erp implementation
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• 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
Presentation Topics
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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
Accounting
General Ledger
Order Entry
Distribution
Materials Planning
Shop Floor Control
Extended ERP
Logistics
Warehousing
E-Commerce
Scheduling
Forecasting
Capacity Planning
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
• E Commerce, E business
• Global Outreach
• Improved scalability
• Cost Reduction
• Delivery & Cycle Time Reduction
• Avoids Data & Operations Redundancy
• Reliable Information Access
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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, Productivity enhancements, Customer
service, Cash Management, Inventory problems,
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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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
Performance
Target Zone
Pre-ERP Expectations
Acceptable
Performance Post-ImplementationRealizations
Corrective ActionMust Be Applied
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
Sometimes ERP - Implementation Performance Falls Short of Expectations…
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• There is a lack of user education on how
to use the system, resulting in many
“workaround” processes
• 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 heroesThe goal of a well planned implementation is The goal of a well planned implementation is notnot to create heroesto create heroes
If the end comes without sufficient up – front planning, you may hear what
we sometimes hear . . .
“The ERP system has become more of a hindrance than help.”
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Enabling information systems, applications, tools, and infrastructure
The governance model for the management, administration, and evaluation of initiatives, with a strong focus on the appropriate metrics applied for measurement
The human resource environment, including skills, organizational culture, and organizational structure
Strategic understanding of the role, positioning and focus for enterprise-wide decision-making in support of overall organizational objectives
Operating methods and practices, including policies and procedures, which determine the way activities are performed
Strategy Controls
Process
Technology
People
Alignment
The Five Levers of Change in any Organization
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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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• Identify what benefits the organization needs to get
out of an ERP, and focus on these benefits throughout
the implementation
• Executive management should endorse the ERP
project
• 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
Best Practices for Stage 1- Solution Inquiry
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Persons directly responsible for ERP implementations
Source: IT toolbox ERP Implementation Survey
Best Practices for Stage 1- Solution Inquiry
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%
CEO/President
IT Director
CIO
CFO
CTO
COO
Other
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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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• 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
Best Practices for Stage 2- ERP Approach
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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
Production / Go Live
DetailedDiscussions
Design &Customization
Implementation/Prepare to Go Live
• Run Trial Production• Maintain Systems
• 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
• Create G o-Live Plan & Documentation
• Integrate Applications• Test the ERP Customization• Train Users
• Reconciliation Reports• Conversion Plan Execution
• Accepted norms & Conditions• Project Organization Chart• Identify Work Teams
• Organization Structure• Design Specification• Process Flow Diagrams• Function Model• Configuration Recording• Systems Modification
• Testing Environment report• Customization Test Report• Implementation Report
DeliverablesPhase Tasks
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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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• 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
Best Practices for Stage 5 - Sandbox
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• 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?
ERP Implementation Lifecycle -Stage 6 - Design & Deployment
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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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• Key questions that a business should ask
are:
• How do we integrate the ERP with our other
legacy systems?
ERP Implementation Lifecycle -Stage 7- ERP Integration
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• 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
Best Practices for Stage 7- ERP Integration
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• Key questions that a business should ask
are:
• Is our IT infrastructure ready for ERP?
ERP Implementation Lifecycle -Stage 8 - IT Infrastructure
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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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• Consider expanding ERP to other solution
areas
• Supply Chain Management
• Customer Relationship Management
• E-commerce Solutions
ERP Implementation Lifecycle -Stage 10 - Extending the Enterprise
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ERP Implementation Lifecycle -Stage 10 - Extending the Enterprise
Key decision makers in adding new modules
Source: IT toolbox ERP Implementation Survey
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
CFO
IT Director
CEO/President
CIO
COO
CTO
Others
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Current Enterprise Applications Environment
Combination of standalone &
bespoke packages, 3%
Mainly based on integrated ERP
packages, 44%
Mainly based onstandalone packages,
7%
Mainly based on bespoke applications,
14%
Combination of integrated and standalone packages,
21%
Combination ofintegrated and
bespoke packages, 11%
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?
No, a small portion ofthe software is notused, 41%
Yes, Software is usedextensively, 22%
Yes, software is usedto its full extent, 5%
No, a large portion ofthe software is notused, 32%
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 generally available, but managers need to identify which elements are relevant, 44%
Many managers within the organization are suffering from an "information overload" and cannot pick what is relevant, 20%
Other, 7%
Information is targeted or personalized for specific functions/managers, 29%
Source: PMP Research
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1. Governance1. Governance Lack of a single person in charge who reports Lack of a single person in charge who reports
directly to openly supportive senior executive directly to openly supportive senior executive
accountable for the solution. Also, ineffective accountable for the solution. Also, ineffective
steering body of crosssteering body of cross--functional senior functional senior
executivesexecutives
2. Scope2. Scope Failure to align contract for services with the Failure to align contract for services with the
requirements expectations. Also, make sure requirements expectations. Also, make sure
initial scope is achievable to build momentuminitial scope is achievable to build momentum
3. Change Management3. Change Management Insufficient investment in all facets of change Insufficient investment in all facets of change
managementmanagement
4. Skills4. Skills Team members lack a thorough understanding of Team members lack a thorough understanding of
the technical capabilities of the solution or of the the technical capabilities of the solution or of the
underlying business processesunderlying business processes
5. Decision Making5. Decision Making Relying too much on consensusRelying too much on consensus--based decisionbased decision--
making, rather than rapid evaluation of optionsmaking, rather than rapid evaluation of options
Top Ten Reasons ERP Implementations Fail
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6. Communications6. Communications Lacking at all levels (executives, functional Lacking at all levels (executives, functional
owners, across team, with working level system owners, across team, with working level system
users, external stakeholders, etc.) users, external stakeholders, etc.)
7. Solution Architecture7. Solution Architecture Lack of a solution architecture or proven Lack of a solution architecture or proven
implementation methodologyimplementation methodology
8. Training8. Training Insufficient investment at all levels (including Insufficient investment at all levels (including
executives)executives)
9. Culture9. Culture Trying to force an integrated, enterpriseTrying to force an integrated, enterprise--wide wide
solution into a stovesolution into a stove--piped culture. Systemic piped culture. Systemic
resistance to changeresistance to change
10. Leadership10. Leadership Lack of Lack of ““publicpublic”” leadership from senior, leadership from senior,
accountable executive and/or lack of continuity in accountable executive and/or lack of continuity in
this leadership positionthis leadership position
Top Ten Reasons ERP Implementations Fail