Enterprise Resource Planning
At the end of this Module …
We will be able to understand - The ERP system Life Cycle - The Costs Involved in each Phase - ERP Implementation Life Cycle - Guidelines for successful ERP Implementation
ERP SYSTEMS LIFE-CYCLE
To define the life-cycle model we use a simplified version of the model proposed By Esteves and Pastor (1999)
ERP SYSTEMS LIFE-CYCLE ..
Adoption decision phase Acquisition phase Implementation phase Use and maintenance phase Evolution phase Retirement phase
ERP SYSTEMS LIFE-CYCLE
Adoption decision phase
In this phase managers examine the need for a new ERP system Select the general information system approach - that will best address critical business challenges - that will improve the organizational strategy. This decision phase includes - Definition of system requirements, - Its goals and benefits - An analysis of the impact of adoption at a
business & organizational level.
ERP SYSTEMS LIFE-CYCLE
Acquisition phase
This phase consists on selection of a ERP product that - best fits the requirements of the organization, - that minimize the need for customization. A consulting company is also selected to help in the next phases of the ERP life-cycle especially in the implementation phase. Factors such as price, training and maintenance service are analyzed The contractual agreement is defined It is also important to make an analysis of the return on investment (ROI) of the selected product.
ERP SYSTEMS LIFE-CYCLE
Implementation phase
This phase includes - the customization or parameterization - adaptation of the ERP package to the needs of the organization. Usually this task is made with the help of consultants who provide implementation methodologies, know-how and training
ERP SYSTEMS LIFE-CYCLE
Use and maintenance phase
This phase covers the personal of time where - the ERP product is selected in a way that returns benefits and minimizes disruption. During this phase, one must be aware of the aspects related to functionality, usability and adequacy to the organizational and business processes. Once a system is implemented, it must be maintained, because malfunctions have to be corrected, special optimization requests have to be met, and general systems improvements have to be made.
ERP SYSTEMS LIFE-CYCLE
Evolution phase
This phase corresponds to - Integration of more capabilities into the ERP system - Providing new benefits, such as advanced planning and scheduling, supply-chain management, customer relationship management, workflow, - And Expanding the frontiers to external collaboration with other partners.
ERP SYSTEMS LIFE-CYCLE
Retirement phase
This phase corresponds to the stage when, - with the appearance of new technologies - or the inadequacy of the ERP system or approach to the business needs, Substitute the ERP software with other information system approach more adequate to the organizational needs of the moment
ERP SYSTEMS LIFE-CYCLE .. A Recap…
Adoption decision phase Acquisition phase Implementation phase Use and maintenance phase Evolution phase Retirement phase
COSTS INVOLVED IN ERP LIFE CYCLE
Costs – Tangible & Intangible
Tangible costs are the costs that can be measured in a direct way (In Monetary terms ) Intangible costs are those costs that are difficult to be measured in a direct way, since they refer to vague concepts
COSTS INVOLVED IN ERP LIFE CYCLE
Phase Adoption Tangible Costs Intangible Costs Decision making costs
Acquisition
Consultancy Hardware Software licenses
Consultancy Training Human resources System specification
Decision making costs Opportunity costs
Implementation
Customization, conversion and data analysis Time dedicated by staff Business process re.engineering
Usage and Maintenance
System Reconfiguration System adaptation Cost of system failure
Cost of new applications
Indirect costs of system failure Lost of competitiveness
Evolution Retirement
Opportunity costs Decision making costs
CASE STUDY ……
ERP Implementation Life Cycle
No Clear Separation between various phases But Logical order is followed Not all applicable in all cases
ERP Implementation Life Cycle ..
Step1: Identification of Needs for ERP Step2: Evaluating ‘as-is’ state of Business Step3: Decide on Desired situation Step4: Reengineer to achieve Desired level Step5: Pre-Evaluation Screening Step6: ERP Package Evaluation Step7: Finalize ERP Package Step8: Install/Upgrade Hardware& Network Step9: Identify Implementation Consultants Step10: Implement ERP Package Step11: Post Implementation
ERP Implementation Life Cycle ..
Step1: Identification of Needs for ERP
Identify Reasons for ERP solution
- DISCUSSIONS IN CLASS -
ERP Implementation Life Cycle ..
Step2: Evaluating ‘as-is’ state of Business
Do Process Mapping
( Includes details like Time Taken , Decisions to be taken & decision points, Flow of information,Reports & reporting Point etc ..)
ERP Implementation Life Cycle ..
Step3: Decide on Desired situation
Bench Mark
ERP Implementation Life Cycle ..
Step4: Reengineer to achieve Desired level
- DISCUSSIONS IN CLASS -
ERP Implementation Life Cycle ..
Step5: Pre-Evaluation Screening
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Do sufficient research on the packages available Eliminate that are not suitable for your type of business Find out from Similar or Group companies Know Competitors information Look at origin of these packages
ERP Implementation Life Cycle ..
Step6: ERP Package Evaluation Analyze the Package based on The Presence ( Global/ Local ), Type of market catering to , Modularity, Ease of Implementation , Cost of Product,Cost of Implementation, Post Implementation Support - Make a Matrix of the various packages
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ERP Implementation Life Cycle ..
Step7: Finalize ERP Package
ERP Implementation Life Cycle ..
Step8: Install/Upgrade Hardware& Network
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Upgrade / Install the present Hardware Check for the Compatibility of them to the Selected ERP Package Upgrade/ Install the present Network connectivity ( Internet & Intranet )
ERP Implementation Life Cycle ..
Step9: Identify Implementation Consultants Identify & Finalize based on - The Skill Set - Their Past & present performance - Installation base - Industry specific experience - Cost factors
ERP Implementation Life Cycle ..
Step10: Implement ERP Package
Various steps are involved .. a) Form Implementation Team (from all areas, to monitor, resolve issues, interact with Consultants ) b) Prepare Project Plan (PERT/Gantt Chart in MS Project covers all the activities with resource details c) Map Business process to ERP (Reengineered Business process is mapped to ERP d) Gap Analysis (Gaps – 3 types ) e) Customization f) Develop Specifics – Like report or process or transactions g) Transfer from Legacy (Present ) systems h) Test Run i) Training of End Users j) Parallel Run – ( Both in ERP & in present system ) k) UAT ( User Acceptance Testing ) l) Migrate to New System- GO LIVE ! m) Documentation
ERP Implementation Life Cycle ..
Step11: Post Implementation Involves Minor Changes to the systems Problem Solving Resolve the Queries by users Fine tuning of performance Provide chances for Enhancements Incorporate Increment Changes
Guidelines for Successful Implementation of ERP
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Understand the Corporate Needs & Culture
Readiness for Changes Vs Capability to implement the Changes Seeing the need for Changes Vs Willing to accept Changes
Guidelines for Successful Implementation of ERP ….
Complete Business Process Changes
Keep in mind the Need for change Vs Cost of Changes Vs those supported by ERP
Communicate Across Organization Provide Strong Leadership Ensure Efficient & Capable Project Manager Choose a Balanced Team Train Everyone Select a good Implementation Methodology COMMITMENT TO CHANGE
Did we cover in this Module …
- The ERP system Life Cycle - The Costs Involved in each Phase - ERP Implementation Life Cycle - Guidelines for successful ERP Implementation