1. 1 Lecture 10 Ch.5 ERP Implementation

2. 2 Agenda 0. Why ERP? 1. ERP Implementation - CSFs 2. Technology 3. Processes 4. People Management 5. Managing Change 6. Strategies for Implementing ERP 7. What lessons were learned? 8. Questions to Ponder 9. Best Practices 10. Optional Business Trends – a quality methodology 11. Optional: NIBCO’s “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)

3. 3 (to p2)

4. 4 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)

5. 5 Implementation - Critical Successful Factors People Process Technology PM PM: Project Mgt. (to p6)

6. 6 It’s Working… EnterpriseVendorApplicationsOrganization Cisco Systems, Inc. OracleManufacturing, Financial, Order Entry Supply Chain Networks Pace U. SCT Banner Student, Human Resource, Finance Multi - Campus Atofina Chemicals SAP R/3Material Mgt., Production Planning, Order Mgt., Financial Reporting 12 Business Units Starwood Hotels OraclePayroll, Accounts Payable, General Ledger 750 Hotels (to p4)

7. 7 It Failed… A&P FoxMeyer Hershey Food (in the summer of 1999) Allied Waste Reasons for their failures …. (to p8)

8. 8 Why it Failed? Project ManagementOperational Reasons Hershey FoxMeyer Inexperienced Managers Expanding or Changing the Project Scope Allied Waste A&P What does the enterprise need to do in the future? (to p9)

9. 9 entire corporate cultureWith 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. top management commitmentThe potential for organizational changes is enormous and without top management commitment and support, ERP could not possibly be implemented. issues of technologyTherefore, 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)

10. 10 2. Technology technologycompatibility Decisions need to be made on the technology and its compatibility with the organization’s processes and culture. Technology 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)

11. 11 should be 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 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)

12. 12 Critical Concerns Nonrobust and incomplete ERP packages Complex and undefined ERP-to-legacy system interfaces Middleware technology bugs Poor custom codes Poor system performance. ERP software-vendors (to p13)

13. 13 Major ERP Vendors SAP Baan J.D.Edwards Oracle (to p2)

14. 14 3. Processes includesThe 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. often hasERP software often has their own processes and such processes may not be in congruence with the company’s process. supportBusiness processes support the strategic opportunities of the company and ERP should be seen as a means of enhancing such opportunities (to p15)

15. 15 should To effectively take advantage of strategic opportunities, ERP should guide management’s actions and decisions in the following ways: scrutinize 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 Understand your business and how you are positioned against your competitors. Select Select the right ERP software and infrastructure to support the strategic initiatives of the firm. (to p2)

16. 16 4. People Management People 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)

17. 17 5. Managing Change Managing 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 change Optional exercise: Change Management (to p2) (to p19) (to p18)

18. 18 Resistance guarded Appleton [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. intellectually oriented Ross [1998] notes that resistance may be intellectually oriented, as employees may not see how they fit in with the new system. (to p17)

19. 19 Change Management Optional 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)

20. 20 6. Strategies for Implementing ERP The Big Bang – doing all at once using re-engineering concept Franchising Strategy – different units adopt their ERP and then link up together Slam Dunk – Focuses on few key processes and implement first Can you evaluate their pros & cons? (to p2)

21. 21 7. What lessons were learned? Operationally Validated Theories Application Area/domain Project Management ERP Competence (to p2)

22. 22 8. Questions to Ponder When implementing a new initiative such as ERP… What are the CSFs? What major steps will we have to follow (Hint: see next slide)? What is SAP’s Solution Manager (SM)? (to p2)

23. 23 Commit ( Selecting the project managers, Recruiting the project team) Start ( kick-off meeting, project team member training) Manage ( work plan, risk management) Analyze Configure ( Integrate the package) Test Change Support Convert ( the data from the existing system into the new system) Prepare ( test the business process) Go-live Improve Typical ERP Implementation (to p2)

24. 24 9. Best Practices Prepare a summary of best practices for implementing ERP systems. Focus your discussion on people, processes, technology, partners, knowledge, outputs, and outcomes. (to p2)

25. 25 10. Business Trends Optional 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)

26. 26 11. NIBCO’s “Big Bang” What have you learned from the NIBCO ’ s 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: NIBCO’s “Big Bang” (to p2)