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INFO245 Implementation Strategies

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... difficult and more costly than changing processes and people's work routines. ERP Vendors ... provides a fall-back if new system doesn't work out. Disadvantages ... – PowerPoint PPT presentation

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Title: INFO245 Implementation Strategies


1
INFO245 Implementation Strategies
2
Introduction
  • This section will analyse three basic questions
    regarding implementation strategy
  • What rationales do organizations use when they
    decide to implement ERP?
  • Should business processes or ERP software be
    changed?
  • How should ERP functionality be rolled out?

3
Business Rationales for ERP
  • Business Rationale One basic question why are
    we doing this?
  • Categories
  • Technology Replace outdated hardware and
    software with more scalable, flexible and
    maintainable technology
  • Business Process Replace inefficient legacy
    processes with new processes that are grounded in
    best practices
  • Strategic Implement a technology platform that
    gives the organization abilities it did not have
    before
  • Competitive Provide the organization a better
    ability to compete in their industry

4
Should we change process or software?
  • Forrester Research conducted a survey and found
    the following of firms following policies
  • choose application that fit their business and
    customise a bit - 37
  • customise applications to fit their business - 5
  • reengineer business to fit application - 41
  • no policy - 17

5
  • Designing ERP Systems
  • Basic strategies Change business process or ERP
    software Possible scenarios
  • Small change to each
  • Big process change with small software change
  • Small process change with big software change
  • Big change to each

6
  • Small process and software changes
  • AKA Small-r Reengineering
  • Used when current processes closely match chosen
    software
  • Advantages
  • faster, cheaper, more predictable implementation
  • Disadvantage
  • may reduce benefit resulting from process change

What rationale(s) would be used to justify this
small-r reengineering?
7
Small process and software changes
  • Generally target generic processes (i.e., A/P
    or G/L)
  • Largely favored by
  • small-medium size firms and ERP software vendors
  • Firms that are implementing generic applications
    such as Accounting
  • Firms where IT not viewed as strategic

8
Large process and small software changes
  • Big business process change and small software
    change
  • Advantages
  • Easy upgrades, lower development and maintenance
    costs, increase opportunity for improvement or
    standardization from software best-practices
  • Disadvantages
  • Homogenization of unique, value-creating process
  • Risk associated with large scale change to
    process/job descriptions.
  • Difficult to implement in decentralized firms

9
Large process and small software change
  • Largely favored by
  • Firms looking for software to facilitate business
    change
  • firms that think modifying software is more
    difficult and more costly than changing processes
    and peoples work routines
  • ERP Vendors

10
Large software and small process change
  • Change the software to match existing processes
    or to implement a best practice not available in
    ERP packages.
  • Advantages
  • Avoid losing competitive advantage of a
    industry-best practice

11
Large software and small process change
  • Disadvantages
  • Software costs and maintenance effort
  • Requirement to retain large IT staff with very
    specific expertise
  • Largely favored by
  • Large firms with unique, industry leading
    business practices that provide a competitive
    advantage.

12
Large process and software change
  • Aka Big R Reengineering
  • Requires extensive resources and time
  • Boeing and BAAN
  • Advantages
  • Process/software alignment
  • First mover benefits
  • ERP partner sometimes willing to share cost and
    risk (why?)
  • Disadvantages
  • Expense
  • Time
  • Risk
  • Likely implementers
  • Large firms industry leaders

13
Implementation Failure and Success Factors
BIG-R
Extensive
Potential project failure because of process
changes
Potential project failure because of process
changes and IT changes to software
Extent of change to organisational processes
Small-r
Minimal
Potential project failure because of IT changes
to software
highest probability of successful implementation
Minimal
Extensive
Extent of Software Change
14
How can we change software?
  • Assume traditional ERP, not open source
  • Assume not Big R reengineering
  • Option 1 customize core software code
  • Seldom a good idea
  • Option 2 write your own custom code (or hire a
    consultant) outside of the ERP system use
    standard interfaces to link to ERP system
  • Expensive and time consuming
  • Option 3 Purchase add-ons from third party
    vendors.

15
  • Third Party Add-Ons
  • Add-Ons are software packages that
  • are written by third-party developers
  • are written to work with specific ERP systems
  • enable functionality not in the ERP system
  • are encouraged and certified by the ERP vendor
  • Provided by ERP Software Partners
  • These partners provide complete, technically
    verified turnkey software solutions that extend
    and add value to SAP solutions. In addition,
    third-party software vendors can develop
    applications based on SAP's standard,
    release-stable interfaces. www.sap.com
  • Example IBM Datastage provides the ability to
    input data into SAP R/3 database during data
    conversion.

16
Which Approach?
  • Depends on the organization
  • Capabilities (absorb change, implement large
    systems)
  • Constraints (size, resources)
  • Tolerance for risk

17
ERP Modules
ERP Systems have numerous Modules that impact
many business areas within an organization.
18
Implementation Approaches
  • Big Bang
  • All modules implemented in all business units in
    all geographies at the same time
  • Issues?
  • Phased
  • Modules implemented one at a time or in small,
    logical groups
  • Issues?
  • Wave
  • Hybrid approach that can take many forms
  • Implement all modules in a given geography
  • Move on to next geography, etc.

19
Big Bang
  • All modules, all locations, all users at the same
    time
  • Three steps
  • All software configuration options chosen and
    implemented
  • Thoroughly test individual modules and interfaces
    between modules and other systems
  • Typically a many month process
  • Testing feedback allows tuning application
  • Shut down legacy system(s) and start up
    production ERP system
  • Done in very short time (few days)
  • Legacy system is gone.no return to legacy system
    possible

20
Big Bang - Advantages
  • No need for temporary interfaces (to legacy
    systems)
  • Limited need to maintain legacy systems
  • Mothball them
  • Lower risks (maybe)
  • Resources more fully engaged
  • More likely key resources not lost (turnover)
    before implementation complete
  • Functionality Linkage
  • All ERP functions will be available (unlike
    phased approach) faster time to benefit
  • No going back
  • Enforce process change

21
Big Bang Advantages (cont)
  • Shorter implementation time
  • ERP implementations sometimes fail due
    implementation time
  • Changing requirements (as business changes)
  • Personnel turnover
  • Political maneuvering
  • Although resource requirements roughly equal to
    phased (person years), overall timeframe can be
    shorter as
  • all modules implemented at one time
  • No need to design and build temporary interfaces
    to legacy systems
  • Example if implement financials in phased
    approach?
  • Cost can be lower under certain conditions

22
Big Bang - Disadvantages
  • Huge resource requirements
  • Bigger team required (although for shorter time)
  • Project management more difficult and complex
    with larger team
  • Lack of focus on individual modules
  • All modules implemented, cant give each module a
    lot of attention
  • Big Bang Big (Potential) Failure
  • A failure in just one module can mean overall
    failure
  • Why?
  • Kind of failure attracts media attention, affects
    stock price, etc.
  • No way to go back to legacy system
  • Once turned off, legacy systems cant be
    reactivated.
  • No way to demonstrate progress until entire
    system implemented

23
Phased Approach
  • Modules implemented one at time or in small
    groups
  • Sometimes, only selected locations implement the
    module
  • Modules are implemented sequentially
  • Requires significant attention to existing
    systems
  • Why

24
Phased Approach - Advantages
  • Resource requirements less
  • Smaller project team - fewer resources required a
    given point in time (although needed longer)
  • Focus on module functionality
  • Lower Risk
  • No chance of enterprise-wide failure
  • Legacy System Fallback
  • Legacy system can run in parallel mode
  • Knowledge Transfer
  • Project team has time to learn can apply
    knowledge (of package) in subsequent phases
  • Faster time to working system
  • Although not complete, project team can
    demonstrate business value faster.

25
Phased Approach - Disadvantages
  • Temporary interfaces to legacy systems
  • Cost
  • Risk
  • Ongoing legacy system maintenance
  • Cant shut off legacy systems until late in
    implementation
  • Turnover
  • Longer overall timeline greater likelihood of
    losing key resources before end of project
  • Legacy system fallback why an issue?
  • Longer project

26
Organizational Characteristics Influence
  • Size and complexity
  • Determined by
  • number, characteristics of customer base,
  • product lines / product complexity
  • Process complexity
  • Small, simple organizations Big Bang
  • Large, complex organizations Phased

27
Organizational Characteristics Influence
  • Hierarchy and Control
  • Determined by the number of layers in the
    management hierarchy and degree to which
    organizational controls are in place
  • Controls maturity of management processes
  • Related to size and complexity
  • Flat organization, loose controls Big Bang
  • Loose controls organization does not have the
    maturity to sustain a very large project
  • Hierarchical Organization, tight controls
    Phased

28
Extent of Implementation Influence
  • Relates to the number of ERP modules to be
    implemented and the extent of modification to
    modules required
  • Few Modules, little modification Big Bang
  • Many Modules, extensive change Phased

29
Running Parallel
  • Run ERP and Legacy at the same time until its
    clear its safe to turn off legacy systems
  • Perceived Advantages
  • basis of comparison between old and new systems
  • provides a fall-back if new system doesnt work
    out
  • Disadvantages
  • double effort to enter data and maintain two
    systems
  • old system may not be good for comparison
  • may have many errors
  • may have little in common with new system due to
    new re-engineering
  • In reality cant run parallel in some modules
  • Example?
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