Supply Chain Management Lubes Supply Chain
Management Capital Project Management Workforc
e Management
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Business Case

• Less Tangible Benefits
• Increased information for analysis
• Improved quality and integrity of information
• Consistency of data
• Better business decisions
• Cost drivers
• Breadth of scope
• Resistance to changing business processes
• External resources
• Technical infrastructure starting point

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Critical Success Factor 3

• Manage for RESULTS

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Manage for Results

• Begin with the end in mind.
• Dont allow the details of implementation obscure
  the objectives of the program.
• Evaluate implementation options against the goals
  of the business case.
• Manage to critical path delivery dates.
• Perfection is expensive.
• Learn when good enough is good enough.
• Dont allow milestone dates to slip without
  consequences.

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Manage for Results

• Fast, high quality, low cost - You can have two
  out of three. (Quote credited to CITGO IT
  Manager)
• Balance speed with effectiveness.
• Move quickly enough to maintain focus.
• Move slowly enough to do it right and allow the
  organization to absorb the change personally.

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Critical Success Factor 4

• Manage CHANGE

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Manage Change

• Dont let change just happen.
• Its not the change itself that most people
  resist, but the uncertainty of it.
• Communicate, Communicate, Communicate.
• Link messages to each stage of the project
• Begin with awareness and move to specifics
• Target individual stakeholder groups
• Clarify the benefits of the change - to everyone
  in the organization.
• Change Management is Perception Management

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Critical Success Factor 5

• Dont underestimate TRAINING and production
  SUPPORT requirements.

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Plan for Training and Support

• Plan for training and support needs early in the
  project and plan for more than expected.
• Dont forget production systems need support even
  while implementation continues.
• Develop Power Users.
• These resources will promote user acceptance more
  than anything else you can do.
• Recruit trainers from the organization.
• Provide for follow up and advanced training for
  key users.

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Critical Success Factor 6

• Dont proceed without
• COMMITTED EXECUTIVE SUPPORT

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Committed Executive Support

• ERP systems cross traditional corporate
  boundaries - breaking down silos.
• Support from senior executives will be required
  to remove inevitable roadblocks.
• Walking the talk starts at the top.
• People will look to the top to see if the
  behaviors they are being asked to change are real
  or just the flavor of the month.
• In a bacon and eggs breakfast, the chicken is
  involved, the pig is committed.

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Critical Success Factor 7

• Accelerate DECISION-MAKING

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Accelerate Decision-Making

• Empower the Project Team.
• Not enough time to make consensus decisions.
• Quick decisions are more important than perfect
  decisions.
• Put a clear decision-making process in place.
• Clearly define roles and responsibilities.
• Define expectations for decision timetable and
  the consequences of not meeting targets.

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Critical Success Factor 8

• FOCUS

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Focus

• Clearly define scope.
• Be open to new opportunities, but evaluate
  against the parameters of the business case.
• Maintain a sense of urgency and high priority.
• Ensure senior management gives the project a high
  priority among corporate initiatives.
• Ensure the team is assigned full-time and
  relieved of previous responsibilities.
• Physically relocate the team to a common area to
  protect from distractions and encourage teamwork
  and cooperation.

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Critical Success Factor 9

• DONT MODIFY the code

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Dont Modify the Code

• Dont jeopardize the benefits of integration.
• Enhancements and bug fixes are continuous, custom
  modifications make applying them a very complex
  process.
• Ensure maintenance and upgrade path.
• New releases which employ new functionality and
  improved business processes help preserve the
  investment in the software.

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Critical Success Factor 10

• Work on TEAM RETENTION
• from the beginning

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Team Retention

• Companies cannot compete with contract
  opportunities on compensation alone.
• Expect to lose some good people and staff
  accordingly.
• Promote quality of work life and other
  incentives.
• Use creative incentives.
• Completion incentive awards.
• Opportunities to learn new skills and functions.

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Critical Success Factor 11

• PARTNER for success

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Partner for Success

• Not many organizations can do this alone.
• Choose partners with shared values and incentives
  for mutual success.
• SAP is a constant work in progress - develop a
  voice into development priorities.
• Youll get out of the relationship what youre
  willing to put into it.
• Participate in user councils, joint development,
  personnel exchanges, etc.
• CITGO has also developed strategic executive
  relationships.

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Insert charter here
Insert charter here.
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Enterprise 2000 Profile

• Project Goals
• Facilitate rapid transformation
• Enhance analytical capabilities
• Enhance Refinery Competitiveness
• Further Improve Customer Service
• Reduce Cost of Purchased Goods
• Improve Employee Development
• Optimize the Supply Chain...

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Enterprise 2000 Implementation Plan
1998
1999
Enterprise Financial/Asphalt Pilot Implementation
Support
Software Upgrade
Lake Charles Plant Maintenance Implementations
Corpus Christi Plant Maintenance Implementation
Logistics Common Design
Light Oils Logistics Implementation
February
Light Oils Rollout Begins
Lubes Logistics Implementation
Human Resources Implementation
June
LCRC Implementation
HR Rollout Begins
Finance, Purchasing Plant Maintenance
Implementation
October
Lemont Implementation
April
Finance, Purchasing Plant Maintenance
Implementation
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Getting There
Legacy Bolt-ons