Hour 6: ERP Implementation

1
Hour 6ERP Implementation Training

• User Training
• Maintenance

2
BENEFITS OF ERPShang and Seddon, AMCIS 2000
Proceedings

• Operational
• Managerial
• Strategic
• IT Infrastructure
• Organizational

3
Organizational Benefits

• Cost reduction
• Cycle time reduction
• Productivity improvement
• Quality improvement
• Customer services improvement

4
Managerial Improvement

• Improved resource management
• Better decision making
• Hard to prove
• Better planning
• Performance improvement

5
Strategic Improvement

• Support business growth
• Support business alliances
• If they have the same system
• Build business innovations
• ? System can be constraining
• Build cost leadership
• Generate product differentiation
• ?? Over time, only if you customize
• Build external linkages
• ? If they have the same system

6
IT Infrastructure Improvement

• Build business flexibility
• ??? ERP inherently a rigid system
• IT cost reduction
• The main reason CEOs adopt ERP
• Increased IT capability

7
Organizational

• Support organizational change
• FORCE organizational change!!
• Facilitate business learning
• BPR does a good job of this
• Empower employees
• Within the system!!
• Build common vision
• FORCES common vision

8
Organizational Change from ERP

• Productivity decline
• Jobs redefined, new procedures established, ERP
  fine tuned, organization learns to process new
  information streams
• Productivity gain
• Develop new skills, structural changes, process
  integration, add bolt-ons
• Payoff
• Transform organizational operations to efficient
  level

9
ERP Project Failure
10
Critical Success Factors

• What the organization must do well to succeed
• For IS Projects
• Top management support
• Inherent in ERP
• Clearly stated objectives
• Inherent in ERP
• End User involvement

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CSF TaxonomyAl-Mashari et al. (EJOR 2003)

• SETTING UP
• Management Leadership
• Visioning Planning
• IMPLEMENTATION
• EVALUATION
• Performance evaluation management

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IMPLEMENTATION

• Financial
• ERP package selection
• Behavioral
• Communication
• Process management
• Training education
• Cultural structural changes
• Technical
• Project management
• Legacy systems management
• Systems integration
• Systems testing

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Features of Successful ERP ImplementationWillcock
s Sykes 2000

• IT Leadership
• Business systems thinking
• Relationship building
• Have needed technical platform
• Ability to troubleshoot
• Informed buying
• Contract efforts coordinated
• Suppliers held accountable
• Long-term relationships with suppliers

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Factors to Reduce RiskMartin Cheung Business
Process Management Journal, 2000

• Business case
• Justify need for system, establish objectives
• Benchmark
• Import best practices
• Implementation strategy
• Align system with corporate strategy
• Project management
• Change management
• BPR
• Installation

15
ERP Critical Success FactorsUmble et al. EJOR
2003

• Clear understanding strategic goals
• Top management commitment
• Project management implementation
• Great implementation team
• Cope with technical issues
• Organizational commitment to change
• Extensive education training
• Data accuracy
• Focused performance measures
• Resolution of multi-site issues

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Levels of IS/IT Failure

• Corresponding failure
• Dont meet design objectives
• Process failure
• Not on time /or not within budget
• Interaction failure
• System not used as designed
• Expectation failure
• Return not what stockholders expected

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Factors in ERP Implementation FailureWillcocks
Sykes 2000
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Strategies to Attain Success
19
User Training

• Focus on business processes
• Not on using system
• Explain why
• Dont skimp on time
• Show why new system superior to old

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Training Delivery Formats

• Web-based virtual training
• Computer-based training
• Video courses
• Self-study books
• Pop-up help screens

21
Implementation Strategy OptionsMarkus et al.
2000

• Business Strategy
• Total local autonomy
• Headquarters control financial only
• Headquarters coordination
• Network coordination
• Total centralization
• Software Configuration
• Single/multiple financial/operations
• Technical Platform
• Centralized/Distributed
• Management Execution
• Big bang/Phased rollout

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Implementation StrategiesMabert et al. 2000
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Implementation Strategies

• Big bang seemingly cheapest
• Dangerous
• Often makes sense in ERP if carefully planned
• Phased rollout reduces risk
• Especially good for large organizations

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ERP MaintenanceNah et al. (2001)

• Corrective
• Incorporate vendor patches, fix problems
• Adaptive
• Implement new features, internal customization,
  implement interfaces
• Perfective
• New versions
• Preventive
• Monitor response time, errors, track maintenance
  activities

25
ERP System Migration

• Over time, need to adopt changes
• Minor modifications
• Maybe system replacement
• Vendors change products
• WHY
• The longer the time between upgrades, the harder
• Easier to support a smaller number of software
  versions
• Migrations can increase sales of seats, add-ons

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User Reasons to Migrate

• Added functionality
• Compliance with new standards
• Discontinued vendor support
• Customer problems in linked systems

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Summary

• Time, cost, functionality tradeoff
• In ERP, functionality the most important
• Critical success factors
• Top support clear objectives inherent in ERP
• Need User Involvement
• Phased implementation reduces risk
• but increases time
• Once installed, still many pitfalls
• Vendors change products
• User training critical