• 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
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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
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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
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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
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Evolution of ERP systems
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Evolution of ERP
ERP
Materials Planning Order Entry Distribution General Ledger Accounting Shop Floor Control
Reliable Information Access Avoids Data & Operations Redundancy Delivery & Cycle Time Reduction Cost Reduction Improved scalability Global Outreach E Commerce, E business
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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
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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, service, Productivity enhancements, Inventory Customer problems, Cash Management,
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)
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Sometimes ERP - Implementation Performance Falls Short of Expectations…
Pe Ta rfo rg rm et a Zo nc ne e
Pre-ERP Expectations
Corrective Action Must Be Applied
le Acceptab nce Performa
PostImplementation Realizations
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
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
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If the end comes without sufficient up – front planning, you may hear what we sometimes hear . . . •
There is a lack of user education on how to use the system, resulting in many “workaround” processes
“The ERP system has become more of a hindrance than help.”
• • •
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 heroes The goal of a well planned implementation is not to create heroes
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The Five Levers of Change in any Organization
Strategic understanding of the role, positioning and focus for enterprise-wide decision-making in support of overall organizational objectives
gy e at r St
Co nt ro ls
The governance model for the management, administration, and evaluation of initiatives, with a strong focus on the appropriate metrics applied for measurement
Operating methods and practices, including policies and procedures, which determine the way activities are performed
Technology
Enabling information systems, applications, tools, and infrastructure
Peo p
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le
The human resource environment, including skills, organizational culture, and organizational structure
Alignment
s ces Pro
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ERP Implementation Lifecycle
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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?
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Best Practices for Stage 1- Solution Inquiry
•
Identify what benefits the organization needs to get out of an ERP, and focus on these benefits throughout the implementation
•
Executive project
management
should
endorse
the
ERP
• •
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
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Best Practices for Stage 1- Solution Inquiry
Persons directly responsible for ERP implementations
Other COO CTO CFO CIO IT Director CEO/President 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%
Source: IT toolbox ERP Implementation Survey
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ERP Implementation Lifecycle-Stage 2-ERP Approach • Key questions that a business should ask are:
• 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?
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Best Practices for Stage 2- ERP Approach
•
Determine the number of partners, the scope of the partnerships etc.
Create the business case, justification & ROI scenarios to determine the most feasible approach
•
Ensure that all gaps between plans & performance are closed out
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ERP Implementation Lifecycle Stage 3 - Package Selection
• Key questions that a business should ask are:
• •
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?
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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
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ERP Implementation Lifecycle – Stage 4 - Implementation Plan
•
Key questions that a business should ask are:
•
How do we get started with the implementation?
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ERP Implementation Methodologies
• The Big Bang • Modular Implementation • Process Oriented Implementation
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Implementation Approach
Phase
Detailed Discussions
Tasks
• 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
Deliverables
• Accepted norms & Conditions • Project Organization Chart • Identify Work Teams • • • • • • Organization Structure Design Specification Process Flow Diagrams Function Model Configuration Recording Systems Modification
Design & Customization
Implementation/ Prepare to Go Live
• Create G o-Live Plan & Documentation • Integrate Applications • Test the ERP Customization • Train Users • Run Trial Production • Maintain Systems
• Reconciliation Reports • Conversion Plan Execution
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Implementation Time
Size of Business
Scope Of Processes
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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 10 - Extending the Enterprise
Key decision makers in adding new modules
Others CTO COO CIO CEO/President IT Director CFO 0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Source: IT toolbox ERP Implementation Survey
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Current Enterprise Applications Environment
Combination of standalone & bespoke packages, 3%
Combination of integrated and bespoke packages, 11%
Mainly based on integrated ERP packages, 44%
Combination of integrated and standalone packages, 21%
Mainly based on bespoke applications, 14%
Mainly based on standalone packages, 7%
Source: PMP Research
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Enterprise/ERP Systems Usage
Do you feel that you are using your existing enterprise or ERP software to its full extent?
Yes, software is used to its full extent, 5% Yes, Software is used extensively, 22%
No, a large portion of the software is not used, 32% No, a small portion of the software is not used, 41%
Source: PMP Research
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ERP Implementation Quality
How would you describe the information delivered to managers in your organization via your ERP and enterprise systems?
Information is targeted or personalized for specific functions/managers, 29%
Information is generally available, but managers need to identify which elements are relevant, 44%
Other, 7%
Many managers within the organization are suffering from an "information overload" and cannot pick what is relevant, 20%
Source: PMP Research
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Top Ten Reasons ERP Implementations Fail
1. Governance
Lack of a single person in charge who reports directly to openly supportive senior executive accountable for the solution. Also, ineffective steering body of cross-functional senior executives Failure to align contract for services with the requirements expectations. Also, make sure initial scope is achievable to build momentum Insufficient investment in all facets of change management Team members lack a thorough understanding of the technical capabilities of the solution or of the underlying business processes Relying too much on consensus-based decisionmaking, rather than rapid evaluation of options
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2. Scope
3. Change Management
4. Skills
5. Decision Making
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Top Ten Reasons ERP Implementations Fail
6. Communications
Lacking at all levels (executives, functional owners, across team, with working level system users, external stakeholders, etc.) Lack of a solution architecture implementation methodology or proven
7. Solution Architecture
8. Training
Insufficient investment at all levels (including executives) Trying to force an integrated, enterprise-wide solution into a stove-piped culture. Systemic resistance to change Lack of “public” leadership from senior, accountable executive and/or lack of continuity in this leadership position