Pre-evaluation Screening

Limit the number of packages Look for product literature of vendors, getting

help from external consultants & packages used by similar companies Package stronger in certain areas than others Peoplesoft: Stronger in HR & less in Mfg. Baan : Stronger in Mfg. and less in Finance Investigate origin of packages

Package selection
Do it right the first time None of them are perfect Objective : Not to find a perfect fit package

but to find a package that is flexible (S/w that could be customized to obtain a good fit Identify a system that best meets the business needs, matches business profile & that which identifies with the business practices Develop selection criteria for evaluation of packages

Selection criteria

Functional fit with the companys business

process Degree of integration b/w various components of the ERP system Flexibility & Scalability Complexity User friendliness Quick implementation Ability to support multi-site planning & control Availability of regular upgrades Amount of customization required Local support infrastructure Total costs: license, training, implementation,

Project planning phase

Designs the implementation process Time schedules, Deadlines, selecting

implementation team, roles identification, assigning responsibilities & organization resources Decide when to begin the project How to do it When to be completed Also, plan How to monitor the progress of implementation What to do in case of contingencies What control measures & corrective actions to be taken

Gap Analysis
Companies create a complete model to

identify functional gaps Even the best ERP package meets only 80% of the companys functional requirements Remaining 20%: issue for companys BPR Solutions Upgrade Identifying 3rd party to fill the gap Designing custom program Altering ERP source code

Re-engineering
ERP should engender business change, but

should not engender the jobs of thousands of employees

Treat ERP as an investment as well as cost-

cutting measure, rather than as a downsizing tool

BPR approach to ERP implies two

implementations: Technical & Business process implementations

Unwritten rule of ERP: Synchronizing existing company practices with ERP package rather than changing the source code and customizing it to suite company Develop a prototype for thorough testing of the to be model ERP consultants configure & test the prototype to solve any logistical problems inherent in the BPR before the go-live implementation Configuration: What wont fit into the package Where the gaps in functionality occur

Configuration

Implementation team training

Training implementation team members Company training its employees for

implementation
Select right attitude people who are willing to

change, learn new things , good functional knowledge and are not afraid of technology

Testing
Testing real case scenarios Overloads Multiple users logging on to same time with same query Users entering invalid data Hackers Find the weak links in the system and bugs indentified should be fixed before going live

Going Live
Once Technical and Functional process is

configured and tested, system is proclaimed operational and goes LIVE

Old system is removed and new system is

used

End User Training

Employees training Management should address : resistance to

change
Implementations fail Lack of end user

training

Post implementation
To reap full benefits of ERP system, system

should get enterprise-wide acceptance Should have enough trained employees to handle problems Upgradation (analyze cost benefits) Training never ends; it is an ongoing process( new people and new functionalities) LIVING WITH ERP SYSTEMS WILL BE DIFFERENT FROM INSTALLING THEM

Transition strategies
Big Bang strategy Phased strategy Parallel strategy Process line strategy Hybrid strategy

BIG BANG strategy

Installation of ERP systems of all modules

happens at once Reduce the integration cost of thorough & careful execution Implementation as Large scale information system More than automating existing business processes; it transforms the business processes Transformation happens on a specific date As it consumes too many resources, its seldom recommended Success careful preparation & planning prior

BIG BANG TRANSITION

LEGACY SYSTEM NEW ERP SYSTEM

PAST

GO-LIVE DATE

FUTURE

Finance Manufacturing Human resources Materials Management Quality Management Plant Maintenance Marketing Sales & Distribution

Finance Manufacturing Human resources Materials Management Quality Management Plant Maintenance Marketing Sales & Distribution

BIG BANG strategy

Advantages: Implementation cost less( no interface pgm required) Well-designed for rapid implementations Avoid complex integration issues Big Bang is used in situations where an immediate ERP solution is needed Disadvantages: Time & cost of planning & preparation Bottleneck of critical resources Recovery process

PHASED IMPLEMENTATION
LEGACY SYSTEM

NEW ERP Go Live Date

Finance Manufacturing Human Materials Quality Plant Marketing Sales &

SYSTEM
Finance Manufacturing Human resources resources Materials Management Management Quality Management management Plant Maintenance Maintenance Marketing Sales & Distribution

PHASED IMPLEMENTATION
Implements one functional module at a time, in

sequential order Suits companies that do not share many common processes across departments Independent modules are installed in each unit & integration is done at later stage Each unit has its own instances of ERP & DB Reduces the risk of installation, customization & operation of ERP Interface programs are common in phased approach (Eg. Finance & Distribution modules)

PHASED IMPLEMENTATION
Advantages: One functional module at a time Comfortable stepping stone approach Less resources Disadvantages Large technical resources Cost & time is higher Variant: Mini phased approach

Parallel strategy
Past Go-Live date Finance Finance Manufacturing Manufacturing Human Resources Human Resources Materials Management Materials Management Sales & Distribution Sales & Distribution Plant Maintenance Plant Maintenance Legacy FUTURE Shutdown

Parallel implementation
Both legacy & new ERP system are kept active

simultaneously Remain in operation from 1 day to several months Good recovery options if something goes wrong & business processes not interrupted if new ERP systems malfunctions It provides exact comparisons in real world Consumes more resources than others

Parallel implementation
Exact duplication of legacy system to be

made in the new ERP system Confusion often arises as people do not interact with both systems in similar way ( go for detecting errors) Not appropriate where legacy system has an expiration limitation

Process line strategy

Go-Live Product 1 Manufacturing Manufacturing Finance Finance Materials Mgt Materials Mgt Marketing Marketing Legacy system Product 1 Go-Live Product 2 Manufacturing Manufacturing Finance Finance Materials Mgt Materials Mgt Marketing Marketing New ERP system product 1 New ERP system product 2

Legacy system Product 2

Process line strategy

Mange parallel business process flows or product

lines ( for 2 products) Utilized by S&M sized companies which have less complex internal business processes 1st product line & all its resources go first in making the transition to new ERP. once, it is achieved successfully 2nd product line transition is done Usually smaller process lines with low risk & higher prob. of success is done first

Hybrid transition strategy

Combination of process line, phased, & parallel

implementation Complexity varies depending upon the situation Small single site ERP implementations have simpler hybrid strategies than those used by MNCs Flexible in adopting to the specific needs of the business situations Org. can specifically tune implementations for their needs Great deal of communication combined with strong leadership is required

Choosing a strategy
Technical resources Number of users Consultant availability ERP team structure Deadlines Reliability H/W resources

Work instructions, training material, plan of approach, templates, example deliverables, std./customized s/w components, parameter setting, h/w requirements, chart of accounts Lower implementation costs & much quicker implementation

Why many ERP package implementations fail?

ERP Attitude - A process - A set of tools To work successfully - people who know ERP & business practices well - good vendors - planning implementation well and executing perfectly - end-user training - Mature development process & development environment & organizational culture has to be conducive - Implementing in the process way rather in the tool

Approach to ERP

To develop a business model comprising the business process or activities & showing the interconnection & sequence of the business subsystems or processes that derive it

Business Strategy

Business Model

Business Process

Organizatio ns

MIS

Databas es

Money

People Facilities Material Information

Information

INPUT

WORKFLOW

OUTPUT

F/B & control

Benefits of ERP
Reduction of lead time On time shipment Reduction in cycle time Better customer satisfaction Improved supplier performance Increased flexibility Reduction in quality cost Improved resource utility Improved information accuracy &

decision making capability