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  1. Potential Mistakes in a Complex QAD Implementation MWUG Tuesday September 25th, 2012 1

  2. Introductions • Chuck Macke • Director of IT for Ralcorp Frozen Bakery Products • Started in IT with the Chicago Transit Authority in 1980 • MBA from University of Chicago Booth School of Business • Computer Engineering degree from University of Illinois • CPIM certification from APICS • Non-IT titles of Sales & Operations Planning Manager and Director of Distribution for Elkay Manufacturing, where he spent 19 years prior to joining Ralcorp • Tim Lovely • Principal at Logan Consulting since 1995 • 17 year of various ERP projects – with focus on QAD – QAD Certified Fin., Mfg., Dist. • Master of International Business from the University of South Carolina • BA in Political Science from Emory University • Prior positions at PPG Industries, Inc. Fresenius Sistemi Terapeutici S.p.A, and Borg-Warner Chemicals Inc. 2

  3. Agenda • Goal of Presentation • Ralcorp Background • Acquisition Summary • IT Integration Summary • Top Integration Mistakes to Avoid and How 3

  4. Presentation Goal • Ralcorp Frozen Foods acquired a division of Sara Lee in October 2011. • The team structured the project to ensure it addressed five common mistakes seen in complex system integration and implementation projects • The goal of this presentation is to discuss how the team proactively addressed them and the impact it had on the project 4

  5. Ralcorp Background • Ralcorp Holdings – Two Divisions of a $4B+ company • Ralcorp Food Group • Ralston Foods • American Italian Pasta Company • Ralcorp Sauces Snacks and Spreads (RS3) • Ralcorp Frozen Bakery Products 5

  6. Ralcorp Background 6

  7. Acquisition Summary • Ralcorp Frozen Foods acquired Sara Lee’s North American private brand refrigerated dough business - $400M Net Sales • Carrolton TX Plant • Forest Park GA Plant • Shared Services Processes • St. Louis MO Shared Services Operations for Ref. Dough • Manila processing for Ref. Dough • Two Plants would remain • All Financial Shared Services, Centralized Supply Chain, and Customer Service would be carved out and absorbed by Ralcorp 7

  8. Mergers Are Complex Projects • Collaboration • As strangers we must come together to build a $500 million store brand company • Innovative thinking – what is the best way to operate • Find new ways to grow • Fast Results Expected • Companies merge to create value • Mergers are expensive • Setting short term and long term goals encourages collaboration • Communicate results, changes and risks 8

  9. Here Are a Few Strategic Goals • Store brands refrigerated dough delivers on EBITDA goals for FY 2012 • Identify all product offering gaps at customer by the end of October • Develop new cookie products to drive category share • Reduce input costs annually • Ensure our products are the highest quality • Ensure capital spending in FY 2012 drives material cost reductions • Implement new IT structure within 9 months 9 month timeframe, 6 month goal from close date of 10/1/12! 9

  10. IT Integration Summary • Assume the Ralcorp Frozen QAD footprint and process model! • First assess gaps between the Ralcorp Frozen model and the new business • Minimize any changes to standard process model • Transition all shared services functions to Ralcorp Frozen (AP, AR, Finance) • Number and scope of systems is significant (25+ applications to integrate) • Do not impact business or customers at cutover!

  11. High Level Plan and Timeline 10/1/2011 Day 1 10/31/2012 End State Oct 2011 Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May-Jul 2012 Aug-Oct 2012 Business Process Infrastructure 11/11 Applications Assessment 1/31/12 – Key Static Data Validation Milestone 11/18 Project Approval 12/6 12/23 1/31 QAD Envt. Prep Team Training Ongoing Training 1/31 User Procedures 1/31 Static Data Conversion Testing 1/31 Change Dev. & Unit Testing 2/15 SIT System Integration (IT) Testing 2/24 Refrigerated Dough Core ERP Implementation Timeline EDI Development & Customer Testing SIT 2/24 Dynamic Data Conversion Development & Testing 2/24 M1 3/9 User Acceptance Testing UAT 3/23 Mock Conversions M2 3/31 EUT End User Training 4/30 Support 4/1 Go/No Go -30 Go/No Go -60 Go/No Go -15 Go/No Go -2 TSA Exit Ceridian Kronos Payroll Asset Keeper T&E Cr..Card Product Vision Eagle POR QAD/TMS/Eagle/EDI Ariba, Futurion Axiom MP2 HFM Application Go-Lives 6/1 11 11 Independent Plans – Running in Parallel with Core ERP Implementation

  12. Application Roadmap • Summary • I2O No significant GAPs – team recommends moving to Discovery from Dough Nexus for sales team • OTC No significant GAPs – use of IRM by RD sales team and EDI Customer Testing critical to go-live • PLN Lean Logistics / Manugistics Trucks is key GAP for team. MP2 plan driving to late Feb / early Mar plant go-lives • Eagle implementation phased – end item warehouse / shipping 4/1 with receiving / line feed 6/1 and 6/15. • Print and Apply / CIMS plant level systems included in cutover plan 12

  13. Application Roadmap SDW Integrated with Core RF Applications • Summary • PRO RF Lack of Supplier Portal for PO entry a GAP – team recommends forming longer term supplier strategy and not addressing for initial cutover. • FIN No significant GAPs • HRB No significant GAPs 13

  14. Project Organization Matt Pudlowski IMO Executive Business Lead Tim Mauch IMO Executive Business Lead Chuck Macke IMO Executive IT Lead Cheryl Anderson IMO Support Tim Lovely Integration PM Logan Consulting Mike Brennolt IMO Support Logan Consulting End State Integration Workstreams Initiate to Order Order to Cash Procure to Pay Plan to Produce Infrastructure Benefits & Culture Mgmt Finance & Reporting

  15. Common Mistake #1 • Failure to Properly Define Business Requirements and Address Gaps At Beginning of Project 15

  16. Assessment Process • Approach: • Targeted review /discovery sessions for each area within a Major Business Process (i.e. Pricing within Order to Cash) • On Site Follow Up after Assessment • Logan Consulting (LC) will facilitate Business Process and Application Assessments with Core Team leads from RF and RD • RF Standard Model will be used as baseline for each session • Assessment Deliverables (Check marks) • Detailed GAP Analysis • Detailed Implementation Plan of Std. Model • Data Conversion Approach • RF, RD and External Resource Plan • Responsibility Matrix • End State Process Models • End State Application Map • Bottom Line: Plan, Costs, Timeline, Resources, Applications • Major Milestones • 10/10 – Assessment Kickoff – Earth City • 10/24 – Assessment Kickoff – Carrollton • 10/31 – Assessment Kickoff – Forest Park • 10/31 – Week of 10/31 - Review of Initial Gap Analysis • 11/11 – Complete Assessment Deliverables 16

  17. Fit Summary • The fit of Refrigerated Dough business processes into the Ralcorp Frozen standard model is very high. • Only 1 critical GAP has been identified, Transportation Logistics. • 5 other notable GAP’s were found, but proposed solutions have already been determined with none of them being major in cost or scope. • 12 other GAP’s were identified for management with solutions offered and approved. • A working list of Process Change and Implementation notes has been created and factored into the integration plan • Several business practices are also noted as being significantly different between the RD model and the RF model 17

  18. GAP Analysis Potential Deviation from RFBP Standard Model Potential Deviation from RFBP Standard Model 18

  19. GAP Analysis Potential Deviation from RFBP Standard Model Potential Deviation from RFBP Standard Model 19

  20. GAP Analysis Potential Deviation from RFBP Standard Model 20

  21. Key Management Decisions • The Assessment has identified business practices that differ between Ralcorp Frozen and Refrigerated Dough, requiring management direction • Definitive direction is required prior to 12/15/11 in order to manage scope and plan • Proposed Blackout Period on key business policy changes after 12/15/11 until Go-Live 21

  22. Common Mistake #2 • No Plan for Change Management 22

  23. Change Management • Refrigerated Dough has been on their integrated ERP platform (SAP) for 12 years. • Standing up the Ralcorp Frozen model (the clear mission) will require changes to systems transactional processes, as well as the organization and business processes. Some examples to consider: • Role and Autonomy of Earth City shared services changing • Fitting into the RD organization • Nomenclature rules and conventions changing (ie item numbers) • Keeping plant best practices while moving to the RF model • Adopting RF policies • Discussing Alternatives and then supporting the ensuing decision in a supportive and timely manner April 1, 2012 23

  24. Change Management • How can the plant core team best communicate and manage this change with their teams? • Communicate.Core team members should update others that will be effected every week if not more often. • Demonstrate.While acknowledging that full user training is not until March; the Pilot environment is for the Core Team to use. Showing others not only reduces uncertainty but also is a great vehicle for Core Team members to better internalize their own training. • Question.Use on site Logan resources to help answer questions and concerns. Use the IMO team to address areas of concern. • Execute.Do not fall behind, the schedule has no padding for delays. • Honesty.Change is occurring; confront it and embrace it. • Commit.Make this change for the better, not just for change sakes. • Fun.This is hard work but let’s do it with a spirit of fun and co-operation. • Accomplishment.It’ll feel really good when a successful Go Live cutover is accomplished and you’ll know that you played a key role. 24

  25. Change Management • What changes of note that the teams/users can expect ? • Hardware and Software • New Equipment – Scanners, Computers, Printers, etc. • New Source Documents and Reports. • Picklists, Distribution Orders, MRP, DRP, etc. • New system (QAD) with new look and feel • Ariba, MP2, etc. • Major Process Changes • Production involved in real time case reporting (Hawk) • All Finished Good moves (putaway, pick, stage) are real time and visible on both screens and scanners. No directed putaway. • Costing (policy changes) • Discontinuation of Old Material Number (the two critical field values will be in QAD) • Accounting Period Change to Monthly • No offshore group involvement (Manila) 25

  26. Change Management • Process stays the Same or Similar (but potentially with New tools) • Planning and Scheduling • Master Contracts and Purchasing (but no Auto Fax) • Interplant Distribution • Ingredient and Packaging Receiving and Inventory • (this will change in later 2012 with second phase Eagle) • CIMS and its use for backflush transactions • Plant PLC controls • Print and Apply • Communications with Sonoco • Master File Management 26

  27. Common Mistake #3 • Focusing Only on Technology 27

  28. People, Process, Technology • People • As discussed, Change Management is a key requirement of a complex integration and implementation • Process • Users need to see that the business processes are supported by the application • The Sara Lee Refrigerated Dough users were in a mature SAP environment • Focus on business process, ongoing training, and detailed User Acceptance Testing was critical • A process based plan was critical to our success • Technology • Application Roadmap was complex • Hardware and Infrastructure team was critical • Migration of Applications, PC’s, Printers, Scanners, Print and Apply, Email, etc.. 28

  29. People, Process, Technology • Process • Ralcorp Frozen QAD was the presumed standard process model • Process scripts and flows were reviewed and confirmed during the assessment • Process scripts and user procedures and training aids were developed • Ongoing training and workshops started 3 months prior to go-live • By UAT – users had a solid understanding that QAD would meet the business requirements 29

  30. Common Mistake #4 • Failure to Anticipate How Project Will Impact Customers and Stakeholders. 30

  31. Customer and Stakeholder Impact • Everyone is OK with change – as long as it doesn’t effect them! • Insist on two way communication • Established a Benefits and Culture Team – served Internal Customers • New payroll / HR / 401K system and provider • Monthly Integration Newsletter • Multiple On-Site Road show presentations of status and plan • Corporate Communications Group – served External Customer • Professionally prepared communications • Customer actions were required • Customer acknowledgement was required and tracked weekly • Order to Cash and Purchase To Pay Teams supported customer and supplier communications 31

  32. Common Mistake #5 • Lack of Executive Buy-In 32

  33. Executive Buy-In • Many Executive Teams that say they back project – but do they? • Ralcorp Corporate Steering Committee – Monthly • Included Ralcorp CEO and Ralcorp Frozen President • Ralcorp Frozen Divisional Steering Committee – Bi-Weekly • Included Ralcorp Frozen President and Ralcorp Frozen Executive Team • Supported IMO (Integration Management Office) • Critical Issues elevated quickly and resolved • Management and staff incentives helped drive attendance • Resource support and project prioritization • Helped enforce late stage project “no-fly” zones 33

  34. Common Mistake #6 • Inadequate Budget 34

  35. Budget • Two budget gates were defined: • Pre-Close - Prior to acquisition close, a holistic Business and IT Integration budget was defined • Business – staff, synergy savings, IMO support, etc… • IT – application licensing, implementation consulting, etc… • Post-Assessment – Assessment phase confirmed and adjusted pre-close budget • New licensing requirements for Lean Logistics • Additional cost for Print and Apply • Sara Lee TSA costs • Refined consulting estimates • Early December approved and finalized project budget with Steering Committees 35

  36. Budget • Stressed importance of defining and validating business requirements • Plan for contingencies where possible • Contingencies driven by uncertainty of TSA costs and SAP complexities • True carve outs are complex – team wanted minimal to no budget surprises after assessment phase 36

  37. Common Mistake #7 • Not Setting and Gaining Agreement on Resource Expectations Early 37

  38. Resource Plan Overview • Goal is to show general allocation per month per core team member for the project • Assumptions: • Assume a 40 hour week • You likely spend 4-8 hours on Ref. Dough Integration Meetings today • This is approximately 10-20% and will continue • Future State (December 2011 through April 2012) • Time required will increase • December – Team Training Workshops for each functional area, Data validation and configuration finalization • January – Training Workshops continue, Procedure Development • February – Validation and Testing – Engage plant supervisors, begin End User Training planning and cutover planning • March – Final User Acceptance Testing, End User Training, Cutover • The following pages address core team only, including plant team – shop floor, end users, etc…engaged closer to go-live with focused end user training • Team needs to review and identify key resource gaps 38

  39. Resource Planning • Minimum Required Percentage and Hours Per Month to Go-Live – Finalizing SLT Owner Approval % Allocation to Integration per Initial Plan Examples For Review 39

  40. Post Cutover Support 2 Week Plan • Plan early – key is Supervisor Training as First Line of Support • Per Shift – important to note level of resources required for multi-site concurrent rollout, but note drawdown • Optionally, 10 or 12 hour approach could be used • UAT and Plant Management guidance will be used to determine support team requirements • Message: • Plan early for support resources from DG and other plants • RF and RD need to start planning for cutover weekend and support early Support Plan Needed for Two Plants! • Sample Cutover Support Plan for Carrollton Week 1 Good Friday Plants Down Week 2 40

  41. Summary • Focus on Business Requirements • Plan for Change Management • Focus not only on Technology • Anticipate and Address Customer and Stakeholder Impact • Gain Executive Buy-In and Participation • Budget Based on Business Requirements and Contingency Plan • Define Resource Requirements Early • End Result: • 6 week assessment • 4 month implementation • 1 month go-live support for two large sites and shared services team • Project completed significantly under budget. 41

  42. Thank You!Questions? 42