Lecture 10

Lecture 10

Ch.5 ERP Implementation

Agenda0. Why ERP?1. ERP Implementation - CSFs2. Technology3. Processes4. People Management5. Managing Change 6. Strategies for Implementing ERP7. What lessons were learned?8. Questions to Ponder9. Best Practices10. Optional Business Trends a quality methodology11. Optional: NIBCOs Big Bang(to p3)(to p10)(to p14)(to p16)(to p17)(to p24)(to p22)(to p21)(to p20)(to p25)(to p26)(to p4)

(to p2)

1. ERP Implementation Critical Successful Factors (CSFs)Implementation of ERP is not easy. There are many factors that come into play.

We shall identify the three factors to explain ERP failures as technology, process, and people.

Samples of 1) successful companies 2) failed companies (to p5)(to p7)(to p6)

Implementation - Critical Successful FactorsPeopleProcessTechnologyPMPM: Project Mgt.(to p6)

Its Working(to p4)

EnterpriseVendorApplicationsOrganizationCisco Systems, Inc.OracleManufacturing, Financial, Order EntrySupply Chain NetworksPace U. SCT BannerStudent, Human Resource, FinanceMulti - CampusAtofina ChemicalsSAP R/3Material Mgt., Production Planning, Order Mgt., Financial Reporting12 Business UnitsStarwood HotelsOraclePayroll, Accounts Payable, General Ledger750 Hotels

It FailedA&PFoxMeyerHershey Food (in the summer of 1999)Allied WasteReasons for their failures .(to p8)

Why it Failed?Project ManagementOperational ReasonsHersheyFoxMeyerInexperienced ManagersExpanding or Changing the Project ScopeAllied WasteA&PWhat does the enterprise need to do in the future? (to p9)

With ERP, there is a tendency that the legacy system may be transformed or reengineered and the entire corporate culture may transform to adapt to ERP. The potential for organizational changes is enormous and without top management commitment and support, ERP could not possibly be implemented. Therefore, to understand the ramifications of ERP on corporate goals, vision, and strategy, we need to look at the issues of technology, process and people and how they may be affected or influenced by ERP.What does the enterprise need to do in the future? (to p2)

2. TechnologyDecisions need to be made on the technology and its compatibility with the organizations processes and culture.

Technology should be seen as a way of facilitating work process to meet the overall objective of the organization such as achieving customer satisfaction. (to p11)

A compatible technology should be cost effective, adaptable to the organization, and flexible to enable the organization achieve its long-term goals.

One of the problems in the early stages of ERP was that some of the technologies were not flexible or adaptable to other software products from different vendors.

Samples of Obstacles .. (to p12)

Critical ConcernsNonrobust and incomplete ERP packagesComplex and undefined ERP-to-legacy system interfacesMiddleware technology bugsPoor custom codesPoor system performance.

ERP software-vendors(to p13)

Major ERP VendorsSAPBaanJ.D.EdwardsOracle(to p2)

3. ProcessesThe process includes the methods, procedures, and guidelines for doing things. It may help to create a culture in the work place that could lead to increased productivity. ERP software often has their own processes and such processes may not be in congruence with the companys process. Business processes support the strategic opportunities of the company and ERP should be seen as a means of enhancing such opportunities (to p15)

To effectively take advantage of strategic opportunities, ERP should guide managements actions and decisions in the following ways:Before a company invests in ERP, it must first scrutinize itself by taking a good look at its processes, business strategy, and work culture.Understand your business and how you are positioned against your competitors.Select the right ERP software and infrastructure to support the strategic initiatives of the firm. (to p2)

4. People ManagementPeople are the most important asset of any company and no new technology including ERP can be successfully implemented without the support of the people.

People are often resistant to change because its outcome could be uncertain and unpredictable. (to p2)

5. Managing ChangeManaging change will require an articulation of why change is necessary as in the case of ERP replacing the legacy system and communicating that idea effectively to the people.

Resistance to changeOptional exercise: Change Management(to p2)(to p19)(to p18)

ResistanceAppleton [1997] points out that resistance to ERP often stem from the fact that people are required to share information that once was closely guarded and make decisions differently. Ross [1998] notes that resistance may be intellectually oriented, as employees may not see how they fit in with the new system. (to p17)

Change ManagementOptional Internet Assignment: Visit and explore the Internet site for change management. Why is it important to understand change management before implementing any projects? Focus your discussion on organizational roles and structure, communication, training and education, performance management, and management practices.(to p17)

6. Strategies for Implementing ERPThe Big Bang doing all at once using re-engineering conceptFranchising Strategy different units adopt their ERP and then link up togetherSlam Dunk Focuses on few key processes and implement first

Can you evaluate their pros & cons?(to p2)

7. What lessons were learned?

Operationally Validated Theories

Application Area/domainProject ManagementERP Competence(to p2)

8. Questions to PonderWhen implementing a new initiative such as ERPWhat are the CSFs?What major steps will we have to follow (Hint: see next slide)?What is SAPs Solution Manager (SM)?

(to p2)

Commit (Selecting the project managers, Recruiting the project team)Start (kick-off meeting, project team member training)

Manage (work plan, risk management)AnalyzeConfigure (Integrate the package)TestChangeSupportConvert (the data from the existing system into the new system)Prepare (test the business process) Go-liveImproveTypical ERP Implementation(to p2)

9. Best PracticesPrepare a summary of best practices for implementing ERP systems. Focus your discussion on people, processes, technology, partners, knowledge, outputs, and outcomes.(to p2)

10. Business TrendsOptional Internet Assignment: Visit and explore the Internet site for the Six Sigma methodology (Define-Measure-Analyze-Improve-Control). Why is it important to understand the Six Sigma methodology before implementing any projects?(to p2)

11. NIBCOs Big BangWhat have you learned from the NIBCOs case?If you could do one or two things differently at strategic, tactical and operational levels, what would you do?

Internet Assignment: Download the article. Use the following key word: NIBCOs Big Bang(to p2)