ERP Implementation & Maintenance Joel Freeman IST 402

ERP Implementation On average, ERP Implementation… Takes upward of 2 years to implement Costs about $15M Periods of mediocre or even a decline in company performance are common 3 stages of change… Decline: ERP fine tuned, users re-learn business procedures Stabilization: Users become proficient with new system Pay off: Users familiar with system; additional efficiency attained 2

ERP Implementation Why is proper implementation necessary? 3 http://www.serverworldmagazine.com/sunserver/2000/06/images/barrycal.gif 3

Critical Success Factors in ERP 1.) Clear understanding of strategic goals 2.) Commitment by top management Must maintain data accuracy to ensure no confusion or errors with the system goes live. Allocates funding and provides motivation to project team as well as for end user support Must understand business processes being worked with and must maintain steady progress. Company’s technical capabilities and/or restrictions must be dealt with effectively to ensure organizationally-wide compatibility with the system. Upper management must provide end users the support and motivation to accept and acclimate to the new system. End users must fully understand how the system works. Without proper training, users are unlikely to accept new system. Coordinates and monitors project scope and activity in addition to keeping the project on schedule ERP system should satisfy all performance requirements set forth by management. Provides scope and requirements for the desired ERP system System must handle issues concerning multiple company locations and the functions that each respective location is responsible for. 3.) Good project management 4.) Effective implementation team 5.) Successful coping with technical issues 6.) Organizational commitment to change 7.) Extensive end user training 8.) Data accuracy 9.) Focused performance measures 10.) Multi-site issues resolved 4

Implementation Strategy Options Control Strategy Total local autonomy Multi-location organizations implement unique instances of ERP independently at each location Headquarters control – Financial Only Multi-location organizations allow for customization to business processes at different locations Headquarters coordination Customization in several selected business functions Network coordination Allows coordination with other business unites without high levels of centralization Total centralization Used in tightly coordinated organizations 5

Implementation Strategy Options Software Configuration Single Financial / Single Operation Smaller, simple organizations with centralized layout Single Financial / Multiple Operations Single organization with a broad geographical layout Multiple Financial / Single Operation Single organization with centralized layout and broad financial responsibilities Multiple Financial / Multiple Operations Broad geographical layout and financial responsibilities 6

Implementation Strategy Options Technical Platform Centralized Remote access through telecommunications and PCs Distributed Information is distributed across several locations within the organization Centralized is usually more cost effective and more easily organized. 7

Implementation Strategy Options Implementation Execution Big-Bang ERP system is developed to completion Old system goes down / new ERP goes live in one shot Very risky method; if successful, fastest implementation Phased Rollout ERP system goes live by releasing modules a few at a time Much safer approach; takes much longer to implement 8

Implementation Strategy Options Hershey Foods – Big-Bang Implementation Desired to transfer Legacy systems over before Y2K Project fell behind schedule, rushed to completion Launched in July 1999 Inventory began slipping through ‘cracks’ in system Nearly lost business with many large candy vendors because of error http://www.phptr.com/articles/article.asp?p=27108&seqNum=7 9

Implementation Strategy Options Commonwealth of PA – Phased rollout Implementation Began rolling out ‘ImaginePA’ in 2002 Continues to roll out solution Current applications have been very successful Pioneer in ERP implementation http://www.bearingpoint.com/industries/public_services/state_and_local_govt/state_and_local_finance_ERP.html 10

Levels of IT Project Failure Corresponding Failure Technical failure; software behaved unexpectedly Process Failure IT system is over budget or overscheduled; investment no longer justifiable to organization Interaction Failure System doesn’t get used as much as anticipated; lost benefit Expectation Failure System functions correctly, but may be lacking some requirements set forth by management or users Strategic/Competitive Failure System works entirely as intended, but fails to meet organization’s strategic goals 11

ERP Implementation Failure Technological determinism IT team takes on too much responsibility for system User and organizational requirements often not met Supplier/Consultant-Driven CIO and IT is neglected in implementation ERP is outsourced to outside contractors Often exceeds projected costs Outdated relationships & capabilities Organization lacks the resources to successfully implement the system 12

Features of Successful ERP Implementation Key IT Capabilities IT Leadership Business systems thinking Relationship building Architecture planning Technology Fixing Informed buying Contract Facilitation Contract Monitoring Supplier Development 13

User Training Thorough training is often overlooked as a criteria for success Some common reasons users are inadequately trained… Software-specific training; little attention placed on business processes Lack of explanation behind why users complete required tasks in system Lack of adequate training time Sticking to the old style rather than converting to the new efficient practices 14

Common Maintenance Tasks ERP Maintenance Common Maintenance Tasks Corrective Application of vendor patches and upgrades Troubleshooting user complaints Adaptive Testing any upgrades Further enhancements Perfective Version upgrades Preventive Monitor backups, error logs, response times, etc. Track flow of maintenance times 15

ERP System Migration Continuous upgrades allow vendors to support only newer versions of ERP systems Reduces maintenance headaches Lowers overhead vendor costs Added functionality Compliance to new standards Eliminating user disappointment with system performance 16

References http://www.serverworldmagazine.com/sunserver/2000/06/images/barrycal.gif http://www.phptr.com/articles/article.asp?p=27108&seqNum=7 http://www.bearingpoint.com/industries/public_services/state_and_local_govt/state_and_local_finance_ERP.html 17