SAP PS Case Study

1. Pratt & Whitney
SAP Project System Implementation
2005 Project Management Challenge Conference
March 22 & 23 2005
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2. Agenda
• Pratt & Whitney
• ERP Program Overview
• Program Management/EVMS
• The SAP Journey
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3. Specialty Materials
& Services
Space
Power Systems Propulsion
Large Commercial
Engines and
P&W Canada
Aftermarket
Services
Military Engines

4. ERP Critical Success Factors
• Must have burning platform
• Executive involvement from top (President/CFO)
• Not an IT project - It’s about changing business process around SAP
• Tied to executive’s Incentive Compensation
• Do planning and scoping up front (before capital request)
• Vigorously compete both software and solution providers
• Integrator choice up front
• Co-locate and incentivise the ERP organization
• Don’t underestimate Change Management and site preparation
• Legacy interfaces will kill you (must have clean data)
• Manage Legacy System retirements
• Set strategy for reporting (Business Warehouse) and
execute consistently
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5. Burning Platform
“Enterprise Resource Planning is a major commitment to a
new way of doing business at Pratt & Whitney. We will have
unprecedented access to shared information across the
organization. It will facilitate the creation of customer value
through better integration of our marketing, engineering,
manufacturing and customer support operations.“
– Karl Krapek
President – P&W
9/17/98
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6. Data/Information Transformation
Finance
Purchasing systems
Key Master Data # of SAP
Master
Purchasing Files
Inventory
systems Chart of Accounts 16 1
Bills of Material 40 1
Product Materials Customers 29 1
systems
Configuration Cost Centers 9 1
Employee 68 1
Order Entry
Spares Equipment 80 1
systems
processing Materials 71 1
Vendors 36 1
Etc.
Etc.
Developed incrementally
over 30+ years
ERP is targeting ~ 650 Legacy Systems for Retirement
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7. Top Level Commitment!
“…no new system development
activities or modifications to
legacy systems will be
authorized outside of ERP
without a business benefits
review and evaluation.”
Louis Chenevert
Letter to P&W Management
December 1999
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8. P&W’s Global Business System
Design Facilities
Manufacturing Facilities
North Berwick, ME
Connecticut
Lansing, MI Indianapolis, IN Stators, Seals, Ducts,
Combustors
Composites Tubes, Ducts, TOBIs
HPC Stators Repair Facilities
Thrust Reversers
Manifolds
Shafts, Rotating Ireland
Components Cases Ukraine
Airfoils
Ok City Airfoil Coatings
Tooling Support Services
Coatings India
Serviceable Material
Engineering
Test Cells
Springdale, AR
Cases & Gear Boxes,
Bearing Housings
Common Japan
Processes
Global Support CA
Process Design
Edwards AFB,
Flight
Turbine Airfoils
Common Data
Single System
San Diego, CA/ Tijuana, Mexico
Taiwan
Composites
World-wide Visibility
Single Installation HPC Stators
Thrust Reversers
Nacelles Singapore
Dallas, TX Area Fan Blades
Turbine airfoils Combustors
Dallas Aerospace Turbine Airfoils
Talon, IGT Stators & Honeycomb
A/C Controlling Surfaces Tube Repair
San Antonio, TX
Christchurch Engine Center
Military Combustors
JT8D, RR Dart
Serviceable Military Material
San Antonio Engine Center Singapore Engine Center
F100 Columbus Engine Center JT9D, PW4000, CFM56-5
Norway Engine Center
JT8D, V2500 Middle East Propulsion Company
CFM56-3, -5, -7
F100
Cheshire Engine Center
JT9D, PW4000, PW2000, V2500, F117
Engine Depots
Single Instance Strategy….Critical Early Decision!
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9. Pratt & Whitney’s ERP Scope
Engineering Product/Technical Support
Engine
Manual
IPC
C C
Information
C C
U U
Assembly – Development & Production Overhaul
U U
SS S
S
TT
TT
O O
O O
M M
M M
EE E
E
R R
R R
Logistics
Component Production Procurement Component Repair
Program Management
Product Support/Warranty Administration/Fleet Management Programs
Finance/Plant Maintenance/Quality Human Resources/EH&S
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10. SAP System Overview
FI
SD
APO Financial
Sales &
Accounting
Distribution
Currently on R/3 4.5B
CO
MM
SAP
Controlling
Materials
with A&D Industry
PP AA
Mgmt
Production Asset
Software
Planning
Solution
Accounting
Common PS
QM
Plan to upgrade to 4.7
Project
Quality
Infrastructure System
Mgmt
PM WF
Plant Main-
Workflow
tenance
HR IS
Human Industry
R/3 BW APO
August 2004
Resources Solutions
EH&S
Daily Transactions 3,264,521 150,845 10,028
Data Base Size 1,751GB 2,949GB 304GB
Avg Mon Growth 37 GB 75 GB
BW
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11. ERP Functionality through 2002
1999 2000 2001 2002
3/00 - Phase 2 (P&W) 2/02 - Phase 5 (P&W)
7/99 - Phase 1 (ESA) 1/01 - Phase 3 (P&W)
• Warehouse Logistics • MRO (Columbus)
• Finance • Labor Collection
• Parts Tracking • EH&S
• Procurement
• Business warehouse • Plant Maintenance
• MRO (part 1)
8/01 - Phase 4 (P&W) • Business Warehouse
• MRO (Cheshire)
5/00 - Phase 3 (ESA)
10/99 - Phase 2 (P&W) 6/02 - (P&W)
• Component Repair
• MRO (part 2)
• Core Finance • MRO (Norway)
• Material Valuation
- Phase 3 (P&W)
• GL 8/02 - Phase 5A (P&W)
• Spares Order
• Plant Maintenance
• A/P • Component Repair (EH)
Processing
• Business warehouse
• Fixed Assets 10/02 - Phase 5B (P&W)
• Engine Sales Orders
• Budget/Actuals 8/00 - Phase 3 (P&W) • Program Management
• Procurement
• Business Warehouse • Engine Assembly & • Product Design &
• MRP
Costing Validation
• Quality Management
• Configuration Management • Product Data
• Plant Maintenance
• Electronic Work Instructions Management for Devl.
• Labor Collection
• Labor Collection • Labor Collection
• Business Warehouse
• Business Warehouse • Space (Full Solution)
10/00 - Pratt Canada 11/01 - (P&W) • F117 Flex Program
• Business Warehouse • Product Data • Customer Owned
Management Property
11/00 - UTC
• Quality
• Business Warehouse
• Tooling
• Business Warehouse
11/02 - (P&W)
• Military Component
Repair (Oklahoma City)
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12. Agenda
• Pratt & Whitney
• ERP Program Overview
• Program Management/EVMS
• The SAP Journey
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13. Product Development at P&W
~ $1B Annual Product and Technology Development Spend
Externally Funded via Contracts
• F135 Joint Strike Fighter
• F119 F22 ATF
• SSME
• AATS
• SED
Internally Funded (E&D)
• PW6000 (A318)
• GP7000 (A380)
ALL development planning and
• Space
cost collection performed in SAP.
• Technology Programs
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14. Program Management/EVMS
System Must…
• Incorporate integrated cost and scheduling
for large programs
• Provide complete program baseline control
• Deliver EVMS tools that are robust and
comprehensive
• Enable full integration between suppliers
and OEM contractors
• Have the ability to produce accurate EACs
and USG required reports
• Include robust change control and
auditability
• Be simple to use and navigate through
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15. Evolution to Enterprise
EV Management
More than Just a System Change…
10/2002
2000
Common Metrics
Common Metrics
And Reporting (wInsight)
And Reporting (wInsight)
Multiple:
Multiple:
• Tools
• Tools
• Processes
• Processes
• Metrics
• Metrics
• EV for ME only
• EV for ME only
ERP
ERP Program ERP
CE Program ME Program
EVMS CE Program ME Program
EVMS
Management Implemented!
Implemented!
Data Data
Data Data
Organization
Organization
project begins
Formed Single tool
Formed Single tool
Common Process
Common Process
Real-time Data
Real-time Data
EV for CE and ME
EV for CE and ME
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16. Program Management –
Prior to ERP
Multiple Tools, Multiple Processes — Not Integrated!
Commercial Development Military/Space Schedules
(MS Project)
Schedules
Budgets
(MS Project)
PMPS
CE Manpower
Milestones
Requirements
ME Manpower F100 Budget & EV Budget & EV
Requirements
EMS
Dekker Tracker CPSIII
$$
Work
$$ $$
Authorization
Work
PDC
Authorization
(Cost Accumulation)
Project Cost
EWACS (Cost Accumulation)
SALTI
Reporting CBS
Labor
• Spend Variance Reporting Billing
collection
• EAC EV – Cost & Schedule Variance
• Limited EV EAC
CDRLs
117 Legacy Systems
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17. EVMS Organization Formed!
• Drive Culture Change
• Consistent Process and Tools
• Constancy of Purpose EVMS
Organization
Systems/ EVMS
ACE Training Program
Surveillance Analyst
• EVMS Process Owner
EVMS CIPT • Program Planning
Analyst and Budgeting
Close
• Master schedules
Coordination
• Program management
• Standard work implementation with
instructions (how to’s)
– Requirements Program
– Templates – metrics
– Plans/schedules Office
– Thresholds – actions
Deployed to – Budgets/estimates
• Plans, analysis
Module Centers/ • CIPT schedules
and reports
Systems • Status
• Change control
Engineering
• Analysis and reports
• Corrective action
• Changes
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18. EVMS Overview at P&W
Monthly Process in SAP
Take Action
Take Action
and
and
Modify Plan
Modify Plan
Establish Analyze
Establish Analyze
Develop Close
Develop Close
Baseline and
Baseline and
Proposal Project
Proposal Project
(Plan) Report
(Plan) Report
Authorize Monitor
Authorize Monitor
Work Project
Work Project
(Execute) (Status)
(Execute) (Status)
Single….Standard Process Established Across the Enterprise
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19. ERP EVMS Implementation Goals
• Standardization
– Business Process
– WBS structure
– Metrics and Reporting
– Labor forecasting
• Improved Visibility to Program Data
– Actual costs near real-time
– Cost detail drill down
– Open Commitments
– Timely reporting
• Less Paper!
– Work Authorization
– Program performance
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20. Pratt’s IT Toolset for EVMS
SAP wInsight Performance Trending
SAP PS EVC
CPR Reporting
EV & Customer Reporting
Business Warehouse (BW)
All Program Data
•Plans – resource and cost Snapshot of
spend profiles,
plans
manpower
•Schedule Reports/Queries
Documentum
•EV Methods
•Baseline
Work
•Actuals Authorization
Documents
•Earned Value (BCWP)
•Estimate at Complete (EAC) MS Project ®
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21. Program Management in SAP
EVMS BW & SAP
Project Schedule and Milestones
- Level I, Level II, Level III
Toolset Reporting Staffing, budget
costs, etc…..
WBS/Network
Structures
in SAP PS
EV
Resource
Rqmts by Program
wInsight
Program Measurement Baseline
CP
Integrated Schedule & Budget
R
Staffing Requirements
Estimate at Completion (EAC)
Billing (Project 1)
Work Center Definition
Earned Value Analysis
(Master Data)
INVOICE
Blah blahhh blah blah
bla blb blah bla
doifdsfoisd dffsdsdjf
Cost Collection (Project 1)
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22. SAP PS Implementation Approach
• Standard PS (as much as possible)
– Customizations only for “true” gaps
– All Program Management legacy FI
SD
APO Financial
Sales &
Accounting
systems retired – no interfaces Distribution
CO
MM
SAP
Controlling
Materials
PP Mgmt AA
• All program management data Production Asset
Software
Planning Accounting
within SAP Common PS
QM
Project
• Full integration with SAP functionality Quality
Infrastructure System
Mgmt
PM WF
Plant Main-
Workflow
– Finance and Billing tenance
HR IS
Human Industry
Resources Solutions
EH&S
– Contracts
– Purchasing
– Warehousing BW
– Development engine assembly
– Tooling
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23. SAP Structure
and Cost Accumulation
Parent
Parent
ME.1061 - Level 1
ME.1061-05 - Level 2 WBS Levels
WBS Levels
ME.1061-05-01 - Level 3
ME.1061-05-01-02 - Level 4
ME.1061-05-01-02-001 - Level 5
Planning Detail
ME.1061-05-01-02-001-100 - Level 6
WBS
WBS
Control Account (CSVAR level)
Lowest Level
Lowest Level
Breaks down the work in the WBS
“Linked” to the lowest level of the WBS Network
Network
Can have more than one network in the WBS
Activity
Activity
Segregation of work scope in the
network (WPs and PPs)
(WPs and PPs)
Not part of the charge number
# Can only be used once in the
network
Element
Element
Unique to an activity - # can only be used once in the network
Computer
Travel
Mat’l
Labor – Work Centers (Units) Outsourcing
Material (Burdened or Unburdened)
Fuel
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24. WBS and Network Structure
WBS – Standard Across Programs
•Aligns with Budget and EVMS Responsibilities
•Aligns with contract line item/billing requirements
NetWork Activities
•Schedule (constraints, durations,
Activity Elements
relationships)
•Resource Plan/Actuals
•EV method and status
– Work Center Hours and dollars
– Hardware (direct mat’l) plans
– Milestone, Percent Complete,
– Other costs plans and actuals
0 -100, Level of Effort (LOE)
– Integration with PO and
•Integration with PM, SM orders
PP orders
•Earned Value metrics
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25. EVMS Month End Processing
Majority of EVMS data is the result of real-time transactions
However,
EVMS Month-end closing is executed by the IT team in background as
part of the Financial closing.
Run EVC for
Run EVC for
Calculate EV Apply Calculate
Calculate EV Apply Calculate Summarization wInsight
Summarization wInsight
(CNE2) Overhead ETC/EAC
(CNE2) Overhead ETC/EAC and Inheritance Extract
and Inheritance Extract
RA/
RA/ Assessments Billing
Assessments Billing
Settlement
Settlement
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26. Monthly EV Process (Timeline)
Month
Week 0 Week 1 Week 2 Week 3 Week 4
Financial/ IPMT Activities
EVMS
• Monthly Program Review
CIPTs Month Flash
monthly • Schedule
End Close Cost
status Reports • Risk Assessments
• Issues
• Accomplishments
CIPT Activities
• Analyze Data
wInsight • Variance Analysis
database
• Risk Assessments
available
to CIPT’s • Closure Plan
SAP
Bull’s Eye
wInsight
Pratt & Whitney Aircraft NA OTHER OTHER
Element: $HD Bull's-eye Chart - As of: SEP 02 Name:
BEHIND SCHEDULE, UNDER COST
AHEAD OF SCHEDULE, UNDER COST
40
30
CV % CUM Percent of Dollars
20
10
78
6
0 5 0
4 2 1
3
-10
-20
-30
-40
BEHIND SCHEDULE, OVER COST COST
AHEAD OF SCHEDULE, OVER
-40 -30 -20 -10 0 10 20 30 40 50
SV % CUM Percent of Dollars
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27. Change Control – Baseline & EAC
5000
• Approved Work Scope Changes
Baseline
4000
• All changes documented
3000
2000
Baseline Plan
1000
$’s
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Manpower Plans
Workscope Changes Engineering Requirements Firm Through 2003
2001 - 2003 Requirements
7000
Plan 6000
M f g S up p o rt , IDWA s , Ot he rt
Staffing Requirements
5000 A f t e rmarke t
Revisions
P o w e r S ys t e ms r
Co s t R e duc tio n
V2 5 0 0
4000 GP 7 0 0 0
P W6 0 0 0
Eng ine S urg e
OC E Te c hno lo g y/ C o ntra c ts
3000
F 117 / OM E/ Othe r
F 10 0
External
2000
50% Contract
JS F
(Revenue)
F 119
1000
EAC Changes S pa c e
0
2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 2002 Q3 2002 Q4 2003
2
2
5000
EAC
4000
EA VAC
C
3000
• Approved EAC Changes
2000
Baseline • All changes documented
Actual Costs
Plan
1000
• Must be consistent with funding levels
Earned Value
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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28. Common Metrics
Monthly Program Reviews Organizational Metrics
Module Center-Control Tower On Plan
TASK TITLE: High Pressure Combuster Blue cells updated automatically
Information Flow Module Metrics
DATE
TASK MGR: Jon Smith July 20, 2001
Off Plan
March 2001
Programs
$300k
Plan
Centers
$250k
Quality Cost Delivery People
Earned Value $200k
Mod Center
$150k Overall
Actuals
$100k Quality Cost Delivery People
Dev Dev
EV - Earned Value Progam Warrant Performa Module EVMS Cost EVMS Sched
$50k Reliability Staffing
Hrdwre Hrdwre Fill
Program s Score y Costs nce Cost Variance Fillrate
SV - Schedule Variance Cost rate
CV - Cost Variance $k
BAC - Budget at Completion
J F M A M J J A S O N D
Quality Cost Delivery People
End of Month
Des Rev Salary
E&D Overhead FETT Repair Dev Salary Salary Employee
EV SV CV BAC E&D Productivity
Engineering
COST Escapes Turnbac Trips to
Rework Rate Leadtime Leadtime staffing training scorecard
ks Medical
$ 242,000 0 -22,000 242,000 264,000
% 100.0 0.0 -9.1
Quality Cost Delivery People
COMMENTS: (expand as needed)
Cost per Comm Total
Module Mil Spares Inventory Total Injury Hourly
Escapes Scrap Del PPV Spares Fill Recordable Total Waste
Manufacturing Fill Rate fill rate Turns Rate Training
Hour Rate Rtae
Standard & Disciplined
Approach Required
WTT Module
WTT Module
Across Programs & Center
Center
Module Centers
Engrg Product
EVMS Program Engrg Product
IPMT
IPMT
Director Director
Analyst Director Director
Business
Business
CIPT
CIPT Center
Center
CIPT
CIPT
EVMS CIPT
Analyst
IPT
IPT
IPT
IPT
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29. Customizations
• Baseline creation and maintenance
• Work Authorization – documentation
and archival
• EAC calculation
• SAP Reporting (Report Painter and ABAP)
• System Performance!!
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30. e-Business Tools..Ease of Use
e-BTR (Budget Transfer Request)
e-CSVAR
Take Action
Take Action
and (Cost/Schedule
and
Modify Plan Variance)
Modify Plan
Establish Analyze
Establish Analyze
Develop Close
Develop Close
Baseline and
Baseline and
Proposal Project
Proposal Project
(Plan) Report
(Plan) Report
Authorize Monitor
Authorize Monitor
Work Project
Work Project
(Execute) (Status)
(Execute) (Status)
e-PRF (Project Request Form)
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31. Post Go-Live Efforts
• Contract Rollover – business process and functionality to facilitate
movement of WIP, material etc., from one project to another
• Proposal (ProPricer) Conversion – import plans to SAP PS
• Travel and Expense
• More Reports – Well over 100 and still growing. Reports added for
data validation and planning, not just management reporting.
• Ease of Use
• System/User status maintenance screen
• Baseline/EAC maintenance
• EV Cockpit
• Integrated Master Schedule Incorporation
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32. Today…Two Years Later!
Legacy
268 Commercial
1768 Projects 1312 Military
188 Space
Zero
1,010,696 WBS elements
61,824 Networks
1,263,818 Activities/Elements
809,860 Assigned Orders
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33. Standard EVMS Processes
Business Process Elements
Standard Work Breakdown
Structure (WBS)
Baseline Plans
Work Authorization Standard
Processes
Cost and Schedule Variances Across
Programs
EAC Process
Change Control
Reporting
EVMS Standard Work
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34. Big Hits at Pratt & Whitney
$
Project Plan, Integration!
Goods
EV and Costs
•Data timeliness
receipts
•Visibility to details
Labor hours & $s
Services
BW Reporting
(particularly staffing)
Actual $ when invoiced
Common process for
Military and Commercial
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35. EVMS Standard
Documentation and Work
System
Description
Standard
Work
Policies &
Procedures
Program Specific
PMI’s
Work Step Instructions
(WSI’s)
Earned Value Training
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36. The EVMS IT Team
Development/Go-Live Sustaining
PW Subject Matter PW: 4-5
Experts: 9 IT Technical: 3
IT Technical: 5-6 Consultants: 0.50
Consultants: 4
Plus help from SAP
consulting for system
performance
improvements.
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37. Pratt’s EVMS Transformation
FROM TO
FROM TO
Roles and Responsibilities • Inconsistent • Consistent with IPD
Roles and Responsibilities • Inconsistent • Consistent with IPD
Ownership of Process, Metrics, • Multiple • Central EVMS Organization
Ownership of Process, Metrics, • Multiple • Central EVMS Organization
Systems and Tools
Systems and Tools
Metrics • Multiple • Common
Metrics • Multiple • Common
Process and Documentation • Separate • Single
Process and Documentation • Separate • Single
Resource Plans • Multiple Sources • Based on Standard Work
Resource Plans • Multiple Sources • Based on Standard Work
Cost and Schedule Systems • Multiple • Single
Cost and Schedule Systems • Multiple • Single
Source of Management • Multiple • SAP wInsight
Source of Management • Multiple • SAP wInsight
Data/Reports
Data/Reports
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38. Looking Back…
What Worked Well
• Business Process experts leading development
• Early involvement of end-users in integration testing
• Report development (both SAP and BW) begun early
• 3+ Go-Live dress rehearsals for data conversion
• Co-location with of IT and Business Teams at go-live
Lessons-Learned
•The user interface matters – What is acceptable for working with a
small amount of data may not be acceptable when working with
large projects.
• Test system performance early…
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39. Summary
• ERP/SAP is a game changer for Pratt & Whitney
• Single instance strategy allows world wide visibility
and process consistency
• Unprecedented level of data available to drive
rapid decisions
• EVMS – process, tools, organization, and culture
• Full application of SAP to Program Management/EVMS
• The ERP and EVMS journey continues…
Thank you!
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40. PRATT & WHITNEY PROPRIETARY
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