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Software and Vendor Selection, Operational and Post Implementation Lecture 5 Supakorn Kungpisdan, Ph.D. firstname.lastname@example.org 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. ITEC3612 Enterprise Architecture and Resource Planning 3 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. ITEC3612 Enterprise Architecture and Resource Planning 4 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 ITEC3612 Enterprise Architecture and Resource Planning 5 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 ITEC3612 Enterprise Architecture and Resource Planning 7 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. ITEC3612 Enterprise Architecture and Resource Planning 11 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. ITEC3612 Enterprise Architecture and Resource Planning 12 Examples of Processes and Flows ITEC3612 Enterprise Architecture and Resource Planning 13 Examples of Processes and Flows (cont.) ITEC3612 Enterprise Architecture and Resource Planning 14 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 ITEC3612 Enterprise Architecture and Resource Planning 16 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 ITEC3612 Enterprise Architecture and Resource Planning 17 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 Question?
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