ERP Implementation & Maintenance

1. ERP Implementation& Maintenance Presented By Thu Dang

2. ERP definition • Selection Methods • Business Process Reengineering • Identify best way to do each business task • Project Management • Critical Path Method • System Installation Options • System failure method • Implementation techniques • Waterfall • Spiral

3. According to a survey conducted by Forrester Research in April 2001, only six percent of 500 companies surveyed considered their ERP systems effective, while 79 percent said they were not effective or only somewhat effective.

4. Factors contributing to ERP failure • Inherent complexity of ERP implementation • Inadequate Training • Process Risk and Process Barriers • Corporate Culture • Unrealistic Expectations • Over-customization of Software • Timeline Flexibility • Infrastructure

5. Inherent complexity of ERP implementation • Problem: • ERP systems are: • Complex • Difficult • Time-consuming • Expensive • Commitment from all divisions and • Change in company’s culture (the way company does business) • Require years to complete and • No guarantee of the outcome

6. Inherent complexity of ERP implementation • Hershey Foods’ SAP AG’s R/3 implementation failure • Spent $112 million and 30 months on the project • July 1999, problems pushing orders through the system, resulting in shipping delays and deliveries of incomplete orders

7. Reasons of Hershey’s failure • Go live early then scheduled • 4 years vs. 30 months • Simultaneously implemented a customer-relations package and logistics packages • Increasing the overall complexity and employees learning curve • Went live at busiest time • Just before Halloween Results: loss in profits –3rd quarter profits drop by $151 million compared to the previous year

8. Solutions To Failure • Plan ERP project go-live date during the company’s slow periods • Roll out the modules in stages (Phased rollout) • Don’t attempt to implement other application simultaneously • Don’t speed up the timeline –critical testing and training of users

9. Inadequate Training • Training of user personnel is critical • Trained technical staff, and user community • Must find right person or organization to conduct the training • Training programs: • Web-based virtual training • Computer-based training • Video courses • Self-study books • Pop-up help screens

10. Process Risk and Process Barriers • Process Risk • The risk that a business will suffer significant financial losses or harm to its reputation as a result of significant changes in the way the company does business. Types of process risk: • Project fights – when problem occur, top management drops the project • Process fumbles – new implementation is more than the company can handle, timelines slip and performance problems crop up • Process failures – new process doesn’t work after go-lives

11. Process Barriers • Focusing on technology –software alone will not solve business problems • Ignoring requirements definition –processes are adopted to fit the software or legacy processes are forced into software that’s not designed to handle them • Skipping the implementation plan phase –jumping from requirements definition to development phase

12. Solutions • Top management must remain fully committed to the project • Good project team, headed by an experienced project lead • Well thought out implementation plan

13. Corporate Culture • Leadership sponsors’ involvement, accessibility in the project and recognition of the role of employees play in a successful implementation • Failures: • Employees do not realize the needs and benefits of the project • Resist to change • Users do not take ownership of the project

14. Solutions • CEOs and CFOs have to visibly support and monitor the progress of the project • Every project needs a sponsor –someone who can make things happen • Alpha Industries • Involving the users from the outset • Took time to prepare the staff for change • Allowing them to buy in to the change process • Involve everyone and gave the users ownership of the project

15. Unrealistic Expectations • System does not quite match up with the expectations of project stakeholders • Solutions: • To avoid the problem of mismanaging user expectations, project manager must be able to: • Explain what can and can not be achieved • Understand the user expectations • Prioritize the user expectations and communicate the priorities to the user community • Formally document the user expectations • Continuously validate project deliverables to expectations

16. Over-customization of Software • Problem: • Organizations modify software more than they should, rather than modifying their business processes • Hurts performance and cause upgrade and testing headaches • Solutions: • Find ERP package that mirrors business practice as closely as possible, then resolve to implement the package without significant modifications

17. Timeline Flexibility • Company must ensure that the system is fully tested and ready for implementation or deal with negative consequences • Whirlpool, for example • Suffered delays in shipping product • Left appliances sitting in warehouses and stores with six-to-eight week delays for shipping orders It’s important to stick to the schedules in ERP implementations but if meeting the project deadline results in a failed implementation, management should extend the deadline.

18. Infrastructure • Infrastructure issues must be considered in the rollout of any large system. Server technology, bandwidth measurements, and database requirements must all be researched prior to system installation.

19. 10 categories of CSF in ERP implementation 1.     Clear understanding of strategic goals 2.      Commitment by top management 3.      Excellent implementation project management 4.      Great implementation team 5.      Successful coping with technical issues 6.      Organizational commitment to change 7.      Extensive education and training 8.      Data accuracy 9.      Focused performance measures •   Multisite issues resolved • Continually monitored the project after go-live

20. Successful ERP Implementation • Georgia’s Department of Administrative Services (DOAS) –implemented ERP on time and within budget • Complete annual contract reviews in hours instead of weeks • Reduced audit preparation time by at least 50% • Bradley Corporation – • Lower inventory levels and warehouse space requirements • Increased sales without added staff • Decreased lead times and increased on-time deliveries Attributes their success to reengineering the business processes • McKesson HBOC attributes their success to a cautious rollout and strict adherence to plan • Install SAP’s backoffice applications one by one • Changes must be approved by an executive steering committee

21. REFERENCES • Olson, David L., Managerial issues of Enterprise Resource Planning Systems • http://www.computerworld.com/news/1999/story/0,11280,37464,00.html • http://www.umsl.edu/~sauter/analysis/488_f01_papers/barton.htm#Introduction • http://www.computerworld.com/news/1999/story/0,11280,29365,00.html • http://itmanagement.earthweb.com/entdev/article.php/614681 • Pfaff, Greg. ERP Installation Options • Grieggs, Elizabeth. ERP Project Management