1. UNIT III
ERP IMPLEMENTATION

2. Why ERP? Benefits Simplification of business processes
Enhance productivity, flexibility and customer responsiveness
Compliance and control
Efficiency improvements
Enable new business and growth strategies
Agility improvement
Reduce cost and eliminate inefficiencies
Continuous improvement
Expand your knowledge of key business data
Extend your business using the internet

3. Reasons for implementing ERP or Perspectives of ERP Implementation
Technology
Business
Operational
Strategic
Competitive.
The reasons for going in for ERP systems can be grouped into four different sets of categories:
Technology: Acquisition of an ERP system is motivated by the need for new information technology and mainly aims to support the current way of doing business.
Business : Globalization, desire to adopt best practice business models, need for increased flexibility and agility etc.,
Operational: Poor and uncompetitive business performance, high cost structure, complex and ineffective business process etc.,
Strategic: To improve the efficiency, effectiveness and responsiveness of the organization.
Competitive: To increase the competitiveness of the organization and enabling it to respond effectively to ever changing business environment.

4. Other Reasons Replace legacy systems Simplify and standardize systems
Improve interactions with suppliers and customers
Gain strategic advantage
Link to global activities
Pressure to keep up with competitors
Ease of upgrading systems
Restructure the organization
The reasons for going in for ERP systems can be grouped into four different sets of categories:
Technology: Acquisition of an ERP system is motivated by the need for new information technology and mainly aims to support the current way of doing business.
Business : Globalization, desire to adopt best practice business models, need for increased flexibility and agility etc.,
Operational: Poor and uncompetitive business performance, high cost structure, complex and ineffective business process etc.,
Strategic: To improve the efficiency, effectiveness and responsiveness of the organization.
Competitive: To increase the competitiveness of the organization and enabling it to respond effectively to ever changing business environment.

5. ERP Implementation Life cycle : Objectives
Speed
Scope
Resources
Risk
Complexity
Benefits
Speed: How much the company would like to take in implementing the system.
Scope: Includes all the financial and technical characteristics that company wants to implement.
Resources: Resources are everything that is needed to support the project including people, hardware systems, software systems, technical support and consultants.
Risk: The risk of a project is a factor that impacts the overall success of the ERP implementation.
Complexity: Complexity is the degree of difficulty of implementing, operating and maintaining the ERP system.
Benefits: Benefits are the extent to which the company will utilize functionality of the ERP system for system development, maintenance and other support activities.

6. ERP Implementation Phases or Lifecycle
Pre-Evaluation Screening
Package evaluation
Project planning phase
Gap analysis
Reengineering
6. Customization
7. Implementation team training
8. Going live
9. End-user training
10. Post implementation
Pre-Evaluation Screening
The purpose of this phase is to eliminate those packages that are not at all suitable for the company’s business processes.
Package evaluation
In this phase the ERP package that I best suited for the organization is selected.
Project planning phase
In this phase the details of how to go about the implementation are decided. In this phase, the time schedules, deadlines etc., for the project are arrived at.
Gap analysis
This is the process through which companies create a complete model of where they are now and where they want to be headed. It is the step of negotiation between the company requirements and the functions a package possesses.
Reengineering
It is in this phase that human factors are taken into account.
Customization
In this phase, the ERP package is modified to suit the business processes of the organization.
Implementation team training
This is the phase where the company trains its employees to implement and later run the system.
Going live
This is the phase where the system that is being implemented is tested for any problems, bugs, errors etc.,
End-user training
This is the phase where the actual users of the system will be given training on how to use the system.
Post implementation
This is the phase where the ERP system is used for conducting the business.

7. Critical phases of ERP Implementation
Adoption decision
Acquisition
Implementation
Use and maintenance
Evolution
Retirement
Adoption decision
Includes definition of system requirements, its goals and benefits and an analysis of the impact of adoption at business and organizational level.
Acquisition
This phase involves selecting the product that best fits the requirements of the organization to minimize need for customization.
Implementation
This phase deals with the customization or parameterization and adaptation of the ERP package acquired, to meet the needs of the organization.
Use and maintenance
This phase consists of the use of the product in a way that returns expected benefits and minimizes disruption.
Evolution
In this phase, additional capabilities are integrated into the ERP system to obtain additional benefits.
Retirement
When new technologies appear or the ERP system or approach becomes inadequate to the needs of the business, managers decide if they will substitute another information system approach that is more adequate to the organizational needs of the moment.

8. ERP Implementation : Pre-Implementation Tasks
Assembling of participants
Feasibility study and need analysis review
Project mission and vision statements creation
Determination of organizational structure
Determination of the modules to be implemented.
Creating the core team
Establishing the training needs
Establishing the data conversion strategy
Establishing interfaces
Determining work estimates
Cost of consultants
Calculation of implementation time
Identifying constraints
Establish policies and guidelines
Assembling of participants
One of the first steps of the project planning session is to assemble the critical stakeholders of the project. This should include all people who have a direct influence over the project.
Feasibility study and need analysis review
Feasibility study report contains the factor that will affect the ERP implementation. The need analysis is the justification for the project. Review of these two documents will give an idea on what could be the potential problem areas and where more attention and resources will be needed.
Project mission and vision statements creation
The vision should be a global statement that is continuous and ongoing. The mission statements will consist of the major milestones of the project.
Determination of organizational structure
The organizational structure is determined to decide how the implementation is to proceed.
Determination of the modules to be implemented.
Creating the core team
It includes project sponsor, executive committee, project manager, work teams etc.,
Establishing the training needs
Determine how much education will be required, the type of education and the number of participants.
Establishing the data conversion strategy
The goal in this step is to establish what needs to be converted/migrated and how it is going to be done. It is best to have experienced people from the legacy system working together with application consultants to fully understand the complete need.
Establishing interfaces
The goal of this step is to identify any interfaces that require development. This section is for the required interface programs between systems for which none exist.
Determining work estimates
The work estimates for all the activities from planning sessions to training and maintenance after installation of the ERP project should be determined in advance.
Cost of consultants
In this step, the areas where the services of external consultants are needed are identified and the cost of hiring the consultants is calculated.
Calculation of implementation time
The scope, time and resources are decided and based on that the implementation time is calculated.
Identifying constraints
All constraints of the project should be identified and documented.
Establish policies and guidelines
Project policies and guidelines form consistent methods for dealing with situations and events are established and documented.

9. Requirements Definitions
Process of capturing and documenting the user requirements and specifications.
- Understand current system
User triggers development of product /system
Emphasize - Product

10. Classification of requirements:
Business requirements
User requirements
Functional requirements

11. Requirements Engineering: Develop requirements based on -
Human stakeholder
System environment
Feasibility studies
Market analysis
Business plans
Analyses of competing products and domain knowledge
Other requirements
Hardware & software requirements
Requirements for releasing product
Compatibility requirements

12. Requirements Engineering
Requirements does not include
Design details
Implementation details
Project planning
Testing information
Tools & techniques : Data flow diagram (DFD) Entity relationship (ER) diagrams etc.,

13. People involved in ERP implementation:
Project Sponsor
Executive committee
Project Manager
Implementation or Work team
Functional Managers
Functional Participants
Consultants
Package Vendors
End-users

14. ERP Implementation Challenges..
1. Inadequate requirements definition
- Selection of wrong ERP package
- Unnecessary customization
- Lack of employee retraining
2. Resistance to change
3. Inability to achieve organizational understanding
Lack of good understanding of business functions and processes.
4. Inadequate resources
Money, people, software, hardware
. Lack of top management support
6. Lack of organizational readiness
Organisation, Work processes and the employees.
7. Inadequate training and education
8. Unrealistic expectation
Under estimated : Implementation cost and time
Over estimated : Benefits and ROI

15. ERP Implementation Challenges..
9. Poor package selection
10. Poor project management
11. Customization issues
12. Long payback period
Discontinuing support for systems
13. Poor communication & co- operation
14. Data quality costs
15. Hidden implementation costs
16. Improper integration
Integration of ERP modules
Integration of e-business applications
Integration with legacy systems
17. Improper operation/use

16. ERP Implementation Approaches/Strategies
Phased Implementation
Pilot Implementation
Hybrid Transition Strategy
Big Bang Implementation
Parallel implementation
Process line implementation

17. Big bang strategy Implements all relevant modules at same time
Mini big bang strategy: To one or two business modules at a time.
Mega big bang strategy: It refers to a large company, with multiple sites, all going live at the same time using the big bang strategy.
Multi big bang strategy: It uses multiple big bangs sequenced in order for different geographical facilities.

18. Big Bang strategy Advantages : Low overall implementation cost
Faster return on investments
Elimination of complex integration issues etc.,
Disadvantages :
High amount of time and effort for pre-implementation planning
High failure rates
Do-it-right the first time nature etc.,

19. Parallel Implementation
Parallel approach keeps both traditional system and new ERP system active simultaneously for a length of time.

20. Parallel Implementation
Advantage:
High success rates
Low resource commitment
Opportunity to learn from mistakes etc.,
Disadvantage:
High overall cost
Lengthy implementations etc.,

21. Phased Implementation
Package is implemented in phases and sequentially.
Single module implemented at all sites or a single module implemented further in multiple phases at all sites.

22. Phased Implementation
Advantage:
- Less risk
- Step by step approach
- Low resource commitment etc.,
Disadvantage:
Large amount of technical resources for creating interface programs.
High overall cost
Lengthy implementations etc.

23. Pilot Implementation : Quick slice or slice approach
To put entire system through all of its paces utilising only a single product line or small area of the company.

24. Pilot Implementation Advantages Low complexity/low risk
Learning curves are fast and ROI is seen immediately
Shorter readiness step
Period for review and refinement is shorter
Disadvantage
Wrong pilot may be chosen
Too many pilots increase complexity
Requires intense focus from participants

25. Process Line transition strategy
Process line strategy breaks the implementation strategy to manage parallel business process flows or product lines.
The first product line and all related resources go first in making the transition from the legacy system to the new ERP system
Once this is completed the other product lines are moved to the new system in sequence.

26. Process line transition strategy
Advantage:
High success rates
Low resource commitment
Opportunity to learn from mistakes etc.,
Disadvantage:
High overall cost
Lengthy implementations etc.,

27. Ideal Strategy Big bang strategy Immediate ERP solution is needed
Suited for small companies
Limited amount of time available combined with immovable go-live date.
Phased Approach
Do not share many common processes across departments or business units.
Parallel Approach
Suited for mission critical situations that cannot survive a major malfunction of an ERP system.
Business environment that require the utmost in stability of an ERP system such as financial, pharmaceutical or medical companies.
Process line Approach
Ideal for companies that have many product lines.
Hybrid strategy
Combination of all the above strategies can be used in organization where the inter- departmental communication is excellent and where there is a strong leadership to manage the project.

28. ROI – ERP Implementation
Inventory Reduction
Improved process efficiency
Improved vendor relations
Waste reduction
Benefits Calculation
Costs Calculation
Software licence
Hardware costs
Internal Training
Change management
Internal conversion

29. ERP Implementation : Hidden cost
Training
Integration & Testing
Customization
Data conversion
Data Analysis
ERP consultants
Brain drain (Employee turnover)
Continuing Maintenance
Training : Learn new set of process
Integration & Testing : Integration of various functional ERP modules/e-business software application/legacy systems
Customization
Data conversion:Customer, supplier records, product design data from old systems to new ERP systems
Data Analysis : Data from ERP combined with data from external systems for analysis purposes.
ERP consultants : Performance metrics and time schedules for consultants.
Brain drain (Employee turnover)
Continuing Maintenance

30. ERP Package Evaluation & Selection
Identify packages that fits the requirement
Find package flexible to meet company’s needs

31. Issues in ERP package selection
Lack of clarity about customer’s requirements
Complexity in business processes
Increased ERP vendors
Lack of planning
Resistance to change
Project cost
Integration, Upgradeability, Adaptability and Applicability of software

32. Methods in ERP selection
Top management & consultants
Centralised selection process
(IT & internal dept)
Considering suggestion of internal department
Combination of above.

33. Selection Committee Functional experts Top management (CIO or COO)
Consultants (package experts)
End users

34. Selection process
1. Assemble project team Executive sponsor Project leader Team members 2. Define Business Vision 4. Requirements & selection criteria 5. Develop scripted demonstration scenarios
Define business requirements
Build or Buy
Integrated or Best of breed
Initial vendor screening
Vendor viability
Functionality
Scalability
Technology
Scenarios are detailed stories that describe a business function, such as production planning, procurement and revenue realisation. The scenarios can then be divided into a series of use cases that detail what is to happen for every contingency.

35. Selection process contd.,
Qualitative factors
Ease of use
Flexibility
Vendor support
6. Finalise selection decision
Documentation requirements – Weigh based on priority
Participant feedback on demos
Gap analysis for software customization
Cost analysis for software and related services
Customer reference ability.
7. Transition to Implementation
Related services eg. Maintenance & training

36. Selection Criteria Multi language & multi currency support
Installation in international specified countries
Local presence – vendors
Cost
Incremental module addition
Provide implementation & post implementation support
Training employees
Capability to interface with banks, suppliers, customers etc..
Easy customization process
Vendor policy, practices regarding updates, version etc., approachable.

37. Mistakes in ERP selection
Limit search to known vendors
Requirements not defined properly
Demonstrate before defining requirements
Over-specify their requirements : “Candy store” syndrome
Too involved in software analysis – Too much time studying requirements
Treat ERP selection as purchasing technology than as major business decision.
They demonstrate software before they define their requirements
Candy store syndrome – Everyone asks for every feature they want in new ERP system. Cost, length, project complexity increase

38. Framework for evaluating ERP
Traditional Approach
BPR as pre-requisite of ERP implementation
Role of SME
Simplified Approach
ERP implementation without BPR

39. Evaluation Criteria Strategy fit Technology Change Management Risk
Implementability
6. Business functionality
7. Vendor credentials
8. Flexibility
9. Cost
10. Benefits

40. Fitzgerald approach- Evaluation criteria
Identification of cost
Contribution to business strategy
Analysis of benefits
Second-order effects
Flexibility
Implementability
Risk
Testing the business idea.

41. Framework for evaluation
Creation of organisational infrastructure
Constitution of the repertoire of ERP Products. (NGT)
Preparation phase
Context setting phase
Evaluation and selection phase
Approval of the selection
Mid course evaluation
Constitution of the repertoire of ERP Products : Nominal Group Technique (NGT) structured methodology that enables assimilation of ideas and judgements of knowledgeable individuals towards building a group consensus over desired outcome. It will provide list of criteria for constituting a repertoire of ERP products based on the information collected from various sources. The list is validated through communication to the representative structure and approved by the steering committee.

42. Data Migration Migration of data from one or more legacy systems
Scale of complexity : small volumes to large volumes
Determines success of ERP implementation
Last activity of production phase
Minimal attention – Time constraints

43. Steps : Successful data migration
Identifying data to be migrated
Determining timing of data integration
Generating data templates
Freezing tools for data migration
Deciding on migration related setups
Deciding on data archiving

44. Data Migration : Objectives
Reduce risk
Lower operational expenses
Improve data quality

45. Data Migration : User perspective
Iteration : Identify corrupt and rectify data
Weeding
Inspection : Archiveddata

46. Data Migration : Development perspective
Maximum safety
Avoid risky big bangs
Phased implementation
Unique, consistent template document referenced by all projects
Development of generic modules - reusability

47. Data Migration processing : Steps
Step 1 : Analysis
Data profiling : Content, structure, quality, integrity
Data Mapping : Table/dataset (source system) mapped to target field in ERP system
Step 2 : Design
Old data formats to new system format’s
Supplement/transform coding structure for ERP
Step 3 : Cleansing Remove obsolete, duplicate data, Data validation Step 4 : Extraction ETL tools – Extracting data from data sources and load to ERP Step 5 : Transform Step 6 : Load Step 7 : Verification

48. Data Cleansing techniques
Standardizing
Matching - eliminate duplications
Consoldiating : Analysing and identifying relationships
Correcting : Using algorithms and secondary data sources
Enriching : Value added data from external sources
Parting. Eg xxx-xxx-xxxx
Conditioning : Conversion of data types from source to target data
Scoring : Probablity of an event

49. Data Loading sequence Material master Vendor master
Open purchase order
Open purchase requisition
Stock balance
Open vendor invoices
Vendor excise details
Excise tax rates
Accounts receivable balances

50. Data Migration : Methods
Manual data Migration
-Manually
Check source system and punch data in ERP
Time consuming
Costly
High chance of error
Small implementation

51. Data Migration : Methods
Electronic data migration
-Volume of data is not constraint
Faster, cheaper
Low chances of error
Manual verification after migration

52. Training & Education Training needs – Different
Managers – Focus on decision making & analysis
Clerical staff – Perform job
All users
– overview of system & working
- Automation of process
- Change in process
- Triggers host of events

53. Inadequate training – ERP system failure
Select appropriate plan – training
Effective understanding of business process
Training inside or outside

54. Education or Training ? Who?
Level of education
- Steering committee
Project leader
Functional teams

55. Budgeting : Education & Training
Cash outlays
Employee time
Equipment
Facilities

56. What education & training needs?
Evaluation

57. People Organization in Implementation
Vendors
Consultants
Employees (Inhouse team and users)

58. Vendors Supply product & documentation Trainer
Project support function

59. Consultants Guarantee success of project
Reduce cycle time, increase response time, improve productivity
Administer each phase of implementation
Finalise time schedule for each phase/task
Value : Know-how, expertise
Improve companies business process
Customization issues
Present advantages & disadvantages
Maintaining technical documentation.

60. Employees : Resistance
Fear of being redundant
Fear of failure
Fear of future

61. Handling : Employee resistance
Training & Education ERP champions
Creating ERP champions – Expert users, Facilitator, Trainer
Pilot projects
Involvement of Employee in ERP process
Managing expectations.