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INFO245 Implementation Strategies


... 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

INFO245 Implementation Strategies
  • 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
  • How should ERP functionality be rolled out?

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  • Technology Replace outdated hardware and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
  • Competitive Provide the organization a better
    ability to compete in their industry

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

  • 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

  • Small process and software changes
  • AKA Small-r Reengineering
  • Used when current processes closely match chosen
  • 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?
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

Large process and small software changes
  • Big business process change and small software
  • 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

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

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

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

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

Implementation Failure and Success Factors
Potential project failure because of process
Potential project failure because of process
changes and IT changes to software
Extent of change to organisational processes
Potential project failure because of IT changes
to software
highest probability of successful implementation
Extent of Software Change
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

  • 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.
  • Example IBM Datastage provides the ability to
    input data into SAP R/3 database during data

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

ERP Modules
ERP Systems have numerous Modules that impact
many business areas within an organization.
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.

Big Bang
  • All modules, all locations, all users at the same
  • Three steps
  • All software configuration options chosen and
  • 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 return to legacy system

Big Bang - Advantages
  • No need for temporary interfaces (to legacy
  • 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

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
  • Cost can be lower under certain conditions

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
  • 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
  • No way to demonstrate progress until entire
    system implemented

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

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.

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

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

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

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

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
  • Disadvantages
  • double effort to enter data and maintain two
  • 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?