ERP implementation &Transition strategies

By 138907138944138950138954138956

Agenda

What is an ERP System?Why implement an ERP system?How should ERP systems be

implemented?Implementation strategiesTransition strategies

What is an ERP – Key Characteristics“a business strategy and set of industry-domain-specific applications that build customer and shareholder communities value network system by enabling and optimizing enterprise and inter-enterprise collaborative operational and financial processes”IntegrationPackagesEvolvingBest PracticesSome Assembly Required

Typical architectural components

Why implement an ERP System? To support business goals

◦ Integrated, on-line, secure, self-service processes for business

◦ Eliminate costly mainframe/fragmented technologies

Improved Integration of Systems and Processes Lower Costs Empower Employees Enable Partners, Customers and Suppliers

ERP implementation life cycle

How should we implement ERP systems

Obtain the right mix of people, processes and technology!!

How should we implement ERP Systems? People

◦ Project Structure ◦ Should be aligned to processes

Process◦ Implementation Process (outlined in detail) ◦ Adapt your processes to those of the ERP.

Technology◦ Hardware◦ Software◦ Integrated Systems

Alternative team structuresMethod Description Advantages Disadvantages

Isolated function

Participants from each functional area are responsible for their own implementation and use of the software.

1. Resources of the organization are focused on the implementation2. They have the most knowledge about their business processes and will be very knowledgeable end-users later

1.insufficient communication between functional groups2.workflows that span multiple functional modules may be incorrectly implemented, or may not be implemented

Lightweight The project team consists 1.Functional managers 2.Lead persons3.A lightweight project manager

Improved cross-functional communication through regular project team meetings

Conflicts are common and it takes a long time to resolve issues as several participants have to reach an agreement.

Alternative team structuresMethod Description Advantages Disadvantages*Heavyweight

A senior manager has direct authority and control over the ERP project

Straight forward communication gives a clear sense of direction.

Strategy turns increasingly difficult to use as the size and complexity of the ERP implementation increases.

A-Team This team structure is similar to heavyweight structure1.A senior manager manages the project team. 2.all the functional managers are full time members of the ERP team

The complete authority to make most of the decisions at all levels lies within the team.

As decisions can be made by the core team without the need to communicate with other team members there may be limited buy-in for these decisions

Process1. Definition and Analysis2. Design3. Build4. Transition5. Production

TechnologyTechnology is an enabler, not the driver

(it is there to assist the organisation to achieve business goals)

It is a means to an end, not the end

Implementation strategySeven generally deployed strategies

◦Breakneck◦Star◦Turnkey, Low Risk, and In-House

Not have the luxury of full time human resources to an ERP implementation

◦Budget◦Partner

Implementation strategiesMethod Description Advantages DisadvantagesBreakneck Implement an ERP

solution on a low budget very rapidly

The company has a quick solution if strategy works

A very high risk approach which rarely works

Star Do the right way with a senior manager in charge and dedicated team members

The implementation usually results faster and cheaper

Full time resources are needed

Turnkey Subcontract to ERP system integrators and providers all ERP implementation activities.

1.The implementation is done by experienced people. 2.No internal resources are needed

1.The configured product does not match business needs. 2.Outsiders cannot fully understand the functional specifications

In-house Use only internal resources to implement the ERP system

The strategy generates cost savings coupled with internal ownership

1.An inexperienced team requires a long time for implementation2.this turns out expensive

Implementation strategies(cont.)Method Description Advantages DisadvantagesBudget Focus costs cutting by

limiting the scope of the ERP project and eliminating consultants

There is a perception that this approach is cheaper

A general lack of support from senior management produces lack of interest on the project by the users

Partner Use both internal and external resources. Split the responsibility of the ERP project

Partners complement the strength of the internal team and have partial ownership of the project

The implementation usually takes longer due to conflicts between the supply chain partner

Low risk Commit a high level of resources with low complexity and relax milestones to minimize

High probability of success

Implementation takes a long time

Selection of transition techniqueFour basic transition techniques

◦Big bang entails substantial risk

◦Phased◦Process lines

Usually lack multiple process lines◦Parallel

limited resources for small business.

ERP transition techniquesMethod Description Advantages DisadvantagesBig Bang new system go live at the

same time the legacy system is taken offline

Costs are reduced since no interface programs are required

high failure rates are common

Phased One functional module at a time is transitioned in sequential order

1.Companies feel comfortable implementing one module at a time2.the resources needed at any given time are low

The transition takes a long time.

Parallel Both the legacy and the new ERP systems operate in parallel

Good recovery options are available if any thing goes wrong with the new system

Considerable more resources

Process line

1.in big bang fashion 2.only one process line at a time

The experience gained from doing one process line at the time benefits the next implementation

adds complexity

Database conversion strategyTwo basic data conversion methods

◦Electronic Writing custom programs Process is rapid Verifiable Data is difficult

◦Manual Judgments necessary during the conversion Familiar with the new ERP system and develop a

sense

Risk management strategyThree Risks

◦Small business location◦Realities of small business◦Company’s niche and company’s management

Risk management strategyMinimize internal politics and resistance to

change◦Appointment of a heavyweight project manager◦Adopting a partner implementation strategy to

allow the internal team to focus on strategic tasks

Change management strategyThe project manager, or champion, should

accept and deal with the internal politics and resistance to change rather than go into denial

Effective communications must be a priority

Management should lay out the vision of the company and explain the expected benefits