Our experience

Prehistory

Apart from the need to solve some important, but quite secondary tasks, the project of ERP-system implementation at ZTR was aimed at achieving two global goals: setup of order-based transformer nest cost calculation and establishment of production planning according to MRP ІІ standards.

A serious hindrance to the project here was a patch-wise automation, rather developed already, great variety of the stored information and its lack of correspondence to the current situation.

"At the moment of taking the decision to implement a single system we were using about 250 different program products, starting with 1С and ending with the software for mainframes, developed at different periods by different companies", says Sergey Eryomin, IT Director of  Zaporozhtransformator. It was very difficult to maintain this complex: IT department counted about 140 people. The data exchange between all these systems was such a burdensome task that it was easier to go back to initial paper information rather then to try and export the data from one application to another. That is why one of the primary requirements to a new infrastructure was creation of a single information environment".

In addition to Mіcrosoft Dynamіcs  AX (previously Axapta), which was presented by Innoware consulting company, tender committee considered the solutions from SAP, Oracle, JD Edwards -  each of which was a  system offered by the leading supplier of the Ukrainian market. When comparing the offers, ZTR representatives paid close attention to the price/functionality ratio  as well as to the total cost of ownership. "Mіcrosoft Dynamіcs AX beat the competitors in these criteria, - stated Mr. Eryomin. - An additional point in favor of this ERP-system was a flexible licensing model, which allowed paying for only the needed sets of functions".

The project started in September 2002.

Team

The implementation team consisted of:
          Project Manager - Vladlen Berezin, Project Director of Іnnoware,
          Deputy Project Manager - Andrey Homenko, Financial Director of  ZTR,
          Chief of Steering Committee - Victor Choban, CEO of ZTR.
The project team consisted of Іnnoware consultants and several specialists of ZTR ІТ-department. "The group was divided by the different business areas: Finance, Production and Logistics, - says Mr. Berezin. -  Within each area a single professional or a group of specialists were selected to perform key tasks. At first the project team consisted of 6-8 people, but it almost doubled by the stages of project testing and launch". Admission of ZTR ІT-professionals into the team very much resembled a job interview: candidates were selected based on interview by defined criteria. As a result 4 IT department specialists joined the project team. Financial Director, Andrey Homenko, was personally involved into this selection. Innoware consultants were training this group and, afterwards, the key system users.

Project

The system implementation was done according to the methodology developed by Іnnoware; it was performed in several stages. At the stage of the future system concept design (project specification) the implementation team together with the key users of ZTR conducted the business-processes formalization and documenting, optimizing some of the processes to increase ZTR operation efficiency. Global enterprise reorganization (to fit "the best practice") didn't happen. Restructuring had more of an evolutional character.

However, some groups of processes were changed fundamentally, or brand new ones were introduced, due to specifics of ZTR production process. Since the majority of transformers are custom-built, each time they turn out to be completely new products. Each time their production requires thorough preparation of production facilities and new design documentation. Such constraints are not completely thought through in any of the standard of ERP-systems.

"Due to the task formulated at the pre-project diagnostics stage it was agreed to install and integrate only basic business-processes and, therefore, the project was planned to be finished within 9 month," - says Vladlen Berezin. According to Іnnoware scale it continued till January 2004. During this time the system was installed, completely tested and several business-processes were actually implemented and launched. Since this period the system is supported by Innoware, while the main works are completed by ZTR project team.

ZTR implementation project, without any doubt, can be regarded as a large-scale project. This project differs from the less complex ones in organizational, technological and project risks. The reasons for the risks are obviously the size of the structure and a huge amount of business-processes and tasks. In addition, ZTR project was more of a set of smaller projects  implemented simultaneously. Mіcrosoft Dynamіcs  AX implementation affected an avalanche of different problems that had never been solved before.

1. The automation of the net cost calculation implied creation of a corresponding model, to which both the system and the enterprise business-processes had to be adapted. It was necessary to gather initial data, build the processes and design the documentation in a way that it could be easily understood in the shops; to create a network infrastructure and launch the document circulation for regular and efficient information acquisition. A lot of issues impacted the system of management accounts, bookkeeping and the other aspects. The development of such a calculation model was led by the Financial Director of the enterprise, Andrey Homenko. Its processing and implementation, debugging and testing took no less than a year.

2. The automation of the production planning with the possibility of available production faculties control virtually "pulled" the system implementation "down" to the numerous shops of the enterprise. On top of this, the shops use different production methods: continuous, order-based, for warehouse. 9-month project duration implied automation of only the basic planning processes. During implementation a more detailed elaboration of requirements took place and the number of new requirements increased. At the same time, it became clear that the team of ZTR specialists had less than enough people to launch the system because of the great amount of information and huge number of errors in the production manuals. A lot of tasks required additional technological data development and improvement (duration of production stages, structure and characteristics of equipment, etc.)

"Mіcrosoft Dymanіcs AX solution, which is implemented at our enterprise, is a system with a partially open source code, which provides great potential in additional development of the system to meet new needs and requirements of the enterprise, - explained Sergey Eryomin. - At the initial stages, the system adaptation and rework was done by the Іnnoware professionals. After passing the system over to ZTR ІТ-specialists our programmers had already acquired sufficient experience, their skills reached higher level and nowadays all system modifications are performed with our own resources. Consulting company services become really necessary in very rare and exceptionally difficult cases".

"Of course, there is modification, but the positive feature of this project is that ZTR has the Competence center that practically discusses the majority of these reworks with us, - specified Vadim Utkin, CEO of Іnnoware. - We cannot say that the solution (Mіcrosoft Dymanіcs  AX) is changed beyond recognition. The system had to reflect the enterprise specifics, namely order-based accounting, certain production features, etc., which are not present either in standard or in vertical solution functionality. I'm not sure whether the system for such a kind of enterprise exists at all – the business is way too peculiar. Sіemens, ZTR's competitor and partner, uses the SAP solution, absolutely modified according to their needs. These companies require a special approach to their accounts as the transformers are not serial products and each of them can consist of more than 1 million details".

One of the accompanying projects was building the SCS on the premises of the enterprise. This was the precondition for ERP-system implementation and parallel solution to a few additional tasks. SCS is built in accordance with classic technology: "fiber-optic + twisted pair"; wireless solutions were not applied because in the conditions of industrial production such solutions are very expensive and unreliable. In addition, the computer equipment park was extended and modernized. For this purpose the enterprise purchased classic standard Іntel-servers that work under Wіndows".

Paralel exploitation of inventory management, fiscal accounting and book-keeping modules was conducting for about half of a year at ZTR. It can be explained by the necessity of input of large data amounts, stock-taking and registering warehouse surplus. During this period the majority of the work load laid with the accountant because in addition to the book-keeping, this person had to input the data on the warehouse surplus after the stock-taking and this meant tens of thousands of items. "The reason for such a long term of parallel data input was uncertainty about the results produced by the system, - thinks Sergey Eryomin. - This was determined by the need to enter huge amount of data into the system."

Almost two and a half years passed from the project start till the system launch. There was an "end-to-end testing" stage, when each module of the system was tested by all enterprise subdivisions that were going to become the system users. The employees of the enterprise simulated the whole process, starting with receiving the order for production and ending with the finished product shipment and getting financial reports. Naturally, this test was supervised by both internal and external consultants".

Use of results

The solution was officially launched into industrial use on January 1, 2006.

Personnel training was carried out by internal consultants (members of the implementation project team). The system acceptance was divided by stages and ZTR employees starting with the stockmen and ending with the Chief Accountant were simultaneously trained to use it. After the training course, people took the tests and were given marks. Those who failed to pass the exam after several attempts were not allowed to work with the solution. On top of this, there was introduced a motivation system for the personnel that finished the training course successfully.

In the future the enterprise plans to improve the working solution. According to Vadim Utkin, "A transition to a new version of Mіcrosoft Dynamіcs  AX may turn quite difficult. Some modifications implemented at ZTR will be included in the standard version of the solution. However, this will not be a vertically-integrated modification developed specially for Zaporizhtransformator. Mіcrosoft accumulates requests and wishes of the partners and, when there are enough of them, implements those in the typical configurations. As soon as a new version appears at the Ukrainian market, Іnnoware will present its detailed description to the ZTR Competence center and it will be up to the plant employees to decide which modifications should be installed and what will be still realized with a help of standard functions.

Development of the system functionality at the enterprise happens quite smoothly. When working with the ERP-system the users get deeper understanding of its capabilities and as soon as new possibilities are discovered, the application for the automation extension is forwarded to the Competence center. There the functions are assessed, accepted and implemented. Usually those are requests for development of the small modules automating local tasks.

Innoware consulting company successfully implemented a fully functional solution for human resources management and payroll accounting - ІW HR&Payroll - in the Ukrainian subdivision of German enterprise "LEONІ Wіrіng", one of the world's largest producers of banded cable, which is used in the production processes of such automobile manufacturers as Opel/General Motors, Mercedes, Porsche, Audі/Volkswagen, BMW.

With rapid growth of the subdivision, it became necessary to set up a smooth recruitment and career management processes, establish accurate salary and bonuses accounting in accordance with existing legislation of Ukraine. Such tasks were formulated for Іnnoware consultants.

The distinguishing feature of ІW HR&Payroll implementation on LEONІ Wіrіng plant was its integration with both SAP R/3, the basic management system, and with KABA Benzing, the work time registration and access control system.

As a result of implementation, ІW HR&Payroll provided a flexible set of instruments for efficient organization and management of the company personnel policy. In addition to the standard functions, the solution also enabled plant-floor operations accounting and document circulation.

Nico Hoffman, Chief Information Officer of LEONІ associated company, thought very highly about this project saying that this was one of the best implementations for LEONІ subdivisions in the world. According to Nico Hoffman, ІW HR&Payroll successfully solves the problem of manpower policy correspondence with Ukrainian Labor Law and Tax Legislation, as well as takes into account the company corporate policy specifics at the same time. "The enterprise in Ukraine is quite large and counts about 2 000 employees (it is planned to reach 4 000). Therefore it is important for the company to solve such problems as tax and internal reporting on salary and staff, specific calculations of bonuses and incentives, as well as work time registration".

ІW HR&Payroll has proved to be an efficient personnel and compensation policies tool in such companies as Reiffeisen Bank Aval Ukraine, Deloіtte&Touche in  Kazakhstan and Ukraine, GfK-Ukraine, Autotechnics, Ferrero. Five other companies are carrying out implementation projects at the moment.

According to General Director of Іnnoware, Dmytro Popinako, in recent years, the need for the quality personnel management has increased greatly. "The fact that our solution was successfully implemented in many international and leading domestic companies, demonstrates that it meets all requirements of human resources management, including adequate payroll accounting features. Reliability, functionality and reasonable price of IW HR&Payroll are the very advantages that granted us a leading position in this sphere".