1. ERP Implementation & Training Indian Institute of Materials Management
User Training
Maintenance
Presenter By
Rajeev Kumar
IIMM Jamshedpur

2. BENEFITS OF ERP Shang 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 FoxMeyer Drug Bankrupt Hershey’s City of Oakland
19% drop in profit
29% increase in inventory
City of Oakland
Erroneous paychecks
Miller Industries
Inefficient ERP – operating loss
WW Grainger Inc
Earnings dropped $11 million

10. Critical Success Factors
What the organization must do well to succeed
For IS Projects:
Top management support
Inherent in ERP
Clearly stated objectives
End User involvement

11. CSF Taxonomy Al-Mashari et al. (EJOR 2003)
SETTING UP
Management & Leadership
Visioning & Planning
IMPLEMENTATION
EVALUATION
Performance evaluation & management

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

13. Features of Successful ERP Implementation Willcocks & 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

14. Factors to Reduce Risk Martin & 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 Factors Umble 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

16. Levels of IS/IT Failure
Corresponding failure
Don’t 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

17. Factors in ERP Implementation Failure Willcocks & Sykes [2000]
Scenario
CIO/IT Focus
Typical outcome
Technological determinism
Technical
Fail to gain business benefits
Supplier/consultant driven
Disregarded
Cost overruns
Outdated relationships & capabilities
Insufficient talent
Chaos

18. Strategies to Attain Success
User vs. Specialist focus
Users over IT staff
Governance & Staffing
High level of support
Champion present
Time-box philosophy
Short (6-9 months if can)
Dolphins, not whales
Supplier/consultant role
controlled

19. User Training Focus on business processes Explain why
Not on using system
Explain why
Don’t skimp on time
Show why new system superior to old

20. Training Delivery Formats
Web-based virtual training
Computer-based training
Video courses
Self-study books
Pop-up help screens

21. Implementation Strategy Options Markus 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

22. Implementation Strategies Mabert et al. [2000]
Strategy
Months %
Big bang 15 41
Phased rollout by site 30 23
Phased rollout by module 22 17
Mini big bang
Phased rollout by module & site 25 2

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

24. ERP Maintenance Nah 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 WHY
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

26. User Reasons to Migrate
Added functionality
Compliance with new standards
Discontinued vendor support
Customer problems in linked systems

27. Summary Time, cost, functionality tradeoff Critical success factors
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