![Features of Successful ERP
Implementation
Willcocks & Sykes [2000]
•
•
•
•
•
•
•
•
•
IT Leadership
Business systems thinking
Relationship building
Have needed technical platform
Ability to troubleshoot
Informed buying
Contract efforts coordinated
Suppliers held accountable
Long-term relationships with suppliers](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-13-320.jpg)
![Factors to Reduce Risk
Martin & Cheung [Business Process Management Journal, 2000]
• Business case
– Justify need for system, establish objectives
• Benchmark
– Import best practices
• Implementation strategy
– Align system with corporate strategy
•
•
•
•
Project management
Change management
BPR
Installation](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-14-320.jpg)
![ERP Critical Success Factors
Umble et al. [EJOR 2003]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Clear understanding – strategic goals
Top management commitment
Project management implementation
Great implementation team
Cope with technical issues
Organizational commitment to change
Extensive education & training
Data accuracy
Focused performance measures
Resolution of multi-site issues](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-15-320.jpg)
![Factors in ERP Implementation
Failure
Willcocks & Sykes [2000]
Scenario
CIO/IT Focus
Typical outcome
Technological
determinism
Technical
Fail to gain
business benefits
Supplier/consultant Disregarded
driven
Cost overruns
Outdated
relationships &
capabilities
Chaos
Insufficient talent](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-17-320.jpg)
![Implementation Strategy Options
Markus et al. [2000]
• Business Strategy
–
–
–
–
–
Total local autonomy
Headquarters control – financial only
Headquarters coordination
Network coordination
Total centralization
• Software Configuration
– Single/multiple financial/operations
• Technical Platform
– Centralized/Distributed
• Management Execution
– Big bang/Phased rollout](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-21-320.jpg)
![Implementation Strategies
Mabert et al. [2000]
Strategy
Months
%
Big bang
15
41
Phased rollout by site
30
23
Phased rollout by module
22
17
Mini big bang
17
17
Phased rollout by module & site
25
2](https://image.slidesharecdn.com/hour61-131122072846-phpapp01/85/ERP-implementation-and-trainig-22-320.jpg)
ERP implementation and trainig
- 1. Hour 6: ERP Implementation & Training User Training Maintenance
- 2. BENEFITS OF ERP Shang and Seddon, AMCIS 2000 Proceedings • • • • • Operational Managerial Strategic IT Infrastructure Organizational
- 3. Organizational Benefits • • • • • Cost reduction Cycle time reduction Productivity improvement Quality improvement Customer services improvement
- 4. Managerial Improvement • Improved resource management • Better decision making – Hard to prove • Better planning • Performance improvement
- 5. Strategic Improvement • Support business growth • Support business alliances – If they have the same system • Build business innovations – ? System can be constraining • Build cost leadership • Generate product differentiation – ?? Over time, only if you customize • Build external linkages – ? If they have the same system
- 6. IT Infrastructure Improvement • Build business flexibility – ??? ERP inherently a rigid system • IT cost reduction – The main reason CEOs adopt ERP • Increased IT capability
- 7. Organizational • Support organizational change – FORCE organizational change!! • Facilitate business learning – BPR does a good job of this • Empower employees – Within the system!! • Build common vision – FORCES common vision
- 8. Organizational Change from ERP 1. Productivity decline • Jobs redefined, new procedures established, ERP fine tuned, organization learns to process new information streams 2. Productivity gain • Develop new skills, structural changes, process integration, add bolt-ons 3. Payoff – Transform organizational operations to efficient level
- 9. ERP Project Failure FoxMeyer Drug Bankrupt Hershey’s 19% drop in profit 29% increase in inventory City of Oakland Erroneous paychecks Miller Industries Inefficient ERP – operating loss WW Grainger Inc Earnings dropped $11 million
- 10. Critical Success Factors • What the organization must do well to succeed • For IS Projects: – Top management support • Inherent in ERP – Clearly stated objectives • Inherent in ERP – End User involvement
- 11. CSF Taxonomy Al-Mashari et al. (EJOR 2003) • SETTING UP – Management & Leadership – Visioning & Planning • IMPLEMENTATION • EVALUATION – Performance evaluation & management
- 12. IMPLEMENTATION • Financial – ERP package selection • Behavioral – – – – Communication Process management Training & education Cultural & structural changes • Technical – – – – Project management Legacy systems management Systems integration Systems testing
- 13. Features of Successful ERP Implementation Willcocks & Sykes [2000] • • • • • • • • • IT Leadership Business systems thinking Relationship building Have needed technical platform Ability to troubleshoot Informed buying Contract efforts coordinated Suppliers held accountable Long-term relationships with suppliers
- 14. Factors to Reduce Risk Martin & Cheung [Business Process Management Journal, 2000] • Business case – Justify need for system, establish objectives • Benchmark – Import best practices • Implementation strategy – Align system with corporate strategy • • • • Project management Change management BPR Installation
- 15. ERP Critical Success Factors Umble et al. [EJOR 2003] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Clear understanding – strategic goals Top management commitment Project management implementation Great implementation team Cope with technical issues Organizational commitment to change Extensive education & training Data accuracy Focused performance measures Resolution of multi-site issues
- 16. Levels of IS/IT Failure • Corresponding failure – Don’t meet design objectives • Process failure – Not on time &/or not within budget • Interaction failure – System not used as designed • Expectation failure – Return not what stockholders expected
- 17. Factors in ERP Implementation Failure Willcocks & Sykes [2000] Scenario CIO/IT Focus Typical outcome Technological determinism Technical Fail to gain business benefits Supplier/consultant Disregarded driven Cost overruns Outdated relationships & capabilities Chaos Insufficient talent
- 18. Strategies to Attain Success User vs. Specialist focus Users over IT staff Governance & Staffing High level of support Champion present Time-box philosophy Short (6-9 months if can) Dolphins, not whales Supplier/consultant role controlled
- 19. User Training • Focus on business processes – Not on using system • Explain why • Don’t skimp on time • Show why new system superior to old
- 20. Training Delivery Formats • • • • • Web-based virtual training Computer-based training Video courses Self-study books Pop-up help screens
- 21. Implementation Strategy Options Markus et al. [2000] • Business Strategy – – – – – Total local autonomy Headquarters control – financial only Headquarters coordination Network coordination Total centralization • Software Configuration – Single/multiple financial/operations • Technical Platform – Centralized/Distributed • Management Execution – Big bang/Phased rollout
- 22. Implementation Strategies Mabert et al. [2000] Strategy Months % Big bang 15 41 Phased rollout by site 30 23 Phased rollout by module 22 17 Mini big bang 17 17 Phased rollout by module & site 25 2
- 23. Implementation Strategies • Big bang seemingly cheapest – Dangerous – Often makes sense in ERP if carefully planned • Phased rollout reduces risk – Especially good for large organizations
- 24. ERP Maintenance Nah et al. (2001) • Corrective – Incorporate vendor patches, fix problems • Adaptive – Implement new features, internal customization, implement interfaces • Perfective – New versions • Preventive – Monitor response time, errors, track maintenance activities
- 25. ERP System Migration • Over time, need to adopt changes – Minor modifications – Maybe system replacement – Vendors change products • WHY – The longer the time between upgrades, the harder – Easier to support a smaller number of software versions – Migrations can increase sales of seats, add-ons
- 26. User Reasons to Migrate • • • • Added functionality Compliance with new standards Discontinued vendor support Customer problems in linked systems
- 27. Summary • Time, cost, functionality tradeoff – In ERP, functionality the most important • Critical success factors – Top support & clear objectives inherent in ERP – Need User Involvement • Phased implementation reduces risk – but increases time • Once installed, still many pitfalls – Vendors change products – User training critical