1. Implementing Enterprise Systems
Sharmistha Dey

2. Recap from last week…. SAP Overview Requirement Analysis Business Case
2 types of requirements analysis?
Issues with Requirements / Gap analysis
Which resulted…
Business Case

3. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not understanding the scope
Not committing the right resources
Not managing the change
Not managing benefits
Not embracing integration
Not planning for the end of the project

4. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not understanding the scope
Last time you will replace major systems
Partial delegation of your IT strategy to vendor
Every aspect & person to be affected
These are business not IT projects
Limit conflicting parallel activities, e-commerce

5. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not committing the right resources
Creative, capable & knowledgeable staff
Use the best people in the organisation
Steering committee empower team to make bus decisions
Full time people, not part time
Team members will be greatly enhanced
Motivate and retain team members

6. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not managing the change
Change management, soft & psychological
Communicate and influence change
Be personal in your communications
Use network of project reps, 2 way feedback
Change man need to be trusted and respected
User training crucial

7. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not managing benefits
Costs & Times actively reported
Benefits not actively reported
Business case needs to be revisited including benefits
Benefits need - owners & key factors
Bus case needs detailed benefit delivery plan

8. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not embracing integration
Resistance to organizational restructure
Operational staff are empowered
Significant change to structure necessary
Roles need to be redefined along processes

9. Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins, www
Implementation Sins Ref: Manoeuvre, The Six deadly ERP Sins,
Not planning for the end of the project
What are the long term implications
Outsource vs in-house for long term management
Build in-house support groups for future
What is the future of project team after ERP?
Continuous improvement, how do you transfer from “project mode” to “structured improvement”?

10. Enterprise Systems Implementation methods
“Phased” and “big bang” are the two primary (and contrasting) approaches used to implement ES.
This lecture will investigate..
what these terms mean,
some properties of each approach, and
some of the advantages and disadvantages of each.
This lecture will also analyse the choice of the implementation methodology in light of
organisation size,
complexity, and
structure and in terms of overall extent of the implementation.

11. What is a Big-Bang implementation?
In a full big-bang implementation, an entire suite of ES applications is implemented at all locations at the same time.
Using Big-Bang, the system goes from being a test version to being the actual system used to capture transactions in only a matter of days.
Big bang requires simultaneous implementation of multiple modules.
The big bang approach usually employs a three-step process.
All relevant processes and artefacts are chosen (or developed) and implemented in the software.
All modules are tested individually and for their interfaces with other modules.
The old system is turned off and the new system is turned on.
A lot of prayers..

12. What is a phased implementation?
A phased approach is one where modules are implemented one at a time or in a group of modules, often a single location at a time.
Phased implementations are sequential implementations that consist of designing, developing, testing, and installing different modules.
Unlike big bang, phased implementations require that substantial attention and maintenance be given to legacy systems in order - at each phase - to facilitate integration with the new ES.
As compared with big bang, the phased approach has smaller “slices” of module process and artefact design, development, testing, and implementation.

13. What are the advantages of a big bang approach?
No need for temporary interfaces;
Limited need to maintain and revise legacy software;
Lower risks;
Immediate Functionality linkage;
No going back (This may be seen as a disadvantage…depending on the way you see it)
Shorten implementation time; and
Lower cost;

14. What are the advantages of phased implementations?
Peak resource requirements are less than with big bang;
More resources can be devoted to a particular module;
Legacy system fallback;
Personnel gain knowledge in each phase;
Project manager can demonstrate a working system; and
Time between development and use is reduced.

15. What are the disadvantages of Big bang?
Huge peak resources may be required;
Fewer resources will be available for a particular module;
The risk of total system failure may be higher;
Cannot readily go back to legacy system;
Personnel have fewer hands-on opportunities to gain knowledge;
Project manager can’t show that it works until the system is entirely installed; and
Time between development and implementation may be longer.

16. What are the disadvantages of phased implementation?
Heavy use of temporary interfaces;
Need to maintain and revise legacy software;
Higher risk of uninvolved and uncoordinated personnel;
Higher risk of losing personnel to turnover;
May not be enough modules implemented to achieve functionality;
Operative legacy system constitutes fallback position that may derail new implementation;
Longer duration to install; and
Higher total cost.

17. Organisational characteristics and implementation methodology
Sharmistha Dey

18. Sample Organizational Characteristics
Size
Complexity
Organizational Hierarchy
Number of Modules
Extent of the coverage

19. In general….
Organisational size and complexity are a critical set of intervening variables upon which choice of appropriate implementation methodology depends.
Small and less complex organisations use big-bang approaches whereas larger, more complex organisations use phased approaches.
As the size and complexity of firms increase, the likelihood that those firms will pursue a phased approach increases.

20. PHASED COMPLEX Big bang SIMPLE SMALL LARGE Complexity
Organisational size

21. Organisational size and complexity
Organisational complexity derives from a number of sources, including:
organisation’s products and customers;
characterises of products and customers;
product line.
The size of the firm also can relate to a number of factors, including:
revenues or total assets;
number of offices or geographic regions;
products and customers might also be used to measure organisation size.
Number of user licenses for the ES

22. Small, less complex firms
For smaller and less complex firms, there will be less variation across products and customers.
As a result, implementation of the resulting design is not as difficult as in more complex settings.
Further, since the size is small and the design is not complex, there is likely to be less risk of failure associated with a big-bang implementation.
Accordingly, since big bang is generally faster and cheaper, smaller and less complex firms can effectively employ a big-bang approach.

23. Large, more complex firms
If the firm is very large and complex, then a phased implementation is more likely to be used than big bang.
Organisational size and complexity can make a big-bang approach too difficult or the probability of failure too high, leading the organisation to choose a phased approach.
Analysts have suggested that most large firms use some version of a phased approach and that few large firms employ a big-bang implementation.

24. Organisational hierarchy and control
Even if all other organisational issues are equal, the choice of implementation methodology should consider
organisational hierarchy and controls.
In general, as an organisation becomes more hierarchical with tighter controls, it becomes more able to sustain a phased implementation.

25. Flat organisation and loose controls
Bobby Cameron of Forrest Research has suggested that some company characteristics should lead to use of a big-bang approach:
“If a company has a flat organisation that is not tightly controlled, it’s very difficult to sustain commitment throughout a phased implementation”.

26. PHASED
Tall
Organisation structure
Big bang
Flat
Loose
Tight
Extent of controls

27. Extensive hierarchy and tight controls
If the organisation structure has an extensive hierarchy (is “tall”) and there is tight control, then there is substantial organisational machinery to facilitate a phased implementation.
In addition, because of the organisation structure and controls in place, it may be that - absent substantial reengineering - a phased approach is the only politically feasible one.

28. Extent of implementation
The extent of the implementation –
characterised by the number of modules and the degree to which the organisation changes those modules (customization) - can also influence the implementation methodology.

29. Number of modules
Since ES are modular, organisations can choose to implement different modules that meet their needs.
As the number of modules increases, it becomes increasingly difficult to coordinate all the module interactions.
In addition, the amount of resources required increases with each module chosen for implementation.
As a result, as the number of modules increases there is a shift from a big-bang to a phased approach.

30. SAP R/3 Application Modules
BASIS FI
Financial
Accounting CO
Controlling AM
Fixed Assets
Mgmt. PS
Project
System WF
Workflow IS
Industry
Solutions MM
Materials HR
Human
Resources SD
Sales &
Distribution PP
Production
Planning QM
Quality
Manage-ment PM
Plant Main-tenance

31. “Module Fit”: extent of modification
In some cases, modules will require only limited modifications, but in others they may require substantial modification.
As the extent of change to modules increases, preferences will shift from a big-bang to a phased implementation.
If the modules used are virtually as the vendor intended and developed them, then interaction problems will be minimal. Big-bang approach is possible

32. Few modules and minimal change
If there are minimal changes to the modules then the extent of testing is largely limited to vendor-tested scenarios, ensuring the modules were properly implemented and that best practices interface with each other appropriately.
If there are only a few modules then there will not be as many interactions to be tested.
This means that an organisation choosing to implement few modules with minimal change is likely to employ a big-bang approach.

33. Many modules and extensive change
Changes to the software increased in the level of complexity of the implementation.
In particular, software changes introduce the possibility of errors and force the need for increased testing of those changes - within both the specific module and the modules it interacts with.
The need to implement a large number of modules generates an even higher level of complexity.
Hence, if an organisation has chosen to implement many modules and if some of those modules will require substantial change, then a phased approach would be expected; in fact, high levels of complexity may make a phased approach necessary.

34. PHASED
Many
Number of modules in the implementation
Big bang
Few
Minimal
Extensive
Extent of change to be made

35. Alternative implementation approaches

36. Waved
The ES implementation was viewed as a change program that consisted of different waves of change.
Each wave in the program would deliver functionality to a different business unit or geographical region.
Although each wave would be managed independently, the overall project team would manage the interdependencies to ensure that the change program remained on course.
The wave approach provides a number of advantages.

37. Advantages of the waved approach
Each wave supplies feedback as to how the system implementation is proceeding and how well it is being accepted.
With each successful wave there is a victory that can keep team morale high.
Waves are flexible; if a new release of the ERP software becomes available, then the program managers can add a new wave.

38. Aggressive implementation schedule
Although some organisations are reluctant to pursue a big-bang implementation, they may still pursue what is referred to as an aggressive implementation schedule.
An aggressive schedule suggests that temporary links to legacy systems really are temporary and not semipermanent.
In addition, an aggressive schedule might implement multiple modules at the same time.

39. Running in Parallel
A classic implementation strategy is to run in parallel.
If an ES is being implemented then the organisation would run the ES and the existing system for some period of time (typically, a month or a quarter) in order to ensure that the new ES was running as anticipated.
This approach can be used regardless of how many ES modules are implemented.
Running in parallel has a number of advantages.
The old system provides a basis of comparison to see if the new system is working as anticipated.
Similarly, the old system provides a back-up in case the new system does not pan out.
As a result, running in parallel is often seen as a low-risk solution.

40. Running in Parallel (cont.)
Unfortunately, running in parallel has a number of limitations. First, it requires roughly double the number of computing and human resources.
Sometime the old system may not be a good system for comparison.
No incentive to keep running the old system, as a result, the old system may be seeded with substantial errors.
If the old system is functioning then some may not see the need to proceed with the new system. Accordingly, the continued existence of the legacy system may threaten the potential life of the new system.

41. Life after Implementation and Implementation Success Factors
Sharmistha Dey

42. Deloitte’s Implementation Research
Sharmistha Dey

43. Many of these companies have achieved or are on track to achieve specific, quantifiable benefits
37% of respondents have already achieved or are on track
to achieve specific, quantified benefits
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)

44. Many companies now realize that a Second Wave of activity is necessary to attain full ERP benefits
Going live with ERP marks a key milestone in the enterprise transformation journey … but going live is only the end of the beginning
The Journey: Enterprise Transformation
First Wave
ERP
Implementation
Second Wave
Process
Optimization
The Destination:
Growth
Agility
Profitability
The Tool:
ERP
“Go-Live”
In sharp contrast to conventional wisdom, going live is not the end of the ERP journey but a fundamental milestone — one with a whole new set of challenges and opportunities which we call ERP’s Second Wave
While going live marks a key milestone in the enterprise transformation journey, only 15% of respondents in a recent Deloitte Consulting/Benchmarking Partners survey believe that full benefits will be achieved at go-live
The “"Second Wave"” phenomenon is very real for our clients and prospects
Companies report that it may take 3 to 9 months to return to baseline performance after going live … and another 1 to 2 years to realize significant benefits
Companies are interested in ways to shorten the time to full benefits, and to leverage their investments in ERP for more than just transaction processing
For example, Bayer is spending $500MM on SAP … realizing a positive return on investment requires them to do more than just automating existing activities

45. Both technology and operational problems have motivated companies to undertake ERP
Not much is market facing
Concern over Y2K at the top
Note: Based on multiple answers per respondent
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)

46. … The Journey to ERP Optimization Never Ends
The message remains the same ...
Synergize
Synthesize
Ongoing
Stabilize
6-18 Months
Implement
3-6 Months
… The Journey to ERP Optimization Never Ends
Go Live

47. ERP Optimization Will Drive a Variety of Initiatives
Synergize
Strategic planning
Major process redesign
Business case development
Supply chain
Lean manufacturing
Synthesize
Data warehousing
e-commerce
Additional vendor software
Data collection systems
Stabilize
Retraining
Process cleanup
Data cleanup
Software reconfiguration
Report design

48. Issues: Key Finding
Comparing issues shows dramatic shifts as programs progress beyond going live
Ongoing Support 4%
25%
Findings and Conclusions
Reporting 4%
25%
Business Performance 3%
22%
Change Management
44%
63%
Issues & Obstacles
Software Functionality
10%
26%
Discipline 5%
20% 5%
Post-Live Transition
20%
Consultants
16% 9%
Until Now
Going Forward
30%
Program Management 9% 0%
10%
20%
30%
40%
50%
60%
70%
% Respondents
Note: Based on multiple answers per respondent
Source: Deloitte Consulting and Benchmarking Partners (Based on a study of 85 companies that have gone live with an ERP system)

49. Top Ten Findings
Findings and Conclusions 1 6
Going live is not the end of the ERP journey
ERP enables better, faster decisions by unleashing the power of the integrated enterprise 2 7
ERP delivers significant tactical and bottom-line strategic benefits
ERP provides a backbone to further extend functionality through bolt-ons and other solutions 3 8
ERP also yields significant returns from unexpected benefits
Issues and obstacles show dramatic shifts in emphasis after going live 4 9
Companies should anticipate a temporary dip in performance after going live
An ERP implementation is at its core a people project 10
There are twelve best practices for accelerating, maximizing, and sustaining the benefits of the ERP journey 5
There are three distinct stages in each wave after going live

50. Enterprise Systems Lifecycle
“Go-live”
Productivity
18 Months ?
Implementation
ERP “Shock”
Benefits
3 month preparation period
Time

51. Companies should anticipate a temporary dip in performance after going live4
Some reported examples ...
… 4 months to bring back to legacy system baseline
… 6 months of decreased productivity
… 2 to 3 month performance decline due to the normal learning curve
… 6 months of stabilization after go-live
… reality is this hurts the business in the first 6 months C A
Performance B
Go-Live
Time
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)

52. An ES implementation is about people9
An ES implementation is about people
People related issues dominate during implementation...and going forward
Issues/Obstacles Until Now 2% 4% 5% 6% 7% 8%
16% 0%
10%
12%
14%
18%
Discipline
Ownership (of benefits and other)
Consultants
Top Management Support
Prioritization/Resource Allocation
Training
Project Team
Internal Staff Adequacy
Change Management
PEOPLE 62% 3% 4% 5% 6% 7%
13% 0% 2% 8%
10%
12%
14%
16%
Ownership (of benefits and other)
Discipline
Project Team
Prioritization/Resource Allocation
Internal Staff Adequacy
Training
Change Management
PEOPLE 51%
Note: Rounded percentages; Based on multiple answers per respondent
Issues/Obstacles Going Forward
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)
% Total Mentions

53. There are twelve best practices for maximizing & sustaining the benefits of ES10 1 7
Process Expertise
Extending Capabilities
Commonality
Using Capabilities
Benefits Ownership
Metrics
Focus on Benefits
Alignment
Breadth of Change
Business Case
Post-Implementation Plan
Role Transition 2 8 3 9 4 10 5 11 6 12

54. Implementation: ERP The Next Wave
ERP 2: The e-business challenge
Information Sharing – ERP focus is on internal information , e-business provides ability to share info internally & externally
Optimisation Focus – ERP focus is across one value chain, e-business focus is on multiple value chains
Internet Substitute – ERP “one in all in application” opposed to “standalone apps” linked on internet backbone
Technology Changes – Closed client/server vs open standards

55. Evaluate Success
After the stabilization period, the firm can begin the process of evaluating success.
This requires determining just when the evaluation should be made and exactly how success is to be measured – for example, using cost-benefit analysis, some approach based on the criteria used for deciding to go ES, or a methods like “the balanced scorecard”.
More information in Enterprise System Success lecture