In the past ten years, we've seen plenty of global ERP projects justified by "TCO." By that I mean: IT-centric "business" cases, such as rationalizing legacy landscapes, clearing up database contracts, and getting rid of spaghetti-like systems.
Those use cases don't cut it anymore. Today, if an ERP project can't justify a business transformation, I don't like your chances.
Recently, I had the chance to dig into the ambitious global ERP project of IFS customer Suzuki Garphyttan. Good timing for me, I was speaking with the perfect foil for my questions - Anders Jonsson, IT Manager at Suzuki Garphyttan.
Suzuki Garphyttan explains its specialization as follows:
Suzuki Garphyttan develops and manufactures advanced spring wire from various alloys for use mainly in combustion engines and transmissions, where the quality and performance requirements are extremely strict. The main applications are valve springs, transmission springs, piston rings and springs for fuel injection systems. We are currently represented by factories on three continents: Europe, North America and Asia.
"We are not doing that technology for itself - it is for the business"
Suzuki Garphyttan is one of those companies you might not have heard of, but whose parts you rely on. I'd say the chances are good you've had a ride in a car with Suzuki Garphyttan's wires in it. But: we also know that combustion engines are headlong into a different time, where competing technologies are gaining favor, e.g. electric cars. A review of Suzuki Garphyttan's web site shows they are not standing still. They cite their Swedish development center in Garphyttan:
Collaborate with our Swedish development center in Garphyttan to develop or specify just the right thread for your project. Together we can give your products a new edge in the market.
Now, does a development center for custom wire projects sound like something a twenty year old ERP system could support - especially as it scales? So that's where I started with Jonsson. I asked him: how has the role of IT inside of Suzuki Garphyttan changed? He responded:
We are still a technical team; we need to work with the technology. But of course, we are not doing that technology for itself - it is for the business. So you really need to know what is important for the business.
With the business shifts Suzuki Garphyttan is making, supporting that from an IT standpoint is everything. Being less focused on combustion engines isn't just about new revenue streams. It's about becoming more agile. Jonsson:
We need to find new areas for the business. When we see that, we need to have an IT environment that is agile, and can adjust to the new demands that new customers will put on us.
A new global ERP system - why now?
Which brings us to ERP. Prior to IFS, Suzuki Garphyttan was facing the limits of ERP silos. Jonsson explains:
When I started to work at Suzuki Garphyttan, I soon saw that we had a quite diverse IT environment, with several ERP systems, more or less one ERP system for each site that we had. If we are going to compete, and take new market shares on new markets, that is not an easy way to handle it.
Want to respond quickly to customer specifications? That's not a strength of older ERP systems:
New customer requirements come from new business areas. Therefore, we decided to consolidate the number of systems, so we had one system that we could develop for the new customer demands that will come.
Suzuki Garphyttan's path was clear: time for a new global ERP system.
It is a really big change for Suzuki Garphyttan, with all the things that are happening in the company. We are trying to double the revenue, to be able to get a healthy company going forward, with the changes within the car industry [on the horizon].
And how did IFS become the solution of choice? IFS met several crucial requirements. As Jonsson told me, the other systems they evaluated didn't pass the global scale test:
When we compared the different systems, we saw that if we really would like to have one system, with one setup, for all the businesses, IFS was the best choice for us. We could see that IFS has a good implementation method, with processes that would work for us.
They were quite good at listening to our demands when we were presenting to them. They were also very open to discuss how to solve the different issues that we saw in our business within the systems. We had quite long discussions with IFS. They actually took our demands seriously, in an early stage, during the sales phase of the investigation.
Jonsson had prior (good) experiences with IFS while at another company, but he said that did not factor in. He wanted to make an objective assessment:
I will not say that I was biased when we did the investigation, because I tried to be quiet. I took a distance from the real decision, and used the external consultants for the decisions. When we were placing all the pieces in the puzzle, it was quite obvious for all of us that IFS was the best choice.
From decision to action
As for which version Johsson's team selected, that's a tricky question. Jonsson told me they started with a cloud version of IFS 10, but shifted to an IFS Cloud implementation, the IFS go-to release for the future. Why the move? Jonsson:
It was important for us to have a cloud-based solution. What we saw was that the IFS Cloud was more mature in the architectural design than our IFS 10 app cloud.
Suzuki Garphyttan signed on with IFS late March 2020; the project officially kicked off in May 2020. Companies put many big ERP projects on hold when the pandemic hit - not this one. Suzuki Garphyttan's management team decided to press on. One factor? The potential for available (and affordable) resources for the project, given other projects on hold.
This is going to be a decisive year for Jonsson's team: the first IFS Cloud regional go-live is slated for April, with one more two more sites to go live later this year. The rest of the go-lives will be completed in 2023. When these go-live, almost all of Suzuki Garphyttan's 600 employees will now touch IFS systems in some way.
The wrap - getting employees on board with modern ERP
Every global project hits a speed bump or two. In this case, Jonsson told me that skills issues, both internal and external, led to some delays in the go-live goals - though things appear to be on track now. Here's my bias: I believe project obstacles are inevitable; we all do a disservice to customers if we don't discuss them openly. But how do you overcome these obstacles? Some claim it's the strength of the new technology. I believe it's the strength of the underlying partnership. But what does Jonsson think? He responded:
We have a very open and honest discussion with IFS. I think that is crucial to be able to do this kind of project... Quite often, in this kind of project, you find out things you really weren't aware of when you started the project. But we have very good cooperation with IFS.
Obviously, since this project isn't live, we can't get into documenting benefits yet. But I do think it's appropriate to ask: will the IFS system support the business models Suzuki Garphyttan is planning? As I see it, with Suzuki Garphyttan's ambitious plans for more diverse/customized products, a classic transactional ERP system isn't going to be enough. Jonsson's view?
We definitely need a system that can help us to collaborate with our customers and vendors in a much better way. We also need to make use of the digitalization.
Mobile use cases with IFS Cloud is part of that plan. Bonus: "pen and paper" processes could be eliminated:
We want to start using mobile devices for the workers out in the production area - make it possible to do mobile apps, for starting operations in the production area, and reporting operations in the production area in a much better way than we can do today... I think we will make use of the new interface for this with IFS.
With global changes in store, you can't shy away from change management - and quality user training. Jonsson's team invested heavily on that front:
I think we are in a quite good place. We have started the end user training now - we get quite good feedback from the end users. I'm feeling quite glad about that.
The buy-in from management is high also - the global management team is on the steering committee for this project. Jonsson told me their CEO is sharing a monthly video with all employees on what is important to the company, and what has to happen. He showed me an internal video for their "OneShare" transformation initiative, with the new ERP system at the center.
The video touches on the gains from consolidating systems - into one employee UI. The video's biggest message? How a modern ERP system will help Suzuki Garphyttan and its employees thrive. Example: the benefits of integrated global data for employees, supporting decision making and so on. As we wrapped up, Jonsson told me:
We have a slogan for the company: "Together for a better tomorrow." That also means together with external parties we are working with. We try to have a partnership with the vendors that we are working with. We have had that partnership together with IFS, and I'm proud of the work we have done together.
That bodes well for the go-live(s) ahead. We'll look to provide updates.