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ITEC Enterprise Architecture and Resource Planning

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					  Software and Vendor Selection,
Operational and Post Implementation
              Lecture 5
      Supakorn Kungpisdan, Ph.D.
         supakorn@mut.ac.th
  Outline
 Software and Vendor Selection
 Operational and Post Implementation




ITEC3612 Enterprise Architecture and Resource Planning   2
  Learning Objectives
 Understand the initial steps in the process for the
  successful purchase and implementation of an ERP
  system.
 Determine the total cost of ownership and what it is to
  partner with an ERP vendor.
 Understand why the first steps in the purchase of an ERP
  are critical to the change management process.
 Identify the steps involved in negotiating a contract with a
  vendor.


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  Preview
 The selection of a vendor that best meets the needs and
  long-term direction of the company is a critical first step in
  a successful implementation.
 A well-understood selection process will need to be
  utilized.
 May hire a specialized consulting firm to assist in the
  selection process.




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  High Level ERP Purchase Process
1. Vendor research and                           6. Analysis and selection,
   information gathering                            Evaluation of bids, Functional
2. High-level vendor                                evaluation, Technical
   demonstrations and                               evaluation, Vendor-detailed
   evaluation                                       demonstrations, Contact
                                                    references, Develop a total
3. Needs and requirements                           cost of ownership
   assessment
                                                 7. Vendor negotiation, Contract
4. Development of request for                       review and change, Pricing-
   bid or proposal                                  software, maintenance, and
5. Release request for bid to                       consulting, support
   vendors                                       8. Purchase system


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  Vendor Research
 To identify a short list of vendors who will help to shape
  business requirements.
      Identifying and researching all aspects of a vendor package will
       assist companies in determining the total cost of ownership
       (TCO).
      Helpful for companies moving from legacy systems
 Ask department managers and subject matter experts
  for their input in vendor selection.
 Including end-users will help with change management
  and also help to gain trust for later in the implementation.


ITEC3612 Enterprise Architecture and Resource Planning                    6
  Vendor Research (cont.)
 Consider the following for vendor selection.
        Other businesses using the vendor
        The vendor’s financial position
        The vendor’s implementation philosophy and support issues
        The hardware and software infrastructure used to support the
         ERP
        The vendor’s direction and currency of software
        The vendor’s release and upgrade strategies
        The vendor’s user-base involvement in defining future functional
         changes
        The vendor’s development and maintenance resources

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  ERP System Research
Item                                       Descriptions
User base                                  How many companies using it and what
                                           purposes
Financial position                         Sales revenues, profits, growth, R&D, debt
Implementation issues and support          Call to companies using the software
HW/SW infrastructure fit and               Identifying and documenting supported
scalability                                platforms
Vendor direction                           Track vendor history of changes and upgrades
                                           systems along with statement of direction
Currency of technology                     Try to understand and document cost to
                                           migrate from legacy systems to ERP




ITEC3612 Enterprise Architecture and Resource Planning                                    8
  ERP System Research (cont.)
Item                                       Descriptions
Release strategy                           • How often are there releases to the system
                                           and what is included in releases?
                                           • Are fixes timely and minor upgrades included
                                           periodically?
                                           • What is timing for major releases and are
                                           there defined upgrade paths?
                                           • Are there vendor costs related to upgrades?
Development and maintenance staff          Check if implementation and maintenance
                                           staff are available in job market
System update process                      Help to understand how much company’s
                                           direction and long-term needs will be met by
                                           the vendor



ITEC3612 Enterprise Architecture and Resource Planning                                      9
  Short List of ERP Vendors
 SAP—Solutions are for all types of industries and for every
  major market. Its products include mySAP Business Suite,
  SAP NetWeaver, and solutions for small and midsize
  companies (e.g., SAP Business One and SAP All-in-One).
      Well-known for Production and SCM
 Oracle/PeopleSoft — (Acquired PeopleSoft in 2004)
  Provides solutions divided by industry category.
      PeopleSoft acquired J.D. Edwards




ITEC3612 Enterprise Architecture and Resource Planning          10
  Short List of ERP Vendors (cont.)
 SSA Global—(Acquired Baan in 2004.) Claim to offer
  solutions that accomplish specific goals in shorter time
  frames.
 Microsoft Dynamics—Part of the Microsoft Business
  Solutions group of products, its solutions can be tailored
  according to business needs.
 Epicor—Focuses on enterprise software solutions for mid-
  market companies.




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  Matching User Requirements to Features

 Identification and documentation of user and system requirements
 Documenting current legacy system functionality or by using
  business process re-engineering to address “best practices” in the
  industry.
 Define how the integrated ERP system cross-functional data flow will
  affect departments within the company
 Two major documents are often a result:
      Data and functional flow of departmental or business processes.
      Table or description of functions in each department and the level of
       importance of each function.
 Identifying vendor system functionality based on documented
  processes will help to purchase a system based on facts.

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  Examples of Processes and Flows




ITEC3612 Enterprise Architecture and Resource Planning   13
  Examples of Processes and Flows (cont.)




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  Request for Information (RFI)
 RFI is a written request asking ERP system information only and is
  not part of the bid process
 To check how close the company’s business processes match
  vendor’s system
 To help company assess if the documented processes are rational
  and reasonable
 Vendors may answers questions related to functionality, and even to
  demonstrate the system




ITEC3612 Enterprise Architecture and Resource Planning                  15
  Request for Bids (RFB)
   Aka. Request for Proposals (RFP)
   Expensive and time-consuming process for both the company and
    vendor, but it can yield significant software savings when done
    right.
   RFB should always include.
           Type of ERP system the company wants with specific functionality
           Specified hardware and software infrastructure
           Training requirements
           Any specific contract issues required by the company




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  Vendor Analysis and Elimination
 Office staff will need to evaluate functionality.
 IT staff will evaluate the technology requirements.
 Contract staff will need to evaluate the contract and pricing
  of the system.
 No vendor will meet all requirements so vendor
  discussions and negotiations should focus on the best fit
  for the business.
 Develop and analyze the total cost of ownership (TCO).
      Difficult. Largest cost of system occurs after the implementation
       in the system maintenance and upgrades
      Actual software purchase will be less than 15% of overall cost

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  What Does ERP Really Cost?
 Some experts said ERP installation cost will cost about six times as
  much as the software license
 Actually, software installation has so many variables and total cost
  will depend on:
        The number of divisions it will serve
        The number of modules installed
        The amount of integration that will be required with existing systems
        The readiness of the company to change
        Ambition of the project
 Among 63 companies surveyed—including small to large companies
  across industries, the average TCO was $15 million (the highest was
  $300 million and the lowest was $400,000).


ITEC3612 Enterprise Architecture and Resource Planning                           18
  Contract Management and License
  Agreements
 Talks should center on the products included in the purchase and
  maintenance terms of each product.
 May include professional services for the implementation or
  installation or may bid separately
 Should address contract life cycle management
 Things every ERP contract should have:
      Identify all deliverables delivery dates
      Ensure that you, the customer, have acceptance authority.
      Identify authorized persons on both sides for contract management and who
       has the authority to authorize changes to the contract.




ITEC3612 Enterprise Architecture and Resource Planning                             19
  Contract Management and License
  Agreements (cont.)
 A quality manager or contract monitor appointed by the program
  manager will have primary responsibility for making sure both sides
  abide by the terms and conditions of the contract.
 Changes should only be made when necessary due to unforeseen
  circumstances, mutually beneficial reasons, or unintended mistakes.
 Communicating progress keeps all involved and will also help to
  maintain momentum.
 It is best to over-communicate during this phase.




ITEC3612 Enterprise Architecture and Resource Planning                  20
  Outline
 Software and Vendor Selection
 Operational and Post Implementation




ITEC3612 Enterprise Architecture and Resource Planning   21
  Learning Objectives
 Describe all the components to a successful “Go-live” and
  determining their readiness.
 Understand what is involved in stabilizing the system after “Go-live”
  and how to track and address problems and issues on a daily basis.
 Value the transition from developing a system to supporting it in a
  production environment.
 Understand the process of transferring knowledge to operational
  staff and the importance to the long-term system success.
 Realize the value of training before and after “Go-live.”




ITEC3612 Enterprise Architecture and Resource Planning                    22
  Preview
 In assessing an ERP project’s readiness for Go–live,
  planned tasks and activities must be completed to allow
  project management to address any outstanding issues
  that may jeopardize the Go-live date.

 Readiness process needs to include as many team
  members, appropriate users, and managers as possible.

 Much of the success of an implementation lies with the
  stabilization and post implementation support
  processes.
ITEC3612 Enterprise Architecture and Resource Planning      23
  Preview (cont.)
 Stabilization is the time from Go-live to about 90 days after, or until
  the number of issues and problems has been reduced to a small
  manageable number
 During the stabilization, development within the system should be
  cease
 Focus on all resources to ensure that users understand how to use
  the system and can resolve issues and problems as quickly as
  possible.
 Continuing of monitoring implementation issues will provide a basis
  for moving from stabilization to post-implementation support.
 Training also gears up during the readiness process and continues
  through stabilization and post-implementation support.

ITEC3612 Enterprise Architecture and Resource Planning                      24
  Sample Project Methodology




ITEC3612 Enterprise Architecture and Resource Planning   25
  Go-Live Readiness
 Create an elaborate readiness checkpoint for Go-live to
  make sure steps are not missed.
 Assess Infrastructure, development, configuration,
  conversion, testing, training, communications, operations,
  command central, reporting, and users
 Document readiness reviews and communicate to the
  project team and the company.
 Provide a detailed report and an executive summary for
  senior management.



ITEC3612 Enterprise Architecture and Resource Planning         26
  Go-Live Readiness (cont.)
 The Go-Live Readiness Review and Status Report
      A table that shows the status of each area at a glance, with the
       key activities that need to be completed agreed to before going
       live.
 Determining readiness consists of a series of meetings and
  discussions on the status of each area’s tasks and
  activities.
      If the PMO sees a lot of RED items the first time through, it will
       help to focus the project teams on what needs to be
       accomplished in the time period between the assessment and
       Go-live .


ITEC3612 Enterprise Architecture and Resource Planning                      27
  Sample Go-Live Readiness Report
   Category                          Technical infrastructure readiness
                                     Operational readiness
                                     Testing readiness
                                     Conversion readiness
                                     Training readiness
                                     Communications readiness
                                     Production support readiness
                                     Audit readiness
                                     Risk readiness
                                     Corporate management readiness
   Criterion                         What activity or component needs to be ready?
   Criticality                       High, medium, low
   Site or group                     Area, location, or group that must be ready
   Key measurement                   What activity or task needs to be completed




ITEC3612 Enterprise Architecture and Resource Planning                               28
  Sample Go-Live Readiness Report (cont.)

  Work around                   If the task or activity is not complete before Go-live, is there an
                                acceptable workaround?
  Decision Owner                Name of the person responsibility for making decision
  Task Contact                  Name of the person responsible for working on the task and can
                                address the actual status of the task or activity
  Minimum Pass                  A percentage of task or activity that must be completed before
                                going live
  Current status                Status of the readiness assessment
  Assessment                    Red: not ready before Go-live
                                Yellow: the task is likely to be completed
                                Green: complete
  Assessment Date               Date the task or activity was assessed




ITEC3612 Enterprise Architecture and Resource Planning                                                29
  ERP Training
 Training must be provided to everyone that will be using the system,
  and should use real data and examples.
 If done correctly training will capture about 90 percent of what users
  will see on a daily basis.
 ERP training personnel should include trainers who work for the
  software vendor, third-party trainers that have specific experience in
  ERP systems.
 Developing a variety of ways to train will better ensure the
  effectiveness of training.
 Training needs to be endorsed by senior management early to
  ensure adequate funding.



ITEC3612 Enterprise Architecture and Resource Planning                     30
  Stabilization
 Begins when the ERP system software is in production,
  initial training is complete, and conversion of critical data is
  done.
 After the ERP system goes live, the organization will need
  to shift to stabilization process—60 to 90 days.
 IT staff will be monitoring the infrastructure for response
  times and ensure that back-ups are taken appropriately.
 Subject matter experts should be prepared to help many
  users from their departments operate the system in the
  correct way.


ITEC3612 Enterprise Architecture and Resource Planning               31
  Issues Arising During Stabilization
 Customizations add to the complexity if not documented and
  communicated well.
• Users, make mistakes as they use the new process for the first
  time.
 In a parallel implementation approach, the ERP system is
  operated concurrently with the old legacy system, which is
  labor-intensive, confusing, and frustrating.
 Reconciliation has to be done between the new ERP system
  and the old legacy system to validate the inputs and outputs.




ITEC3612 Enterprise Architecture and Resource Planning             32
  Post-implementation Support
 Objective: Ensure that the system is doing what it needs
  to do
 If the postproduction process is inadequate, then the
  implementation may be considered a failure.
 Many of the risks associated with cutting over to the new
  ERP can be reduced by appropriate pre–Go-live and end-
  user training.
 Subject matter experts and core project team members
  provide general support to answer simple process and
  system questions.


ITEC3612 Enterprise Architecture and Resource Planning        33
    Postimplementation Support
   Training: before and after Go-live
   Go-Live Support: day-to-day
   Data Validation: periodically
   Data Correction: sometimes
   New Features




ITEC3612 Enterprise Architecture and Resource Planning   34
  Knowledge Transfer
 There must be a well-defined process in place to transfer
  knowledge and skill to new or existing staff or team
  members during and after the implementation process.
 Should document project monitoring and tracking,
  collaboration and communication, subject matter expertise,
  and lesson-learned repository should be documented.
 A knowledge management plan can monitor the transition
  from one phase of the implementation to the other, which
  enables a smooth transfer of knowledge.



ITEC3612 Enterprise Architecture and Resource Planning         35
  Knowledge Transfer (cont.)
 A knowledge management plan will:
        Ensure knowledge is retained.
        Reduce the cost of support due to lower number of support calls.
        Facilitate faster learning.
        Better maximize the capabilities of the system.
        Cut time in troubleshooting problems.
        Ensure a correct use of the system.
 One centralized data repository can then be used to store
  documents which will eliminate confusion, duplication, and
  losing data.

ITEC3612 Enterprise Architecture and Resource Planning                      36
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