1. IS 466 ADVANCED TOPICS IN INFORMATION SYSTEMS LECTURER : NOUF ALMUJALLY 21 – 9 – 2011 College Of Computer Science and Information, Information Systems Department 1

2. Lessons Learnt from Lecture1  Define the ERP ? ERP systems are packaged software systems that Automates and integrates business processes by sharing common data and practices across the entire enterprise and produces and accesses information in a real-time environment  The benefits of the ERP System  The Disadvantages of ERP?  (cost- expertise- change – flexibility)  ERP Components  (business process – software – hardware – users)  ERP Vendors

3. Objectives  ERP system concept  Who is involved in the implementation?  How long does it take?  ERP implementation methodology  Organisational characteristics and implementation methodology  ERP lifecycle 3

4. Legacy Systems Each department has its own system Infrastructure specific Inefficient processes Potential for inaccuracies 4

5. Limitations of Legacy Systems Legacy systems used in large enterprises of the 1970s and 1980s have limitations. Difficult to increase the capacity of such systems Unable to upgrade them with the organization’s business changes, strategic goals and new information technologies. 5

6. ERP System Concept 6

7. ERP System Concept (cont.) Data warehouse Large, centralized data repository Single place for data storage and access 7

8. The Journey Begins: ERP Implementation

9. Summary of ERP implementation background Most likely, an ES implementation would be the first, biggest and possibly the last large system implementation. Which could take many years to go-live and millions of dollars. Many parties are involved in the implementations. They bring in different knowledge types to the organization. 75% of ES implementation costs are devoted to Consultants, NOT on Systems and Hardware. A lot of time and money spent on Requirements Analysis phase trying to figure-out what is required for the organization. There are well-documented Critical Success Factors for ES implementations...including Consultant Engagement, Top mgmt support, … etc 9

10. Who Is Involved? 10 Vendor who develop the ERP packages. Consultants that provide the installation, training & configuration services End Users In house implementation teams that plan and execute implementations of SAP SAP and in-house support teams that help trouble shoot problems and support installations.

11. VENDORS DEFINITION :  Vendors are the people who develop the ERP packages.  they spent a huge amount of time & effort in research & development to create the package solution that is flexible, efficient and easy to use.  The ERP vendors spent a large amount of money so that they can become experts, to develop a flexible, efficient & easy to use ERP package. 11

12. ROLES OF VENDORS The vendor should supply the product & its documentation as soon as the contract is signed. The vendor is responsible to fix the errors which are found during the implementation process, so it becomes necessary that the vendor should be constantly touched with the implementation team. The vendor also has to provide the training to the company’s user & also to the people who are involved in the implementation process of the s/w. 12

13. ROLES OF VENDORS (con.) 13 The vendors training should explain how the package works, what are major components, how the data & information flows across the system, etc. The vendors participate in all the phases of an implementation in which he gives advices, answers to technical questions about the product & technology. In case, there is gap between the package & the actual business process then it is the job of a vendor to customize the s/w & make necessary modifications.

14. CONSULTANTS DEFINITION:  Business consultants are professional people who develop the different methods & techniques to deal with the implementation process & with the various problems that will crop up during implementation.  They are experts in the area of the administration, management & control activities.  They have experience of implementation & various methods that ensures successful implementation.  The only limitation with consultant is they are very expensive.  They have to make a plan to carry the activities in the right direction during the implementation process. 14

15. ROLE OF CONSULTANTS The consultants are involved in the implementation process of the organization. The consultant should guarantee the success of the project and should be able to show the results such as reduction in cycle time, increased response time, improved productivity, etc to the satisfaction of the customer. They are responsible for the administration of all the phases of the implementation so that the activities occur at the scheduled time and at the desired level of quality with effective participation with all those who must participate. They add value to the project as they provide knowledge about the packages & the implementation process which gives the employees the practical experience. 15

16. END USERS DEFINITION  They are the people who use the ERP system once it has been developed.  The end user should be given the training as to how use the various functions that are automated in the ERP system.  They fear among the employees of unemployment is taken out with the training sections.  The end users are provided with the skills set & more opportunities to work in a challenging environment using the modern technologies. 16

17. How Long Does the implementation Take? 17 Large Organizations spend 2 to 3 years on their initial implementation Value SAP approach allows a basic implementation in 6 to 9 months Smaller organizations have implemented in 3 to 4 months Must be prepared to implement Education and Training Prepare organization for change

18. ERP Implementation Methodology

19. ERP Implementation methods “Phased” and “big bang” are the two primary 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. 19

20. 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.. 20

21. 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 ERP system. As compared with big bang, the phased approach has smaller “slices” of module process and artefact design, development, testing, and implementation. 21

22. What are the advantages of a big bang approach? Limited need to maintain and revise legacy software; Lower risks; Immediate Functionality linkage; Shorten implementation time; Lower cost; 22

23. 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; 23

24. 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 24

25. What are the disadvantages of phased implementation? 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; Longer duration to install; and Higher total cost. 25

26. Organisational characteristics and implementation methodology

27. Sample Organizational Characteristics Size Complexity Organizational Hierarchy Number of Modules Extent of the coverage 27

28. 1- Organisational size and complexity 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. 28

29. PHASED Big bang SMALLLARGE SIMPLE COMPLEX Organisational size Complexity 29

30. Organisational size and complexity (con.) 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 ERP System. 30

31. 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. 31

32. 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. 32

33. 2- 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. 33

34. Flat organisation and loose controls “If a company has a flat organisation that is not tightly controlled, it’s very difficult to sustain commitment throughout a phased implementation”. 34

35. PHASED Big bang LooseTight Flat Tall Organisation structure Extent of controls 35

36. 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. 36

37. 3- 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. 37

38. 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. 38

39. “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 39

40. 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. 40

41. 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. 41

42. PHASED Big bang MinimalExtensive Few Many Number of modules in the implementation Extent of change to be made 42

43. ERP Lifecycle

44. ERP LIFECYCLE ERP lifecycle is in which highlights the different stages in implementation of an ERP. 44

45. Different phases of ERP Lifecycle 1. Pre-Evaluation Screening 2. Package Evaluation 3. Project Planning Phase 4. Gap Analysis 5. Reengineering 6. Configuration 7. Implementation Team Training 8. Testing 9. End-User Training 10. Going Live 11. Post Implementation Phase 45

46. 46 Pre-selection Process Package Evaluation Project Planning Gap Analysis ReengineeringConfiguration Implementation Team Training TestingEnd- user Training Going Live Post – implementation Phase

47. 1- Pre-Evaluation Screening Pre-Evaluation Screening is the phase which starts when company decides to go for a ERP System, the search for perfect solution starts. Not all packages are same each has its own weakness and strength. Some packages can be good in some areas while in other sectors they may not. Once few packages are screened, detailed evaluation process starts. 47

48. 2- Package Evaluation 48 Package Evaluation process is one of the most important phase of the ERP implementation, because the package you select will decide failure or success of project. There is little room for error in this as ERP packages are so expensive once purchased can not switch to another.

49. Few important points to remember while evaluating software includes. Flexibility Complexity User Friendliness Technology Quick Implementation Amt of Customization Required Local support infrastructure. Total cost i.e license, training, customization etc. 49

50. 3- Project Planning Phase In this phase details of how to go about implementation, schedules and deadlines etc are decided. Roles and responsibilities are identified and assigned. The resources that will be used for implementation efforts are decided This is phase which will decide:  when to begin,  how to do it and  when the project is supposed to be completed  what to do in contingencies. 50

51. Con. the people who are going to be in-charge of implementation are identified. Team members are selected & task is allocated. This phase plans ‘what to do’ in case of contingencies, how to monitor the progress of the implementation. This phase also decides what corrective measures or actions should be taken when things get out of control. 51

52. 4- GAP ANALYSIS Importance of Gap Analysis Gap analysis is a phase in the ERP implementation, where the organization tries to find out the gaps between the company’s existing business practices & those supported by the ERP package. This is the process through which companies create a complete model of where they are now “as is” & where they want to head in the future “to be”. 52

53. Con. Different ways of finding gaps  One of the most affordable, but most difficult, solutions involves altering the business to ‘fit’ the ERP package.  Another solution is that the company can simply agree to live without a particular function.  Identifying a third-party product that might fill the gap.  Altering the ERP source code (customization). 53

54. 5- REENGINEERING Implementation is going to involve a significant change in number of employees and their job responsibilities. Process become more automated and efficient. 54

55. 6- CONFIGURATION IMPORTANCE OF CONFIGURATION This is the main functional area of the ERP implementation. Business processes have to be understood & mapped in such a way that the arrived solution matches with the overall goals of the company. 55

56. 7.IMPLEMENTATION TEAM TRAINING When the configuration is taking place the implementation team is being trained not how to use the system, but how to implement it. This is the phase where the company trains its employees to implement & later run the system. The ERP vendors & the hired consultants will leave after the implementation is over. Employee become self sufficient to implement the software after the vendors and consultant have left. 56

57. Con. 57 Good in-house team For the company to be self sufficient in running the ERP system, it should have a good in-house team that can handle the various situations. Thus, it is very vital that the company recognizes the importance of this phase & selects those employees who have the right attitude: people who are willing to change learn new things are not afraid of technology- good functional knowledge.

58. 8- TESTING This is the phase where you try to break the system. Here we reach a point where we are testing real case scenarios. The system is configured & now we must come up with extreme case scenarios: system overloads multiple users logging on at the same time with the same query users entering invalid data hackers trying to access restricted areas & so on. The test case must be designed specifically to find the weak links in the system & these bugs should be fixed before going live. 58

59. 9- GOING LIVE On the technical side, the work is almost complete- data conversions is done, databases are up & running. on the functional side, the the configuration is complete & testing is done. The system is officially proclaimed. But once the system is ‘live’, the old system is removed & the new system is used for doing business. 59

60. 10- END USER TRAINING Success & failure The success or failure of an ERP system depends on how the actual users use the system. The most successful implemented ERP packages fail due to lack of end user training. People are divided into groups ERP system changes the job descriptions of the people, so it is important to identify the people who are going to use the system. The current skills of the people are identified & they are divided into groups. Every group is provided training on the new system. Training sections The training section gives the overall view of the system & how the individual actions will be affecting the entire system. 60

61. 11- POST IMPLEMENTATION (MAINTENANCE MODE) Important factors One important factor that should be kept in mind is that the post implementation phase is very critical. Once the implementation is over the vendors & the hired consultants will go. Necessary enhancements & upgrades There should be people within the company who have the technical processes to make the necessary enhancements to the system as & when required. The system must be upgraded as & when new versions or technologies are introduced. Training is needed Everyone who uses these systems needs to be trained on how they work, how they relate to the business process & how a transaction ripples through the entire company whenever they press a key. The training will never end; it is an ongoing process; new people will always be coming in & new functionality will always be entering the organization. 61

62. Questions ?? 62

63. What should you do this week ? Review the lectures Reading : 1- Michael Donovan - "Successful ERP Implementation the First Time “ http://www.inventoryinc.com/pdf/perfor8.pdf Consult Lecturer if any questions related to the subject. 63