ERP Implementation Challenges: ERP Demystified (Second Edition) by Alexis Leon (2008)
ERP Implementation Challenges: ERP Demystified (Second Edition) by Alexis Leon (2008)
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Implementation Challenges (contd.)
• Unrealistic expectations - The cost of implementing and the time required to
implement are underestimated while the benefits and ROI about the system are
overestimated creating frustration and failure.
• Poor package selection - Choosing the right ERP packaged software that best matches
the organizational information needs and processes is critical to ensure minimal
modification and successful implementation and use.
• Poor project management – ERP implementation is a very complex project with a
large scope and long duration. Managing such complex projects is a challenging task.
Poor project management is a sure recipe for failure.
• Customization issues - Most organizations approach the customization/ tailoring
decision without the proper information required to reach a good decision and often
result in failed implementations.
• Long payback period – The long payback period and higher ROI can make many
organizations doubt the success of the ERP systems and thereby discontinuing the
support for the systems.
• Poor communication and co-operation - ERP potential cannot be leveraged without
strong coordination of effort and goals across business and IT personnel.
• Data quality costs - Poor quality data input can be fatal to ERP projects. The users of
the ERP system will lose their confidence in the system if they get bad data out of the
system.
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ERP Implementation Challenges (contd.)
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
20. ERP Implementation (Transition) Strategies
• An ERP implementation strategy determines how the ERP system will be installed.
The implementation strategies are also called transition strategies.
• The implementation strategy focus on how to make the transition from a legacy
system to a new ERP system.
• The selection of the transition strategy that is best suited for each organization is
crucial as a wrong strategy can result in a failed or flawed implementation.
• Understanding the relationships of ERP transition strategies between the process,
people and technology will assist the ERP implementers to better understand what
type or combination of types of ERP transition strategy is best.
• The different ERP implementation strategies are:
1. Big bang
2. Phased
3. Parallel
4. Process line
5. Hybrid
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Big Bang Strategy
• In this strategy, the installation of ERP systems of all modules happens across the
entire organization at once.
• In the big bang strategy the company moves from the existing or legacy system to the
new ERP system on a specific date.
• The success of the big bang strategy depends on how well an organization plans and
prepares itself prior to implementation.
• Some of the advantages of big bang strategy are low overall implementation cost,
faster return on investments, elimination of complex integration issues, etc.
• The main disadvantages of this strategy are high amount of time and effort for pre-
implementation planning, high failure rates, ‘do-it-right-the-first-time’ nature, etc.
• The big bang strategy have several variants like mini big bang, mega big bang and
multi big bang.
1. The mini big bang strategy applies the big bang approach to one or two business
modules at a time.
2. The mega big bang strategy refers to a large company, with multiple sites, all
going live at the same time using the big bang strategy.
3. The multi big bang strategy uses multiple big bangs sequenced in order for
different geographical facilities.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Phased Implementation
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Parallel and Process Line Strategies
• Parallel approach keeps both the legacy system and the new ERP system active
simultaneously for a length of time.
• The main advantage of the parallel approach is that it has good recovery options in
case something goes wrong.
• The parallel approach consumes considerably more resources than other techniques
during the transition as all functional interaction with the legacy system must also be
duplicated exactly in the new ERP system.
• Process line strategy breaks the implementation strategy to manage parallel
business process flows or product lines.
• Using the process line strategy, the first product line and all related resources go first
in making the transition from the legacy system to the new ERP system. Once this is
completed the other product lines are moved to the new system in sequence.
• The advantages of the process line approach are high success rates, low resource
commitment, opportunity to learn from the mistakes, etc.
• The disadvantages include high overall coast, lengthy implementations, etc.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Which Strategy?
• Big bang strategy is ideal in situations where an immediate ERP solution is needed. It
is better suited for smaller companies where all the critical resources of the project
can fall within the immediate control of a project manager. It is also suited to any
situation where a limited amount of time is available combined with an immovable
go-live date.
• The phased approach suits companies that do not share many common processes
across departments or business units.
• The parallel approach is ideally suited for mission critical situations that cannot
survive a major malfunction of an ERP system. It also works well for business
environments that require the utmost in stability of an ERP system such as financial,
pharmaceutical or medical companies.
• Process line approach is ideal for companies that have many product lines. In such
cases, the organization can implement the ERP systems to the different product lines
in a phased manner.
• Hybrid strategy which is a combination of all the above strategies can be used in
organizations where the inter-departmental communication is excellent and where
the is a strong leadership to manage the project.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
21. ERP Implementation Lifecycle
• Objectives are the major high-level characteristics that can have a great impact upon
the success of an ERP project.
• The objectives include characteristics such as:
1. Speed - The speed of the project is how much time the company would like to
take in implementing the system.
2. Scope - The scope of the project includes all of the functional and technical
characteristics that the company wants to implement.
3. Resources - Resources are everything that is needed to support the project
including people, hardware systems, software systems, technical support and
consultants.
4. Risk - The risk of a project is a factor that impacts the overall success of the ERP
implementation.
5. Complexity - Complexity is the degree of difficulty of implementing, operating
and maintaining the ERP system.
6. Benefits - Benefits are the extent to which the company will utilize functionality
of the ERP system for software development, maintenance and other support
activities.
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Phases of ERP Implementation
• Like any other project the ERP implementation project also has to go through
different phases.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Phases of ERP Implementation (contd.)
8. Testing – This is the phase were the system that is being implemented is tested
for any problems, bugs, errors, etc.
9. Going live - This is the phase where ERP is made available to the entire
organization.
10. End-user training - This is the phase where the actual users of the system will be
given training on how to use the system.
11. Post implementation – This is the phase where the ERP system is used for
conducting the business.
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Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
22. Pre-implementation Tasks
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How to Successfully Implement ERP Systems ?
• Some of the things that an organization can to do to ensure the success of an ERP
implementation are:
1. A well-defined project organization structure that details the project planning,
execution and monitoring mechanism
2. An attitude that stresses on business transformation instead of process
automation
3. An approach that brings about the proper integration of people, process and
technology through effective management of change
• Some other things that will ensure success are:
1. A well thought out, comprehensive process to help plan, guide and control the
entire ERP implementation effort.
2. Evaluating the ERP plan before you commit to software acquisition and
installation.
3. Ensuring that the resources required for the implementation are in place
4. Constant monitoring and management
5. Top management participation and support
6. Reviews and corrective actions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Pre-implementation Tasks
• The main tasks that should be performed during this session are:
1. Assembling the participants — One of the first steps of the project planning
session is to assemble the critical stakeholders of the project. This should include
all people who have a direct influence over the project.
2. Feasibility study and need analysis review – Feasibility study report contains the
factors that will affect the ERP implementation. The needs analysis is the
justification for the project. Review of these two documents will give an idea on
what could be the potential problem areas and where more attention and
resources will be needed.
3. Project mission and vision statements creation – The vision should be a global
statement that is continuous and ongoing. The mission statements will consist of
the major milestones of the project.
4. Determination of organizational structure – The organizational structure is
determined to decide how the implementation is to proceed.
5. Determination of the modules to be implemented
6. Creating the core team – Project sponsor, executive committee, project manager,
work teams, etc. are created in this step.
7. Establishing the training needs – Determine how much education will be
required, the type of education and the number of participants.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Pre-implementation Tasks (contd.)
8. Establishing the data conversion strategy – The goal in this step is to establish
what needs to be converted/ migrated and how it is going to be done. It is best to
have experienced people from the legacy system working together with
application consultants to fully understand the complete need.
9. Establishing interfaces – The goal of this step is to identify any interfaces that
require development. This section is for the required interface programs between
systems for which none exist.
10. Determining work estimates – The work estimates for all the activities from
planning sessions to training and maintenance after installation of the ERP
project should be determined in advance.
11. Cost of consultants – In this step, the areas where the services of external
consultants are needed are identified and the cost of hiring the consultants are
calculated.
12. Calculation of implementation time – The scope, time and resources are decided
and based on that the implementation time is calculated.
13. Identifying constraints – All constraints of the project should be identified and
documented.
14. Establishing policies and guidelines – Project policies and guidelines form
consistent methods for dealing with situations and events are established and
documented
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Review Questions
1. What are the tasks that should be performed before and ERP implementation?
2. Why are pre-implementation tasks important for the success of the implementation?
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
23. Requirements Definition
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Requirements Engineering
• Requirements engineering is a collaborative activity.
• The requirements engineer has to systematically extract and inventory the
requirements from a combination of human stakeholders, the system’s environment,
feasibility studies, market analyses, business plans, analyses of competing products
and domain knowledge.
• The elicitation and analysis of system requirements needs to be driven by the need to
achieve the overall project aims.
• Requirements do not include design details, implementation details or project
planning or testing information.
• Projects can also have other kinds of requirements—development environment
(hardware and software) requirements, requirements for releasing a product,
compatibility requirements and so on.
• There are formal tools and techniques available that are used by business analysts to
define requirements—data flow diagrams, entity relationship (ER) diagrams, etc.
• One the requirements are captured, the analysts will have a clear statement of
requirements that can be given to the vendor at the appropriate time.
• The analysts will also have a good understanding of the business, which will help
when viewing vendor products and holding discussions with the vendor.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Meeting the Requirements
• Sometimes a package provided by an ERP vendor will be able to meet all
requirements.
• Sometimes a module from a vendor may be suited for a particular application but the
whole package will have many drawbacks.
• In most cases, in order to get the perfect match some amount of customization will be
required.
• But customization comes at additional implementation costs.
• Another key factor is the integration of the ERP system with other systems in the
organization’s supply chain. To solve this ERP vendors are designing applications
with integration as a feature.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
1. Why is getting accurate requirement important for the success of the ERP
implementation?
2. What is a requirement? Discuss with real world examples.
3. What are the different types of requirements?
4. Why it is important to get the requirements from all the stakeholders of the project?
5. Explain the requirements elicitation process.
6. Discuss the requirements definition process.
7. Why should one define the requirements?
8. How do we ensure that the requirements are met?
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24. Implementation Methodologies
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Implementation
• The nature of the ERP implementation is such that it is best handled within a project
management context.
• The organization of the project team that is best for managing the implementation
takes the following format:
1. The CEO leads the steering committee and sponsors the project.
2. The person who manages the implementation is the project manager
3. The project manager reports to a steering committee, who reviews progress and resolves any
territorial, resource or policy disputes.
4. The project managers has the implementation teams reporting to him
• Implementation strategy should be decided based on the following:
1. Speed of implementation
2. Availability of people for carrying out the implementation tasks
3. Availability of time for training all users
4. Cost
5. Confidence in the new system
6. Disruption to operations
7. Total timescale
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Implementation Plan
• Before implementing an ERP system in an organization or project, it is very crucial
that the implementation process be planned.
• The implementation plan documents the who, what, why, where, when and how of
the project. It is the outcome of discussions with affected people and involves
negotiations over resources, timescales and costs and their agreement.
• The most basic plan will identify all the activities, those doing them and the time
frame.
• A project plan will enumerate the major tasks, the estimated duration (usually
specified in months), resources required and people who will be doing the tasks.
• The project plan can be handwritten, prepared using a spreadsheet or using
specialized project management software.
• There are two types of plans—high-level plan and detailed plan.
1. The high-level plan will give an overview of the project and can be used by the
top management for monitoring the project.
2. The project manager will develop a detailed project plan, where the high-level
plan is broken down into a lot more detail with the time windows being weeks or
days rather than months.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Risk, Budget, Cost
• Even the most detailed of project plans can go astray for events that could have been
anticipated and prevented and hence it is prudent to carry out a risk analysis.
• The aim of risk analysis is to anticipate possible problems, assess their likelihood of
occurrence and their intensity of impact and finally, to establish how they can be
prevented or best handled if prevention is not possible.
• Risk assessment should be carried out at the outset of the project and should be
regularly reviewed, revised and updated. Process developments and changes in
project conditions may raise the profile of risks that were previously viewed as
insignificant.
• After the costs of the ERP implementation are identified (during the planning stage),
a budget is be established. The budget should have provisions for unanticipated
problems and unforeseen issues that are likely to result in additional expenditure.
• The total cost of ERP ownership includes the costs of packaged software, hardware,
professional services (for ongoing maintenance, upgrades and optimization) and
internal costs (training cost, re-location costs, cost of temporary employees, etc.)
• The costs of the ERP implementation, operation and maintenance should be
budgeted and all budget should be reviewed and revised periodically.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Performance Measurement
• Performance measurements are carried out to measure the success of the ERP
implementation and the effectiveness of its operation. Three performance related
measures are costs, time and benefits.
• The project plan have detailed list of the tasks, the people responsible for each tasks
and the timeframe for the completion of the tasks. The project plan can be used to
measure the progress of an ERP implementation.
• For each step or series of steps of the implementation, objectives can be defined
which, if achieved, represent progress. By achieving these deliverables there is less
likelihood of problems arising at a later date as a result of an earlier event.
• The four measurables — cost, time, benefits and deliverables — present different
dimensions for measuring the performance of an implementation.
• It is important to remember that while measurables provide a means to assess
progress and attainment, they in themselves do not determine success.
• Performance measurement only provide reference points for further action.
• Performance measurements are not a substitute for managing people in such a way
that they give their best and more.
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Problems and System Issues
• During the implementation there will be many issues which are raised and which will
require resolution. The danger is that some of these issues, having been identified are
forgotten, only to surface at a later date, perhaps after the system is live. Thus, it is
desirable that there is an agreed procedure for recording issues and their resolution.
• The technical issues include the installation and commissioning of both hardware
and software.
• Some of the technical issues are:
1. How does the system perform when the ERP application is under heavy use?
2. How quickly will storage space be consumed when the system is live?
3. What is the back-up procedure?
4. Does the system lock and if so how is it unlocked?
5. Do the locations of PCs and printers require to be changed?
6. How are passwords managed?
7. What user menus need to be generated and how will this be handled?
8. What is the disaster recovery procedure?
• The technical issues should detected earlier and should be resolved as a small
problem like lack of pre-printed stationary can prevent the system from operating
smoothly.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Implementation Methodologies by
Vendors and Consultants
• A methodology is a roadmap to an implementation. The purpose of a methodology is
to deliver an implementation on time, according to specifications and within budget.
• Most vendors, especially in the software industry, have developed their own
methodologies. Consulting companies also developed their own methodologies in
relation to a product.
• Some of the ERP implementation methodologies by vendors and consultants are:
1. Accelerated SAP (ASAP) from SAP
2. The Total Solution from Ernst & Young LLP
3. Fast Track Workplan from Deloitte & Touché
• Methodologies are expensive and even though methodologies are customized, they
are still roadmaps.
• An experienced project manager must manage the projects so that he can use the
methodology to implement the ERP system in the best possible way and in the best
interests of the organization.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Implementation—Hidden costs
• Although different companies find different hurdles and traps in the budgeting
process, those who have implemented ERP packages agree that some costs are more
commonly overlooked or underestimated than others.
• The hidden costs of ERP implementation are:
1. Training
2. Customization
3. Integration and testing
4. Data conversion
5. Data analysis
6. Consultants
7. Brain drain (employee turnover)
8. Continuing maintenance
• To avoid getting blindsided by unexpected expenses, veterans recommend
assembling cross-functional teams to identify the costs up-front.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
1. What are the most important phases of the ERP life cycle?
2. Why is it difficult to manage an ERP implementation?
3. How will you organize the ERP implementation team?
4. Discuss the ERP implementation strategy?
5. What is the importance of the ERP implementation plan?
6. How do you assess the risk of an ERP implementation?
7. How is budget allocated to the various implementation activities?
8. What are the costs involved in an ERP implementation?
9. Why is cost benefit analysis performed?
10. How is performance measurement done?
11. Why is performance measurement done?
12. What are the system issues of an ERP implementation?
13. Explain the ERP implementation methodologies by SAP, Ernst & Young and Deloitte
& Touché.
14. What are the hidden costs of an ERP implementation?
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25. Package Selection
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Package Evaluation and Selection
• As all ERP packages are not created equal and have their own strengths and
weaknesses, an ERP package that is suited for one organization will not be suited for
another.
• So the most important step in the ERP implementation is to select the ERP package
that is best suited for the organization.
• Evaluating the ERP systems available in the marketplace and then selecting one for
your organization are critical parts of the process.
• The most important factor to keep in mind when analyzing the different packages is
that none of them are perfect.
• The objective of the evaluation and selection process is to find a package that is
flexible enough to meet the company’s needs.
• It is generally accepted that most ERP packages are stronger in certain areas than in
others and each one is trying hard to add functionality in areas where they have been
lacking.
• When making the analysis it is a good idea to investigate the origins of the different
packages to identify their strengths.
• To choose the best system, the company should identify the system that meets the
business needs, matches the business profile and identifies with the business
practices of the company.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Selection Process
• The following are the steps in the ERP package selection process:
1. Selection committee formation - form a selection or evaluation committee that
will do the evaluation process. This committee should comprise of people from
the various departments (the functional experts), top management (preferably
the CIO or COO) and consultants (package experts).
2. Pre-evaluation screening - do a pre-evaluation screening to limit the number of
packages that are to be evaluated by the committee.
3. Studying the technological issues – Examining the technological infrastructure
of the company and deciding the best course of action—whether to integrate the
new system with the existing one or go in for a clean installation.
4. Handling vendors – Listening to the vendor presentations, verifying the
testimonials, questioning them about the various issues that are important for
the organization, making site visits, and getting the vendor claims in writing.
5. Selection criteria creation – The selection committee should develop a selection
criteria to assess the different packages that are short listed.
6. Decision – After the vendor presentation and verification of the vendor claims,
the packages should be compared using the selection criteria and a package that
is best suited for the organization should be selected.
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ERP Packages—Make or Buy?
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
26. ERP Project Teams
• The way a company organizes its ERP project team can greatly influence the outcome
of an ERP implementation.
• ERP project teams are formed not just for implementing ERP software but also for
the ongoing maintenance required of an ERP system.
• Team structures vary tremendously from company to company and situation to
situation.
• The company management should do the ERP team formation in consultation with
the consultants and vendors.
• The ERP teams should contain the consultants and vendor representatives before,
during and after the implementation.
• The vendor representatives will come into the ERP team only after the selection of the
ERP package, but the external consultants (the experts) should be there to help in the
package selection and vendor negotiations.
• The most critical factor that decides the success of any ERP system implementation is
the support of the people who use the system. So the ERP project team members and
the management should do everything in their power to get the support of the end-
users.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
People involved in the ERP Implementation
• The participation of people in an implementation can fall into several different positions:
• Project Sponsor - The role of the project sponsor is to ensure that the ERP implementation
gets all the assistance it needs from resources to management backing.
• Executive committee – This committee formulates the long terms goals, objectives and
strategies regarding the implementation of the ERP system in the company.
• Project Manager - Person responsible for translating the vision and goals into reality.
Reports to the executive committee and heads the project management team.
• Implementation or Work Team - This team consists of selected employees from the
company in addition to vendor representatives and consultants. These employees will
perform the various tasks in implementing the ERP system from installing the hardware,
software, customizing, documenting, training and so on.
• Functional Managers – They oversee the day-today operations of their respective functional
areas.
• Functional Participants - Functional participants answer questions, and review the training
programs and business process flows that are proposed in the new software.
• Consultants – They are experts who will assist the organization’s team in all matters related
to the implementation and operation of the system.
• Package vendors - They are people who have developed the ERP packages and they also
will assist the organization in the implementation, customization, training, etc.
• End-users - End-users are the general mass of people who will use the new ERP system
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Implementation Team
• The CEO, CIO or COO sponsors the project and ensures full support of the
management.
• The executive committee comprising the top management team formulates guidelines
and monitors the project, take corrective actions when required. The project
managers report to the executive committee.
• The project manager heads the project management team. This team includes the
head of the vendor representatives, the chief consultant and the work team leaders.
• The implementation teams carry out the various tasks for implementing the system.
If the implementation team is comprised of people from all departments and from all
levels, they can convey what they have learned about the ERP system and thus help
overcome the initial resistance the system is bound to face.
• The external consultants help the project manager and the work team members in all
aspects of the implementation.
• Vendor representatives advise about best working practices, software functionality
and assist with technical issues.
• The implementation team with the help of the consultants and vendor
representatives help the end-users on how to use the system.
• The technical and administrative support teams ensures that the implementation
team has all the resources they need, when they need it.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Organization of the ERP Implementation Project
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
1. Discuss the importance of people in an ERP implementation project.
2. Discuss the ERP package implementation—the various challenges, tasks and activities, the goals
and objectives.
3. Who are the people involved in the ERP implementation?
4. Explain the nature of the ERP implementation team.
5. Explain the composition of the ERP implementation team.
6. Explain the organization of the ERP implementation team.
7. Discuss the role of the CEO or project sponsor in the ERP implementation.
8. Discuss the composition, duties and responsibilities of the executive committee.
9. What is the role of external consultants in the ERP implementation?
10. Discuss the duties and responsibilities, desired characteristics and qualities of the implementation
project manager.
11. What are the functions of the project management team?
12. What are work teams? Explain its organization and functions.
13. What are the duties of the technical support team?
14. Explain the duties of the administrative support team?
15. Explain how the implementation team works.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
27. Process Definition
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Implementation of Finance and Accounting
Systems
• In an ERP implementation, when should the new finance and accounting systems be
implemented? The available choices are:
1. Implement all or most of the new financial and accounting systems prior to
beginning implementation of the new planning and scheduling processes. This
will delay the planning and scheduling implementation and hence the benefits
like being able to close the books better, faster and cheaper.
2. Implement the new planning and scheduling processes first and have the
accounting side follow. This means that for a time the legacy accounting systems
will be fed by the new ERP transactions.
3. Implement the new financial and accounting systems simultaneously with those
for planning and scheduling. This option if planned meticulously, executed
perfectly and monitored constantly can be successful and deliver the maximum
benefits
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
28. Vendors and Consultants
• Vendors are the people who have developed the ERP packages. They are the people
who have invested huge amounts of time and effort in research and development, to
create the packaged solutions.
• Choosing the right vendor and the right ERP package is one of the most critical tasks
of ERP implementation.
• Vendor selection is not a popularity contest and bigger does not always mean better.
While selecting a vendor the factors like track record, quality of the product, the
financial stability, longevity, after sales service, contribution in implementation,
training, and maintenance should be considered.
• The vendor should supply the product and its documentation as soon as the contract
is signed. Once the contract has been exchanged the vendor will guide the company
through a series of events culminating in the use of the tool.
• The vendor is responsible for fixing any problems that the implementation team
encounters in the software.
• Another role the vendor has to play is that of the trainer—to provide the initial
training for the company’s key users, people who will play lead roles in the
implementation of the system
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Vendors (contd.)
• Vendor training should achieve the goal of showing the key users how the package
works, what the major components are, how the data and information flow across the
system, what is flexible and what is not, what can be configured and what cannot,
what can be customized and what should not, the limitations, the strengths and
weaknesses, and so on.
• The objective of vendor training is to show how the system works, not how it should
be implemented.
• The trainees should use these training sessions to question the vendor on all aspects
of the system.
• The project manager should monitor and control the costs incurred by the vendor.
• Problems and bugs should be brought to the vendor's attention for resolution, for
which there should be a provision within the contract regarding the withholding of
payment.
• The vendor should supply the product and its documentation as soon as the contract
is signed.
• The vendor is responsible for fixing any problems in the software that the
implementation team encounters.
• The ERP software might have to be customized to suit the company’s needs.
Customizing means altering the product so that it is suited for the company’s
purposes. It is the vendor who is responsible for the customization.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Consultants
• Business consultants are professionals who specialize in developing techniques and
methodologies for dealing with the implementation and the various problems that
will crop up during the implementation.
• A consultant's success depends upon a number of factors including computer literacy,
conceptual skills, software knowledge, industry knowledge, maturity, problem-
solving capability, communication skills and organizational skills.
• Thus, consultants are people who have made the business of ERP implementation
their business and have invested huge amounts of money and manpower for that
purpose.
• Consultants provide three general categories of services—management, application
and technical.
1. Management consultants focus primarily on the function of management as it
relates to the organization of resources and business process flows.
2. Application consultants focus on the process of communicating, teaching,
demonstrating and configuring software for the business process flows.
3. Technical consultants deal with technical issues such as database conversions,
source code modifications, communication protocols, operating systems,
software installation, hardware systems and integration programs.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Consultants (contd.)
• Consultants are responsible for administering each of the phases of the
implementation so that the required activities occur at the scheduled time and at the
desired level of quality and with effective participation of all those who must
participate.
• Consultants bring know-how about the package and about implementation—know-
how that is not included in the standard documentation. This know-how (also known
as practical knowledge) is derived from their expertise, which stems from practical
experience.
• By eliminating the trial and error method of implementation and doing it right the
first time the consultants help in saving huge amounts of money, time and effort.
• It is the duty of the consultant to understand the total context and scope of the
envisioned work and to know when to alert the company management about actions
and decisions that must be undertaken so that the job will not be compromised and
the implementation will not be jeopardized.
• Maintaining technical documentation on the project also falls within the duty of the
consultant.
• The consultants should create a knowledge base and should train enough people so
that the work they have started is continued.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
32. Data Migration
• Data migration is the process of translating data from one format to another.
• Data migration is necessary when an organization decides to use a new computing
system or database management system that is incompatible with the current system.
• When implementing a new ERP system the data in the existing legacy business
systems should be migrated to the ERP systems database.
• The real configuration of an ERP system can only happen when there is real data in
the system.
• Data loading and data conversion is not a project that can be done after everything
else is ready, it should be done along with the implementation and should be
complete by the time the implementation is over.
• Extracting and cleansing the data from the existing system can be the single largest
task in the project.
• Data migration can be done either manually or using conversion tools.
• Manual data migration is a time consuming, monotonous and error prone process.
• Data migration using tools automates the migration process, but if not used properly
and without proper analysis, the migrated data will be of bad quality and of no use.
So the choice and use of the data migration tools should be done with care.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Data Migration Process
• Data migration is the process of moving required (and most often very large) volumes
of data from existing systems to new systems.
• Good data migration solutions should achieve maximum flexibility and quality. This
requires taking a number of measures and actions such as:
1. Iteration
2. Weeding
3. Inspection
• The migration of data onto the new system will need planning in detail and at an
early enough point in the implementation to ensure that this process is completed on
time.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
33. Project Management & Monitoring
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Project Manager
• The one person who shoulders the maximum responsibility in an ERP
implementation project is the project manager.
• Qualities of project manager:
1. Team player
2. Should recognize individuals and their efforts
3. Ability to inspire trust and communicate the vision
4. Excellent technical expertise
5. Computer skills
6. Good communication skills
7. Leadership qualities
8. Positive attitude
9. Capability to anticipate the problems and resolve them
10. Good listener
11. Leads by example
12. Excellent organizational knowledge
13. Ready to accept blame for his mistakes
14. Should trust his subordinates and delegate work effectively
• The project manager is the key decision-maker in the ERP implementation.
• The project manager must be capable of making, defending and standing by every
decision.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
ERP Project Management
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Project Monitoring
• One of the main roles of the members of the executive committee is project
monitoring—that is to check and verify that the work that is being done is satisfactory
and that the momentum, morale and enthusiasm of the work team who are
performing the tasks is maintained.
• Before implementation starts the consultants and the company representatives will
sit together and prepare a work plan or project plan.
• The work plan contains numerous activities, the man-hours required to complete
them and the resources need perform the tasks.
• All the parties involved—the executive committee, the vendor, the consultants and
the in-house team—should be in agreement with the contents of the plan.
• The work plan or the project plan forms the basis for project tracking and monitoring.
• The adherence to the plan, and constant monitoring and taking appropriate
corrective actions before the project gets out of control will ensure the success of the
project.
• The key players in the project tracking and monitoring are the project management
team and the executive committee.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
34. Post Implementation Activities
• Treat the day your ERP project goes live as the start of the next phase of your journey.
• Getting to the go-live date on time and under budget is just one piece of the ERP
benefits realization puzzle.
• The efficient operation and maintenance of the ERP system is a challenge that the
ERP team has to undertake after going live.
• The organization should retain a sub-set of your installation team so that they can
enhance the ERP application, handle bottlenecks, tweak and improve the system,
look for continual productivity gains—and learn.
• The post implementation ERP team should be made up of both business and
technical personnel.
• Immediately after going live, the organization enters a stabilization period and during
this period the organizational performance will go down.
• Pre-go-live end-user training can mitigate many of the risks that organizations face at
the time of cutover.
• Defining the go-live and ongoing support processes as part of the overall ERP
planning, will better leverage the ERP technology to realize real business benefits and
ROI from the ERP project.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Post Implementation (contd.)
• The following issues must be addressed in order to achieve the best results during the
post-go-live period:
1. Managing The stabilization period - After a system goes live there is what has
been referred to as a “stabilization period” that typically lasts from three to nine
months. There is usually a performance dip during this period, but by
anticipating problems, giving proper and timely end-user training, and resolving
any issues that comes up during actual use, the stabilization period can be
reduced.
2. Problem resolution mechanism – During the initial period after going live, may
problems are likely to occur. When problems arise there should be a problem
response mechanism which deals with them and which everyone is aware of.
This mechanism should be simple and provide a means for tracking progress in
resolving the problem.
3. Setting up user help-desk - The user help-desk is a call centre facility provided by
the vendor, which allows the client to log problems that he cannot resolve.
4. Setting up in-house help desk - When the system goes live the implementation
team needs to set up a help-desk to answer the queries of the users. Activities of
the in-house help desk can include detecting and responding to system bugs and
answering user questions.
5. Creating a knowledge base – The knowledge of the consultants and
implementation team members should be captured in a knowledge base, which
can be referred by the users to solve problems that have previously occurred. The
questions and solutions from the help desk can also become part of the
knowledge base.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Post Go-Live Activities
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Audits and Review
• Audits and reviews should be conducted to identify what still needs to be done. This
is usually done by the comparison between plans and reality.
• For ERP systems, this comparison has at least three dimensions: systems design and
implementation, planned and actual use, and expected versus actual system
capabilities.
• Some of the issues that are found during the audits & reviews are:
1. Implementation Compromises - Implementation compromises are deviations
from a planned implementation—generally to save time or money.
2. System Design and Implementation - The system design is not always what is
implemented. In order to find differences, planned implementation should be
compared to actual.
3. Compare Planned and Actual Use - A system audit can be performed in order to
find out how the system is actually being used.
4. Compare System Functioning - A comparison between key parts of that vision
and the ensuing reality are necessary to ensure that the system is working as
expected.
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Review Questions
ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.