Implementing an ERP Solution Learning What to Watch For When Implementing an ERP Solution
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Past 8 Lecture Review ¾
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Since the beginning of the course, we have covered a lot of information Each lecture has built the foundation for the remaining lectures for the course as we move into understanding how an ERP is implemented/deployed Thus far, we have covered: – What goes into an Enterprise Solution – What effects our ERP deployments – What Business Processes are in terms of ERPs – How we develop business processes to work with ERPs
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Understanding ERP Methodologies ¾
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When we talk about ERP methodologies, we need to understand the different methods that are used and how they affect the overall process We are discussing this because it makes a huge difference on who you should select as a vendor Now, we need to be clear that there are 100s of articles on what the “best practices” are for implementing ERP software, but understanding each strategy and choosing is the difficult part We will talk about the top 3 implementation strategies
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Why Is Methodology So Important? ¾
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Foxmeyer Drug Company (1996) went into bankruptcy after having to abandon a USD 40M ERP system after deployment Hershey Foods Corporation (1999) had problems deploying an ERP system which contributed to a USD 151M annual loss HP (2004) had problems with the deployment of an ERP system which contributed to a USD 160M annual loss Avis Europe (2004) cancelled an ERP deployment after having spent the equivalent of USD 54.5M Cadbury Schweppes (2006) had ongoing problems from implementing an ERP system in 2005 leading to a major product recall in 2006, contributing to a GBP 12M loss
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The Top 3 Strategies ¾
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The Big Bang – Implementation happens in a single instance – Everyone switches to the new system on a single date Phased Rollout – Changeover occurs in phases over an extended period of time – Users move onto the new system in a series of planned steps Parallel Adoption – Both the legacy and new ERP system run simultaneously – Users learn the new system while working on the old
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Some Things To Keep In Mind ¾
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While we are clear that there are 3 strategies that most organizations usually follow, it doesn’t mean that every one must follow one exclusively We also need to understand that there is no such thing as “the most successful strategy” What may work for someone else’s organization may not work for yours
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The circumstances dictate the appropriateness of the implementation strategy.
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Always use a component implementation strategy to determine the best possible overall strategy. Use pilot projects, alpha testing, refinements and iteration before opening it to the entire organization.
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The Methodologies
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The Big Bang Theory ¾
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A Big Bang ERP Implementation happens in a single, major event All modules are installed across the entire organization all at once There are numerous pre‐implementation activities that need to be carried out prior to the Big Bang After all planning activities are successfully executed, the legacy systems are turned off and the new ERP is turned on You can not turn back at this point, even if something goes wrong Having said that, you can have fall‐back scenarios prepared just in case the initial changeover fails
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The Big Bang Theory – Risks & Benefit ¾
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Risks – There is a high‐level of risk involved with this strategy – There are a number of things that can, and will, go wrong in an instant changeover Benefit – The implementation is quick and less costly than a long, phased implementation
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The Big Bang Theory Advantages
Disadvantages
Implementation time is shorter
Difficulties are most pronounced
Implementation difficulties and “pains” are condensed
Details may be overlooked in the rush to change
Costs are much lower than a long, drawn‐ out implementation
Employees have less time to learn the new system
Employees only need to be trained on the Full end‐to‐end system testing is tough to carry our prior to implementation new system, not for the changeover period Implementation happens on a single date Fall‐back scenarios are more difficult than and everyone knows the date originally thought A failure in one part of the system could (will) affect others There is a catch‐up period
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Phased Rollout ¾ ¾ ¾
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What we call the Steady State Theory Small changes occur over time instead of in one single shot An organization moves off the legacy system and onto the new ERP system in a series of predetermined steps There are 3 well‐known techniques – Phased Rollout by Module – Phased Rollout by Business Unit – Phased Rollout by Geography
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Phased Rollout by Module ¾ ¾ ¾
This is the most common phased rollout strategy ERP modules are implemented one at a time You start with core business functions – those necessary for daily operations – then add in more modules and functionality with each phase
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Phased Rollout by Business Unit ¾
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Working from this strategy, implementation is carried out in one or more business units or departments at a time Some organizations have an implementation team that travels between each department during implementation phases As the team gets more experience with each unit implementation, the more efficient other phases become
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Phased Rollout by Geography ¾
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For organizations with multiple locations, this is the most frequent approach The new ERP system is introduced at one or more company locations at a time We call this a “pilot adoption method”
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Phased Rollout Advantages
Disadvantages
Companies gain knowledge and experience during initial implementation phase that are applied later
Not as focused and urgent as Big Bang
Possible to introduce modules while programming modules
Involves continuous change over an extended period of time
With conversion occurring in parts, time is Each module relies on information from available for adjustments other modules so there could be critical information missing There is no catch‐up period, employee learn as they go
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Several adjustments are needed
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Phased Rollout Advantages
Disadvantages
More time for users to adapt to the new ERP
Duration of the project is much longer than Big Bang
Technical staff can focus on one part of the system or a select group of users at one time
A fall‐back to the old becomes more difficult with each phase
Project members may develop unique implementation skills that they can be positioned for in later rollouts
Temporary bridges must be created between legacy and the new ERP
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Parallel Adoption ¾ ¾
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The least talked about ERP implementation strategy Also called – Parallel Conversion – Parallel Running – Parallel Cutover Believed to be the least risky implementation process The middle road between Big Bang and Phased Rollout Includes running both the Legacy and ERP at the same time Allows users to learn the ERP while continuing regular work on the Legacy After all the requirements for the ERP are met, the Legacy is decommissioned
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Parallel Adoption – Risks ¾ ¾
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Is the most expensive implementation method Very inefficient because employees are entering data into both systems While we are not able predict the extra costs that could come from a backfired Big Bang implementation, parallel adoption has become unpopular because of perceived high costs
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More Things to Remember ¾
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There is no silver bullet when it comes to implementing an ERP system Every company has unique goals and an implementation requires careful planning and analysis Most companies like to combine the strategies to fit their requirements and goals Some companies chose to implement e‐business systems at off‐site locations while running an ERP at headquarters You have to be prepared for all situations and modify your strategy based on each company’s individual requirements
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Things That Can Rock Your World
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What Does That Mean? ¾
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When implementing an ERP, we need to watch out for things that can destroy our implementation strategy We need to keep in mind that very few organizations do it successfully the very first time To succeed, you need to assure that these things are addressed and accounted for, otherwise you will fail over and over again
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Start With Business Processes Don’t get tied up with the technical capabilities or software platforms until this is done.
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Make Sure To Know Why You’re Implementing ERP Be clear on understanding business objectives and what you’re trying to accomplish
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Senior Management Commitment & Involvement The most important factor in the success of any ERP implementation.
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Readiness of Change There must be harmony in the systems and operations.
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Training Make sure that you select and train key personnel so that they can be change agents.
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Quality People Engaged The most competent and best people should lead the implementation – anything less is suicide.
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End User Empowerment Empower the people working with on the implementation team to make key decisions.
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Defined Scope The blueprint must have a defined scope and be prepared with involvement of key personnel.
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Sound Project Management Must have a defined roadmap and milestones to succeed.
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Review and Audit Project review and audits must be done at regular intervals to determine the success and progress of the implementation.
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Required Infrastructure Make sure that the organization provides all the required infrastructure for the implementation team.
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Strong Communication There must be strong communication between the implementation team and the organization to assure all matters are resolved in a timely manner.
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The ERP Implementation Cycle
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Discovery Focus on the business requirements and how the organization’s needs fit with the software.
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Design System configuration, gaps and data conversion from legacy systems.
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Develop Write the programs, configure the security, develop the conversion process, and test the configuration.
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Test & Train Stress test the system by trying to break the system. Make sure to train the users otherwise a great implementation looks bad.
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Deploy & Optimize Plan to succeed or succeed to fail. Always be watching to see how to make the system better.
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Support No matter which implementation strategy you follow, make sure that you have planned to support the users.
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