erp implementation - session-2

7/31/2019 ERP Implementation - Session-2

1/23

ERP IMPLEMENTATION SESSION 2

By

Vishnu Tunuguntla

B.Tech, MBA, PMP, CSSBB,CQA, (Ph.D)


2/23

Major items in the Agenda

Identification of ERP Technologies

Product Evaluation Challenges involved in selection of technology and how to handle

them

Business case Management

Business case preparation & Analysis

Stakeholders involvement in Business case preparation

Challenges in preparing the Business case and benefit quantification andhow to handle them

Review of the business case and articulation of the value indicators andapproval of the business case

Vendor Management


3/23

Identification of ERP Technologies

Discussions with the Subject Matter Experts

Participation in the technology forums to understand thebest practices and Lessons Learned

Interfacing with the Consulting Firms to understand

various options


4/23

Product/Technology Evaluation

Identify High LevelRequirements

DetailRequirements

Map RequirementsWith each Product

Check ifProduct is supporting all

req in this release

SupportedModification

3rd partyFuture releaseNot supported

Allocate Priority detailsfor each requirement

Develop rating forEach product

Evaluate the Ratings Select the Product

Field Visits where theProduct is working


5/23

Challenges involved in selection of technology

Ownership of the selection Process Business or IT

Business often wants to take the lead as they intend to leveragethe tool as a transformation enabler and hence want to see howthe tool can facilitate continuous optimization of businessprocesses, provide abstraction and reuse of business logic, andenable change in near real time

On the other hand, IT wants to ensure that the tool fits into thelarger enterprise architecture, integrates well with the enterprisesystems and meets performance and scalability expectations.

So the solution would be having the right level of participation fromboth sides is the best approach and ensures the tool is well

accepted and adopted over a period of time.

Features crucial for the selection process

Convincing the Business Units about Common Requirements


6/23

Business Case Management

Alignment

Financial Benefits

Non Financial Benefits

Risks

Optimizing Riskand Return

Documentation

Maintenance

Fact Sheet


7/23

Business Case

Financial Benefits:

Business Level:

Increase of Revenues

Increase of Volumes effecting the fixed cost per unit &productivity

Risk Mitigation resulting in lower failure cost Operational Level:

Identify the Current Cycle time and Estimated Cycle time for theTarget Process.

Collect the Cost being incurred in each step (effort)

Estimate the effort that would be incurred at each step in the TargetProcess

Identify the Pain Points in each Process and quantify the impact ofthese items in dollar terms.

Describe how the pain points would be minimized / eliminated in the

Target Process


8/23

Business Case

Non financial Benefits:

Enhancement of the Process functionality

Improved Governance of Processes

Increase in Brand Image

Availability of data/information

Relationships improvement with customers and suppliers

Increase in Quality of services

Increase in Customer satisfaction


9/23

Major Investments/Expenditures

Investments/Expenditures

Technology-related expenditures: hardware, software, installationand configuration costs, start-up and training cost.

Direct Operating and Maintenance Cost

Expenditures related to business process redesign, training and

adoption

Cost of Risk Mitigation and adjustments in the control framework

Time & money lost in the Parallel run


10/23

Alignment Analysis

Alignment With Strategic ObjectivesContribution of IT-related investments to atleast one ofthe strategic objectives

Contribution to the current objectives and priorities of theorganization.

Contribution to the objectives of a parent company or largercontext within which the organization is operating

Contribution to the achievement of a desired future state orbusiness vision


11/23

Alignment Analysis

Enterprise Architecture: The enterprise architecture refersto the way relationships among components of anorganization, including processes, people and technology,work together to create services and/or products.

Alignment With Enterprise Architecture Evaluation of the extent to which investments in IT-enabled

change are moving in the direction of the target architecture.

Comparison of alignment with the Target area for each business unit


12/23

Articulation of Value Indicators

Identification of Critical Business Processes

Articulation of expectations with respect to theseprocesses (Cycle time or defects, interface problems etc)

Quantify the expectation

Define as a Value Indicator and track this during theimplementation and demonstrate as part of benefitrealization this contributing to Business Strategy


13/23

Computation of the Financial Indicators

Conversion of Non financial benefits in to Dollar termsusing suitable assumptions.

Make suitable adjustments to the cash inflows/cashoutflows

Compute Net Present Value/Internal Rate of Return/Payback period


14/23

Risk Management

Major Categories of Risk:

Delivery riskThe risk of not delivering the required capabilitiesAre we doing things the right way ? This identifies the risk of

inconsistency with other current or potential programs and withexisting capabilities

Are we getting them done well? This identifies traditional project risk

- budgets, schedules and meeting required specifications and qualitystandards

Benefits riskThe risk of the expected benefits not beingobtained

Are we doing the right things? This identifies the risk of error or lack

of clarity in the desired business outcomes in a changingenvironment.

Are we getting the benefits? This identifies the risks around thebusiness being realistically able to realize the expected benefits ofthe program.


15/23

Documentation

Create the Business case as per the suggested templateand circulate it for review to all the stakeholders (Refer tothe template given below.)

The Business case is reviewed by the stakeholders andthe review comments are provided.

The modifications are done to the Business case as perthe review comments and sent for approval

The Business case is approved by Senior managementand is base lined


16/23

Maintenance

Change the Business case whenever there is a change inthe Projected Benefits ,Investments and risks.

The business case document should be part of the stagegate review process and would be an important

consideration whether to move forward with execution.


17/23

Vendor Selection

Creation of a manageable list of vendors for final reviewtypically three to five

Scheduled detailed product demonstrations

A check of vendors references

A visit to site where one of Vendors customers is using asimilar ERP solution


18/23

Criteria for Vendor selection

Vendors stake in the marketVendors background, Previous experiences, clientele

Cost of implementation, acquisition, support and upgrade

Past Implementation record of the vendor, experience in a

specific verticalTechnologies with which they have experience

Profiles of their consultants

Past record Project delivery

Risk mitigation plans and Business continuity assurancesbeing offered

Financial strengths and future goals of the Vendor


19/23

Vendor Management

Decide Scope ofRequirementsFor ERP

IdentifyVendors (3-5)

Establish Criteria forVendor selection

Evaluation ofProposals

Send Request forProposal

Vendor Short listingNegotiations

with Vendor(s)

Selection of VendorPrepare ServiceLevel agreement

Review of serviceLevel agreement

Move to Ist Phase ofERP Implementation

Anycomments?

No

Yes

Fine Tuning ofProposals By Vendors

Move to Next Phaseof Implementation

Review ofresults?

OK

Take Corrective

Action

Not OK

Make Mile Stone

Payment to Vendor


20/23

Overall Flow - Recap

Analysis of CurrentState

Quantify CurrentProcess Cost

Identify Costof failures

ERP SolutionEvaluation

Define Target State

Business CasePreparation

Business CaseReview

Anycomments?

Business CaseApproval

Yes

No

VendorManagement

Phase wiseImplementation of

ERP SolutionBenefit capturing

Move to Next Phase ofImplementation

Inline withBC?

Take Correctiveaction

No

Yes


21/23


22/23

Change Management and Training.This was mentioned as the major problem with implementations. Changing work practices to fit the

system is a major difficulty. Also mentioned were training across modules and starting training soonerTo BPR or not to BPRIt is difficult to draw the line between changing Business Processes to suit the system or retainingBusiness Processes and paying the cost, in dollars and time, to change the system. As time and costsqueeze the implementation, the usual path is to not modify the system, but to change the way peoplework. This feeds back into Change Management and Training.Poor PlanningPlanning covers several areas such as having a strong Business Case, to the availability of Users to makedecisions on configuration, to the investing in a plan that captures all the issues associated withimplementing it.Underestimating IT skills

As most people are upgrading from old technology, the skills of the staff need to be upgraded as well.The upgrade is also going to place significant demands on a team who are geared to maintain an old butstable environment. Usually this effort is underestimated.Poor Project Management

Very few organizations have the experience in house to run such a complex project as implementing alarge-scale integrated solution. It usually requires outside contractors to come in and manage such amajor exercise. It can be a fine line between abdicating responsibility and sharing responsibility. Manyconsulting firms do a disservice to their clients by not sharing the responsibility.Technology TrialsThe effort to build interfaces, change reports, customize the software and convert the data is normallyunderestimated. To collect new data, and clean the data being converted, will also require an effort thatis beyond what is normally expected.


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Low Executive Buy-inImplementation projects need Senior Executive involvement to ensure the

right participation mix of Business and IT, and to resolve conflicts

Underestimating ResourcesMost common budget blow outs are change management and user training,

integration testing , process rework, report customisation and consulting

fees.

Insufficient Software EvaluationThis involves the surprises that come out after the software is purchased.Organizations usually do not do enough to understand what, and how the

product works before they sign on the bottom line. The Bleeding Edge ERP

is so massive and integrated that reporting and linking to other systems

(either your own or your customers and suppliers) can be much more

difficult than you expect. Companies looking at ERP need to examine howthey accept online feeds from a customer, or a customers' customer, and

examine the technological enablers as well as the implications of these

technologies inside of the Business.

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erp implementation - session-2

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