ERP Implementation Life Cycle
Contents
What is ERP? Objectives of ERP Implementation What is ERP life cycle?
Block Diagram of Phases of ERP Implementation Life Cycle
Phases of ERP Implementation Life Cycle
Why do many ERP Implementations fail?
Bibliography
ERP Implementation Life Cycle
ERP Implementation Life Cycle
What is ERP?
ERP (Enterprise Resource planning) covers the technique and concepts employed for the integrated management of business as a whole, from the viewpoint of the effectiveness use of management resources, to improve the efficiency of an enterprise. ERP packages are integrated software packages that support the above ERP concepts. An Enterprise Resource Planning system (ERP) is a collection of modules/components integrated together while utilizing one database typically used primarily by medium to large manufacturing organizations with multiple sites located worldwide. Connecting to one database allows users from all departments of the organization located anywhere in the world to attain the necessary information to carry out their responsibilities. This integration approach offers improved operational processes and streamlined information to the fingertips of anyone with the security rights to access it. Paper documents are reduced or eliminated as online documents travel throughout the system to the appropriate department for updating and forwarding. Transactions pass through the system automatically updating several modules/components in real-time to provide timely and accurate data for users to access and share from any location in the world.
Enterprise Resource Planning
ERP Implementation Life Cycle
Objectives of ERP Implementation
Objectives are the major high-level characteristics that can have a great impact upon the success of an ERP project. The objectives include characteristics such as:
ERP Implementation Life Cycle Speed Scope Resources Risk Complexity Benefits Speed The speed of a project is directly related to the amount of time that a company has before the completion of the ERP implementation or the amount of time that it would like to take for the implementation. The speed of the project in the context of this chapter is how much time the company would like to take in implementing the system. The amount of time that the company actually takes may be dramatically different. The amount of time that the company would like to take should be figure used when developing a project plan. Scope The scope of the project includes all of the functional and technical characteristics that the company wants to implement. A company installing a full-fledged ERP system would have a much greater scope than a company installing a few modules.
Resources Resources are everything that is needed to support the project. This includes people, hardware, software systems, technical support and consultants. All the different resources of an implementation have one thing in common-money.
ERP Implementation Life Cycle Risk The risk of a project is a factor that impacts the overall success of the ERP implementation. Success is measured by factors such as overall user acceptance, return on investment (ROI), time to implement etc. High-risk situations are less likely to possess these characteristics. Complexity Complexity is the degree of difficulty of implementing, operating and maintaining the ERP system. Companies of different sizes, business environments and organizational cultures have different levels of complexity. A multinational corporation that has production facilities and team spread across different parts of the world and working in different time zones is generally much more complex than a company with 50 employees occupying one geographical location. Benefits Benefits are the extent to which the company will utilize functionality of the ERP system for software development, maintenance and other support activities. ERP tools automate almost all aspects of organization‟s activities; they make the job of the employees, managers and other stakeholders easy and improve the development and productivity. Better integration of the ERP system with the product design, development and production will result in high quality products, reduction in number of defects, faster problem resolution, quicker incorporation of enhancements, better customer service, etc. which leads to improved brand image, which will lead to an increase in market share and profits.
What is ERP life cycle?
ERP lifecycle is in which highlights the different stages in implementation of An ERP. The process of ERP implementation is referred to as "ERP Implementation Life Cycle". There are different stages of the ERP implementation that are as give below: Ø Pre-evaluation Screening
ERP Implementation Life Cycle Ø Package Evaluation Ø Project Planning Ø Gap analysis Ø Reengineering Ø Customization Ø Implementation team training Ø Testing Ø Going Live Ø End-User Training Ø Post implementation
Block Diagram of Phases of ERP Implementation Life Cycle
Pre-evaluation Screening
Package evaluation
Project planning phase
ERP Implementation Life Cycle
Gap analysis
Reengineering
Customization
Team training
Testing
Going live
End-user training
Post-implementation
Phases of ERP Implementation Life Cycle
1. Pre-evaluation Screening
Once the company has decided to go for the ERP system, the search for the package must start as there are hundreds of packages it is always better to do a through and detailed evaluation of a small number of packages, than doing analysis of dozens of packages. This stage will be useful in eliminating those packages that are not suitable for the business process.
2. Package Evaluation
ERP Implementation Life Cycle This stage is considered an important phases of the ERP implementation, as the package that one selects will decide the success or failure of the project. Implementation of an ERP involves huge investments and it is not easy to switch between different packages, so the right thing is „do it right the first time‟. Once the packages to be evaluated are identified, the company needs to develop selection criteria that permit the evaluation of all the available packages on the same scale.
3. Project Planning
This is the phase that designs the implementation process. It is in this phase that the details of how to go about the implementation are decided. Time schedules deadlines, etc for the project are arrived at. The plan is developed, roles are identified and responsibilities are assigned. It will also decide when to begin the project, how to do it and it completion. A committee by the team leaders of each implementation group usually does such a planning.
4. Gap analysis
This is considered the most crucial phase for the success of ERP implementation. This is the process through which the companies create a complete model of where they are now, and in which direction will they opt in the future. It has been estimated that even the best packages will only meet 80% of the company‟s requirements. The remaining 20% presents problematic issues for the company‟s reengineering.
5. Reengineering
It is in this phase that human factors are taken into consideration. While every implementation is going to involve a significant change in number of employees and their job responsibilities, as the process becomes more automated and efficient, it is best to treat ERP as an investment as well as cost cutting measure.
6. Team training
ERP Implementation Life Cycle Training is also an important phase in the implementation, which takes place along with the process of implementation. This is the phase where the company trains its employees to implement and later, run the system. Thus, it is vital for the company to choose the right employee who has the right attitude- people who are willing to change, learn new things and are not afraid of technology and a good functional knowledge.
7. Customization
This is the main functional area of ERP implementation. There is a bit of mystique around the customization process and for good reason: the Holy Grail of ERP implementation is synchronizing existing company practices with the package. In order to do so, business processes have to be understood and mapped in such a way that the arrived-at solutions match up with the overall goals of the company. But, companies cannot just shut down their operations while the mapping processes take place. Hence the prototype-a simulation of the actual business processes of the company-will be used. The prototype allows for through testing of the “to be” model in a controlled environment. As the ERP consultants configure and test the prototype, they attempt to solve any logistical problems inherent in the BPR before the actual go-live implementation.
8. Testing
This is the phase where one tries to break the system. One has reached a point where the company is testing the real case scenarios. The system is configured and now you must come up with extreme cases like system overloads, multiple users logging on at the same time, users entering invalid data, hackers trying to access restricted areas and so on. This phase is performed to find the weak link so that it can be rectified before its implementation.
9. Going Live
This is the phase where ERP is made available to the entire organization. On the technical side the work is almost complete: data conversion is done, databases are up and running and on the functional side, the prototype is fully configured and tested and ready to go operational. The
ERP Implementation Life Cycle system is officially proclaimed operational even though the implementation team must have been testing it and running it successfully for some time. But once the system is „live‟ the old system is removed and the new system is used for doing business.
10. End-user Training
This is the phase where the actual users of the system will be given training on how to use the system. This phase starts much before the system goes live. The employees who are going to use the new system are identified. Their current skills are noted and they are divided into groups based on the current skill levels. Then each group is given training on the new system. This training is very important as the success of the ERP system is in the hands of the end-user. So, these training sessions should give the participants an overall view of the systems and how each person‟s actions affect the entire system.
11. Post implementation
Once the implementation is over, the vendor and the hired consultants will go. To reap the fruit of the implementation it is very important that the system has wide acceptance. There should be enough employees who are trained to handle problems those crops up time to time. The system must be updated with the change in technology. The post implementation will need a different set of roles and skills than those with less integrated kind of systems. At a minimum, everyone who uses these systems needs to be trained on how they work, how they relate to business process and how a transaction ripples through the entire company whenever they press a key. However, an organization can get the maximum value of these inputs if it successfully adopts and effectively uses the system.
ERP Implementation Life Cycle
Why do many ERP Implementations fail?
ERP implementations fail miserably during the initial stages of the operational phase itself or fail to deliver the promised benefits. Why does this happen? Given below are some of the most common reasons: Lack of top management buy-in, commitment and support Improper planning and budgeting Use of wrong ERP tool Lack of training Work culture of the organization
1. Lack of top management buy-in, commitment and support
The top management must be clearly convinced about the importance of ERP and how ERP could be used as a competitive weapon and how the company can fail if an ERP system is
ERP Implementation Life Cycle not available to manage and control the business operations. If the management is aware of the potential benefits of ERP and dangers of not having an ERP system, it will give the full backing and necessary organizational resources to implement the best system possible.
2. Improper Planning and Budgeting
Before starting the ERP implementation project, detailed planning involving all the major stakeholders is necessary for the success of the project. It is during this phase that the decision` regarding procedures to be followed, tool to be bought, the budget to be allocated for implementation and maintenance, etc. are decided. If this planning is not done properly, then there is every chance that many factors would be overlooked resulting in selecting the wrong tool, insufficient funds, and inadequate team members and so on.
3. Use of wrong ERP tool
We have seen that no two organizations are the same and each organization requires an ERP tool that is best suited for its organizational environment, work culture and procedures. So the ERP planning team should take into account all these factors before deciding on a tool. They should research the available tools, match them with the organization‟s requirements, visit companies where the tools are installed to see them in action, should discuss about end-user training, tool updates and upgrades and so on. Only when all the members of the team are convinced that a specific tool is best suited for the organization, the purchasing decision must be taken.
4. Lack of Training
One of the main reasons ERP fails is due to the resistance of the user. This is often the result of ignorance and fear-ignorance about the tool and fear of additional work or unemployment. These factors can be corrected by giving proper training. Training should be given at different levels on different aspects of the ERP Implementation. The top management should address the employees‟ fear of loosing their jobs as the tool automates many tasks.
ERP Implementation Life Cycle
5. Work Culture of the Organization
The Work culture of the organization is very important for the success of ERP. If the organization has a workforce that is willing to learn new things and change to new technologies, then there will be no problems for ERP implementation. But if the employees resist change and see the introduction of formal methods as a means to assign accountability, they will perceive the new technology as something negative. So, the basic mindset of the workforce needs to be changed. This is important not only for the success of ERP but also for the success of any process improvement initiative. In changing the employee mindset the two critical factors required are top management support and proper training.
BIBLIOGRAPHY
Page No. 215-225, ERP Demystified, Alexis Leon, Second Edition, Tata McGraw-Hill Publishing Company Limited, New Delhi. Chang. S., A comparative analysis of major ERP life cycle implementation, management and support issues in Queensland Government, Journal of Global Information Management, July 2002. Klee, A., The ERP Life Cycle: From Birth to Death and Birth Again, IT Jungle, May2005.
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Websites Referred
http://www.erpwire.com/erp-articles/erp-implementation-life-cycle.htm http://www.slideshare.net/apurvogourav/erp-implementation-life-cycle
ERP Implementation Life Cycle http://en.wikipedia.org/wiki/enterprise-resource-planning