26 Mar Leaving a legacy: Rockwell Automation transforms to a single ERP system
When Mike Jackson began his role as CIO with Rockwell Automation in 2003, what he heard repeatedly in talking to people throughout the organization was that there were too many systems constraining the business.
With $5.7 billion in annual revenue and locations in 80 countries and approximately 21,000 employees, the provider of industrial automation controls was running roughly 700 different legacy systems. By virtue of numerous acquisitions, Milwaukee-based Rockwell has grown with isolated sites and business units. And since business processes tend to be local and limited, this produced a series of individual cultures.
Jackson’s challenge was to replace the legacy systems and strive for broad-based functionality across the organization with the implementation of SAP, a single, global enterprise resource planning package.
Entering the fourth year of what figures to be a five-year deployment, Jackson talked about some of the principles that have guided Rockwell through the transformation process during a presentation to IT professionals earlier this month at the Fusion 2009 CEO-CIO Symposium in Madison.
“When I came on board, people here knew they had a problem with the legacy infrastructure – there were too many systems tied together,” Jackson said. “It was a matter of getting the will to solve the problem, and determining what the solution needed to be.
In the beginning stage, Jackson pulled together the most credible senior business people who were involved enough to understand the process.
“They were the ones, that, as a team, determined that we can have single global processes and one set of technology to support it,” he said. “So, they were the ones who sold it going forward.
“There was a lot of cynicism for this project,” Jackson added. “It was first started in the late `90s in Europe, and it didn’t work. I went into this with the idea that we are not moving forward until everyone has got their arms locked.”
Rockwell CEO Keith Nosbusch served as the chief sponsor of the Global Process Transformation (GPT) effort. At the project launch in 2005, Jackson moved 65 IT staff people away from legacy support to the GPT team. Key strategies included establishing governance and project priority setting.
“All of a sudden, the future was upon us,” Jackson said. “IT was moving to the new project team, decommissioning applications, and also growing the business.
“When you are going from one set of processes, which people are very familiar with, to a totally different way to process your business transaction, it’s like getting someone who has thrown right-handed and learning to throw with their left hand, without getting the game to stop,” Jackson said. “But, now we are able to help people get through it a little better.”
Building a scalable process
The actual deployment effort began in May 2006, starting with Rockwell manufacturing plants and the supply chain then moving on to customer facing areas.
“We started out small with a single plant, and now we are doing releases that involve 12 projects at the same time, with multiple plants,” said Matt Fordenwalt, deployment leader for the GPT project. “It has just scaled tremendously in terms of what we have been rolling out to the organization. Now we are doing a portfolio of projects that touch sales and marketing, to engineering and manufacturing.”
Fordenwalt says the effort represents a total partnership and collaboration between the project team and those business functions affected by the change.
The GPT team appoints a business readiness manager -someone who is going to be an accountable lead across all constituencies – and they drive within their businesses the readiness effort – from the gory details of cleansing their data, to getting their people ready from a business rollout standpoint.
Fordenwalt has a set of business readiness managers and project teams who hold the GPT effort together. To support that effort on the project team side, there are resources dedicated to building and testing that solution.
“We have developed this scalable method of how we do this across projects,” Fordenwalt said. “I’d say we have learned at every step along the way. We are getting better and better at converting existing product lines, manufacturing plants and legacy data and bringing that up on the new standard SAP.”
Process improvement drives IT investment
Instead of every region and every business doing it their own way, the bulk of Rockwell’s global transformation is to stop investing in legacy systems so that those systems can be turned off, Jackson said. Another piece involves capping the number of outside consultants and getting them out of the loop as soon as possible.
“There’s always pain,” Jackson said. “I think in some of our early startups, there were some distortions in our supply chain – not having all the parts to build some of our complex projects. We learned from that, how to minimize that and quickly recover. It’s been painful, but it’s gotten better each time. So, at this stage, we’re pretty mature.”
The challenges of the current economy reinforce why Rockwell is going through the multi-million dollar GPT project. The corporation is well ahead of the original goal – a hard savings of $100 million a year – and is looking to save more going forward, Jackson said. Cost cutting becomes more aggressive each year.
Rockwell is more than halfway through the process, with about 80 percent of the GPT effort applied to its North American operations, and is now looking at taking the solution to the remaining 20 percent worldwide – an effort which will involve converting some of the more complex parts of Rockwell’s business, Fordenwalt said.
“Post transformation, it will be more of a process issue and less a technology issue,” Jackson said. “It will be all the process owners deciding how to embed transformation once the project goes away.”