When global power solutions leader Cummins set out to modernize its distribution unit’s ERP system, the stakes couldn’t have been higher. Previous attempts at modernization had fallen short, leaving the unit running on technology that predated many of its employees.
While the technical hurdles were significant, the real challenge lay in reshaping Cummins’ approach to major technology projects. “There have been numerous attempts to upgrade the ERP system of the distribution business unit, but we’ve never managed to make it stick,” said Mark Smith, who leads value realization for Cummins’ distribution business unit.
The team chose the name ‘Project Quantum’ — fitting for both the leap in technology and the scale of organizational change ahead.
“With this program, there’s so much more focus from the top down on making sure that this is successful,” noted Smith. “We’ve brought in new capabilities that we’ve not used before, like value realization and change management, to just throw everything at it and make sure that it’s successful.”
The Imperative for Change
Cummins’ distribution unit faced a unique technological challenge within the organization. While manufacturing, power generation, engine business, and components divisions operated on modern Oracle systems, distribution had grown through acquisitions across different countries, each bringing its own technological complexities.
“Up until now, we’re still running our International distribution business primarily on two systems called MoveX and GOMS, which are based on source code that Cummins purchased before I was born,” said Smith. “It’s incredibly dated. No one can say we don’t get the most out of our investments.”
The systems ran on Avalon, a source code from the 1980s that gave users nothing more than green text on black screens. As Cummins grew worldwide, these outdated systems became a bigger problem – they struggled to connect with modern software, leaving different parts of the business unable to share data effectively.
A previous implementation attempt in Africa revealed the pitfalls of their initial approach. “We didn’t fully understand the link between value delivery and adopting the standard functionality,” said Smith, describing “a mindset of thinking we were all unique and special and important.”
"We tried to heavily tailor the system to align with what everyone was currently doing, and it didn’t work.”
Excessive customization followed: “We tried to heavily tailor the system to align with what everyone was currently doing, and it didn’t work. We ended up with a system that was so heavily modified that you’d probably never be able to upgrade it properly.”
These early struggles led to a complete rethink. Rather than forcing SAP to work their way, they learned from SAP’s proven industry practices and adjusted their operations accordingly.
“What we’re doing now is looking at SAP and saying this system has been developed for industry best practice, and therefore, what we need to be doing is trying to align the way we work to how the system and the industry work,” explained Smith. By adapting processes to leverage standard capabilities, the team aimed to break their cycle of implementation failures.
Selecting SAP S/4HANA marked a decisive step forward, promising modern capabilities and integrated functionality. Yet success would depend less on the technology and more on Cummins’ ability to prove, measure, and realize concrete business value throughout the transformation.
To build momentum, they started small – piloting the system in two countries to demonstrate early wins before expanding further.
Overcoming Skepticism Through Value Realization
Senior leadership required more than promises of improved efficiency to approve another large-scale ERP implementation. “We’re not approving this unless you can prove to us that you know how to deliver value,” said Smith while discussing initial hesitations. “That’s what started the ball rolling.”
Past business cases had eroded confidence by relying too heavily on speculative projections. “Our original business cases had too many benefits which were unprovable, so proving that the project had been a success essentially became an act of faith,” explained Smith.
Meeting this challenge, Cummins developed a comprehensive three-stage value realization process. Stage one involved traditional top-down assessment using industry benchmarks, which were necessary for initial approval but no longer sufficient on their own. In stage two, initiative planning, the team worked alongside their system integration partner to examine the “art of the possible” in SAP’s capabilities while simultaneously gathering pain points from business users.
Stage three focused on operationalization, the critical step of embedding value delivery into the project’s DNA. The team meticulously mapped system capabilities, required process changes, and affected business areas against their original value assumptions, a detailed validation process that helped transition delivery ownership from the project team to the business units that would ultimately be responsible for realizing value.
Recognizing that financial benefits typically lag 12-18 months behind implementation, the team developed a sophisticated approach to measuring progress.
“We know that we’re not going to deliver financial value from our initial pilots,” said Smith. “But if we can put it in place and find operational leading indicators, like small process KPI metrics, that we can prove to people are improving, then that gives them the confidence to say, ‘Okay, yep, do your next rollout.’”
Their measurement framework accounts for multiple time horizons: immediate post-go-live hypercare, a subsequent six-month period of learning and process embedding, and finally, the realization of measurable financial benefits. “The assumption, obviously, is that if you can improve all of your leading KPIs, then the lagging KPIs should follow. If the lagging KPIs don’t move as expected, you should have sufficient data to pinpoint the reasons why and act accordingly,” noted Smith. This gave leadership a clear view of what to expect and when — from early signs of improvement to actual financial returns.
Collaboration and Change Management
Early implementations at Cummins suffered from a divide between IT and business functions. Technical solutions arrived without sufficient consideration for business adoption or value creation.
“In the past, the project team would create a project, hand it over to the business, and then disband after hypercare. If business results didn’t improve there was very little ownership, as the business could just point fingers at a project which no longer existed,” said Smith. “Now we’re saying that whilst the project team is responsible for the design, they’re not responsible for delivering value — that has to come from the business.”
Establishing a value realization office proved crucial in bridging this gap, though the role itself is still in flux. “We’re figuring out how we want the role to work and how we want to scale this type of value focus across the rest of our organization,” noted Smith.
Building these new capabilities demanded extensive collaboration. The team engaged regularly with SAP experts and worked closely with Accenture during the program’s first three months to understand industry best practices. “Internally within Cummins, we have very little working knowledge of SAP,” said Smith. “We knew we had to bring in someone else.”
Through ongoing correspondence with SAP specialists and regular knowledge-sharing sessions, the team gradually molded their approach. “We’ve been having regular correspondence back and forth, sharing ideas and running things by each other,” said Smith. “Bringing all of that together and experimenting with it has enabled us to slowly mold this process that we’re now doing.”
The team learned some crucial lessons along the way. Above all, they discovered you can’t create value without bringing people along for the ride. “There is a very strong link between value realization and change management. The two really work hand in hand to figure out what needs to change in order to unlock value, and then working with the change management group to ensure that drive and end state is embedded in what they’re telling people about what is going to happen,” explained Smith.
“You have to change, and you have to know where to change and how to change.”
“You have to change, and you have to know where to change and how to change. That’s what we’ve been helping to educate people on,” said Smith.
Value Realization Beyond ERP
While senior leadership advocates for broader adoption of value-based IT decision-making, the practical application requires flexibility. “Obviously, the scale of the work that we’re doing for this project is not going to be the same as what you do for a quick four or five months IT implementation,” noted Smith. Now, they’re figuring out how to adapt these lessons for projects, both large and small.
By choosing SAP S/4HANA Cloud Private Edition and connecting it with specialized business apps, the distribution unit is building a foundation for long-term growth. Already proven successful elsewhere in Cummins, tools like SAP Ariba for procurement and HighRadius for financial processes are just the beginning.
“It unlocks that possibility of integrating much more heavily with more advanced edge systems that we haven’t been able to use in the past,” said Smith. With approximately 30 edge applications targeted for integration, the team is thinking big about future possibilities.
Senior leadership’s perspective has evolved dramatically since the project’s inception. “All of our senior leaders who have seen what we’ve been doing in action are eager to try to roll that out in other areas of the business,” said Smith.
The challenge now lies in adapting these methods for different scales of implementation. “How do we take what we’ve done here and apply it to processes and transformation projects of all levels?” asked Smith. “We’re still working on that scalability.”
What began as a software upgrade turned into a complete rethinking of how to make technology investments pay off. By combining robust technical solutions with careful attention to adoption and value creation, Cummins has established a new model for technology investment.
Their experience proves that successful transformation requires more than selecting the right technology — it demands a comprehensive approach to value realization, change management, and business engagement.
The impact reaches far beyond this single project. Leadership’s initial skepticism pushed the team to develop better ways to evaluate and track success. Now, these methods are reshaping how Cummins approaches all its technology investments.
Cummins’ experience has reshaped its approach to technology investments. “You can’t just buy and implement a system and expect everything to be better,” noted Smith. “Value isn’t just going to be something that appears.”