Getting to the Finish Line: How to Increase Your Chances of Success When Turning on Your New SAP System April 7th 2011 Brenda McCue & Jeff Boone Ace Hardware Corporation [

Agenda Introduction Overview of Ace Cutover Framework for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

Introduction About Ace Hardware Founded in 1924 by a small group of Chicago hardware store owners, Ace changed the retail landscape by allowing individual stores to purchase merchandise in bulk to save money and buy at the lowest possible price. Each Ace store is independently owned and operated by local entrepreneurs – hard-working, passionate business owners who are involved with and, many times, reside in the communities where their stores are. 4,400 Ace stores around the world We are your local hardware store and we are a part of your community.

Introduction SAP at Ace Hardware First SAP implementation in 2008 – “Build the Foundation” Implemented Order to cash processes (SD, MM) Core ordering applications still tied into legacy systems Second SAP implementation in 2010 – “Business Transformation” Implemented core financials (FI/CO) and purchasing (MM) Chart of Accounts, Accounts Receivable, Accounts Payable, Inventory Improved the Order to cash processes (SD, Vertex, FSCM) Sales Order, Credit, Delivery, Interfaces with our legacy DMPS/WMS Implementation partner - IBM

Introduction Today’s goals What do we mean by “Cutover” Business Process Technical Implementation Organizational Transition Importance of the Go Live Checklist Executing the Go Live Checklist can be a project itself

Agenda Introduction Overview of Ace Cutover Framework for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take-Aways

Overview SAP Go Live Checklist Excellent tool Tells what needs to be done, but not how to get it done

ACE’S CUTOVER FRAMEWORK Overview Using a disciplined project management method to implement SAP systems should lead to a boring Go Live and Hypercare Early strategic plans Detailed cutover plans Cutover time period(s) Controlled Hypercare BUSINESS PROCESS ACE’S CUTOVER FRAMEWORK Certification of new Business Process Business Shutdown Controlled Start TECHNICAL IMPLEMENTATION Technical Components Time Installs to new Business Process Contingency plans User Access and IT Controls ORGANIZATIONAL TRANSITION Training Change Management Cutover Management

Overview Key Aspects of Ace’s Cutover Framework Can be used for large complex programs of work or smaller scale projects (smaller projects can scale down the steps executed that are not necessary) Driven by the Go Live Checklist Integrates key project work streams: business process, technical implementation, organizational transition, internal controls Provides the roadmap and descriptions of each unit of work which must be accomplished Supports an integrated team concept

Overview Internal Controls Disciplined Project Management Early Strategic Plans Detailed Cutover Plans Controlled Hypercare Cutover Strategic Rollout plan Certification of testing Conversion Validations Metric Reporting Bus & Tech Validations Technical Strategy Detailed Cutover Plan Execute Cutover Plan Defect & Issue Mgmt Org Impact Assessment Org Change Mgmt Issue Management Transition to Operations Training Strategy Training Internal Controls Disciplined Project Management

Agenda Introduction Overview of Ace Cutover Methodology for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

Early Strategic Plans Early Strategic Plans Internal Controls Detailed Cutover Plans Controlled Hypercare Cutover Strategic Rollout plan Certification of testing Conversion Validations Metric Reporting Bus & Tech Validations Technical Strategy Detailed Cutover Plan Execute Cutover Plan Defect & Issue Mgmt Org Impact Assessment Org Change Mgmt Issue Management Transition to Operations Training Strategy Training Internal Controls Disciplined Project Management

Early Strategic Plans Cutover activities occur throughout the life of the project. Many project team members and non-project team members participant in cutover activities at different stages of the project. It is critical to begin implementation planning steps early in the project. The activities listed in the “Early Strategic Plans” section should be done in the initial stages of the project.

Strategic Rollout plan Early Strategic Plans BUSINESS PROCESS Business Shutdown & Controlled Start Define scope and sequencing of core system functions Do we implement everything in one “big bang”, or can we implement “chunks” of functionality over time? Determine the level of risk that can be managed How can we implement a new GL and close the books for the prior year at the same time? Determine any key obstacles for the implementation Do not make any system changes during the yearly convention as significant orders are placed and cannot be impacted Strategic Rollout plan

Strategic Rollout plan Early Strategic Plans TECHNICAL IMPLEMENTATION Technical Components Determine if there are new hardware/software technologies When we purchased FSCM, there were additional technical components required to connect the software (XI proved to be a technical challenge before, during, and after cutover Determine technical direction as a result of the rollout plan Once the rollout strategy was set, the technical team made design decisions based on the roll-out (versions of BAPI programs included code changes for specific releases). Strategic Rollout plan Technical Strategy

Early Strategic Plans ORGANIZATIONAL TRANSITION Change Management Determine if there are significant impacts on the organization that need special consideration Do we need a central team to maintain master data as this would lead to new teams and roles for HR to define and recruit to fill Do the new process changes eliminate current roles or require new roles to be defined? Training Determine how end users will receive training and what communications are necessary How many people will need to be trained? Do we use external training resources or do we use a train-the-trainer approach? Do we use classroom training or web training or a combination? Org Impact Assessment Training Strategy

Agenda Introduction Overview of Ace Cutover Methodology for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

Detailed Cutover Plans Early Strategic Plans Detailed Cutover Plans Controlled Hypercare Cutover Strategic Rollout plan Certification of testing Conversion Validations Metric Reporting Bus & Tech Validations Technical Strategy Detailed Cutover Plan Execute Cutover Plan Defect & Issue Mgmt Org Impact Assessment Org Change Mgmt Issue Management Transition to Operations Training Strategy Training Internal Controls Disciplined Project Management

Detailed Cutover Plans Detailed planning activities occur many weeks before the actual implementation. You will need to dedicate project team member(s) to managing the detailed cutover plans and activities up to 8 weeks before the implementation (depending on the size of the project). Non-project team members also participate in the cutover activities.

Detailed Cutover Plans BUSINESS PROCESS Certification of New Business Process Final testing activities to certify the systems (QA Certification) Difficult business process transitions may require a test run (“Mock test”) Business Shutdown & Controlled Start Define business cutover steps/impacts Certification of Testing Detailed Cutover Plan

Detailed Cutover Plans TECHNICAL IMPLEMENTATION Technical Components Potential new hardware/software changes may require a test run to ensure system stability (“performance test”) Technical installations may require a test run (“Mock test”) Time Installs to New Business Process Define technical cutover steps/impacts Align the technical installs to the best timelines surrounding the defined business impacts Contingency Plans Define risks that could impact the implementation. Build contingency plans for those risks identified as critical. Define back-out strategies and plans User Access and IT Controls Define and set up security requirements Certification of Testing Detailed Cutover Plan

Detailed Cutover Plans ORGANIZATIONAL TRANSITION Cutover Management Discuss any special cutover security requirements First , draft high-level implementation plans for review. Then build the detailed steps into a project plan (at minute increments if necessary) Communicate cutover plans to all people impacted Logistics planning for project team support activities necessary during the cutover and hypercare time periods (issue mgmt and escalations, coverage schedules, etc.) Change Management Training for support teams for new support activities Training End User Training materials, final training schedules, logistics for training classes, end user communications End User Training and communications Detailed Cutover Plan Org Change Management Training

Detailed Cutover Plans Example – High level plan

Detailed Cutover Plans Example – Detailed plan

Agenda Introduction Overview of Ace Cutover Methodology for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

Cutover Cutover Internal Controls Disciplined Project Management Early Strategic Plans Detailed Cutover Plans Controlled Hypercare Cutover Strategic Rollout plan Certification of testing Conversion Validations Metric Reporting Bus & Tech Validations Technical Strategy Detailed Cutover Plan Execute Cutover Plan Defect & Issue Mgmt Org Impact Assessment Org Change Mgmt Issue Management Transition to Operations Training Strategy Training Internal Controls Disciplined Project Management

Cutover The actual implementation “cutover” time period could take one day, one week, or several weeks. There can be one or many cutover time periods for a project. Your dedicated cutover leads will manage/control this process. Non-project team members also participate in the cutover activities. STICK TO THE PLAN No “Cowboying”

Conversion Validations Cutover BUSINESS PROCESS Business Shutdown & Controlled Start Execute steps in the cutover plan Validate system conversions Document any one-time cutover or conversion activities Execute Cutover Plan Conversion Validations

Conversion Validation Cutover TECHNICAL IMPLEMENTATION Technical Components Execute steps in the cutover plan Validate and double-check all installs (last run of old systems & first run of new systems) Contingency Plans Execute back-out plans or contingency plans (if needed) User Access and IT Controls Use cutover security Implement user access to the system Document any one-time cutover or conversion activities Time Installs to New Business Process Work with business staff in War Room to validate systems as they are activated or conversions are completed Execute Cutover Plan Conversion Validation

Cutover ORGANIZATIONAL TRANSITION Cutover Management Change Management Validate steps in the cutover plan are executed Co-locate the project team to a central location to expedite reaction time to issues (WAR ROOM) Monitor issues and risks Follow issue escalation processes in place with the support teams Status reporting and communications to all impacted staff Change Management Provide assistance to end users as systems are activated and users are given access Execute Cutover Plan Issue Management

Agenda Introduction Overview of Ace Cutover Methodology for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

Controlled Hypercare Controlled Hypercare Internal Controls Early Strategic Plans Detailed Cutover Plans Controlled Hypercare Cutover Strategic Rollout plan Certification of testing Conversion Validations Metric Reporting Bus & Tech Validations Technical Strategy Detailed Cutover Plan Execute Cutover Plan Defect & Issue Mgmt Org Impact Assessment Org Change Mgmt Issue Management Transition to Operations Training Strategy Training Internal Controls Disciplined Project Management

Controlled Hypercare Once systems become active, system defects can cause chaos quickly if there is no clear escalation path You must have a formal escalation path for everyone impacted by the changes (project team and support teams, end users, external touch points, etc.) There must be formal structures in place to make decisions in a timely manner Hypercare should last for a pre-determined amount of time with resources co-located in a central place

Controlled Hypercare BUSINESS PROCESS Controlled Start Continue to execute steps in the cutover plan to monitor systems are functioning as expected Monitor business metrics to ensure issues are found and resolved quickly Follow issue escalation processes in place with the support teams Work with technical teams to rank and prioritize business critical defects to be fixed Bus & Tech Validations Metric Reporting Defect & Issue Mgmt

Controlled Hypercare Example - Daily Status Activities in Hypercare All meetings to be 30 minutes in duration !! Time Type Purpose Responsible/Attendees 8:00am Report Operations review (i.e. jobs not run, etc) IT Ops Lead, IT SE Lead 9:00am Meeting Emergency incident review Close incidents and changes from prior day Call out significant incidents remaining open Cutover Lead, IT Ops Lead and Prod Services Lead, IT Director, IT SE Lead 9:30am Key Incident/Defect Review - Review key incidents/defects and prioritize Cutover Lead, IT SE Lead, Business Leads 3:00pm Business metrics complete - Send business metrics for the day to cutover leads Metrics report lead, Metric owners 4:30pm Business Impact review Review Business Metric report (including incident/defect metrics) Review PMO escalation list Cutover Lead, IT Director, Business Owners, PMO 8:00pm

Controlled Hypercare Example - Business Metrics Reporting for Order to Cash cycle

Controlled Hypercare Example - Metric results for Order to Cash cycle

Controlled Hypercare TECHNICAL IMPLEMENTATION Technical Components Continue to execute steps in the cutover plan to monitor systems are functioning as expected Follow issue escalation processes in place with the support teams Manage defects and implement fixes in a controlled manner (follow release management processes to ensure controls are followed) Bus & Tech Validations Defect & Issue Mgmt

Transition to Operations Controlled Hypercare ORGANIZATIONAL TRANSITION Cutover Management Continue to validate steps in the cutover plan are being executed to monitor systems are functioning as expected Co-locate the project team to a central location to expedite reaction time to issues (WAR ROOM) Monitor issues and risks Follow issue escalation processes in place with the support teams Status reporting and communications to all impacted staff Change Management Follow up with End Users, provide sandboxes for ongoing training End User Training and communications Bus & Tech Validations Transition to Operations

Agenda Introduction Overview of Ace Cutover Methodology for Projects Early Strategic Plans Detailed Cutover Plans Cutover Controlled Hypercare Key Take Aways

ACE’S CUTOVER FRAMEWORK Key Take Aways Using a disciplined project management method to implement SAP systems should lead to a boring Go Live and Hypercare Early strategic plans Detailed cutover plans Cutover time period(s) Controlled Hypercare BUSINESS PROCESS ACE’S CUTOVER FRAMEWORK Certification of new Business Process Business Shutdown Controlled Start TECHNICAL IMPLEMENTATION Technical Components Time Installs to new Business Process Contingency plans User Access and IT Controls ORGANIZATIONAL TRANSITION Training Change Management Cutover Management

Key Take Aways These methods can be applied to any project Cutover management is a project within itself War room tactics are critical to success during the implementation Stick to the Plan No Cowboys A controlled business start is critical to success immediately after implementation A controlled process to manage defects and business issues is critical to success for the months and years after implementation

Questions?

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