ERP – Unit -2

ERP strategies

ERP Implementation Strategy #1: Clearly Define Requirements Before Taking Action
The scope of your project can be a critical concern. Businesses that fail to keep tight focus on specific
processes and system requirements will find that ERP implementation may require additional time
and costs. A well-defined scope will ensure your project does not grow out of hand.

ERP Implementation Strategy #2: Evaluate Your Options

Poorly handled and mismanaged evaluation efforts create serious issues during every step of the
implementation process. Vague requirements may lead businesses to choose the wrong vendor,
handle data migration poorly or result in delayed completion. Prepare yourself properly, obtain
input from users and team leads and a carefully evaluate both your legacy systems and planned ERP
implementation before making any big decisions.

ERP Implementation Strategy #3: Document User Procedures

Proper documentation can be essential for understanding how users interacted with legacy systems,
evaluating and improving workflow and providing users with the concise instructions needed to
navigate a new feature-rich working environment. Create and maintain documents detailing key
user procedures and routines, both before and during ERP implementation.

ERP Implementation Strategy Tip #4: Single-Step Implementation

This model of implementation requires all users to migrate to the new system at once. Ideal for
smaller operations and businesses that may have few users, single-step ERP implementation offers a
simple and straightforward way to handle the process so you can more easily focus on your project
scope and implementation parameters. But it’s not for everyone.

ERP Implementation Strategy Tip #5: Phased Rollout

Changing to a new system incrementally over an extended period of time can allow for early
implementation of key features, and ensures that any issues or complications are isolated from
working processes that have already been brought online. While more flexible than a single-step
approach, this strategy may entail a lengthier process, especially for businesses that keep changing
the parameters of an implementation project.

ERP Implementation Strategy Tip #6: Parallel Adoption

This strategy involves both new ERP and legacy systems operating simultaneously. Ideal for
businesses and organizations that have concerns regarding the effective training and education of
users, parallel adoption allows users to learn how to navigate the new system while retaining access
to a familiar and established working environment.

ERP Implementation Strategy #7: Consider Customization Options Carefully

You should consider the amount of customization required to configure and implement a new ERP
system. Systems that have been heavily customized often lead to higher deployment and
operational costs. Many of the most basic business processes are the same for the vast majority of
companies, and you should always evaluate the need for customization carefully, making sure to
weigh it against potential costs.

ERP Implementation Strategy #8: Choose the Right Project Leader

Designate an internal project or team lead to spearhead your implementation efforts. A vendor-
selected project manager can be a terrific asset, but it’s an inside partner who gets what’s really
going on, with a complete understanding of your working process or the needs of your staff. Select a
team lead with experience managing software systems and task him or her with assessing all end-
user requirements as well as fully learning the new system. An internal project lead is an invaluable
resource for handling many aspects of data migration and staff training.

ERP Implementation Strategy #9: Don’t Forget Mobile Users

Limiting access to ERP systems to desktop working environments would be a major liability. The
growing popularity and sophistication of mobile devices should not be overlooked when it comes to
your ERP implementation strategy. A recent Nielsen study found that mobile has now surpassed
desktop usage of the Internet. With that in mind, it’s important to roll out a mobile ERP strategy that
allows users to stay productive when using smart phones and tablets, and will not create additional
security issues.

ERP Implementation Strategy #10: Allocate Sufficient Time and Resources for Training
Learning and mastering a new way of operating can often require a considerable investment of time
and effort. Provide your staff with the time needed to get acquainted with the new ERP system and
ensure they have access to ample training resources and opportunities during migration and rollout,
and in an ongoing capacity.

ERP implementation Challenges

Finding the perfect software

There are a vast number of ERP systems available, so it is can be confusing choosing which one to
invest in or what is best for the business.

The first step is to have a thorough understanding of the needs and challenges of the business and
then give this to a selection of ERP providers for a response. The ERP provider chosen should have
experience within your industry, take the time to understand the business and be able to help you
meet your business goals. Otherwise, you could end up making a very costly mistake. It is important
to ensure you gather enough information about your overall requirements and have open
conversations with potential providers, so you can find the right software to meet your business
needs and the right partner to support you in your ERP journey.

Commitment from managers

It is imperative that those who lead from the top are fully committed to the ERP implementation.
Actively communicate with key personnel and ensure they understand the need for them to be fully
involved. Also involving them in the decision-making process will increase the likelihood of
commitment. The better the communication, the more likely you will have complete buy-in from not
only your managers but also the rest of the team.

System training
The ERP system will only ever be as good as those who are using it, so one of the main challenges
your business will face is to ensure adequate training is provided. The successful implementation of
your ERP system will be much more feasible if you offer your employees full training and ensure they
are motivated to use the system.

Sufficient testing functional

Even if the ERP system meets all of the business requirements and expectations one of the potential
downfalls could be the lack of testing. It is imperative that a sufficient amount of testing is carried
out in the ERP implementation to ensure it will perform when deployed. Testing will provide the
opportunity to highlight any issues, so they are taken care of before the system is fully implemented
and live.

Lack of budgeting
In the long run, ERP systems can help businesses increase efficiency and productivity, but
implemented badly could have the opposite effect, which is something that is not always taken into
account. When budgeting you must take into account the financial costs and ERP project team
members time. It is essential for someone within the company to take charge of the project,
communicate and work closely with the ERP provider in order to achieve the best results.

ERP Implementation Life Cycle

Selection of packages:

This is the very first stage of the ERP implementation life cycle, where the company has to select a
good ERP package that suits your company and your business needs, with a proper research. When
selecting an ERP system, degree of matching and customization it can provide your business and
stability and future assistance of the software provider, are few things you should keep in mind for a
successful ERP implementation.
Project Planning:

At this phase of the ERP life cycle, you should come up with a clear and realistic plan for the process.
This includes scheduling timelines and deadlines for projects, identifying roles and assigning
responsibilities for the ERP implementation process.
Analysis GAP:

Being one of the important and crucial steps in the ERP life cycle, GAP analysis is the analysis done to
create a clear and complete model to identify the current state of the company and the direction it
will head to in the future depending on the business goals of the company.
Re-engineering:

This is where the human factor of the business comes to spot light. The step involves many changes
and alteration in the number of employees and job responsibilities which should be performed
carefully as it directly affects the efficiency of the company.
Training:

To enhance the efficiency, having a group of employees who are well trained and familiar with the
new system is essential which is why this step becomes important in the ERP implementation life
cycle.
With the help of the software service provider, at this stage, the company should start training their
employees for the ERP system who been selected after considering the following qualities;
willingness to change, the ability to learn new thing quickly and accurately and familiarity with new
technology.
Testing:

Testing is not an exception for a new system to run smoothly. Here the company will test real life
extreme scenarios like user error detections, system overload, simultaneous multiple user log-ins,
data security and more. This will help the company to identify errors, bugs and weak links before the
implementation.
Application:

It is in this stage the ERP system’s actual implementation happens. After the data conversion and
data base work is over, the implementation of the new ERP system will be done and then, the old
system will be removed.
Maintenance:

After implementation, maintenance is the lasts step of the ERP life cycle where the constant
maintenance of the system involves. This is the where the employees will learn to face and deal with
system related problems while the system should be updated corresponding to the future updates
of the software solution provider.

Pre implementation Tasks

Step 1 – Form a team

The first and foremost thing that you should do once you have decided to deploy ERP software is to
assign a dedicated expert team who can work on it. Designate your ERP project champion and
identify the key stakeholders. These can be the department heads or key individuals from each
department who know the functioning of that department well. Get yourself a consulting team for
all the know-hows of proceeding with an ERP deployment.

Step 2 – Get support from management

It is very important that your upper management supports your ERP team’s efforts and puts in an
active involvement in the project. Insights, inputs and feedback from upper management are very
important to be able to select the right solution.

Step 3 – Gather all the requirements

Now that you have the necessary support and minds to work with, you should start collecting your
exact requirements. Make an extensive list of requirements. Define the scope of your project and
pay attention to the specific businesses processes and system requirements. Make your
requirements specific, concise and clear. This will help the vendors come up with detailed plans and
solutions and make it easy for you to decide on the final solution.

You may also have to consider special cases like mobility, cloud usage and specific business
processes and technologies used by your company while setting up your requirement specification.
You can find the right fit only when you have done this step properly.

Step 4 – Define your objectives and business needs

Derive your business objectives and needs from your requirements. State what you expect from the
ERP software and be clear on its benefits. Review your requirements documentation and make sure
your objective aligns with your vision and desired outcomes.

Step 5 – Make a plan

They say, “Fail to Plan is a Plan to Fail”; Make an IT strategy plan and make sure it aligns with your
business objectives and requirements. Formalize the desired solution architecture and the necessary
means for evaluation and up keeping.

Step 6- Get references

Once you are clear with what you want, the next step is to start looking for the right vendors. You
need to qualify the ERP software and then select your ERP Implementation Partner. To do this you
can get references from your peers or experts in the field.
Step 7- Evaluate the options you have
Once you have shortlisted list of solutions, evaluate them on need basis and against a set criteria.
You should understand the ERP providers planning, support approach and capabilities and evaluate
them. Review the product demos and assess them carefully. Don’t forget it is more important to
have a correct ERP Implementation Partner than the product (ERP Software) itself.

Step 8 – Consider customization and change management

Level of customization and support for change management are two important factors you need to
consider while evaluating an ERP solution. ERP software must be able to facilitate changes on large
scale and must make change management effective. Again the change management team of your
ERP Implementation partner will be helpful here.

Requirements Definition
Therefore, the ERP requirements definition should focus on defining the future state of business
processes and evaluating the ERP solution against that future state business process model. The
future state business process model then becomes the requirements definition.

The ERP requirements definition becomes a script of business processes of sorts. The function
requirements are listed within the process script.

The vendor demonstration focuses on future state business processes. Think of the ERP
demonstration as a “day-in-the-life” process presentation.

The demonstration starts with defining a product and then progresses through the following
processes:
1. Sales process
2. Planning process
3. Production process
4. Shipment process
5. Accounting process
6. Engineering process
7. Quality process
8. Warehouse process
9. Human resources process

Evaluation and Selection of ERP Packages

Evaluation and selection of ERP package is an essential criterion for successful ERP implementation.
Quality of selection will have a long term impact on the processes of the organization. It is also not
easy to switch to another product with concomitant scale of investment and complexities. This
evaluation and selection process should be properly directed and normally comprises of following
activities:

Formation of an evaluation committee: An ERP implementation is not an IT project but a business

oriented development. Therefore, in addition to Chief Information Officer, this committee should
comprise of all functional heads and driven by a top management representative. Since all business
functions are represented in selection process, the chosen package would have wide acceptance
subsequently.

Requirement Analysis: This analysis should outline functional expectations of various business
divisions, such as warehouse, finance, procurement, from potential ERP package. Vital requirements
specific to the company should be highlighted e.g.
  Must have Distribution Requirement Planning (DRP) functionality.
 In transit inventory and pallet tracking, as a part of shipping requirement.
 Multiple purchase orders linked to one bill of lading.
 Multi currency and multi locations functionality.

Requirement analysis forms a base for preparing a Request for Proposal (RFP), where important
technical and commercial perquisites are incorporated. Common examples of technical perquisites:
flexibility, Upgradability, User friendliness, field level security, Operating system and database
compatibility. Common examples of commercial perquisites: cost, reference sites, high level project
plan, resumes of consultants, post implementation support, financial health of the company, local
presence, number of installation and upgrade.

Selection Criteria: A pre-determined selection Criteria should be ready before actual selection
process commences. Selection criteria are normally in the form of questionnaire and point system,
where each question represents a business or technical need. Weightage for each point or a group
of points are predetermined which varies according to criticality of the issue. These processes help in
making the selection process objective and transparent.

Selection Process: Selection process constitutes various stages as mentioned below:

1. Short listing of vendors: Hundreds of ERP packages are available in the market, which have
different concept, architecture and sets of functionalities. Analyzing all the packages is not
feasible. Organization need to identify a few best suited packages by looking at product
literatures of vendor, finding out which product is being used by their peer organizations and
getting help from external consultants. Once a few packages are short listed, respective
vendors should be asked to respond to the RFP, as per its format.
2. Demo and Presentation: Responses from shortlisted vendors are evaluated by the selection
committee after collating scores obtained by them and a consensus is reached about their
final ranking. Anyone not fulfilling a predetermined vital requirement is eliminated at this
stage. Top two or three vendors, are then invited for demo and presentation. Mode of
presentation should be carefully scripted and send to the vendors in advance. They should
be asked to walkthrough a particular business cycle through their vanilla software. They
should be specifically asked to clarify any area of concern about their proposal, which may
expose weak/ problem area of their offer.
3. Site visit and contract negotiations: After the committee has reached a decision on best
suited package, visits to reference sites are imperative. The vendor should provide reference
sites of similar size and industry, identical version and belonging to same geographical
location. Team members should have look and feel of the systems operating at reference
sites and ask pertinent questions covering overall satisfaction, functionality, cost/ time over
run, support concerns etc. After site visit, if the committee members feel that their selection
is right, they proceed with final negotiation and procurement. Negotiations are normally
held on license and annual maintenance cost, payment plan including a leasing option,
support issues and other commercial and legal terms.
 Data migration is the process of moving data from one location to another,
one format to another, or one application to another.

Types of migration:

 Storage migration. The process of moving data off existing arrays into
more modern ones that enable other systems to access it. Offers
significantly faster performance and more cost-effective scaling while
enabling expected data management features such as cloning, snapshots,
and backup and disaster recovery.

Cloud migration. The process of moving data, application, or other business

elements from either an on-premises data center to a cloud or from one cloud to
another.

Application migration. The process of moving an application program

from one environment to another. May include moving the entire application
from an on-premises IT center to a cloud, moving between clouds.

Project management, then, is the application of knowledge, skills, tools,

and techniques to project activities to meet the project requirements.

Initiation / Defining Phase

 In this phase specification of the project are defined
 Project objectives are established
 This is where the project’s value and feasibility are measured. Project managers typically use
two evaluation tools to decide whether or not to pursue a project:
 Business Case Document – This document justifies the need for the
project, and it includes an estimate of potential financial benefits.
 Feasibility Study –It balances the requirements of the project with available
resources to see if pursuing the project makes sense.
 Teams are formed

Planning Phase
 In this phase the team identifies all of the work to be done
 The project’s tasks and resource requirements are identified
 A project plan is created outlining the activities, tasks, dependencies, and timeframes.
 The project manager coordinates the preparation of a project budget by providing cost
estimates for the labor, equipment, and materials costs.
 Once the project team has identified the work, prepared the schedule, and estimated the
costs, the three fundamental components of the planning process.
 This is an excellent time to identify and try to deal with anything that might pose a threat to
the successful completion of the project.
Execution Phase

 In this phase the project plan is put into motion and the work of the project is performed.
 Progress is continuously monitored and appropriate adjustments are made and recorded as
variances from the original plan.
 In any project, a project manager spends most of the time in this step.
 During project implementation, people are carrying out the tasks, and progress information
is being reported through regular team meetings.
 The project manager uses this information to maintain control over the direction of the
project by comparing the progress reports with the project plan to measure the
performance of the project
activities and take corrective action as needed.
 Throughout this step, project sponsors and other key stakeholders should be kept informed
of the project’s status.
 The plan should be updated and published on a regular basis.
 Status reports should always emphasize the anticipated end point in terms of cost, schedule,
and quality of deliverables.
 Each project deliverable produced should be reviewed for quality and measured against the
acceptance criteria.
 Once all of the deliverables have been produced and the customer has accepted the final
solution, the project is ready for closure

Implementation/Delivering Phase

 Delivering the completed project to the customer

 Redeploying the project resources
 Delivering of the project might include customer training and transferring documents