Software and Vendor Selection,
Operational and Post Implementation
Supakorn Kungpisdan, Ph.D.
Software and Vendor Selection
Operational and Post Implementation
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Understand the initial steps in the process for the
successful purchase and implementation of an ERP
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
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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
May hire a specialized consulting firm to assist in the
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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
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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To identify a short list of vendors who will help to shape
Identifying and researching all aspects of a vendor package will
assist companies in determining the total cost of ownership
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.
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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
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
The vendor’s development and maintenance resources
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ERP System Research
User base How many companies using it and what
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
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
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ERP System Research (cont.)
Release strategy • How often are there releases to the system
and what is included in releases?
• Are fixes timely and minor upgrades included
• 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
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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
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Short List of ERP Vendors (cont.)
SSA Global—(Acquired Baan in 2004.) Claim to offer
solutions that accomplish specific goals in shorter time
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-
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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
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
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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
To help company assess if the documented processes are rational
Vendors may answers questions related to functionality, and even to
demonstrate the system
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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
RFB should always include.
Type of ERP system the company wants with specific functionality
Specified hardware and software infrastructure
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).
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Contract Management and License
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.
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Contract Management and License
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
It is best to over-communicate during this phase.
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Software and Vendor Selection
Operational and Post Implementation
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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
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.”
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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
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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
During the stabilization, development within the system should be
Focus on all resources to ensure that users understand how to use
the system and can resolve issues and problems as quickly as
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.
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Sample Project Methodology
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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
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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
Determining readiness consists of a series of meetings and
discussions on the status of each area’s tasks and
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
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Sample Go-Live Readiness Report
Category Technical infrastructure readiness
Production support 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
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Sample Go-Live Readiness Report (cont.)
Work around If the task or activity is not complete before Go-live, is there an
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
Current status Status of the readiness assessment
Assessment Red: not ready before Go-live
Yellow: the task is likely to be completed
Assessment Date Date the task or activity was assessed
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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
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.
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Begins when the ERP system software is in production,
initial training is complete, and conversion of critical data is
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
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Issues Arising During Stabilization
Customizations add to the complexity if not documented and
• Users, make mistakes as they use the new process for the first
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.
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Objective: Ensure that the system is doing what it needs
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-
Subject matter experts and core project team members
provide general support to answer simple process and
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Training: before and after Go-live
Go-Live Support: day-to-day
Data Validation: periodically
Data Correction: sometimes
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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.
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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
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