Case Study: Geneva ERP Implementation

This case is primarily about the implementation of Geneva Pharmaceutical’s new Enterprise Resource Planning system, R/3 from SAP.

We felt the following points were particularly important to this case study:

· The implementation of the system was split into three phases.

· Geneva’s old system, IBM AS/400, had a wide array of software programs for different processes. Each business unit deployed applications that best met their own needs, despite the fact they were incompatible across all other business units.

· Whitman-Hart were initially contracted to assist with migration to the new system. They were a consulting firm who were appointed due to their experience in R/3 implementation. The consultants employed by Whitman-Hart were technical specialists with little knowledge of business domain.

· Verne Evans was initially assigned to manage the project during Phase I.

· In February 1998 Randy Weldon was hired as the new Chief Information Officer (CIO).

· Accelerated SAP (ASAP) was selected for deployment as it promised a short implementation cycle of only six months.

· Whitman-Hart were replaced in 1999 by Arthur Anderson Business consulting to assist Geneva with Phase II and III.

· Phase 1 was not completed efficiently and the implementation had spun “out of control.”

· ERP requires a new way of thinking and is “not only a technology change but also a change is work process.”

· At the time the case was written, Phase II and III had not been completed.

From the key points above we can note some of the key decisions taken by Geneva…

Obviously the main decision that was made was that to replace the old IBM AS/400 system with an ERP system. This decision was taken because the old system was simply not efficient enough. The pharmaceuticals market is a fiercely competitive one and as a result, a large emphasis is placed on the search for higher margins in the industry. For example, operational efficiency plays a major role in this and previously, data which was shared across different business units had to be double-booked and re-keyed manually. This often resulted in data entry errors, higher costs of error processing and greater data inconsistency. This is addition to the additional labour time taken up to input the data.

Once the decision to replace the old system was made, a decision had to be made regarding exactly which ERP system to implement. This was narrowed down to a decision between two: BPCS from Software Systems Associates or R/3 from SAP. The generics division opted for R/3.

The implementation of R/3 threw up more key decisions. The problematic first phase meant decisions had to be made regarding how Geneva could get implementation back on track. The decision was taken to bring in Randy Weldon due to his extensive experience of R/3. Weldon decided to replace Whitman-Hart with Arthur Andersen as consultants since Whitman-Hill had very little knowledge of the business domain making them unsuitable. We have gone into greater detail on this decision below. Other key decisions taken in phases II and III included the re-introduction of the Supply Chain Management initiative and the introduction of “Available to Promise” primary decision metric.

What could we learn from Geneva’s Experience?

As stated above, the case study was written before Phase II and III had been completed. As a result it is very difficult to comment upon the success of these phases or the lessons which could be learnt. As a result our answer will mainly focus on the lessons that could be learnt from Phase I and the planning which preceded it.

The first question that we feel should be asked is why Geneva implemented the IMB AS/400 in the first place. A greater deal of communication and forward thinking would have resulted in the company questioning why they were using different software in each department, each not compatible with the next. We are not suggesting that the upgrade would not have been required, but the initial system itself would have been more efficient.

The case study tells us that Whitman-Hart did have previous experience implementing the R/3 system, however their performance would suggest otherwise. The fact that Whitman-Hart employed technical specialists with little business domain and that Weldon was not in favour of them suggests that, as a company, they were not held in particularly high esteem. If this indeed was the case it is possible that Geneva “cut costs” by not carrying out thorough enough research on Whitman-Hart and perhaps some more time and money spent at an early stage may have saved them a lot more in the long run.

The project manager of Phase I, Verne Evans, had no prior R/3 experience. We feel this is quite unbelievable and in doing so, Geneva immediately put the success of the project at risk. The result was the implementation spinning out of control and issues could not be resolved. In this case, surely Randy Weldon, or someone with similar experience, should have been involved and lead the project from the start. In such a set up Evans could have gained experience working under Weldon thus gaining experience himself.

ASAP was also used in order to cut down the time implementation would take. While good in theory, perhaps in hindsight Geneva would have stayed clear of such a plan. We believe this typifies the way in which Phase I was structured: it was done as quickly as possible as cheaply as possible, a view that is shared by Anne Bourgeois, Geneva’s internal IS team leader.

It appears the project to implement R/3 seemed to lack a sense of leadership from the start. Despite ten IS personnel, ten full-time users and ten part-time users being deployed, they were not efficient. It seems that at the time of writing the case study, Phase II was on track and the project as a whole was looking up. It is unlikely that the introduction of Randy Weldon merely coincides with the up turn in fortunes. We feel the main lesson to be learnt is that in most circumstances a combination of experience and leadership is required to successfully guide any project.