erp implementation

w w w . r e l e v a n t e . c o m

w w w . r e l e v a n t e . c o m2

• Enterprise Planning

• Introduction to ERP

• Evolution

• Characteristics

• Architecture

• Advantages

• Major features of ERP

• Best Practices for an ERP Implementation through

its lifecycle

• Top 10 reasons ERP implementations fail

Presentation Topics


Plan to Perform

• Traditional – manage performance by

analyzing past results

• You can’t alter performance after it

happens

• Value of Enterprise Planning – plan before

you perform


Enterprise Planning

• Core Principle – performance must be

planned and continuously managed

• Without a plan:

• Vulnerable to unfolding events

• Buffeted by unforeseen factors

• Lack predictability

• Core Benefit – adapt with greater flexibility

and speed


Wide View of Enterprise Planning

• Initially synonymous with budgeting

• Implies cross-functional planning, breaking

through silos that impede collaboration

• Objective - All information in one holistic view

on a common platform


Evolution of ERP systems


Evolution of ERP

ERP

Accounting

General Ledger

Order Entry

Distribution

Materials Planning

Shop Floor Control

Extended ERP

Logistics

Warehousing

E-Commerce

Scheduling

Forecasting

Capacity Planning

ERP - II

Project Management

Knowledge Management

Workflow Management

Customer Relationship Management

Human Resource Management

Portal Capability

Integrated Financials


Characteristics of ERP Systems

• Modular Design

• Uses centralized common database

management systems

• Modules integrated to provide seamless

data flow

• Flexible & offers best business practices

• Work real time with online & batch

processing capabilities


Architecture of an ERP System


Why implement an ERP System?

• To support business goals

• Integrated, on-line, secure, self-service

processes for business

• Eliminate costly mainframe/fragmented

technologies

• Improved Integration of Systems and

Processes

• Lower Costs

• Empower Employees

• Enable Partners, Customers and Suppliers


Advantages of ERP Systems

• E Commerce, E business

• Global Outreach

• Improved scalability

• Cost Reduction

• Delivery & Cycle Time Reduction

• Avoids Data & Operations Redundancy

• Reliable Information Access


Major Features of ERP (1)

• Company-wide Integrated Information

System

• Performs core Corporate activities and

increases customer service

• Bridges the information gap across the

organization

• Complete integration of Systems

• Across departments

• Across companies

• Better Project Management


Major Features of ERP (2)

• Automatic introduction of latest technologies (EFT),

(EDI), Internet, Intranet, Video conferencing,

E-Commerce, etc.

• Eliminates most of the business problems like Material

shortages, Productivity enhancements, Customer

service, Cash Management, Inventory problems,

Quality problems, Prompt delivery etc.

• Addresses current requirements of the company and

provides opportunity of continually improving and

refining business processes.

• Provides business intelligence tools like Decision

Support Systems (DSS), Executive Information

System (EIS), Reporting, Data Mining and Early

Warning Systems (Robots)


Pre-ERP Expectations:

� Integrated business processes

� Update legacy/customized programs

� Cross-functional efficiencies

� Cost and time savings

� Shareholder value enhanced

� Competitive advantage secured

� Timely information

Post Implementation Frustrations:

� ERP design and business processes unaligned

� Manual processes work around system constraints

� Transactional complexity

� Limited managerial reporting

� Untimely information

� Financial benefits fall short of expectations

Performance

Target Zone

Pre-ERP Expectations

Acceptable

Performance Post-ImplementationRealizations

Corrective ActionMust Be Applied

Improvement objectives:

� Strategy enhanced and deployed

� End to end processes continuously improved

� People aligned and learning

� Stakeholder value measured and enhanced

� Enterprise Resource Management leveraged and improved

� Sustain benefits

� Optimize business connectivity

Sometimes ERP - Implementation Performance Falls Short of Expectations…


• There is a lack of user education on how

to use the system, resulting in many

“workaround” processes

• There are configuration problems

• People do not want to use or are afraid to use the system

• Full core functionality is not being used (reporting done

externally)

• Extensions are needed to provide needed functionality (product

configurator, xxx)

• Processes and the system may not be completely aligned

The goal of a well planned implementation is not to create heroesThe goal of a well planned implementation is The goal of a well planned implementation is notnot to create heroesto create heroes

If the end comes without sufficient up – front planning, you may hear what

we sometimes hear . . .

“The ERP system has become more of a hindrance than help.”


Enabling information systems, applications, tools, and infrastructure

The governance model for the management, administration, and evaluation of initiatives, with a strong focus on the appropriate metrics applied for measurement

The human resource environment, including skills, organizational culture, and organizational structure

Strategic understanding of the role, positioning and focus for enterprise-wide decision-making in support of overall organizational objectives

Operating methods and practices, including policies and procedures, which determine the way activities are performed

Strategy Controls

Process

Technology

People

Alignment

The Five Levers of Change in any Organization


ERP Implementation Lifecycle


ERP Implementation Lifecycle -Stage 1-Solution Inquiry

• Key questions that a business should ask are:

• Are we ready for ERP?

• How will an ERP help our business?

• Have we considered other solution areas beyond ERP?

• Who will lead our implementation effort?


• Identify what benefits the organization needs to get

out of an ERP, and focus on these benefits throughout

the implementation

• Executive management should endorse the ERP

project

• Develop a Mission Statement or Project Charter

• Establish metrics to measure how well the objectives

of the ERP effort are being met.

• Designate a Project Champion

• Implementation responsibilities to be shared between

the IT department and functional areas

• Build a framework for participation from all quarters

Best Practices for Stage 1- Solution Inquiry


Persons directly responsible for ERP implementations

Source: IT toolbox ERP Implementation Survey

Best Practices for Stage 1- Solution Inquiry

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

CEO/President

IT Director

CIO

CFO

CTO

COO

Other


ERP Implementation Lifecycle-Stage 2-ERP Approach


• Do we have the in house resources, skills and

experience to implement ERP?

• Should we build effective strategic

partnerships?

• Have we considered how the implementation

will differentiate our business?

• Have we developed a business case for the ERP

implementation project?


• Determine the number of partners, the scope

of the partnerships etc.

• Set up the internal project team

• Steering Committee (Executive level)

• Advisory Committee (One level lower,-Key

Directors & major stakeholders)

• Cross Functional Project Team

• Create the business case, justification & ROI

scenarios to determine the most feasible

approach

• Ensure that all gaps between plans &

performance are closed out

Best Practices for Stage 2- ERP Approach


ERP Implementation Lifecycle -Stage 3 - Package Selection


• Do the features and functions meet our needs?

• Is the ERP package compatible with our

business?

• Should we buy an integrated package from a

single vendor or best-of-breed solutions from

several vendors?


Best Practices for Stage 3- Package Selection

• Develop and document a project scope statement

• Conduct a business process review & identify signature business

processes

• Document “as is” flows of current information

• Identify functional gaps

• Document & sign off “to-be” flows of current information

• Customize the RFP to include features that meet your “to-be”

flows

• Key factors should be kept in mind while selecting the software

• Functional Capabilities

• Technical Attributes

• Partnership’s Capabilities

• Cost


ERP Implementation Lifecycle –Stage 4 - Implementation Plan


• How do we get started with the implementation?


ERP Implementation Methodologies

• The Big Bang

• Modular Implementation

• Process Oriented Implementation


Implementation Approach

Production / Go Live

DetailedDiscussions

Design &Customization

Implementation/Prepare to Go Live

• Run Trial Production• Maintain Systems

• Project Initialization• Evaluation of current processes,business practices, requirements

• Set-Up Project Organization

• Map Organization• Map Business Processes• Define Functions and Processes• ERP S/w Configuration• Build ERP System Modifications

• Create G o-Live Plan & Documentation

• Integrate Applications• Test the ERP Customization• Train Users

• Reconciliation Reports• Conversion Plan Execution

• Accepted norms & Conditions• Project Organization Chart• Identify Work Teams

• Organization Structure• Design Specification• Process Flow Diagrams• Function Model• Configuration Recording• Systems Modification

• Testing Environment report• Customization Test Report• Implementation Report

DeliverablesPhase Tasks


Implementation Time

Size of Business

Scope Of Processes


Best Practices for Stage 4 - Implementation Plan

• Procure and install required hardware and

package software

• Roll out with preliminary implementation plan

that covers

• A Phased Approach

• Segregation of Duties Plan

• Quality Plan

• Security Plan

• Package training for implementation team

• Project team members’ normal job responsibilities

should be reassigned to other employees/outside

consultants for the project duration


ERP Implementation Lifecycle - Stage 5 - Sandbox

• Key questions that a business should ask

are:

• What steps do we take to ensure that the

implementation is on track?


• Create a separate dedicated work environment

specifically for the project team

• Build user acceptance test scripts

• Identify required custom reports

• Implement a system of sign off’s & hand off’s for

deliverables and work products

• Ensure complete data migration from the old software

system to the new begins early in the implementation

process

• Constantly evaluate risks, constraints & assumptions

• Develop training plan for all users

• Develop rollout plan

Best Practices for Stage 5 - Sandbox



are:

• How do we ensure that the project team and

the end users are in sync?

• How do we ensure that our people are

accepting change?

ERP Implementation Lifecycle -Stage 6 - Design & Deployment


Best Practices for Stage 6- Design & Deployment

• Roll out training plan for all users in a phased manner

• Conduct user group conferences & prototype sessions to

demonstrate the system’s capabilities

• Solicit feedback from end users and ensure that all

concerns & questions are addressed

• Encourage end users to network with peers at other

institutions undergoing similar implementation initiatives

• Ensure that implementation information is continuously

communicated to the user community

• Pilot rollout / evaluation

• Complete live rollout - rollout support



are:

• How do we integrate the ERP with our other

legacy systems?

ERP Implementation Lifecycle -Stage 7- ERP Integration


• Design interfaces ( if required) to integrate

existing applications (e.g. CRM, HR) directly

with the ERP system

• Ensure adequate documentation exists to

support the integration between interfaces

Best Practices for Stage 7- ERP Integration



are:

• Is our IT infrastructure ready for ERP?

ERP Implementation Lifecycle -Stage 8 - IT Infrastructure


Best Practices for Stage 8 - IT Infrastructure

• Set up server infrastructure to build

training, development and production

instances that run concurrently

• Ensure that the infrastructure can handle

the load of concurrent transactions from

all instances

• Ensure system security policy is in force


ERP Implementation Lifecycle - Stage 9 - Operations


are:

• How will we recover from a major outage?


Best Practices for Stage 9 - Operations

• Execute a onsite maintenance SLA with

partners

• Implement a Disaster Recovery Plan

• Review Business Impact & Associated Risk

• Off site backups

• Provide disaster recovery training to key

personnel


• Consider expanding ERP to other solution

areas

• Supply Chain Management

• Customer Relationship Management

• E-commerce Solutions

ERP Implementation Lifecycle -Stage 10 - Extending the Enterprise


ERP Implementation Lifecycle -Stage 10 - Extending the Enterprise

Key decision makers in adding new modules

Source: IT toolbox ERP Implementation Survey

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

CFO

IT Director

CEO/President

CIO

COO

CTO

Others


Current Enterprise Applications Environment

Combination of standalone &

bespoke packages, 3%

Mainly based on integrated ERP

packages, 44%

Mainly based onstandalone packages,

7%

Mainly based on bespoke applications,

14%

Combination of integrated and standalone packages,

21%

Combination ofintegrated and

bespoke packages, 11%

Source: PMP Research


Enterprise/ERP Systems Usage

Do you feel that you are using your existing enterprise or ERP software to its full extent?

No, a small portion ofthe software is notused, 41%

Yes, Software is usedextensively, 22%

Yes, software is usedto its full extent, 5%

No, a large portion ofthe software is notused, 32%



ERP Implementation Quality

How would you describe the information delivered to managers in your organization via your ERP and enterprise systems?

Information is generally available, but managers need to identify which elements are relevant, 44%

Many managers within the organization are suffering from an "information overload" and cannot pick what is relevant, 20%

Other, 7%

Information is targeted or personalized for specific functions/managers, 29%



1. Governance1. Governance Lack of a single person in charge who reports Lack of a single person in charge who reports

directly to openly supportive senior executive directly to openly supportive senior executive

accountable for the solution. Also, ineffective accountable for the solution. Also, ineffective

steering body of crosssteering body of cross--functional senior functional senior

executivesexecutives

2. Scope2. Scope Failure to align contract for services with the Failure to align contract for services with the

requirements expectations. Also, make sure requirements expectations. Also, make sure

initial scope is achievable to build momentuminitial scope is achievable to build momentum

3. Change Management3. Change Management Insufficient investment in all facets of change Insufficient investment in all facets of change

managementmanagement

4. Skills4. Skills Team members lack a thorough understanding of Team members lack a thorough understanding of

the technical capabilities of the solution or of the the technical capabilities of the solution or of the

underlying business processesunderlying business processes

5. Decision Making5. Decision Making Relying too much on consensusRelying too much on consensus--based decisionbased decision--

making, rather than rapid evaluation of optionsmaking, rather than rapid evaluation of options

Top Ten Reasons ERP Implementations Fail


6. Communications6. Communications Lacking at all levels (executives, functional Lacking at all levels (executives, functional

owners, across team, with working level system owners, across team, with working level system

users, external stakeholders, etc.) users, external stakeholders, etc.)

7. Solution Architecture7. Solution Architecture Lack of a solution architecture or proven Lack of a solution architecture or proven

implementation methodologyimplementation methodology

8. Training8. Training Insufficient investment at all levels (including Insufficient investment at all levels (including

executives)executives)

9. Culture9. Culture Trying to force an integrated, enterpriseTrying to force an integrated, enterprise--wide wide

solution into a stovesolution into a stove--piped culture. Systemic piped culture. Systemic

resistance to changeresistance to change

10. Leadership10. Leadership Lack of Lack of ““publicpublic”” leadership from senior, leadership from senior,

accountable executive and/or lack of continuity in accountable executive and/or lack of continuity in

this leadership positionthis leadership position

Top Ten Reasons ERP Implementations Fail

erp implementation

Documents

erp design

evolution of erp systems

integrated business

e business

business problems

refining business processes

end processes

cash management