Description
It gives reasons for the growth of ERP market, advantages of ERP, problem areas in ERP implementation, roadmap for successful ERP implementation. It explains the important factors for making decision, selection criteria for packed software for ERP.
ERP: An Overview
Introduction
• MRP (Material Requirements Planning) – Fundamental concern of production mgt & control in mid 1970s. – BOM – Purchase order mgt, parts lists mgt. • The- order inventory mgt of material – to plant & planned planning and distribution planning is MRP II
• Financial a/cg, HRM, Distribution mgt & mgt according = ERP ? What is ERP? • Originally ERP Packages- targeted Mfg industry
Reasons for the Growth of ERP Market
1. To enable improved business performance
a) Cycle tine reduction
b) Increased business agility c) Inventory reduction
d) Order fulfillment improvement
2.
• •
To Support business growth requirements
a) New Products/ product lines, new customer b) Global requirements including multiple languages & currencies To Provide flexible integrated, real-time decision support a) Improve responsiveness across the org
3.
4.
To eliminate limitation in legacy systems a) Century dating issues b) Fragmentation of data & processing c) Inflexibility to change d) Insupportable technologies
5. To take advantage of the untapped mid-market (medium sized orgs) a) Increased functionality at a reasonable cost b) Client/server open systems technology c) Vertical market solns
• ERP vendors - shifting their focus from Fortune 1000 cos. to different market segments (medium size & small cos.) • Future fierce battle for market share & mergers & acquisitions for strategic & competitive advantage • Ultimate winner customer - gets better products
Advantage of ERP
Advantages – direct & indirect Direct – Improved efficiency Information integration for better decision making faster response to customer queries etc Indirect - Better corporate image Improved customer goodwill
Customer satisfaction
Following Direct Benefits
1. Business integration 2. Flexibility 3. Better Analysis & Planning capabilities 4. Use of latest Technology
Why are ERP Packages used now ? • Multilingual & multicurrency capability apart from order & entity
Problem Areas in ERP Implementation
• Attitude reform of employees • How mgrs use info system – now as strategic mgt methods • Time schedules & deadlines are not set • Implementation costs – estimates based on in-house development cost – chances are they will be wrong
Roadmap for successful ERP Implementation
• Most imp – Gap Analysis – Phases of negotiation between company requirements & functions of a package • Persons with different viewpoints – involved in project to function as a team – effective to invite consultants – wide experience in package implementation role of coordinator – neutral person
• First – clearly define co. objectives & targets • Selection of experienced consultants & integrators • Select employees with right attitude, commitment & functional knowledge – get them trained – make them walk along with external consultants • Enough in-house consultants when external consultants leave
The role of EDP
• EDP/IS professional – system analyst – systems tailor made • cater to current needs no scope for growth & scalability • Development periods are longer & lack of flexibility • ERP packages – completely opposite – core step is Gap Analysis & how to eliminate redundant business processes.
Future of ERP Packages • Most imp point in favor - is their ability to adapt to version upgrades
Enterprise – An Overview
• Enterprise – group of people with common goal & certain resources to achieve that goal • Acts at a single entity
• This view – drastically different from traditional approach - different units based on functions – mktg, prodn etc
• Their info only sent to top mgt & not to other depts.
• Departmental objective conflicting – sales & mktg will want more variety of product's to please customer – production wants less variety to reduce costs. • Enterprise way - entire orgn considered as systems & depts are its sub systems
Integrated Management Information
• Old systems - second drawback - give only the info designed to give • Info from two systems – two reports correlate & combine - tedious & difficult • No good decision can take – if data isolated • Today time available to react to the changing market trends is very short.
The Role of Enterprise
• Get help from consultant – experienced – knows warning signs
• • Designate the right people to lead the project - high in corporate ladder Consultants – to document – everything in great detail - why a particular parameter etc had a particular value - why some option is disabled etc.
Business Modeling
• Business function – their interdependencies – represented in graphical form, flow charts & flow diagrams • From business model – to data model
Integrated Data Model
• No longer - isolated databases
• Integrated database - reduce redundancy & provide updated info
• At given time – snapshot of the orgn.
Benefits of ERP
1. Reduction of lead time 2. On-time shipment 3. Reduction in cycle time 4. Better customer satisfaction 5. Improved supplier performance 6. Increased flexibility 7. Reduction in quality costs 8. Improved resource utility 9. Improved information accuracy & decision making capability
ERP Implementation (To be or not to be)
Introduction
• Choosing a wrong product – in-competent haphazard implementation – & inefficient & ineffective usage
• good - package should be one - best suited • ERP consultants – should be good
• Options - simply overwhelming - SAP, Oracle, People soft, Bann, J.D. Edwards etc & hundreds of small timers • It?s entire „do it right the first time? – or going out of business • Huge cost – allow no margin for error, re-work or correction
Some questions & corrections of Cos.
1. Should we buy an ERP package? If yes, which package should it be ? 2. What will be the costs involved? 3. What are the hidden costs? 4. How to implement? 5. What are likely problems? 6. What are the obstacles & hurdles one should be prepared for? 7. Who should be involved in implementation? 8. What is role of consultants in it? How should they be dealt with, so money is well spent? 9. What changes should be made at organizational level? 10. When will the benefits start showing up ?
Traditional Model
• Computerized systems - specifically made for them
• No inbuilt capability for customization • Costly
Evolution of ERP
• Need based, isolated, piecemeal info systems - were incompatible • IT was not integrated into the corporate strategy • Now to devise holistic view of enterprise • misconceptions – that ERP is a computer system • ERP is primarily an enterprise wide system - encompasses corporate mission, objectives, attitudes, beliefs, values & operating style & people • Second misconception - for mfg orgns alone
Most important factors for making decision
a) Quality of info generated from current system b) Cost of maintaining current system c) Cost of implementing new system d) Advantages of new system
e) Costs of maintaining new system
Evolution of Packaged software solutions
• Legacy systems – modified many times – functioning far below the expected efficiency levels - & obsolete technology • Maintaining difficult
• When they built - software engineering & structured programming practices were still in infancy
• Nor any documentation - may not even have source code. • Year 2000 problem - no choice but to fix program else crash
• Evolved from supportive role – now integral part of business
• Why spend – to extend life of an already antiquated system
• Developments of software should be left to experts
• If internal staff develops – will never equal the quality, scope or technology
• Pkgs – are improving their products - gap between what cos. wants & what package has - is becoming less & less.
The Obstacles
• support of all users - without support chances of failure very high • Was not the case with isolated system • Getting all depts to agree on a system most difficult task – the ERP coordinator is going to face.
• Human nature – resist to change – ERP is about change on a very massive scale
• Fear – replace existing Jobs, afraid of amount of training - job profiles will change - job responsibilities will undergo drastic alterations – people will be forced to develop new skill sets.
• If fears are not addressed – alleviated well in advance – else trouble • Many new jobs created • Eliminate jobs – where only recording • Get away from monotonous clerical work – transform to highly valued individuals & challenging work environment • If employee accept this fact - major obstacle is solved
Costs & Benefits • “How much is it going to costs” It depends On the package chosen Technology used Whether co is using existing hardware/ software infrastructure How much training is needed What resources are available in house Whether external consultants are required?
1. 2. 3.
4. 5. 6.
• One thing is sure – investment will be substantial • Starting from several lakh to crores depending on size of Co. & scope of implementation • Good idea to do - Cost–benefit analysis • Feasibility study – about implementation & implementation strategies • By inhouse executives or entrusted to external consultants.
ERP Implementation Life Cycle
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Pre evaluation screening Package evaluation Project planning phase Gap analysis Reengineering Configurations Implementation team training Testing Going live End-user training Post – implementation
Not all packages are created equal
Introduction
• Most imp. factor – analyzing different packages – none at them are perfect
• Selection process – to find a package – flexible enough to meet the co?s needs – or could be customized to get a “good fit”.
• Packages – stronger in certain areas - Peoplesoft – HR, Baan – Mfg
• Packages evolved – with experience gained from implementation, feed back from users, need to enter into new markets
• Aim to get the system with least no. of differences
The Selection Process
• Most imp.- Will decide success & failure • Evaluation committee • Functional experts, top mgt (preferably CIO or COO, consultants & packages experts) • Packages that is selected (Co.-wide acceptance) • Thorough & detailed evolution of small no. of packages • Package is being used by similar cos. – performing in similar environment to us
Handling the vendors
• Will us all the tricks to get you hooked • Drown you in their Hi-Fi presentations
• Questions should be prepared before hand
• Will expose the weak/problem area • Prepare minutes of the meeting - vendor sign it. False claims - can make them accountable
Role of Technology
• Existing technology very imp role in ERP selection process.
• Technological environment – hardware, software, database mgt system
• Can limit the packages available for evaluation • Mgt to decide – keeping existing infrastructure – or existing systems will not be considered • Better idea- compatible with hardware, software & technology
Selection Criteria
• Questionnaire & a point system • How critical that function is for co. - vital, essential, & desirable
• Human intuition (gut feeling) & judgment should never be underestimated
• Requirements analysis – find out what co. needs
Some e.g.. Of selection criteria
1. Multi language & multi currency support
2.
3.
International installations
„X? number of installations – from which „Y? should be in your business sector. Cost of package less than X Rs
4.
5.
Facility for module addition
6.
Vendor – provide implementation & post implementation support.
7.
8.
Vendor commitment on training the co?s employees
Capability interfacing with other systems - banks suppliers & customers etc. Customizable & customization process should be easy
9.
10. Vendor?s policy about – up-gradations, versions etc should be acceptable
• Consensus must be reached – so chances of conflict between depts are eliminated • Visit a few cos – that have installed – though most people won?t admit – they have made a mistake
• 4 to 5 installations – gives a good idea
ERP Implementation – The Hidden Costs
Introduction • Most cases – costs exceed the budget - why is this? • Event most well planned – hidden costs • Few cos - buy just to save money - objective is the integration of co-wide info • Cheaper & easier to maintain More money because • Plan for consulting • Process rework • Integration testing • host of other expenses - before benefits of ERP
• Under estimate price of teaching users
• Fail to consider data warehouse integration requirements • Extra software to duplicate the old report formats • ERP costs spiraling out of control
One or all of the following 5 areas
1) Training 2) Integration & Testing 3) Data Conversion 4) Data Analysis 5) ERP Consultants
1) Training
• Consistently underestimated
• Receiving clerk becomes an accountant - mistakes have an immediate impact on the books
• Change management - training programs • Training – first item – gets cut – when budgets have to be squeezed - a major mistake – say most ERP implementers
• Successful training - Minimum 10-15% of total project budget • Unwise cos. – who skimp training - Pay the price later • Train an initial batch of employees – in turn train their colleagues
2)
Integration & Testing
• Links between ERP pkgs. & other corporate software – links have to be built on case–by–case basis – this cost easily missed • Don?t modify core-code - once the code is modified the cost of integrating testing & maintaining the system will grow exponentially • ERP implementation done from a Process – oriented perspective • Instead of plugging in dummy data & moving it from one appln to next
3) Data Conversion
• From old system to new ERP • Lot of data - in most legacy systems is redundant seem to deny that fact until they have to move it
4) Data Analysis
• A misconception ERP Vendors perpetuate - will be able to do all analysis • Combined data from external systems • Heavy analysis needs - cost of a data warehouse & quite a bit of work will be required to make it run
5) ERP Consultant
• Extravagant cost • Choosing lesser know ERP pkg - to avoid premium priced consultant – won?t necessarily help either • Users fail to plan for disengagement • Good practice to include performance metrics & time schedule • Co?s staff – should be trained
6) Conclusion
• Veterans recommend - Cross-functional team to identify costs upfront • Both senior executives & end uses – as lower level employees provide a level of detail
Vendors, consultants & users
• Why can?t cos. develop their own ERP packages?
• In house Implementation – Pros & Cons. • Failed ERP implementation can be catastrophic – can put orgn. out of business • Employees who have been trained – can help in implementation at other sites • Can provide training to other employees
a) Role of the Vendor
• Supply of product, documentation as soon as contract is signed • What is flexible? What is not, what can be configured, what cannot, what can be customized, what should not, what are the limitations, what are the strengths & weaknesses • consultants should be there in the vendor?s training – consultant should also ask questions - vendors try to avoid & users are unaware of. • Gives real picture to the users – prevents vendors from making false claims • Vendor understands finer details – subtleties - can make valuable suggestions – could improve performance of system
• If the implementation fails - blame will fall on vendor – a successful implementation – leads to satisfied clients – improved good will - & good referrals
Consultants
• Good at all phases - right from pkg. evaluation to end- user training • Only problem they are expensive – very expensive • But have found out pitfalls & mistakes – that should be avoided
• Usually pays for itself in a relatively short period – between 10 to 30 months
• Most expensive part - consultation charges – 1.5 to 3 times sounds amazing but it is true • Money spent on good consultation is never wasted
Role of consultants
• Guarantee of success – show results (quantifiable like reduction in cycle time, increased response time, improved productivity & so on) • Time schedule for each phase – determined • Consultants seen many mistakes – can avoid phenomenon of “reinventing the wheel” – will know what will work & what will not • Maintaining technical documentation falls within duty of consultants
Contracts with vendors, consultants & Employees
• Contract with Vendor • If not sure about the stability of the vendor & its continued existence – clauses to keep a copy of the source code, the design documents with a party (like a bank) – which will only release it when vendor disappears
• List of deliverables (software, documents, etc.)
• Conditions & concessions for acquiring complementary modules – or for increasing the number of users
•
Contract with Vendor (contd)
• Annual maintenance fee • Warranty or guarantee terms • Terms & conditions – for the receipt of new versions upgrades etc • Details of technical support – on-site, telephonic & so on • Profile of the vendor?s team – who will be assisting
Contract with the consultants
• Performance & penalty clauses • (Like x% increase in productivity, y% reduction in the response time & so on) – held accountable • Profile of the consultants team • Time schedule & implementation budget • List of deliverables (reports, manuals, knowledge bases etc. • Reporting mechanism to the company management
• Project monitoring & status reporting systems
Contract with the employees
• Market value will be improved exponentially • Sign a contract – with the employee before they are put on the implementation team & given training • Before leaving they should give the co. enough notice • Train another person to a level – where he can handle • No employee can leave the co. in the middle of the implementation project
• Retain the employees like offering competitive salaries, a challenging work environment & may be stock options
• Employees are the most important asset
doc_667638711.ppt
It gives reasons for the growth of ERP market, advantages of ERP, problem areas in ERP implementation, roadmap for successful ERP implementation. It explains the important factors for making decision, selection criteria for packed software for ERP.
ERP: An Overview
Introduction
• MRP (Material Requirements Planning) – Fundamental concern of production mgt & control in mid 1970s. – BOM – Purchase order mgt, parts lists mgt. • The- order inventory mgt of material – to plant & planned planning and distribution planning is MRP II
• Financial a/cg, HRM, Distribution mgt & mgt according = ERP ? What is ERP? • Originally ERP Packages- targeted Mfg industry
Reasons for the Growth of ERP Market
1. To enable improved business performance
a) Cycle tine reduction
b) Increased business agility c) Inventory reduction
d) Order fulfillment improvement
2.
• •
To Support business growth requirements
a) New Products/ product lines, new customer b) Global requirements including multiple languages & currencies To Provide flexible integrated, real-time decision support a) Improve responsiveness across the org
3.
4.
To eliminate limitation in legacy systems a) Century dating issues b) Fragmentation of data & processing c) Inflexibility to change d) Insupportable technologies
5. To take advantage of the untapped mid-market (medium sized orgs) a) Increased functionality at a reasonable cost b) Client/server open systems technology c) Vertical market solns
• ERP vendors - shifting their focus from Fortune 1000 cos. to different market segments (medium size & small cos.) • Future fierce battle for market share & mergers & acquisitions for strategic & competitive advantage • Ultimate winner customer - gets better products
Advantage of ERP
Advantages – direct & indirect Direct – Improved efficiency Information integration for better decision making faster response to customer queries etc Indirect - Better corporate image Improved customer goodwill
Customer satisfaction
Following Direct Benefits
1. Business integration 2. Flexibility 3. Better Analysis & Planning capabilities 4. Use of latest Technology
Why are ERP Packages used now ? • Multilingual & multicurrency capability apart from order & entity
Problem Areas in ERP Implementation
• Attitude reform of employees • How mgrs use info system – now as strategic mgt methods • Time schedules & deadlines are not set • Implementation costs – estimates based on in-house development cost – chances are they will be wrong
Roadmap for successful ERP Implementation
• Most imp – Gap Analysis – Phases of negotiation between company requirements & functions of a package • Persons with different viewpoints – involved in project to function as a team – effective to invite consultants – wide experience in package implementation role of coordinator – neutral person
• First – clearly define co. objectives & targets • Selection of experienced consultants & integrators • Select employees with right attitude, commitment & functional knowledge – get them trained – make them walk along with external consultants • Enough in-house consultants when external consultants leave
The role of EDP
• EDP/IS professional – system analyst – systems tailor made • cater to current needs no scope for growth & scalability • Development periods are longer & lack of flexibility • ERP packages – completely opposite – core step is Gap Analysis & how to eliminate redundant business processes.
Future of ERP Packages • Most imp point in favor - is their ability to adapt to version upgrades
Enterprise – An Overview
• Enterprise – group of people with common goal & certain resources to achieve that goal • Acts at a single entity
• This view – drastically different from traditional approach - different units based on functions – mktg, prodn etc
• Their info only sent to top mgt & not to other depts.
• Departmental objective conflicting – sales & mktg will want more variety of product's to please customer – production wants less variety to reduce costs. • Enterprise way - entire orgn considered as systems & depts are its sub systems
Integrated Management Information
• Old systems - second drawback - give only the info designed to give • Info from two systems – two reports correlate & combine - tedious & difficult • No good decision can take – if data isolated • Today time available to react to the changing market trends is very short.
The Role of Enterprise
• Get help from consultant – experienced – knows warning signs
• • Designate the right people to lead the project - high in corporate ladder Consultants – to document – everything in great detail - why a particular parameter etc had a particular value - why some option is disabled etc.
Business Modeling
• Business function – their interdependencies – represented in graphical form, flow charts & flow diagrams • From business model – to data model
Integrated Data Model
• No longer - isolated databases
• Integrated database - reduce redundancy & provide updated info
• At given time – snapshot of the orgn.
Benefits of ERP
1. Reduction of lead time 2. On-time shipment 3. Reduction in cycle time 4. Better customer satisfaction 5. Improved supplier performance 6. Increased flexibility 7. Reduction in quality costs 8. Improved resource utility 9. Improved information accuracy & decision making capability
ERP Implementation (To be or not to be)
Introduction
• Choosing a wrong product – in-competent haphazard implementation – & inefficient & ineffective usage
• good - package should be one - best suited • ERP consultants – should be good
• Options - simply overwhelming - SAP, Oracle, People soft, Bann, J.D. Edwards etc & hundreds of small timers • It?s entire „do it right the first time? – or going out of business • Huge cost – allow no margin for error, re-work or correction
Some questions & corrections of Cos.
1. Should we buy an ERP package? If yes, which package should it be ? 2. What will be the costs involved? 3. What are the hidden costs? 4. How to implement? 5. What are likely problems? 6. What are the obstacles & hurdles one should be prepared for? 7. Who should be involved in implementation? 8. What is role of consultants in it? How should they be dealt with, so money is well spent? 9. What changes should be made at organizational level? 10. When will the benefits start showing up ?
Traditional Model
• Computerized systems - specifically made for them
• No inbuilt capability for customization • Costly
Evolution of ERP
• Need based, isolated, piecemeal info systems - were incompatible • IT was not integrated into the corporate strategy • Now to devise holistic view of enterprise • misconceptions – that ERP is a computer system • ERP is primarily an enterprise wide system - encompasses corporate mission, objectives, attitudes, beliefs, values & operating style & people • Second misconception - for mfg orgns alone
Most important factors for making decision
a) Quality of info generated from current system b) Cost of maintaining current system c) Cost of implementing new system d) Advantages of new system
e) Costs of maintaining new system
Evolution of Packaged software solutions
• Legacy systems – modified many times – functioning far below the expected efficiency levels - & obsolete technology • Maintaining difficult
• When they built - software engineering & structured programming practices were still in infancy
• Nor any documentation - may not even have source code. • Year 2000 problem - no choice but to fix program else crash
• Evolved from supportive role – now integral part of business
• Why spend – to extend life of an already antiquated system
• Developments of software should be left to experts
• If internal staff develops – will never equal the quality, scope or technology
• Pkgs – are improving their products - gap between what cos. wants & what package has - is becoming less & less.
The Obstacles
• support of all users - without support chances of failure very high • Was not the case with isolated system • Getting all depts to agree on a system most difficult task – the ERP coordinator is going to face.
• Human nature – resist to change – ERP is about change on a very massive scale
• Fear – replace existing Jobs, afraid of amount of training - job profiles will change - job responsibilities will undergo drastic alterations – people will be forced to develop new skill sets.
• If fears are not addressed – alleviated well in advance – else trouble • Many new jobs created • Eliminate jobs – where only recording • Get away from monotonous clerical work – transform to highly valued individuals & challenging work environment • If employee accept this fact - major obstacle is solved
Costs & Benefits • “How much is it going to costs” It depends On the package chosen Technology used Whether co is using existing hardware/ software infrastructure How much training is needed What resources are available in house Whether external consultants are required?
1. 2. 3.
4. 5. 6.
• One thing is sure – investment will be substantial • Starting from several lakh to crores depending on size of Co. & scope of implementation • Good idea to do - Cost–benefit analysis • Feasibility study – about implementation & implementation strategies • By inhouse executives or entrusted to external consultants.
ERP Implementation Life Cycle
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Pre evaluation screening Package evaluation Project planning phase Gap analysis Reengineering Configurations Implementation team training Testing Going live End-user training Post – implementation
Not all packages are created equal
Introduction
• Most imp. factor – analyzing different packages – none at them are perfect
• Selection process – to find a package – flexible enough to meet the co?s needs – or could be customized to get a “good fit”.
• Packages – stronger in certain areas - Peoplesoft – HR, Baan – Mfg
• Packages evolved – with experience gained from implementation, feed back from users, need to enter into new markets
• Aim to get the system with least no. of differences
The Selection Process
• Most imp.- Will decide success & failure • Evaluation committee • Functional experts, top mgt (preferably CIO or COO, consultants & packages experts) • Packages that is selected (Co.-wide acceptance) • Thorough & detailed evolution of small no. of packages • Package is being used by similar cos. – performing in similar environment to us
Handling the vendors
• Will us all the tricks to get you hooked • Drown you in their Hi-Fi presentations
• Questions should be prepared before hand
• Will expose the weak/problem area • Prepare minutes of the meeting - vendor sign it. False claims - can make them accountable
Role of Technology
• Existing technology very imp role in ERP selection process.
• Technological environment – hardware, software, database mgt system
• Can limit the packages available for evaluation • Mgt to decide – keeping existing infrastructure – or existing systems will not be considered • Better idea- compatible with hardware, software & technology
Selection Criteria
• Questionnaire & a point system • How critical that function is for co. - vital, essential, & desirable
• Human intuition (gut feeling) & judgment should never be underestimated
• Requirements analysis – find out what co. needs
Some e.g.. Of selection criteria
1. Multi language & multi currency support
2.
3.
International installations
„X? number of installations – from which „Y? should be in your business sector. Cost of package less than X Rs
4.
5.
Facility for module addition
6.
Vendor – provide implementation & post implementation support.
7.
8.
Vendor commitment on training the co?s employees
Capability interfacing with other systems - banks suppliers & customers etc. Customizable & customization process should be easy
9.
10. Vendor?s policy about – up-gradations, versions etc should be acceptable
• Consensus must be reached – so chances of conflict between depts are eliminated • Visit a few cos – that have installed – though most people won?t admit – they have made a mistake
• 4 to 5 installations – gives a good idea
ERP Implementation – The Hidden Costs
Introduction • Most cases – costs exceed the budget - why is this? • Event most well planned – hidden costs • Few cos - buy just to save money - objective is the integration of co-wide info • Cheaper & easier to maintain More money because • Plan for consulting • Process rework • Integration testing • host of other expenses - before benefits of ERP
• Under estimate price of teaching users
• Fail to consider data warehouse integration requirements • Extra software to duplicate the old report formats • ERP costs spiraling out of control
One or all of the following 5 areas
1) Training 2) Integration & Testing 3) Data Conversion 4) Data Analysis 5) ERP Consultants
1) Training
• Consistently underestimated
• Receiving clerk becomes an accountant - mistakes have an immediate impact on the books
• Change management - training programs • Training – first item – gets cut – when budgets have to be squeezed - a major mistake – say most ERP implementers
• Successful training - Minimum 10-15% of total project budget • Unwise cos. – who skimp training - Pay the price later • Train an initial batch of employees – in turn train their colleagues
2)
Integration & Testing
• Links between ERP pkgs. & other corporate software – links have to be built on case–by–case basis – this cost easily missed • Don?t modify core-code - once the code is modified the cost of integrating testing & maintaining the system will grow exponentially • ERP implementation done from a Process – oriented perspective • Instead of plugging in dummy data & moving it from one appln to next
3) Data Conversion
• From old system to new ERP • Lot of data - in most legacy systems is redundant seem to deny that fact until they have to move it
4) Data Analysis
• A misconception ERP Vendors perpetuate - will be able to do all analysis • Combined data from external systems • Heavy analysis needs - cost of a data warehouse & quite a bit of work will be required to make it run
5) ERP Consultant
• Extravagant cost • Choosing lesser know ERP pkg - to avoid premium priced consultant – won?t necessarily help either • Users fail to plan for disengagement • Good practice to include performance metrics & time schedule • Co?s staff – should be trained
6) Conclusion
• Veterans recommend - Cross-functional team to identify costs upfront • Both senior executives & end uses – as lower level employees provide a level of detail
Vendors, consultants & users
• Why can?t cos. develop their own ERP packages?
• In house Implementation – Pros & Cons. • Failed ERP implementation can be catastrophic – can put orgn. out of business • Employees who have been trained – can help in implementation at other sites • Can provide training to other employees
a) Role of the Vendor
• Supply of product, documentation as soon as contract is signed • What is flexible? What is not, what can be configured, what cannot, what can be customized, what should not, what are the limitations, what are the strengths & weaknesses • consultants should be there in the vendor?s training – consultant should also ask questions - vendors try to avoid & users are unaware of. • Gives real picture to the users – prevents vendors from making false claims • Vendor understands finer details – subtleties - can make valuable suggestions – could improve performance of system
• If the implementation fails - blame will fall on vendor – a successful implementation – leads to satisfied clients – improved good will - & good referrals
Consultants
• Good at all phases - right from pkg. evaluation to end- user training • Only problem they are expensive – very expensive • But have found out pitfalls & mistakes – that should be avoided
• Usually pays for itself in a relatively short period – between 10 to 30 months
• Most expensive part - consultation charges – 1.5 to 3 times sounds amazing but it is true • Money spent on good consultation is never wasted
Role of consultants
• Guarantee of success – show results (quantifiable like reduction in cycle time, increased response time, improved productivity & so on) • Time schedule for each phase – determined • Consultants seen many mistakes – can avoid phenomenon of “reinventing the wheel” – will know what will work & what will not • Maintaining technical documentation falls within duty of consultants
Contracts with vendors, consultants & Employees
• Contract with Vendor • If not sure about the stability of the vendor & its continued existence – clauses to keep a copy of the source code, the design documents with a party (like a bank) – which will only release it when vendor disappears
• List of deliverables (software, documents, etc.)
• Conditions & concessions for acquiring complementary modules – or for increasing the number of users
•
Contract with Vendor (contd)
• Annual maintenance fee • Warranty or guarantee terms • Terms & conditions – for the receipt of new versions upgrades etc • Details of technical support – on-site, telephonic & so on • Profile of the vendor?s team – who will be assisting
Contract with the consultants
• Performance & penalty clauses • (Like x% increase in productivity, y% reduction in the response time & so on) – held accountable • Profile of the consultants team • Time schedule & implementation budget • List of deliverables (reports, manuals, knowledge bases etc. • Reporting mechanism to the company management
• Project monitoring & status reporting systems
Contract with the employees
• Market value will be improved exponentially • Sign a contract – with the employee before they are put on the implementation team & given training • Before leaving they should give the co. enough notice • Train another person to a level – where he can handle • No employee can leave the co. in the middle of the implementation project
• Retain the employees like offering competitive salaries, a challenging work environment & may be stock options
• Employees are the most important asset
doc_667638711.ppt