Hoping to get a handle on its numerous corporate projects, a consumer electronics maker turned to SAP composite applications for help only to find it also had to solve a growing people problem.
For Boulogne-Billancourt, France-based Thomson, which manufacturers DVD players, home theater systems and other electronics in addition to offering movie production sound services to film studios, being a step ahead of its competitors is key to its business strategy. Getting a better handle on the company's research and development operations was important to a long term growth strategy, said Bernard Waltsburger, director of IT for strategic business units technology at Thomson. Thomson tried to get a better handle over its various research and development projects using an SAP composite application that could be integrated with SAP back-end systems.
Called SAP xApp Resource and Portfolio Management (SAP xRPM), the composite application connects to the company HR system and taps into other SAP and non-SAP data to determine the progress of a specific ongoing project. Dashboards help upper level managers determine whether a project is on time and on budget by providing detailed cost analysis, forecasts and timelines.
While the application was fairly easy for Thomson to deploy, the biggest hurdle was not technology, but resistance from researchers who said the application could stifle innovation. Executives wanted the ability to pull the plug on floundering projects and allocate company resources to projects that could get the most return on investment, Waltsburger said.
"We had limited visibility of progress on how a project was doing from a financial perspective," he said. "Now we could see whether projects have started and are on track and whether some projects overspent and we can make better decisions based on this data."
Thomson, which runs SAP R/3 Enterprise, began deploying SAP xRPM in early 2005. SAP xRPM is being used in conjunction with Microsoft Office Project Server 2003. The new SAP application went live in January 2006 and began collecting financial actuals on a month-by-month basis for the company's research and development projects, Waltsburger said.
Managers were asking, "How do you expect me to build a project plan for research that has never been done before," Waltsburger said. "Now we're saying to the managers that if you have a guy that says something is cool and he wants to work on it – fine, let him work on something he thinks is cool but he needs to define the project."
Research and development has been a unit left relatively untouched by software automation, according to Jim Brown, vice president and service director of product innovation engineering at Aberdeen Group. As senior level executives look to get a broader picture of the company, data from research and development and other parts of the organization will need to be integrated as part of the change, Brown said.
"The technology is only one piece of puzzle," he said. "In addition to technology, the best-in-class companies are also more likely to have a centralized executive in charge of innovation that crosses departmental boundaries."
The key to successful product innovation is to have centralized product data and the ability to extend that data with integrated business processes and collaboration, Brown said. The companies with the most success have had strong senior leadership, he said.
Waltsburger said that upper level management at Thomson understood the concerns of researchers, but a defined framework needed to be in place for research and development projects. Despite the complaints, the chief financial officer and chief technology officer pushed the project forward, he said.
"We anticipated that there would be a lot of change management needed," he said. "Project and cultural change are extremely important."
Thomson is also using xRPM with SAP NetWeaver Business Warehouse (BW), and SAP Enterprise Portal, Waltsburger said. Using SAP BW is easier than building a custom data warehouse on top of a database, because you have to structure your own tables, he said. Extracting and loading the data is also more difficult, he said.
"It comes with business content which means you don't have to build yourself all the data structures to store the data," he said. "When you have an SAP system and SAP BW in place, it's easy to extract data from the transaction system into the warehouse then once data is in there, you can define how you want to view it."
Technical consultants from SAP helped deploy the software, Waltsburger said.
"It was a significant investment from a cost perspective and from an effort perspective, everyone within the organization had to change the way they were working," he said. "Training and the change management portion of the project worked out to be more costly than we had planned."