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