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by Khalil Cotran, JT International

J
T INTERNATIONAL (JTI), IS part of the
and Ursula Buchmeiser, Jean-Luc Seguin and Bill world’s third largest manufacturer of tobacco
Pelster, Deloitte products, Japan Tobacco. JTI is five years old and
culturally diverse, with almost 12,000 employees
from 90 different nationalities in 40 locations
worldwide. Employees speak over 20 languages and
work across more than a dozen time zones.
Over the past four years, JTI has invested over
US$200 million – its largest ever project investment –
in a major Enterprise Resource Planning (ERP – see
sidebox, right) project. At its foundation were new
global processes built on one of the most complex and
geographically widespread SAP implementations to
date, taking in 13 factories, 50 markets and almost
5,000 end-users. Allied to that were huge efforts in
process redesign and change management.
The project was rolled out to an aggressive timeline
worldwide, in three geographical waves. Each went live
smoothly and the project was completed on time and
under budget. Senior resources and considerable effort

HR’s role in
were devoted to change management, training and
communication. The change management effort is the
focus of this article and we will attempt to share some
of our lessons learned about what HR can contribute.

implementing
Unifying disparate companies
JTI began life in 1999 when Japan Tobacco acquired
the international operations of the American tobacco
giant, RJ Reynolds. At that point JTI was a group of
disparate, inward-focused local companies. Its markets

JTI’s global
and factories, spread over 100 legal entities, had many
different IT systems and individual business practices.
The new company’s business strategy was to position
for growth by bringing all 40 locations together with
common systems and processes, universal business

ERP system
practices and shared service centers. The global ERP
system was to be a fundamental part of JTI’s
transformation into a modern multinational.

HR’s role as global change management team

How HR’s focus on change management
was key to a successful ERP project
In 1999, JT International was comprised of over 100
disparate companies. A global ERP system was vital to
transform the company into a modern multinational.
Find out how HR and the change management team
focused on the “people” side of change to ensure the
four-year project came in on time and on budget.
HR became involved in the ERP project in the role of
global change management team when the pilot phase
– held in Turkey – was coming to an end. The pilot
began in January 2002 and successfully went live 10
months later. A global rollout was then planned in
three waves, with an aggressive timetable:
Wave Timeline Region
1 October 13, 2003 Europe (including Geneva HQ) and Russia
2 June 13, 2004 Eastern Europe, Africa, the Middle East, Greece and Asia
3 November 13, 2004 The Americas
The change management team had five key areas of
focus:
1. Managing the transition from old to new ways of
working.
2. Defining the global organization’s new structure.
3. Caring for the ERP project teams.

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4. Helping people in the business embrace the changes. KE

5. SAP knowledge transfer and training end-users on
! WHAT IS AN ERP?
the new global system. Enterprise resource planning is a term derived from material resource
planning. ERP systems typically handle the manufacturing, logistics,
The system configuration, logistics and project distribution, inventory, shipping, invoicing and accounting for a company. ERP
management were within others’ remit. A separate software can aid in the control of many business activities like sales, delivery,
team was also established to manage communications. billing, production, inventory management and human resources management.
ERPs are often called “back-office systems” indicating that customers and
1. Managing the change to a new way of working the general public are not directly involved. ERPs are cross-functional and
The first challenge was to define a structured approach enterprise wide. All functional departments that are involved in operations or
and governance model to help us manage change on an production are integrated in one system. In addition to manufacturing,
extremely large and complex project. More than 700 warehousing and shipping, this would include accounting, HR, marketing and
people would work in the project teams over four strategic management.
years, peaking at 300 at any one time. Each wave was
Figure 1. JTI’s change governance model
to roll out from a regional hub, a campus-style base for
the regional teams. These teams were made up of
people from the relevant factories and markets. The
business was already stretched, but it was essential that
the markets provide enough members to ensure the
local business environment was well understood.
The global change management team was built on a
concept of key “stewards,” with clearly defined
responsibilities. In each wave, a transformation steward
led the change management activity, working alongside
a training steward and a communications steward (see
Figure 1, right). The training steward was supported by
a number of trainers. The stewards brought not only
business expertise but also valuable local knowledge
and contacts, and each was a person of standing in the
regional markets.
Each transformation and training steward was brought
on board during an initial two-day workshop. These precisely the areas of change. The starting point for this
workshops clearly defined the roles and responsibilities was a master list of new processes, drawn up by process
of all involved, the channels for communication within experts working with functional experts. We were able
the change management structure, knowledge transfer to consolidate the enormous amount of information
and the feedback mechanism. The structure seen here and extract 20 key change areas including the
was effective and remained the same for all three waves. introduction of a Professional Purchasing Organization
The personnel in the global change management team (PPO); introduction of a global chart of accounts; and
remained in place throughout the project. Their role was a new way of processing sales and delivery.
to define the scope of the change management, set out a The next step was to enable the markets and factories
clear methodology, provide the tools to be used and to understand and prepare for these changes. We
guide the regional teams. developed a spreadsheet-based impact assessment tool
which allowed each location to analyze how the changes
2. Defining the global organization’s new structure would affect their operations and organization. Each
Early in the project, the business raised the question of market/factory/function was asked to review the key t
what the changes would be. It was our role to define changes and determine whether they would apply to

Khalil Cotran Ursula Buchmeiser Jean-Luc Seguin Bill Pelster

joined JTI’s HR has 10 years’ is a senior manager is a partner in
function in 1992. consulting experience, in the human capital Deloitte’s human
He is currently focusing on change practice of Deloitte capital practice,
based in Geneva, Switzerland and management, communication and Belgium, where he leads the specializing in HR business transformation,
leads the HR function for WorldWide strategic HR support for business change leadership and learning learning systems and ERP technology
Duty Free. transformation, cost-reduction and service line. adoption. He has over 12 years’ experience
process-improvement initiatives. leading technology adoption projects.

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19096 SHRR run 30/6/05 3:02 pm Page 26
Figure 2. The “performance dip” at JTI
t their local entity. If yes, then they needed to determine
the impact of these changes in terms of operations and
organization (structure, roles and responsibilities, span
of control, decision making, reporting lines). Through
the template teams were required to document changes
in terms of:
• How the targeted activities are currently processed.
• How they will be processed in future, what are the
expected benefits, what actions are required to
ensure the implementation of the new way of
working, by when and who is in charge.
Mapping SAP roles to existing jobs
At the same time, we identified 195 new global SAP
roles. The challenge was to fit these roles to jobs in the
business and then to people. Our goal was to ensure
that JTI would have the right people in the right place
at the right time.
We embarked on intensive workshops to map the
SAP roles to jobs in the local organization. The
workshops brought together functional and business
experts, HR, process owners and system security
experts in order to ensure the new roles were correctly
mapped to jobs in the business. These workshops were
held during each wave and lasted between two and
three weeks. They were a major communication event
and an important step in bringing the project to the
business. As a later step, local HR, working with the
transformation stewards, matched employees to jobs.
3. Caring for the project teams
The regional teams needed to be highly effective. They
were given support in two areas: the information and the
skills to act in the right way; and the personal and
emotional support to work effectively. It was vital to meet
their personal needs in terms of employment conditions,
motivation, career management and the emotional
disruption of being away from home and family.
Personal and career needs
People from different countries assigned to the project
had differing employment conditions. Guidelines were
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drawn up to ensure each person’s financial situation
was protected, with their net income remaining the
same as if they were working in their home location.
Career management was also an issue. What jobs
would people go back to after the project was
completed? Regional team members were assigned for,
on average, eight months. Many, but not all, had jobs
to go back to. This was not true of most of the global
team members, who served around two-and-a-half years
on the project and had matured professionally. The
challenge was finding them new roles. Once the project
closed, all team members, bar those who wished to
further their careers elsewhere, were re-integrated to the
business. The lessons we learned about re-integrating
people are that the process needs to start early, and that
it can only be done with strong executive management
support and a proactive HR effort.
Emotional needs and work-life balance
Project team members worked from a regional hub, of
which there were two for each wave. Most of them
were away from their home and family for long
periods, putting them under great social and emotional
pressure. The project work – with its long hours and
complexity – was often more demanding than the jobs
they had come from. And they were isolated from
former colleagues and home locations.
We were able to care for these needs to some degree.
Anyone assigned to a hub away from his/her home
country was, on a “three-weeks-on, one-week-off ”
schedule, allowed to invite his/her partner to join them
during the three weeks on, rather than the project team
member returning home for a visit.
4. Helping people in the business embrace change
As well as caring for the project teams, we needed to
ensure that people in the business were open to change,
a role we shared with the communication team. Our
belief was that people don’t fear change, but
uncertainty. Communication was paramount in
helping employees deal with the emotional and
organizational change. JTI put such importance on
communication that it was embodied in the
governance model, as detailed in Figure 1. Thanks to
the huge and complex communication effort, the
project gained a very strong identity and expectations
were well managed.
As a further step, we drew up a set of guiding
principles for local HR functions to assist them in
helping affected employees to deal with change. It was
important to give employees emotional support,
allowing them to “mourn” the passing of the old ways.
Principles included:
• Managing legal and contractual issues (e.g., through
a Works Council).
• Timely communication of the project impact (e.g.,
department or position changes) to staff.
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• When possible, timely communication of new
opportunities to impacted staff.
• Provide outsourcing support when needed.
5. Knowledge transfer and training for end-users
Training was provided for almost 5,000 new end-users.
We used the “Train the Trainer” concept, which is well
known and proved effective for us at JTI. There were
200 trainers, selected for their business expertise. Each
underwent a month-long program including soft skills
and SAP training.
Using this approach, JTI knowledge was kept in the
company and continuous support was available to end-
users. Trainers performed another vital role in adapting
the training materials to local needs. SAP knowledge
was passed on through informal channels as well as
training courses. The project started out with 80
external consultants, but we planned to transfer
knowledge to JTI via informal coaching. This was
achieved and only 20 consultants remained by Wave 3.
Fine-tuning the new organization
Six months after rollout, every market and factory was
asked to report on its progress to date. We asked them
particularly whether there were any impediments to
implementation, about outstanding activities and for
their comments in general.
We discovered that in Waves 1 and 2 there was a high
degree of adoption of the new system and processes at
this point. We are currently revisiting Wave 3.
This fine-tuning helped identify the need for further
training and process improvement. The final wave rolled
out at 8 a.m. EST on November 13, 2004, but far from
being the end of the ERP story, it was just the beginning.
There are already many initiatives in place to extend the
scope of SAP, improve processes and realize more
benefits. For example, JTI’s ERP Center of Excellence
(CoE) is currently improving processes or adding new
ones in response to business needs. This will be achieved
by aligning to meet customer needs, providing
stewardship and governance, leveraging knowledge, and
acting globally, cross-functionally and seamlessly. The
staff within the CoE are functional experts from the
business as well as former ERP project team members.
Conclusions
The ERP project at JTI was a success and a major
accomplishment. A dip in performance is inevitable
after such a project. At JTI, the dip (see Figure 2,
above left) became less disruptive as the project moved
through its three waves. This was evidenced by the
diminishing number of requests to the global helpdesk
for support. We hope that, in part, this was due to the
improving change management.
The tangible and intangible benefits to date exceed
expectations and the business objectives are being met.
Benefits are being realized in numerous areas, many
Volume 4 Issue 5 July/August 2005
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KE
! JT INTERNATIONAL
JT International (JTI) is an operating division of Japan Tobacco Inc., the world’s
third largest tobacco manufacturer. It handles the international production,
marketing and sales of the group’s cigarette brands. JTI employs 12,000 people
around the world and sells 90 different cigarette brands in over 120 countries.
tangible, others intangible. These benefits have
generated significant cost savings. Some examples
include the introduction of a Professional Purchasing
Organization and effective negotiations, inventory
reduction, reduced days of sales outstanding and major
centralization of support services such as financial
processing and systems support.
A cultural change is also taking place as people grow
in confidence, having successfully overcome the huge
challenges of the ERP transformation. The numerous
initiatives that followed it are beginning to instill a
spirit of learning and a risk-taking culture at JTI. It’s
important to emphasize that this success was due to
many factors: the efforts of everyone involved; the
strong executive support and governance; and the
positioning of the ERP project as vital to JTI’s
transformation into a modern multinational.
Key learnings for the HR professional
What perhaps set our ERP project apart from others is
the senior resources and considerable effort devoted to
change management, training and communication. We
showed that, given the right conditions and support,
HR can take the lead in change management in a
complex, long-term and demanding ERP project.
HR worked as a true business partner, contributing
to the achievement of business objectives by adding
value. We played a large part in defining the new
organization and its roles and managed the change
through governance, methodology and concrete
support to the business. We ensured that almost 5,000
people were trained on the new global system, and
helped facilitate the transfer of SAP knowledge to JTI.
We also learned the value of having dedicated HR
support for those working on a large project. The HR
contact was able to take care of day-to-day and long-
term concerns such as salary, insurance, taxes,
performance measurement and career management
after the project.
Perhaps the most important lesson was that
companies must plan for HR involvement in ERP
projects from the beginning. It’s essential for HR to be
proactive and lead from the front with other senior
management involved. HR has a responsibility to
deliver its part of the transformation process and be
passionate about what it can achieve.
, CONTACT
Khalil Cotran
E-mail: Khalil.Cotran@jt-int.com
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