MDM is the cornerstone of the ERP project at Lemminkäinen
The construction group Lemminkäinen started making a major change in organisational structure in 2009 with the objective of uniting all group companies, previously organised by business segments, under one roof operating according to the ‘one company’ principle. The process has taken years and has also required big changes to the group’s overall IT framework. One of the key challenges was to build a well-designed master data MDM solution that lays the foundation for a major ERP project.
Prior to the organisation’s restructuring, Lemminkäinen had independently operating group companies with their own systems, registers and reporting. There was plenty of duplicate data, often incomparable and inconsistent throughout the group.
“We could have customer data in 70 different systems, which were not harmonised at all. In such a situation it is pretty challenging to work effectively as a group, bring a uniform approach to the customer and create reliable BI reports,” tells Tapio Vähämäki, IT director at Lemminkäinen.
Lemminkäinen started making a major change in the organisational structure, which unified the group. Companies previously organised according to business segments were organised into country subsidiaries, decentralised support services were centralised and business segment based systems were revamped into a model that served the entire group.
MDM Lays the Foundation for the ERP Project
In support of the restructuring a major ERP project was initiated that will continue at least until 2016. From the beginning one of the cornerstones of the project was to build a high-quality MDM solution.
In the first phase MDM was built to encompass accounting as well as customer and supplier control systems. This part was finished in April 2013 and the next step is working with products and the structures behind them that are affected.
“The project is larger than we originally planned. During the project it became clear that in addition to a master data system we needed a transaction interpreter, which can transform information between the systems. It helps our activities through the transition period,” tells Sami Immonen, Sourcing Manager ICT at Lemminkäinen, who also worked as project manager for the implementation of MDM.
“Prior to the development work, duplicates and disharmony in data made working inefficient. Order, delivery, billing and reporting required substantial revising as well as manual work, which could have been automated with high quality master data.”
“With master data now at the required standard, we don’t need to create the same data over and over again. Also, it is available in the right format all of the time. MDM requires a firm grasp on resource planning, which helps us identify best practices and copy them throughout the group,” says Vähämäki.
What Has Changed?
The first part of the new MDM solution has been rolled out to all business areas. Now homogenous master data is copied from the MDM star, located at the centre of the IT structure, to different parts of the organisation. After passing the qualitative approval process data has integrity and reliability, and harmonised data can be used to create accurate BI reports.
“A centralised process is more streamlined and efficient. Time is saved when the same information is not produced over and over again. All data is verified and used to create one, unified version, thus ensuring that the information entered in systems is correct,” tells Vähämäki.
The executive management and billing department have benefited the most from the centralised accounting, customer and supplier-control system data. The management has more accurate reports, which help insightful decision-making and unit planning. Prior to the MDM solution the same customer could have tens of different expressions in different systems under Lemminkäinen, and the customer information created using this data was open for interpretation and poorly comparable.
“We will now look united in the eyes of the customers. The different billing systems, for example, can be used to produce invoices which are composed with correctly entered master data including unified payment terms for the same customer,” says Vähämäki.
“When you don’t control master data, the worst scenario is that the customer can have due invoices to one unit and the other units are not aware of the situation. With MDM this cannot occur, since data migrating between the units is homogeneous,” explains Vähämäki.
The high integration level of MDM has been a surprise. The centralised process is slower and reduces flexibility so you cannot create individual versions of master data anymore.
“Previously it was possible that an individual localised employee could create duplicate customer data and even give different payment terms than had originally been agreed upon. Now the shortcuts are closed and all master data must be taken from the MDM solution.”