ERP Implementation Strategies
ERP implementation – installation of a software package that integrates all data and processes into a centralized, unified database.Cross functional and company wideOrganizations rely on software for cohesivenessCan lead to cost savings, more efficient processes
Different Implementation Methodologies
Depends on several factorsSize, industry, sales volumeCommon basic factorsPhysical Scope, BPR, Resource Allocation3 Broad implementation strategiesBig Bang, Middle-road, Vanilla
Things to Consider
Must first define business objectivesHigh maintenance costs, Mergers & Acquisitions, ComplianceVendor selectionEvaluated on functionality AND ability to achieve business objectiveHow involved is the provider with the organization?Risk analysis: References, track recordWritten profile
Alternative ApproachStick to deadlines, deal with issues/problems as they ariseTraditional ApproachFix all the “bugs” before rolling out the system
Eliminates possibility of going over budget, missing deadlinesCan create ownership, allows for buy inSuccess depends onorg.’sability to embrace & adapt to change
No one likes changeProblems in system can discourage employeesLower morale, productivity, efficiencyConstant change leads to frustrationFlawed system increases business risk
The “Big Bang”
--- What is the “Big Bang” approach?-- A straightforward ERP Implementation approach.It means all ERP modules, such as financials, manufacturing, and human resources, etc, are implemented in all business units at all geographic locations at the same time.--It will push the entire organization to use the new system at the same time.--The old system will be entirely shut down.
The Big Bang Advantages
1)The entire organization reaps the benefits of the deployed system as this enforces process change.2) Installing the ERP by Big bang approach may help the company to get quicker return on the investment.3) Easier integration and reporting.4) No temporary interfaces required.5) Lower cost of running the systems as legacy systems are retired simultaneously.6) Faster implementation timeline.
1) High capital and human resource investment.2) Any technical performance issue affects the entire user population.3) Requires training of the entire user population.4) Complex deployment and testing.5) The completeness and validity of the converted data is not completely proved, only in the pre-phases, but not in the whole system situation.6) This adoption of the new system is vulnerable because of the limited possibilities to maneuver, and there is a lot of pressure because the deadline must be met.
--- Converting the system.-- Planning, convert data from old system, load data in new system, test data in new system, execute off-line trials, and check to verify validity.--- Releasing parts of the system.-- Release converted database, release produced application, release infrastructure.--- Training the future users.-- Create main buffer of experienced staff, training all users.--- Releasing the whole system.-- Turn down the old system and load the new system.
GlobalDesign andBase DesignTemplate
Base DesignConfigurationAnd Development
All ModulesImplementedIn all countries/regions
Who should choose the “Big bang”?
-- The Big bang is difficult to manage for very large organizations.-- It is easier in organizations that are centralized.-- It is less risky with simple processes.-- It is easier for small, simple organizations.
Physical Scope (Medium)Less than half of total company sitesGauge user acceptanceTest in “real world” environmentReduced risk
BPR Scope (Medium)Few changes to existing business processesLess impact to external partiesLess trainingShorter timeline
Technical Scope (Medium)Limited customizationEasier upgrades and supportReduced risk of knowledge loss when key employees leave
Module Implementation (“ala carte”)Not all ERP modules are implementedIndustry specific modules and sub modules can be chosenSome legacy systems to remain functional
Resource Scope (Medium)Training and costs are balanced between Comprehensive (Big Bang) and Vanilla approach
Physical Scope (Low)Deployment locations are extremely limitedTypically involves less than 100 usersMay not be able to detect issues related to capacity
BPR Scope (Low)Few areas are affected, therefore little change is neededShorter timelineProcesses may not exactly match ERP model
Technical Scope (Low)No modification or customization to softwareEasy upgrades and support
Module Implementation (Skeletal)Only essential modules are chosenIndustry specific modules are discouragedMinimized risk
Resource Scope (Low)Less trainingShorter timelinesLeast cost
ERP Implementation Strategies