Introduction
Vandelay Industries, Inc. (Vandelay) is a company specializing in the production of equipment used in the industrial processing of rubber and latex products. As the company approached the end of the 20th century, it faced increasing competition and began to lag due to outdated operations and management technology. To address this issue, Vandelay’s executives launched a project to implement a new Enterprise Resource Planning (ERP) system. In this context, the current case study focuses on the project’s issues and provides potential solutions for them.
Project Management Issues
At its current state, the project faces four significant issues: centralization versus autonomy, resistance to change, software-specific challenges, and resource constraints. The latter issue is connected to the project’s timeline and budget. According to McAfee (1996), Vandelay intended to complete the transition to a new system within 18 months, utilizing a $20 million budget. However, this estimate is quite optimistic, to put it mildly.
Firstly, Vandelay is a global company, with its manufacturing sites and order entry locations spread across North America, Europe, and Asia (McAfee, 1996). Although geographical separation itself does not pose a serious issue, the established work routines and processes do. Vandelay’s branches were considerably accustomed to substantial autonomy in their operations. This led to the adoption of various hardware and software solutions, as well as numerous process management practices.
Given that the new system’s installation is the longest process within the project framework, it is safe to assume that it can take at least 50% of the total project length, which is 9 months. As McAfee (1996) states, Vandelay currently employs up to 20,000 people, of whom approximately 14,000 will require training on the new system’s operation (McAfee, 1996). In this context, the proposed project team, comprising a total of 50 people, has only 22 consultants who are capable of providing necessary staff training (McAfee, 1996).
Out of 14,000 Vandelay employees, the range of required training spans from a single day to two weeks, depending on the expected level of system use (McAfee, 1996). Assuming a rough estimate of 7,000 people each in need of a two-week training, it is possible to distribute them among 22 educators in a 1:320 ratio. Thus, if every consultant takes 32 people per group, there will be a need to educate 10 groups for 14 working days, or three normal weeks. This means 30 weeks dedicated solely to staff training, which approximately constitutes 7,5 months.
However, consultants are also needed for other activities, specifically to solve implementation-specific issues. McAfee (1996) notes that for the first half of the project, 20% of the project team will be devoted to implementation and 80% for the second half, respectively. This implies that the training process will be 20% slower; moreover, it cannot begin before the system’s specifics are tailored to Vandelay’s operations.
This prolongs the necessary training to nine months, leaving no free time within the project framework. Since it would be overly optimistic to assume perfect project development, there is a need to either extend the time limit or the budget to ease the burden on the human resources involved in the project. That is, increasing either of these values by at least 25%—adding four months to the project length or $5 million to the project budget—will address the issue.
Potential Solutions
The first three project issues are extensively interconnected with the process of organizational change. In short, Vandelay’s staff, which is used to high degrees of autonomy, will likely resist, if not directly oppose, the changes coming with the new system if they realize they might lose their autonomy. However, alignment between organizational and individual goals is necessary for successful organizational change.
Consequently, for Kramer to promote change and avoid resistance to it as much as possible, she should continue with the decision to include representatives from different Vandelay’s branches in the project team. By doing so, Vandelay will convey a message to all of its employees that the company is willing to consider their opinions on the matter and will not forcefully and uncompromisingly deploy the system. This would ease the tension surrounding a lack of autonomy, allowing for greater centralization without any serious consequences.
Centralization in this matter is significant due to the novelty of the system and the company’s future reliance on it. In this context, the opinions of external advisors are valued more than the established rules and norms within the company. In this context, meddling with the system’s source code to better fit Vandelay can only yield the risk of losing expert support (McAfee, 1996).
However, it does not necessarily imply that these experts should dictate the final decisions. For instance, interfacing the system with a custom solution can unnecessarily prolong the project and overuse an already thin budget. Instead, external expertise should be used as a reference point from which the company can analyze its operational peculiarities and business processes, and potentially adjust them to meet the needs of a system.
Conclusion
Overall, Vandelay is currently at its historical developmental stage and must address the mentioned project issues with high attentiveness and thoroughness. This means that setting overly aggressive time and budget limits will ultimately harm the company, suggesting the need to ease these limitations. Moreover, considering the opinions of employees and valuing their views on the final system version can help reduce resistance to change, ensuring a smoother system implementation.
Reference
McAfee, A. (1996). Vandelay Industries, Inc., Harvard Business School Publishing.