CIS 8670 - Enterprise Resource Planning Systems

Implementation and Management

Professor Duane Truex Spring 2010 ©Duane Truex, 2010

Session 5: ERP Life Cycle and Implementation Challenges

Where to begin

•  The Why? – Nature of the problem –  “The critical challenge in ERP implementation

has been to first identify the gaps between the ERP generic functionality and the specific organizational requirements” (Ehie et al, 2004, p.547)

5 Stage ERP Life Cycle (Ehie et al, 2005)

Stages 1.  Preparation

1.  Organize 2.  Define scope 3.  Create project plan

2.  Business Blueprint 1.  As-is models and ERP

Selection 2.  Master the ERP 3.  Change processes

3.  Realization 1.  Technical development 2.  The pilot

4.  Final Preparation 1.  Tune and test 2.  Educate and train

5.  GO Live and Support 1.  Roll out and adjust 2.  Improve and

expand

Eight Critical success factors (Ehie et al, 2005)

•  Project management principles •  Feasibility/evaluation of the ERP Project •  Human resource development •  Process re-engineering •  Top Management support •  Cost / budget •  IT infrastructure •  Consulting services

Evaluating Implementation Choices (Luo & Strong, IEEE Transactions on Engineering Management v. 51,#3, 2004

“Any successful ERP implementation requires a fit between the ERP system and the organizational processes it supports. An important characteristic of ERP systems is that they are packaged software solutions rather than customized systems.

As such, they come with built-in assumptions and procedures about organizations’ business processes. These assumptions and procedures seldom match exactly with those of the implementing organization’s existing processes.” (p. 322)

ERP Issues

ERP vs. traditional software

“One major difference lies with the fact that ERP systems are packaged software.

…packaged software developers are separated from the users organizationally, as well as physically and they usually do not participate in the implementation of the software package.

Intermediaries such as sales and customer support staff and third party consultants often provide the linkage between software developers and users.

Consequently, unlike traditional software development projects where a system is tailor-made to suit the existing business requirements and processes, packaged software implementation involves the users changing procedures and business processes in order to use the package, changing some of the programs in the package to fit their unique requirements, and relying on package vendors for assistance and updates to the software Package.

The disconnect between an organization’s information and process requirements and the solutions provided by ERP is especially pronounced due to the complex nature of the ERP systems.” (pg. 323)

Modifications in the software development life cycle 1.  One of the key decisions in the early stage of the implementation process is

whether to accept the assumptions about business processes built into the system This decision affects the amount of customization needed to the software, as well as to the organization.

2.  The systems development life cycle methodology needs to be modified for the unique characteristics of ERP implementation.

3.  Implementation in the traditional SDLC refers to the later stage of system development in which a completed system is installed, deployed, and placed into operation or production. The stage also includes the conversion to the new system, the training of users, and final documentation of the system.

4.  ERP implementation involves the understanding of existing business processes and ERP technologies, the customization of business processes, and ERP modules and tables to fit each other, and the management of large-scale business process change and system integration projects.

5.  Hence, analysis phase activities (e.g., understanding of critical organization processes) and design phase activities (e.g., knowledge of the ERP software) of SDLC have to be merged for ERP implementation. The interaction between vendors and adopters during the ERP implementation is especially important.

ERP Customization Options- Technical vs. Process

How capable is your organization?

Capability match with Customization Options

Predicting Effort and Success of ERP Projects

(Francalanci, JIT, v 16, pp. 33-48, 2001)

Typical SAP Project structure

Hypotheses

Findings •  The results of this study demonstrate that the technical size of software is

not sufficient for predicting the implementation effort of an ERP system accurately, while organizational measures of project complexity are also critical drivers of effort.

•  The positive correlation between effort and organizational size and number of users indicates that a package requires increasing resources in order to be implemented in larger companies.

•  It is important to note that size is likely to be only one of several organizational variables that contribute to resistance to change and consequent additional effort.

•  The magnitude of the variable organizational costs reduces returns from economies of scale and suggests that prototyping ERPs for a subset of their users may yield economic benefits.

•  This suggests that predicting the implementation effort for individual modules separately is advisable in order to select the most appropriate set of predictors and obtain more reliable estimates.

•  The findings indicate that, on average, parameterization and reprogramming involve a similar effort during implementation.