ERP Implementation

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Presentation Topics

• 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

Extended ERP
Scheduling Forecasting Capacity Planning E-Commerce Warehousing Logistics

ERP - II
Project Management Knowledge Management Workflow Management Customer Relationship Management Human Resource Management Portal Capability Integrated Financials

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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

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Architecture of an ERP System

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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

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Advantages of ERP Systems

• • • • • • •

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

17

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.



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

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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

• Testing Environment report • Customization Test Report • Implementation Report

Production / Go Live

• 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

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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?

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Best Practices for Stage 5 - Sandbox


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

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ERP Implementation Lifecycle Stage 6 - Design & Deployment


Key questions that a business should ask 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?

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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

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ERP Implementation Lifecycle Stage 7- ERP Integration


Key questions that a business should ask are:


How do we integrate the ERP with our other legacy systems?

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Best Practices for 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

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ERP Implementation Lifecycle Stage 8 - IT Infrastructure


Key questions that a business should ask are:


Is our IT infrastructure ready for ERP?

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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

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ERP Implementation Lifecycle - Stage 9 - Operations
• Key questions that a business should ask

are:


How will we recover from a major outage?

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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

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ERP Implementation Lifecycle Stage 10 - Extending the Enterprise
• Consider expanding ERP to other solution

areas
• • •

Supply Chain Management Customer Relationship Management E-commerce Solutions

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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

9. Culture

10. Leadership

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