ERPS – LIFE CYCLE

MOHAR BANERJEE BISWAS

ERP IMPLEMENTATION - PHASES
• Pre evaluation screening
• Package evaluation
• Project planning
• Gap analysis
• Reengineering
• Customization
• Implementation team training
• Testing
• Going live
• End user training
• Post implementation
PRE EVALUATION SCREENING
• Search for perfect package starts from the set of 100s of packages all claiming to
provide the required solution
• Analyzing all packages before selection isn’t viable and is time consuming
• Better to limit the package for evaluation to < 5 as it is better to thoroughly
analyze lesser packages than to skim through more numbers
• Pre evaluation is this process of screening before the actual evaluation
• Based on the package strength and weaknesses, their history and forte, org
function suitability, major areas of features
PACKAGE EVALUATION
• Most important phase because the selected package will decide the success or
failure of the project
• ERP packages are costly, so once a package bought couldn’t be easily switched to
another
• Idea that there is no perfect package is to be understood and a flexible package to
be bought which could meet the needs of the company. Combination of features +
customization
• Develop standard for selection criteria for evaluating all packages on same scale
• Better to have a committee for selection comprising from various depts, top
mgmt, consultants
PACKAGE EVALUATION - CRITERIA
• Functional fit with org’s business processes
• Degree of integration
• Flexibility and scalability
• Complexity
• User friendliness
• Implementation time
• Technology
• Availability of upgrades
• Amount of customization required
• Total cost including license, training, implementation, maintenance, customization,
hardware costs etc
PACKAGE EVALUATION – SAMPLE CRITERIA
PROJECT PLANNING
• Designs the implementation process
• Time schedules, deadlines
• Roles identified, effort determined along with team leads
• Implementation team selected and tasks assigned
• When to begin, how to do it and when to complete and completion parameters
• Contingency planning
• How to monitor progress
• Committee with team leads from each dept do the planning with the ERP in
charge (CIO or COO) as head
PROJECT PLANNING - SAMPLE
CONTINGENCY AND RISK PLANNING - SAMPLE
GAP ANALYSIS
• Model with where they are now and where they want to head
• Generally, best ERP packages meet only 80% of company’s functional
requirements
• Remaining 20% pose a problem to the company’s BPR
• Quantify the results and measurable, timelines and people responsible
• Customize the ERP package or the company’s business process
GAP ANALYSIS - SAMPLE
GAP ANALYSIS - SAMPLE

• NG – No Gap, GAP – Full GAP, PG – Partial GAP

BP – Business Process, S – System
F – Functionality, UI – Interface, T – Technical, RC - Compliance
REENGINEERING - BPR
• Human factors taken into account
• Every implementation is going to involve some change in JD
• Treat ERP as an investment and cost cutting measure but not downsizing tool
• ERP should change business processes and not endanger job of employees
CUSTOMIZATION
• Business processes have to be understood and mapped in a way that the solutions
match with the overall goals of the company
• Idea is to create a prototype (like a simulation of actual business process of the
company)
• Prototype allows for thorough testing of the ‘to be’ model in a controlled env
• Company needs to know which processes have to change during implementation.
Find out what will work and what wont
• People with knowhow of company’s business process and who have ability to
work with people throughout the company are assigned these tasks
IMPLEMENTATION TEAM TRAINING

• While the customization is taking place, implementation team is being trained, not
much on how to use the system but more on how to implement it
• Phase where company trains its employees to implement and later run the system
• Employees selected should be willing to change, learn new things, are not afraid
of technology and have good functional knowledge
 TESTING
• Phase where you try to break the system using real case scenarios. Aim is to find
the weak limits and bugs
• Types of testing
• Unit testing – testing new and additional feature in isolation
• Integration testing – testing end to end business processes including customization,
enhancements and interfaces to external system
• Acceptance testing –testing done by users working with real data
• Security testing – testing user roles, access privileges, authorization and other security
measures. Find loopholes in system’s security
• Performance and stress testing – testing under normal business loads and also at huge
increase in transaction volumes. Ensure system doesn’t fail due to spikes in volume
GOING LIVE
• Phase where ERP is made available to entire org
• On technical side, work is complete, data conversion is done, databases are up and
running
• On the functional side, the prototype is fully configured and tested and ready to go
operational
• Once the system is live, the old system is removed and new system is used for
doing business
END USER TRAINING

• Actual users of the system would be given training on how to use the system
• Starts before system goes live
• Employees who are going to use the system are identified, skills noted, divided
into groups based on skills and training imparted to the groups
• Also job specific training is given to each employee
 POST IMPLEMENTATION - (OPERATION & MAINTENANCE)

• Post implementation – when vendors and consultants leave, ensure employees are capable
enough to handle the system, fix any problem that might arise and enhancements if
required
• Going for upgrade whenever they are announced, the org should first analyze the costs and
benefits
• Maintenance activities will start shortly after implementation and operation
• Annual Maintenance costs should be budgeted during planning. Generally maintenance
costs is 20% of the ERP implementation costs. System upgrade can cost as much as 25-
33% of the implementation costs
 POST IMPLEMENTATION - (OPERATION & MAINTENANCE)

• Maintenance activities include preventive maintenance which is regular

maintenance to keep the system functioning properly
• Emergency unscheduled maintenance – maintenance done to prevent some
damage from occurring to the system or data
• Breakdown maintenance – maintenance performed to correct some problem that
has caused the system to stop functioning
• System updates – activities like applying patches, bug fixes, etc provided by the
ERP vendor
IMPLEMENTATION CHALLENGES

• Inadequate Requirement Definition

• Requirements should clearly specify the issues and problems that ERP is supposed to
solve, the additional capabilities expected out of the system
• Clear requirements specification leads to appropriate selection of ERP package from
the vendor
• Helps is identifying areas where customization is needed, and functions where the
org’s business processes needs modification
• Failing to provide above, could result in the selection of wrong ERP package,
unnecessary customization, lack of employee retraining – all of which can lead to
ERP failure
IMPLEMENTATION CHALLENGES
• Resistance to Change
• Human nature to resist any change
• For ERP to succeed, co operation of everyone involved is an absolute necessity – ERP
is first an Attitude, then a change
• One main reason for resistance is ignorance
• ERP implementation team along with mgmt needs to spend some time and effort in
educating users about ERP and how it’ll help people and company
• Resistance could also be reduced by creating champions - Find well reputed potential
user of the technology, train them, have them evaluate the technology, and then
encourage them to champion the merits of the technology to the rest of the co workers
and mgmt
• The champion becomes the expert user, facilitator, and trainer of the tool
IMPLEMENTATION CHALLENGES
• Inability to Achieve Organizational Understanding
• Workers using ERP systems would be updating the system in such a way that it would
affect the functions of other departments and co workers
• Knowledge workers must have much broader understanding than they did before the
ERP solution, and learn how others in the org perform their functions

• Inadequate Resources
• ERP is a very costly affair that requires a variety of resources – money, people,
software, hardware, etc
• Budget needs to be established based on likely costs as unlimited funding could not be
supported
• Items might be missed from the budget, Long implementation will escalate costs
Skilled and motivated personnel from the org is a critical factor
IMPLEMENTATION CHALLENGES
• Lack of Top Management Support
• Roles of top mgmt in early phases include developing understanding of the capabilities and
limitations of IT, establishing reasonable goals, exhibiting strong commitment, communication
of org strategy to all employees
• Research shows that project cancellations occur when senior mgmt delegates progress
monitoring and decisions at critical junctures of the project to technical experts

• Lack of Organizational Readiness

• Mgmt to make sure that organization, work process and employees are amenable to adapt to the
ERP system

• Inadequate Training and Education

• ERP project have 6 months learning curve at the beginning of the project
• Everyone who uses ERP needs to be trained on how they work and how they relate to the
business process early on in the implementation process
IMPLEMENTATION CHALLENGES
• Inaccurate Expectations
• Management of expectations has an impact through all stages of implementation life
cycle
• Inaccurate expectation are the norm when it comes to ERP
• Most implementations result in cost and schedule overruns – 55%, 35% get cancelled
• Poor Package Selection
• Make sure the provider has the capabilities and expertise to provide the required
solution
• Choice of package depends on budget, time frames, goals, deliverables
• Choosing right package ensures minimal modification and successful implementation
and use
IMPLEMENTATION CHALLENGES
• Poor Project Management
• Proper mgmt of scope is critical to avoid schedule and cost overruns
• Necessitates having a plan and sticking to it
• A project scope that is too broad or ambitious can cause severe problems
• Customizations increases the scope and adds time and cost to an implementation

• Customization Issues
• Modify ERP to match org processes and data structures
• Modify org processes to match ERP
• Perform combination of above 2
• Ignore the problem
• Option 1 and 2 require understanding of the ERP and org processes and data structures
 IMPLEMENTATION CHALLENGES
• Long Payback Period
• ROI runs to around 3 years
• Poor Communication and Co-operation
• Communication is important within project team, rest of the org, and with client
• Requires and org culture that emphasizes the value of sharing common goals over
individual pursuits and the value of trust b/w partners, employees, managers and
corporations

• Data Quality Costs

• Only 15% of companies are very confidant of the data received from other organization
• Only one in 3 companies are very confident about the quality of their own data
• Poor quality data could be fatal to ERP projects
 IMPLEMENTATION CHALLENGES
• Hidden Implementation Costs
• There are many items that are missed or that will consume more money than allotted
• Theses cash shortages will hinder smooth implementation, and if company doesn’t have sufficient
reserves to bear additional expenditure, then the implementation will have to be left half way
• Improper Integration
• Benefits are limited if it doesn’t integrate seamlessly with other IS
• Integration with various ERP modules, integration with other e-business applications (SCM,
CRM, B2B exchange etc), integration of ERP modules from different vendors / versions of same
vendor (due to change of vendor)
• Integration with legacy systems is more complex as over the years legacy systems have huge data
collected, requires 3rd party interface, data conversion is also an issue
• Improper Operation / Use
• You can have the ERP solution implemented but if its resources are not utilized to the fullest, the
whole initiative is a waste
QUESTIONS ??

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