WESTINGHOUSE ELECTRIC TAKES ON THE RISKS OF A "BIG BANG" PROJECT
Westinghouse Electric Company provides fuel, services, technology, plant design, and equipment to utility and industrial customers in the worldwide commercial nuclear electric power industry. A private company created in 1999 after its predecessor was sold and spun off, Westinghouse has 14,500 employees in 17 countries and is headquartered in Cranberry Township, Pennsylvania. Shortly after Westinghouse's creation, the company implemented a full suite of SAP software across the enterprise. For the past 15 years, the nuclear energy industry was in a holding pattern, with steady business throughout but minimal growth. Westinghouse supplied nuclear equipment and services to plants all around the world, and the business was successful. The initial SAP installation served Westinghouse just fine for nearly an entire decade. From 2010 onward, the nuclear energy industry started to expand. Westinghouse began to experience growth in sales, and its legacy SAP installation was not equipped to handle the increased volume of business. Westinghouse needed to update its older system to support new processes, configurations, and functionalities that related to the larger amount of business it was conducting. The company estimated that it would increase in size fourfold over the next few years. Westinghouse opted to launch a sweeping new program to update its IT. The program, called Synergy internally, consisted of 40 different projects, and updating the SAP system was one of the largest. Rather than simply upgrade its existing systems, Westinghouse opted to "re-implement" those systems with much more current SAP technology. Westinghouse did this because its 10-year-old SAP ERP implementation was too outdated. It was easier for the company to simply replace the old SAP ERP systems with a completely new configuration. The division of the Synergy project dedicated to the SAP re-implementation was known as Cornerstone, aptly named because the new system would be the foundation for the company's future growth. Westinghouse wanted to start with a cleancore SAP environment with a completely new reconfiguration. The company's goals were to convert all existing data that the company wanted to save, as well as add new functionalities that would help the company manage its imminent growth. Westinghouse hoped to add a new general ledger, a new enterprise reporting environment based on SAP NetWeaver Business Warehouse (BW) and SAP BusinessObjects solutions, and new implementations of SAP Customer Relationship Management (CRM). In order to ensure that the re-implementation went smoothly, Westinghouse took many precautions to manage the risks involved in such a significant change. First, the company ensured that every element of the Cornerstone project was motivated by a particular business driver or goal. For example, the SAP CRM implementation was intended to address the company's goal of aligning three distinct operational regions to present a single face in every customer location, and the SAP ERP Human Capital Management and SAP NetWeaver Portal implementation were intended to support the company's plan to increase global hiring. By associating goals with each element of the project, Westinghouse was able to more precisely control the implementation of the new system. Once the elements of the new SAP system came into place, Westinghouse had to decide how to actually roll out the new system. It could have used a gradual, phased approach, adding new systems over a three-year period, but the company instead decided on what it called a "big-bang approach." Management decided that the company was growing too fast for a slow approach-it needed the new systems as soon as possible, and hoped to recoup the return on investment sooner rather than later. However, while the phased approach was more expensive, it was also much less risky. To manage the increased risk of the big-bang approach, the company brought in a change management consultant. The consultant, John Flynn, helped Westinghouse with both the Synergy and Cornerstone projects, but focused on the Cornerstone project. Flynn performed a risk assessment study to identify business areas that were most likely to undergo significant change. He found that the Westinghouse supply chain was one of the areas most likely to endure significant change, since the company's growth would add many new elements to the chain. Therefore, the change management team spent extra time with Westinghouse's supply chain staff members to help them understand the new project and its impact on their day-to-day routines. The project team recruited power users from the supply chain organization and discussed specific project details with business unit leaders. These meetings also helped gain support from supply chain executives who could better understand the link between the information systems project and their business goals, and then articulate this connection to other users. Next, after mapping the risk associated with each element of the SAP re-implementation, Westinghouse had to finally switch, or cut over, to the new system. To handle that event, Flynn worked with business leaders to recruit coordinators for every site in the organization. Each site coordinator had a list of responsibilities and a checklist to complete prior to the system going live to ensure each site was ready when the switch was flipped. Westinghouse dedicated extra staff to answer employee questions in the problem areas designated by Flynn. The company created an automatic call distribution system and e-mail system that routed users across all time zones to the employees most able to answer their questions. For example, Westinghouse expected that there would be many questions about passwords, access issues, time entry, and purchase requisition management after the new system went live, so the company provided extra staff to answer those and other frequently asked questions. This "temporary help desk" handled over 2,000 inquiries during the first three weeks of the implementation. The project team also set up a blog where users could share tips and solutions. The cutover to the new SAP system went smoothly, and the company plans to use many of the techniques that it learned from the implementation in the future. It plans to use the blog as its primary communication method for support solutions and other Synergy projects, and future additions to the SAP suite will be much easier than the sweeping big-bang change.
Case Study Question
1. Identify and discuss the risks in Westinghouse Electric's Cornerstone project.
2. Why was change management so important for this project and this company?
3. What management, organization, and technology issues had to be addressed by the Westinghouse project team?
4. Should other companies use a "big-bang" implementation strategy? Why or why not? Explain your answer.