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ECIS 2012 Proceedings 1 ECIS 2012 Proceedings European Conference on Information Systems (ECIS) ONE SIZE FITS ALL: CASE STUDY OF ENTERPRISE SYSTEMS IMPLEMENTATION IN NESTLÉ Mitra, Amit, Bristol Business School, University of the West of England, Coldharbour Lane, Bristol BS16 1QY, UK,
[email protected] Neale, Peter, Consultant - Neale Consulting Services Ltd (NSCL), Knowle, Bristol BS4 2HE, UK,
[email protected] Abs trac t: User resistance, organisational complexity, cultural complications, inadequate change management provisions are some of the well-known hurdles of Enterprise Resource Planning (ERP) systems implementation that have been reported so far. Whereas component based, phased, adaptive, evolutionary approaches have been advocated for most organisations as being effective in combating these hurdles, yet in contrast the literature has remained uninformed by research on large multinational corporations implementing singular ERP systems. Using a case study approach informed by documents, and accounts of key personnel involved in the development of single all encompassing ERP system in Nestlé a critical assessment of the supply chain was undertaken. This study by examining the effects of ERP implementation on four critical facets of supply chain of Nestlé aims to dispel the myth of inevitable failure that shrouds contemporary appreciations of ERP implementations in large multinational organisations. It is expected that the ERP development involving hundreds of representatives from all 70 locations of Nestlé would enable lessons to be drawn for researchers and practitioners alike. Keyword: ERP implementation, Multinational corporation, supply chain management, one size fits all mailto:
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[email protected]� 2 ECIS 2012 Proceedings European Conference on Information Systems (ECIS) 1 In troduc tion Motivations to introduce Enterprise Resource Planning (ERP) or Enterprise Systems (ES) in organisations have varied over the last few decades. Whilst today memories of challenges of Y2K seem to have faded yet at the time, there was considerable debate followed by frenetic activity in the software community to deal with the Y2K problem. Before the start of the new millennia, implementation of ERP systems seems to have been a measure aimed at addressing Y2K concerns of some organisations. Mabert et al. (2001) in their research found that simplification and standardising IT systems to be a driver for adopting ERP systems. Improving communications with customers and suppliers is also a strategic priority that has motivated multinational companies (MNCs) to implement ERP systems. The third common driver of ERP implementations are the advantages that accrue through greater access to data thus providing a strategic advantage. Such access to data is a pointer to the firm’s desire to improve business processes. Importantly, ERP implementation is considered (cf. Davenport 2000, Markus and Tanis 2000, Ross and Vitale 2000) as a business solution rather than an IT solution. As pointed out by Shang and Seddon (2002), most Enterprise systems implementation benefits have been premised on either a snapshot taken at one moment in the life of such systems or very high altitude picture of benefits of enterprise systems. This paper whilst using real time experiences of a key developer for Nestlé, chronicles a case that revisits the micro dimensions of supply chain domain of ERP implementation as well as key macro strategic consequences. Clemmons and Simon (2001) whilst examining control and co-ordination in global ERP configurations posited that it is vendors and implementation consultants who promote ‘one size fits all’ solutions based on ‘industry best practices’. Such vendor motivated drives organisations, to follow ‘best practices’ or embark on extremely costly reconfigurations. In the current example of Nestlé the ‘one size fits all’ approach was used to deal with implementing one system across a single organisation combining 70 localised/regional IS implementations. Therefore whilst Clemmons and Simon (2001) dwelt on applying the same solution across different organisations we are actually focused in this paper on a unitary implementation in a single organisation Nestlé that had hitherto followed regional approaches in its IT operations in different parts of the world. Berente et al. (2010) in their research on NASA’s enterprise systems implementation found that there is a theoretical response from employees’ to demonstrate satisfaction of control imperatives but in the long run such compliance has little bearing on practical execution of work. Yusuf et al.’s (2004) research on ERP systems implementation in Rolls Royce points to similar challenges of legacy systems as in Nestlé with lack of online access to customers, partners and suppliers. Integrating operations using Information Systems (ISs) in general and ERP in particular (Shehab et al 2004) to gain strategic advantage has been a key goal of organisations ever since ISs began to be widely used for commercial gains. Like in every domain where ISs have been implemented there has been cases of failure. Given long standing research in the realm of ERP systems, research reports attribute such failure to non compliance with among others phased implementation (adaptation) (Mitra 2001), component based approaches (Light et al. 2001), cultural complications (Davison 2002). In general, there seems to be a consensus that recognition of localised aspirations (cf. Yamauchi and Swanson 2010, Lorenzo et al. 2009, Madapusi and D’Souza 2005), within a larger implementation is a way to ensure that there is adequate provision of reaping benefits when a global system becomes operational. Success gained through GLOBE’s implementation in Nestlé is likely to show that when 3 ECIS 2012 Proceedings European Conference on Information Systems (ECIS) consensus building measures go on over two years in a location where all key players subsequently responsible for running regional ERP implementations are co-located many of the usual challenges of conflicts between prevailing culture and organisational adaptation processes as portrayed by Boersma and Kingma (2005) can be avoided. Contrary to Morton and Hu (2008) arguments that integration of standardised business processes leads to failures. Research owners Resolution of objective challenges Mabert et al. (2001) Simplification and standardisation of IT systems Davenport (2000), Markus and Tanis (2000), Ross and Vitale (2000) Business gains instead of increase in IT capacity Shang and Seddon (2002) Distinction between snapshot in different comparative static points and aerial/distanced view Clemmons and Simon (2001) Vendors and implementation consultants’ role in promoting ‘one size fits all’ Shehab et al. (2004) Integration of operations Light et al. (2001) Need for a component based approach Davison (2002) Overcoming cultural disparities Table 1: Summary of key strands of ERP implementation objectives 2 Methodology adopted for the s tudy: We decided to use Nestlé as a case for this research because it was a multinational company that had various local strands of IT utilisation across 70 geographic locations that it operated in. Using GLOBE the company top management first of all attempted to gain greater capacity to monitor and control productivity within far to reach contexts. Second by enabling the use of GLOBE various efficiencies that connected the supply chain and the consumers of Nestlé products were consolidated on a worldwide basis. An inductive case study (Yin 2003) approach was adopted for this study. Narrative contributed by the second author who was a key player in the ERP implementation in Nestlé formed the central plank on which the story was structured. The four facets of supply chain management formed the basis on which the story was orientated as it seemed to be the most important ambit alongside others that included Finance, Factories, HR & Payroll, Sales & Marketing. Nuances within a continuum of expectations and experiences were captured within the narrative. All names of Nestlé personnel who were interviewed apart from CEO of the time Peter Brabeck have been anonymised to protect their privacy The study benefited from a range of confidential documentation that was used to provide both micro as well as macro dimensions of the research. The study was connected to the micro dimensions of a major successful ERP implementation in a multinational organisation spanning operations in 70 countries. The study is led by business implications rather than technical aspects of systems development. Despite major reservations in the literature on the need for organic development and the realisation of regional aspirations, this study could clearly demonstrate a wide range of advantages that emerged with the use of a one size fits all approach. In hindsight, it might seem that successful ERP implementation probably could happen only through the one size fits all visualisations. 4 ECIS 2012 Proceedings European Conference on Information Systems (ECIS) 3 Role of ERP s ys tems for Nes tlé within IS /IT infras truc ture As far back as 1990 Nestlé took a strategic decision to deploy SAP as its ERP provider. Throughout the ‘90s the bigger Nestlé businesses in the UK, France, Germany, Italy, Spain and the USA started to implement modules of SAP. By 2000 there was a lot of SAP experience and knowledge within Nestlé and the above countries were well on the way to running significant parts of their businesses on SAP. The corporate decision that said “If you can implement it (a certain functionality) using SAP then you should” (rather than build it from scratch). Bespoke systems design and development was by now seen as slow to implement, expensive to build and maintain and, crucially, lacking in the sort of integration which SAP was famous for providing. In late 2000 the decision was taken by the main Board (the “EBM”) in the headquarters at Vevey, Switzerland that a centralised project – called “GLOBE” – should be funded to design a SAP template which would provide standard functionality covering all parts of the Nestlé business – Finance, Supply Chain, Factories, HR & Payroll, Sales & Marketing. This was a very bold move which involved 700 people – mostly drawn from areas within the actual business rather than the various IS/IT departments – and which was publicly stated to have a budget of $2 billion attached to it. All Nestlé businesses were told they would implement this template and aggressive timelines were drawn up to implement in all 70 countries where Nestlé operated by 2005. All 250,000 employees would be affected. This was the start of the biggest ERP implementation in the world. At the outset it was very clear that CEO Peter Brabeck was not only the chief sponsor but also, and very importantly, was passionate about the aims and objectives of the project. Indeed, he went so far as to say that GLOBE would be his chief legacy to the company and that his success as CEO should be judged by the success of GLOBE. It is important to understand 2 things at this stage – one to do with Nestlé’s culture at that time, the other to do with the way the project was presented at its unveiling to the heads of the individual Nestlé businesses – the “Country Managers’ annual Conference” – in early 2001. The culture had always been that the individual businesses in each country were “king”. They had almost total independence on a day-to-day basis. Once, the annual business plan had been signed off by HQ in Vevey the CEO in the country was free to do largely as (s)he pleased. This was the way the company had always been, would always be and was, indeed, seen as a strength by senior Nestlé people; it was, in fact, the conventional wisdom was that the company had been successful down through the decades because of this independence. Staff from “the Centre” had to ask for permission to come and visit a country and it was not unknown for requests to be turned down. There was a “Technical & Standards” team for IS/IT at Vevey but it was very weak and the major Nestlé businesses certainly did not follow its guidelines nor rely on it for any advice. So, a dictat to implement a template-based design from the Centre was hugely counter-cultural. The second point is to do with the project’s marketing. Brabeck understood very well that he was “going for broke” by having such an ambitious and expensive vision. So, from the very beginning GLOBE was always presented as “not an IS/IT project” but as a way of allowing the whole company to benefit from the “Best Practice” that GLOBE would discover within the company and then spread throughout it. The phrase was delivered over and over again “GLOBE will deliver common Best Practice, using common data based on common infrastructure”. It would allow “the company to be big on the inside so it could be big on the outside” - in other words economies of scale which Nestlé should have been enjoying (but 5 ECIS 2012 Proceedings European Conference on Information Systems (ECIS) wasn’t prior to GLOBE) would result from everybody doing the same things in the same ways. To really nail down this idea that it was not an IS/IT project a group of “Business Excellence” people