1. A Story of Change
“HR Role in Implementing Change”
Khalil, Cotran
November 13, 2009

2. Who is JTI ?
• JTI is the world‟s third largest manufacturer of tobacco
products.
• In 1999 Japan Tobacco acquired the international
operations of the American tobacco giant RJ
Reynolds.
• JTI has 12,000 employees from 90 different
nationalities in 40 locations worldwide.
• JTI markets and factories spread over 100 legal
entities
Slide 2

3. Change is a matter of urgency
• JTI has great brands, great people and great
facilities but has nothing binding them together
• Key competitors are doing a better job
• Need to coordinate efforts across all regions
• Need to increase speed to market
Slide 3

4. Change is a matter of urgency
Enterprise Resource Planning (ERP) is the glue that
brings together processes, systems and people
Slide 4

5. What is ERP ?
• Enterprise Resource Planning is a term derived from
material resource planning.
• ERP Systems typically handle the manufacturing,
logistics, distribution, inventory, shipping, invoicing and
accounting for a company.
• ERP are “back-office systems”. Customers and the
general public are not directly involved.
Slide 5

6. What is ERP ?
Operational Processes
Develop Procure
Market Sell Perform
new Materials &
Products Products Order Mgt.
products Services
Provide
Manufacture Manage
Customer In Scope
Products Logistics
Support Out of Scope
Infrastructure Processes
Manage Manage
Plan and Manage
Manage Manage Plant, Accoting
Manage Capital
HR IT Equip. & & Control
Business and Risk
Facilities Data
Provide Manage
Manage
Decision Support
Programs
Support Services
Slide 6

7. Why ERP?
• To position JTI for growth by bringing all locations
together with common systems and processes.
• To introduce new global processes built on one of the
most complex ERP systems – SAP
• To launch process redesign and Change Management
Slide 7

8. What is SAP?
The software program SAP R/3
 Is the system that will deliver ERP
 Will provide a single technology to streamline the sharing
of data and information, replacing our multiple systems:
 Flexible
 Scalable
 Expandable
 Simple installation
SAP is the largest inter-enterprise software company in the
world:
 Market leader in ERP software
 Representatives in more than 50 countries
 10 million users worldwide
Slide 8

9. Highlights of the ERP Project
• The project was launched in early 2002
• The project was launched in three waves and involved
resources from JTI, Deloitte and SAP.
• The team was a truly multi-disciplinary and integrated
global team which incorporated 700 JTI employees,
100 Deloitte and SAP consultants over the four years.
Slide 9

10. Project Roll Out (Three Waves)
Wave 1 – Europe + HQ Wave 1 – Russia Markets All
Switzerland Greece Russia Factories
Spain Czech R&D, SRA
Germany Wave 2 – CIS
Export Hubs
France Ukraine
Benelux Romania
Global & HQ
Italy Kazakhstan
Andorra
Wave 2 – APA
Japan
China
Malaysia
Taiwan
Thailand
Philippines
Wave 2 – Africa Singapore
Wave 3 – Americas Korea
USA Tanzania
Canada South Africa
Latin America Jordan
Saudi Arabia
Tunisia
Morocco
Slide 10

11. Project Time Line
2002 2003 2004
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Turkey GL Europe + HQ Africa
Pilot Geneva HQ, Switzerland, Spain, Germany France, Tanzania, South
Benelux, Italy and Andorra Africa and Jordan
GL GL
Russia Americas
Canada, USA
GL GL
CIS
Ukraine, Romania, Kazakstan
GL
APA
Japan, China, Malaysia, Taiwan,
Thailand,Philippines and Singapore
GL
Slide 11

12. Project Governance
Extended Transformation
Quarterly Steering Committee
Transformation
Steering Committee
Monthly Executive
Sponsor
Key Related Geographic &
Reporting Direction
Enabling Areas Functional Leadership
IT Leadership ERP Regional Steering
Program Leadership Committees to facilitate
for infrastructure implementation
ERP Quality and Risk
Global Service Desk Program Team Management
Slide 12

13. Change Management – Key Pillar to ERP Success
SUCCESS
ERP IMPLEMENTATION CHANGE MANAGEMENT BENEFIT REALIZATION
Qualitative
Global Processes Business adoption &
& & quantitative
SAP System Organization fine tuning
TRANSFORMATION
Slide 13

14. Success Means Empowering People
to Realize the Benefits Deriving from Processes and Systems
Project Team
Effectiveness
Vision
Strategy Executive
Alignment
Process
Organization
Systems Change
Organization Communication
Structure Change
Management
Focus Project Team
People
Effectiveness
Benefits ! Training
Changeability
Changeability
Slide 14

15. Change Management Approach -
Five Major Components
Change
Components Main Objective
Executive Leaders demonstrate consistent behavior, set direction,
Alignment mobilize individual commitment and align operations
Organization Harmonize roles & responsibilities and organization structure in
Change accordance with the new processes
Inform our employees about benefits and sacrifices deriving from ERP
Communication and engender their buy-in to contribute to the project goals
Project Team Address project team dynamics and enhance performance
Effectiveness
Assure all impacted colleagues acquire the skills and capabilities
Training
needed to successfully operate in the new work environment
Slide 15

16. Executive
Alignment How did it happen?
 Why was it needed?
 Assure timely roll out
 Involve the whole organization
 Mitigate risks
 How did it happen ?
 Clear project governance (organization structure, roles & responsibilities)
 Efficient reporting process
 Decision making through Steering Committees
 Video Conferences with Project Owner
 Leaders involved in project work
 Local Leaders taking an active role in project communication
 Leadership Alignment Meetings where appropriate
 Guidelines provided in Leadership Manual
Slide 16

17. Organization
Change Organization Change Work Streams
Description of new processes, key operational and
Impact Assessment
organizational changes and impacts per process area
Future Role Identification of future roles and related work steps
Identification from Business Process Master List
Allocation of future roles to jobs and jobs to individuals
Role & Job Mapping
in the organization
Identification of the local impacts and adaptation of
Organization Fine-Tuning
Organization structure
Action plan and execution to transition organization and
Transition
people from old to the new work environment
Slide 17

18. Communication The importance of Communicating ERP
• ERP is an all encompassing programme of change.
Effective communications are critical to its success.
• The key messages we wish to communicate on ERP
have been defined by JTI senior managers, we now
need to ensure that these messages are effectively
transmitted & received throughout the organisation.
• A JTI wide ERP communication strategy & supporting
“communications kit” have also been developed.
Slide 18

19. Project Team
Effectiveness A Prerequisite for Performance
• After Project Career Plans
• Knowledge to perform
• Personal Development
• Roles & Responsibilities
• Effort Recognition & Rewards
Perspective Content
• Working in a virtual Team
• Infrastructure & Facilities
• Resources quantity
Team • Capability Transfer DC/JTI
and quality Effectiveness
Project
Areas Processes
Framework
Communication
• On-boarding of new members
• Top Down and Bottom up project communication
• Negotiation and conflict resolution
Slide 19

20. Training
Training Training Work Streams
Analysis by market of training scope, number of
Market Assessment
employees, location, training facilities
Course Design, Update and Development and adaptation of Training Material
Documentation (process and transaction focused)
Set up of Training System and End User Training
Training Logistics
Schedules
Training of SAP End User Trainers (identified by
Train-the-Trainer
markets)
Role based End User Training (focused on process
End User Training
and transactions)
Slide 20

21. It is about PEOPLE
ERP implementation at its core
is a people project
The biggest challenge
before and after implementation
is not TECHNOLOGY, but PEOPLE
Slide 21

22. HR Role
“The Change Management Team”
Letting Go: Commit:
Existing practices. Well Transition New skills Experiences
known current systems with better software
Slide 22

23. The Team‟s Five Objectives
 Manage the transition from the old to the new ways
of working
 Define the global organization‟s new structure
 Attend to the Project team
 Help the people in the organization embrace change
 Transfer SAP knowledge and train end-users on the
new global system
Slide 23

24.  Manage the change to a new way of working
• The change management team was built on a concept of
“Key Stewards”
• In each wave, a regional “Transformation Steward” led the
change management activity, working alongside a
“Training Steward” and a “Communication Steward”
• The stewards brought business expertise, valuable local
knowledge and contacts.
• The personnel in the global change management team
remained the same all through the project.
Slide 24

25. Change Management Governance Model
ERP
Project Lead
Management
Change
HR/Change/Training Team Communication Team
Global
Change Management
Consultant Team
Regional Regional
Regional
Transformation Training
Communicators
Stewards Stewards
Regional Teams
Local Local Local
Local
Transformation Steward TrainingLocal
Steward Local
Communicator
TSLocal Local TSLocal
Trainers

26.  Define the global organization‟s new structure
• Once the new processes were defined, the business and functional
experts identified all “Areas of Change”
• The Change Team consolidated these and extracted the 20 key
Change Areas
• “Impact Assessment Tool” was developed which allowed each location
to analyze how the changes would effect their area.
• Each location was asked to review the key changes in order to
determine their impact in terms of:
Slide 26

27.  Define the global organization‟s new structure
 Structure
 Roles
 Responsibilities
 Span of control
 Decision-making
 Reporting lines
Slide 27

28.  Define the global organization‟s new structure
• 200 new global SAP roles were identified.
• Roles had to be fit to jobs in the business, and then to people
ENSURE THE RIGHT PEOPLE IN THE RIGHT PLACE
AT THE RIGHT TIME
• Intensive workshops were set up to map SAP roles to jobs in the local
organization
• The workshops brought together functional and business experts, HR,
process owners and system security experts in order to ensure that the
new roles were correctly mapped to jobs in the new business.
Slide 28

29.  Define the global organization‟s new structure
• Workshops were held during each wave and lasted between two and
three weeks.
• Workshops were a major communication event and an important step
in bringing the project to the business
• At a later stage, local HR, working with the transformation stewards
matched people to jobs
Slide 29

30. ERP Impact Assessment – Change Area
Details
ERP
Operational
and
Organizational Process
Impact Assessment
Process
M anag P
e rocurement
Change Area IA Tool Reference
Introduction of a Profes ional P
s urchasing Organization P2P 2
Description of the Change (compare future and present state)
Introduction of an organizational structure - Profes ional P
s urchasing Organization (P O) to s
P upport the implementation of the procurement
strategies for production and non-production s pend.
This organization will be dedicated to execute buying activities for services and materials in a profes ional and s
s tandardized way.
The P O activities includes the M anagement of s
P upplier relations and related purcha ing activities s
s , uch as:
 Consolidation of requirements.
Change Area 

Bidding.
Contracting.
 Performance tracking of vendors.
 Ordering.
 Shipping and proper invoicing for full range of spend categories.
 M aster Data maintenance.
 Post-Purcha e activities
s .
Expected Benefits
 Enhanced supplier management.
 Increased buying power as a result of consolidation of purchasing requirements which leads to cos quality or s
t, ervice improvements.
Description of 


Levera
ig
ge current internal procurement bes practices
S nificant saving throug
t
h reduced maverick s
.
pending.
Harmonization of purcha ing activities throug
s hout the company.
Change  Optimized control of spending
Operational Implications for markets
.
/factories Organizational Implications for markets/factories
(what does the change mean for markets and factories in terms of (What does the change mean for markets and factories in terms of
operations proces es procedures the way of doing work)
, s , , Organization Structure, Jobs Decis
, ion Making and Reporting)
 Compliance with corporate purchasing policy, operating Every location (markets/factories/functions is expected to es
) tablis a
h
guidelines code of conduct.
, formal Profes ional P
s urchas ing Organization
 Management of JTI supplier bas and commercial
e  P O needs to be es
P tablished where currently not existing, and
Expected 
agreements.
Coordinate cros -geographic procurement activities and
s
addres local procurement is ues with res
s s pective functions.

increas of s
S
e cope where currently exis
P
ting.
ize and makeup of P O varies from market to market
depending on the complexity of the purchas ing proces and
s
Benefits 
P
Execution of trans
ay Mega-P
actional activities as identified in P
roces , from proces ing of purchas reques ,
s s
purchas order creation, to order acknowledg
e
e
ement.
rocure to
ts 
the number of trans
Appropriate s
s
actions to be performed.
taffing of Purchas
hift from other departments
headcount optimization.
/functions may res
),
Operational
ing Organization (if required
ult in

Impact
Acting as a bridge between JTI Bus ines S
s ervice Center
organization and vendors for is ue res
s olution.  In markets P O reports to country CF
, P O.
 Monitoring suppliers performance and taking timely actions
‟ . In markets and factories a s
, ingle country P O reports to
P
Manufacturing S ervices Lead, with a dotted line reporting to
 Leading local supplier bidding and negotiation proces es in
s country CF O.
clos cooperation with res
e pective departments to ens ure best
Organizational
combination of quality, cos and s
t ervice parameters/conditions Geneva Headquarters P O reports to Global P
P rocurement.
for products and services to be attained.
 Change in the trans actional roles and respons ibilities of Global
 As urance of on-time and complete deliveries from s
s uppliers Procurement, F inance, P lanning, and Local P urchas ing
to requesting parties including accurate documentation. organizations as they relate to purchas ing activities .
Impact  In-depth analysis of key performance indicators while taking
neces ary actions for improvement areas
s .
 Training requirements to be defined according to market
needs .
Slide 30

31. ERP Impact Assessment Tool
Slide 31

32. Role Mapping
Future
roles
Current Job
Future Future
position position
Future Future
position position
Future Future
position position
Future role
mapped to
job and then
to individual
Individuals
Slide 32

33. Role Mapping Workshops
GMs, ExComs, HR and Line Managers
Give guidance and provide knowledge about current jobs
content, individuals and organization structure. These people Transformation Stewards/
will have the responsibility to map future roles to job label. HR Functional Coordinators are
will have to update the job label description. responsible for coordinating the local
Mapping Process.
In particular they will:
•populate the required fields of
the “User Analysis” Data Base
•complete the column “current job
label” on the Role Mapping
Template
•prepare and facilitate the roles
mapping sessions (incl.
Process Experts PSI appropriate working tools and
will provide information about will draw attention to processes)
the role content, the activities to security, authorization
be performed, the changes with guidelines and
the actual processes. segregation of duty.
Slide 33

34.  Caring for the Project team
• It was vital to meet the personal needs of the team in
terms of
 career management
 employment conditions
 motivation
 emotional disruption of being away from home and
family
Slide 34

35.  Caring for the Project team
(The Golden Rule)
• All team members, except those who wished to further
their careers elsewhere, had to be re-integrated to the
business
• The process of re-integration started early on
• The process required strong executive management
support and proactive HR effort
Slide 35

36.  Caring for the Project team
Employment Conditions
• People from different countries assigned to the project
had differing employment conditions
• Each person‟s financial situation was protected, with their
net income remaining the same as if they were working in
their home location
Slide 36

37.  Caring for the Project team
Emotional needs and wok-life balance
• The geographical scope created difficulties
• Project Team worked from a regional hub (Campus) , of which there
were two for each wave.
• Most of team members were away from their home and family for
long periods, putting them under great social and emotional
pressure.
• The project work – with its long hours and complexity – was often
more demanding than the jobs they had come from.
Slide 37

38.  Caring for the Project team
Emotional needs and wok-life balance
• Anyone assigned to a hub away from his/her home country was put
on a “three-week-on”, “one-week-off”‟ works schedule
• Team members were allowed to invite his/her partner to join them
during the three weeks on, rather than the project team member
returning home for a visit.
• This made life much easier and more fun
• There were also some ERP Marriages during the life span of the
project
Slide 38

39. Program Rollout : By Region and Registered Country
Russia Asia Wave 1
China
Russia
Russia
(Hub in St. Pete)
Hong-Kong
Europe & HQ
India
Andorra
Japan
Cyprus
Wave 1
Korea Europe + HQ Wave 2
Czech Republic
(Hub in Trier) Eastern Europe
Malaysia
Finland (CIS), Africa &
Phillipines ME+ Greece
France
Singapore (Hub in Trier)
Germany
Taiwan
Ireland
Vietnam
Italy
Eastern Europe
Luxembourg
Estonia
Mauritius
Kazakhstan
Spain
Latvia Wave 3
Switzerland
Lithuania Americas
The Netherlands (Hub in Toronto)
Romania
United Kingdom
Serbia (Scope extension)
Wave 2
Ukraine
Americas Asia
Africa & Middle East (Hub in Shah- Alam)
Brazil
South Africa
Canada
Tanzania
Puerto Rico
USA Europe
Greece

40. ERP Hubs – The Campus
Slide 40

41.  Help the people in the organization embrace change
• we needed to help ensure that people in the
business were open to change
• This role we shared with the communications
team.
People do not fear change, but uncertainty
Slide 41

42.  Help the people in the organization embrace change
• Through the huge and complex communications effort,
the project gained a very strong identity and
expectations were well managed
• We put such importance on communication that it was
embodied in the governance model
• we drew up a set of guiding principle for local HR to
assist them in helping affected employees to deal with
change, particularly the emotional aspect.
Slide 42

43.  Help the people in the organization embrace change
It was important to give employees emotional
support, allowing them to „mourn‟ the passing
of the old ways.
Slide 43

44.  Transfer SAP knowledge and train end-users
• Training was provided for almost 5,000 new end-users.
• We used the „Train the Trainer‟ concept, which is well
known and proved effective for us
• There were 200 trainers, selected for their business
expertise.
• Each underwent a month-long program including „soft
skills‟ and SAP training.
Slide 44

45.  Transfer SAP knowledge and train end-users
• The rigor of the “Train the Trainer” program had ensured
the job could be done.
• Using this approach, knowledge was kept in the
company and continuous support was available to end
users.
• Trainers performed another vital role in adapting the
training materials to local needs.
Slide 45

46.  Transfer SAP knowledge and train end-users
• SAP knowledge was passed on through informal
channels as well as training courses.
• The project started out with 80 consultants, but it
was planned to transfer knowledge to JTI by O2C
informal coaching. R2R F2S
P2P
• This was achieved, and only 20 consultants
Critical
remained in Wave 3. Users
Priority
Users
Non-Critical Users
Slide 46

47. CONCLUSIONS
• The ERP project at JTI had a well defined roadmap, was
a success and a major accomplishment.
• A dip in performance is inevitable after such a project.
• The „dip‟ became less disruptive as the project moved
through its three waves
• The tangible and intangible benefits exceeded
expectations.
• A cultural change is taking place as people grow in
confidence from facing the huge challenges of the ERP
transformation.
Slide 47

48. Roadmap for Organization Change
1. From Process Redesigns to 2. From Mega Process to SAP Role 3. From SAP Roles/SAP Profile to 4. From Job to Individual
oneERP Impacts Job Label
To-be J 1
ob
O2C
To-be J 2
ob
Core Process Order Management
Process Manage Sales Orders
SAP
Profile
Sub process Process Presales activities Process sales order New J 5
ob “…”
SAP
ERP Process export
Process Profile
“…”
Scenarios domestic sales
Operational quotation
order for key
account
and SAP
Organizational Profile
Receive Determine Receive Determine
“…”
Process
Tasks customer type of customer type of sales
Impact Assessment enquiry quotation
quotation
enquiry document
Worksteps
SAP ROLE: „O2C ORDER“
During Mapping Workshops business experts
In the BPML all Megaprocesses in OneERP Each market and factory links job labels/SAP
The OneERP Impact Assessment describes from impacted markets & factories link SAP
scope are broken down following a standard profiles to individuals in the organization. This
the level of change and business impact in roles to existing job labels/SAP profiles.
process hierarchy. On the lowest level a process should be separated from the role
moving from today‟s operations to the new Mapping decisions are based BPML, SAP Role
logical grouping of worksteps are summarized mapping in order to optimize the organization
way of working. Workbook, Role Directory and verbal
under an SAP role name. structure.
explanations by ERP process experts.
5. From Global SAP Role to SAP 6. From End User to Training Class 7. From Organization Fine-Tuning to
Role Variants Transition
Zz_O2C_Order
Zz_O2C_Ord
er CH45
Zz_O2C_Ord
er CH4 A
B
Zz_O2C_Ord
er CH9 C
Organization Fine-Tuning focuses on the
Based on the role and job mapping result, all
The role variants mapping process is the adjustment of the local organization structure in
identified end users are allocated to training
activity who inks each end users to the role order to achieve objectives set in the new business
classes. End user training to be hold during
variants based on the SAP enterprise process model. The transition phase ensures that
the month of May 2004. Prior to the end user
structure. This activity is key in giving access the organization and its people are smoothly
training the local trainer will be trained during a
to transactions into SAP. transferred from the old to the new work
one month train the trainers workshop.
environment.
Slide 48

49. What to expect right after Go-Live?
Performance
Stabilization
Further &
Process and Benefit Realization
Performance System
Dip Improvement,
Knowledge
Go Live Transfer
+3 +6 +9 Months
ORGANIZATION FINE-TUNING ORGANIZATION (RE)DESIGN
• Smooth Go Live • Process efficiencies
• The right people at the right place • Further improvement of Organization
• Adequate skills and competencies Structure
• Correct authorizations • Benefit Realization
Slide 49

50. CONCLUSIONS
The project was a success
This success was due to many factors.
 Efforts of every single person involved
 The strong executive support and governance
 The positioning of the ERP project as vital to JTI‟s
transformation into a modern multinational.
Slide 50

51. Key Learnings
 Management should devote senior resources and
considerable effort to change management, training
and communication
 HR should take the lead in change management in a
complex, long-term and demanding ERP project.
 HR should provide dedicated HR support for those
working on a large project to take care of their day-to-
day and long-term concerns
Slide 51

52. Key Learnings
 Perhaps the most important lesson was that companies
must plan for HR involvement in ERP projects from the
beginning.
 It is essential for HR to be proactive and lead from the
front with other senior management involved.
 HR has a responsibility to deliver its part of the
transformation process, and be passionate about what
it can do.
Slide 52

53. ……Final Parting Message……
Change Management
is the process
of turning project intentions
into business practice.
Slide 53

54. Thank you
Any Questions
Slide 54