Once Is Not Enough

Dec. 21, 2004
A second look at its initial ERP implementation is helping Hewlett-Packard Chemical Analysis Group capture new value.

Many IT professionals would like to take a breather after their enterprise-resource-planning (ERP) implementation has gone live, but in fact that may be the best time to dig in and look again. The business climate may have changed, personnel and functions may have reorganized, and certainly users will better understand the power of the ERP infrastructure. Another look could provide new opportunities to wring value from the first ERP wave. For instance, Hewlett-Packard Co.'s Chemical Analysis Group (HPCAG), a $1 billion manufacturer of chemical-analysis equipment headquartered in Wilmington, Del., went live with an SAP implementation in May 1998. But it's currently working with Deloitte Consulting and SAP America, having just completed what Deloitte calls a "second wave" ERP assessment. "Our overall program plan, that we are executing as we speak, is broken into functional releases and rollouts over time," says Jim Miller, worldwide SAP program manager at HPCAG, "but this is different. What this is, is refreshing our original business case, which was done a couple years ago, and expanding our thinking beyond what was originally envisioned." In its first wave of ERP deployment, HPCAG replaced a number of legacy systems, addressed the Y2K issue, and completely reengineered and automated its order-fulfillment process. Implemented were SAP modules for sales and distribution, materials management, production planning, and pieces of financials. "Our first wave was focused on the order-fulfillment process, designed to reduce costs, working-capital requirements, and cycle times, which we would expect to result in revenue growth in the long term," says Miller. HPCAG turned to the second-wave consulting engagement to meet four basic objectives:

  • Get an independent, unbiased view on how to optimize its current platform by adopting best practices from other clients.
  • Identify opportunities to expand the platform for even greater benefit beyond the initial concept.
  • Confirm that SAP met HPCAG's business needs in the areas of expansion.
  • Help select, prioritize, and sequence the opportunities, including rough estimates on resource requirements, duration, and benefits.
"The second-wave assessment was strategic," says Miller. "It helped us identify opportunities and clarify our go-forward plans. We turned to the consulting firm for assistance because we knew we could accomplish the task much quicker with external resources [the assessment process took about three weeks], and we wanted to take advantage of their experience, thinking our viewpoint would be too narrow." As a result of the assessment, incremental improvements were suggested in areas such as returns processing, inventory-cycle counting, procurement, data archiving, and forecasting. Also, ongoing education, while appropriate during the project, had lost its rigor once the implementation was live. "They brought some deficiencies to bear and suggested best practices from other companies," Miller adds. The most significant platform-expansion opportunity under the second-wave initiative is extension of SAP to support HPCAG's integrated service-management business. (In addition to manufacturing and selling gas and liquid chromatography devices, HPCAG provides installation, service contracts, and consulting services to its customers.) Deploying SAP's service module, HPCAG has established metrics around labor effectiveness, reduction of replacement-part inventories, and revenue goals tied to service-contract renewals and warranty extensions. A host of other extensions and bolt-ons were identified during the assessment that will contribute new business value, including integrated call-center management; sales-force automation that will enable mobile reps to configure products in the customer's office; a Web-based e-commerce system to enable information gathering and replenishment-parts ordering; and a business-information warehouse for strategic-decision support.

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