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Case Study


Allison Transmission Shifts Product Development into High Gear

by Dave Hannon | insiderPROFILES

October 1, 2011

When President Barack Obama visited an Allison Transmission plant recently, he told the company that its work to design more fuel efficient vehicles was "really important” to the US economy. One of Allison Transmission's keys to success is its effective use of SAP Product Lifecycle Management (SAP PLM), which has streamlined the product development process and allowed Allison to increase the number of new products it releases each year.


When President Barack Obama visited one of Allison Transmission’s Speedway, Indiana, manufacturing facilities in early May 2011, he spoke to a captivated audience of approximately 900 state and local officials, business executives, managers, salaried employees, and manufacturing workers. During his speech, the President expressed his admiration of the advances Allison has made over the past century, transforming vehicles such as military tanks, transit buses, and commercial trucks by equipping them with the state-of-the-art products that Allison designs, develops, and manufactures.

President Obama told the audience, “What you’re doing here at Allison Transmission is really important.” Today, there are more than 4,500 buses using Allison hybrid technology all over the world — buses that have already saved an estimated 19.9 million gallons of diesel fuel. He went on to say, “Pretty soon, you’ll be expanding this technology to trucks as well. And that means we’ll have even more vehicles using even less oil.” It was a particularly proud moment for Allison’s product design team, which has been increasing its focus on new product development over the past several years.

For over 60 years, Allison Transmission concentrated on producing premium fully automatic commercial transmissions, which were known for offering customers value through their quality, reliability, and durability. At the turn of the 21st century, it had been over 10 years since Allison designed an entirely new product from scratch. For the most part, the company enjoyed much success by utilizing a business model based on improving its existing product lines. However, in 2007, General Motors sold Allison Transmission to The Carlyle Group and Onex Corporation — a sale that put the company in a position to chart its own destiny as an independent organization. It was at this time that the company’s board of directors — led by its Chairman Lawrence E. Dewey — made the decision to place a larger emphasis on new product development, facilitating the move to focus on newer technologies such as commercial hybrid-propulsion systems.

To move quickly in a very competitive business climate, Allison’s product development teams had their work cut out for them. However, by working together, being flexible and open to new ideas, Allison Transmission now has more new products under development today than at any time in its history. And with a new SAP Product Lifecycle Management (SAP PLM) system in place, its product development processes continue to be streamlined.

Kicking the Tires

Soon after becoming a stand-alone company, Allison executives initiated a full overhaul of the company’s product development processes and business systems, as part of a broader transformation called the FALCON program. The analyses sought to clearly identify Allison’s key business priorities and determine what IT resources the company would need to achieve its new goals.Fourteen different teams reviewed various parts of the company, mapped processes, and entified stakeholders and pain points; then, they reviewed the systems of record across the company. These teams made more than 40 different IT recommendations.


“That’s when the issue of integration became very apparent,” says Scott Kluemper, Executive Director of the PLM implementation. “We had separate systems for executing the transactions across the business, and we wanted a system where data could flow more easily through it. If we could improve the speed of product development, we could improve the cost of development and also improve our quality.”

After thoroughly reviewing its recommendations,Allison’s IT team determined it could fulfill roughly 60% of them by implementing an integrated PLM system. “We evaluated the complexity, cost, and total cost of ownership,” says Marwan Zakaria, Senior Project Manager at Allison. “And our suggestion was to consolidate the overall product development data in a single system.”

Although Allison has been an SAP customer since 2001, it still used a number of legacy systems for its product development data, which created a siloed development process. But with an increased emphasis on new product development, the time for an integrated PLM system had arrived. And since the company was running most of its other operations — including its supply chain — on SAP software, moving to SAP PLM seemed to make the most sense.

Selling PLM Internally

From the very beginning, the PLM project team at Allison knew it would have to spend a lot of time convincing its engineering teams that implementing a new PLM system would improve, not disrupt, their current processes. Designers were busy developing the architecture for new hybrid-propulsion systems as well as other new products. And engineers were wondering why they had to switch from the legacy development tools that they were already familiar with — especially since they had already launched a number of their product programs using these tools.

So the project team took an evangelical approach to the early stage of the PLM implementation, starting at the top of the organizational chart. They made presentations to company vice presidents, emphasizing the long-term process benefits of working in a single, integrated PLM environment and how it would help Allison meet its new product goals more quickly than its existing systems could.



“If we could improve the speed of product development, we could improve the cost of development and also improve our quality.”
Scott Kluemper, Executive Director, Allison Transmission  


Allison's Scott Kluemper



For example, Allison’s legacy environment relied on custom interfaces to share data between the multiple systems. In cases where there were no interfaces, individuals had to manually copy data from one system and paste it into another, a process that was both time-consuming and error-prone. Standardizing on a single PLM platform and implementing SAP PLM would improve inefficient processes such as these. In fact, the goal was to modify Allison’s processes to fit the SAP PLM model as closely as possible. Allison wanted to minimize the amount of customization required for the implementation.

“We tried to use standard SAP PLM functionality and challenged business function leaders to explain why out-of-the-box SAP software wouldn’t work for their specific processes,” says Zakaria.

The move to SAP functionality involved considerable business process changes as well as a significant need to manage the change. This level of change management requires constant conversation with the right people, according to Kluemper. “We talk with the managers involved to ensure they understand the change, and then have them explain to their people how it will improve their processes,” he says.

After taking a three-day course in change management, Kluemper says that he discovered the key to navigating the process is getting the stakeholders to understand the “why” as much as the “what” and the “how” of the change.

“Our functional people first latched onto the aspects of finding data more easily and having workflows that ensure they are working on the right tasks at the right time,” says Kluemper. “If they can get behind those benefits, they should have an open mind when you present the broader advantages. It also helps if you have somebody from the community delivering the message in a positive way.”

For Allison, that meant having members of the engineering organization conducting the training and spearheading the evangelizing of the new PLM system and processes.

The Nuts and Bolts of Data Migration

When the SAP PLM implementation was nearly complete, the team also developed a data migration strategy. Product-related data resided in a variety of systems at Allison and the goal was to migrate 100% of that data to SAP PLM.

As Zakaria points out, the legacy environment mostly used drop-down menus, which eases the migration somewhat by minimizing the “free form” values or content in the system. But mapping the legacy attributes to the standard list of SAP attributes still proved challenging.

“We faced a choice — either we add more attributes or try to fit them into the existing attributes in the new system,” says Zakaria. “Our original estimate suggested it would take two days to migrate the data. But as we progressed, it began to look like it might take about two weeks.” To address the issue, Allison brought in more powerful hardware to process the data faster. Then after manipulating the data in a staging area, the team started performing the batch migration into SAP PLM.

The migration plan involved a four-week buildup, starting with a migration of only 5% of the data to test the process before advancing to higher volumes. “We did it in multiple stages until we really mastered it,” explains Zakaria. “We always want to have the correct data, so we migrated everything in the system.”

Allison Transmission

The Road Ahead with PLM

Currently, Allison is busy developing several new products. And while its SAP PLM system just went live in October 2011, the company’s already eager to begin reaping and tracking the benefits. While the combination of IT and process change may make it difficult to link specific improvements to certain changes, Kluemper and Zakaria say the expected benefits of the implementation include:

  • Improved visibility and tracking of the product development process through key performance indicators and dashboards
  • Increased collaboration between the purchasing and engineering departments, including providing purchasing with real-time access to advanced engineering and experimental information
  • Improved data flow through the product development process
  • Shorter product development cycles
  • Reduced IT costs in the long run (fewer systems and custom interfaces to maintain)

The future phases of the SAP PLM implementation, which are in the works, will focus on streamlining the product development processes even further by leveraging more advanced PLM functionality. And the project team will likely act on that sooner rather than later. “There’s never a perfect time for implementing a change of this magnitude,” says Zakaria. “And that’s especially true for a PLM implementation, because it places more resource demand on the organization — the leaders and business process owners. That’s why change management is so crucial.”

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