4. T H I N K I N G A B O U T E R P Thinking about ERP The Executives guide to setting strategy for selecting, implementing and operating ERP Third Edition A SYSPRO/iPlan Collaboration Abr Pienaar Johan du Toit Altrina Viljoen Wessel Wessels (iPlan Industrial Engineers on behalf of SYSPRO Ltd.) Simplifying Successyour
5. T H I N K I N G A B O U T E R P Thinking about ERP: The Executives guide to setting strategy for selecting, implementing and operating ERP By: Abr Pienaar, Johan du Toit,Altrina Viljoen,Wessel Wessels iPlan Industrial Engineers Published 2008 SYSPRO Ltd This document is a copyright work and is protected by local copyright, civil and criminal law and international treaty. No part of this book may be copied, photocopied or reproduced in any form or by any means without permission in writing from SYSPRO Ltd. SYSPRO is a trademark of SYSPRO Ltd.All other trademarks, service marks, products or services are trademarks or registered trademarks of their respective holders. SYSPRO Ltd. reserves the right to alter the contents of this book without prior notice. Disclaimer Every effort has been made to ensure that the contents of this book are factual and correct. However, this does not mean that the book is free from error. In addition, this book is intended as an introduction to the concepts and tenets of the subject matter and should be used as such.This publication is designed to provide general information regarding the subject matter covered. Each business is unique; laws and practices often vary from country to country and are subject to change. Because each factual situation is different, specific advice tailored to the particular circumstances should be obtained from a quali- fied expert. SYSPRO Ltd in no way accepts responsibility for any damage or loss incurred due to decisions and actions that are taken based on this book.The authors and publisher specifically disclaim any liability resulting from the use or application of the information contained in this book, and the information is not intended to serve as legal advice related to individual situations.
6. T H I N K I N G A B O U T E R P Table of Contents Chapter One Why think about ERP at all? 1 Chapter Two The degrees of freedom framework 9 Chapter Three Think strategically when selecting an ERP system 25 Chapter Four Thinking through ERP implementation strategies 49 Chapter Five Operating ERP to realize benefits 65 The bottom line: Different strategies for different objectives 75 References 76
7. T H I N K I N G A B O U T E R P SYSPRO develops business software that provides complete control over the planning and management of all facets of business including accounting, manufacturing and distribution operations in an extensive range of industries. Weve been doing it for more than 30 years in over 60 countries. www.syspro.com
8. T H I N K I N G A B O U T E R P Foreword Throughout my career in the ERP industry,I have been fortunate enough to develop some insights into the challenges that organizations face in implementing large-scale business solutions. For many years I have found it hugely beneficial to call in iPlan to help organizations optimize the potential of their ERP software. These highly- skilled professionals have extensive, in-depth experience of ERP imple- mentation projects and understand the full impact of ERP as well as its strategic importance to the organization. As a result, iPlan is able to communicate the crucial decision points of an ERP project to the executive decision-maker, helping him or her tackle problems and align the ERP project strat- egy with the business strategy. This book is the powerful culmination of the experience iPlan has gained through intensive in- volvement in many ERP implementation projects. iPlan understands typical recurring problems such as failure to get senior management buy-in,resistance to change across the business,and a lack of clarity around project objectives. By talking directly to the decision-maker, this book shows organizations how to drive the imple- mentation from the top and focus on key performance measures. Through clearly defining what the ERP project is meant to achieve, organizations can pursue their strategic objectives. If you do nothing else before starting your ERP project, read this book it will make all the difference. Meryl Malcomess Marketing Director SYSPRO Ltd.
9. About this book The premise of this book is straightforward: The business objective you are trying to achieve determines the strategy you should follow when selecting, implementing and operating ERP. This book was written due to the above premise not being standard practice. Most often, busi- ness objectives do not play much of a practical role in the ERP selection process. Executives merely instruct their people to pick the best system that will work for their business and does not cost too much. ERP implementation projects are more often managed on the basis of what the ERP implementation partner company knows, than by what the client requires. Once the system is up and running, executives just want ERP to keep working. On the other hand, once one accepts that the business objective sets the framework for ERP, the focus shifts to thinking about how to ensure that this objective will actually be achieved and how the business benefits will be realized; considering the investment in time, effort and money that ERP requires. We aim this book directly at the executive level of the organization.The intended reader is the chief executive, or a trusted executive who is tasked by the chief executive to make the stra- tegic decisions about ERP in their organization before it commits to a course of action.This is a use it or lose it opportunity: Once ERP systems are selected and implementation partners ap- pointed, the execution of ERP projects is (and should be) run by professionals with knowledge and expertise of ERP computer systems, business process design and the like. How they do it should be controlled by a clear strategy established upfront and firmly anchored in the busi- ness objective. This is not a particularly difficult or arduous task for the executive decision-maker - our target audience. In this book, we present an objective-driven way for executives to think about ERP and set a strategy that eliminates much of the confusion often associated with the selection process when acquiring an ERP system. It also drastically reduces the risk and wrenching dislo- cations that accompany some implementations and significantly increases the probability of operating ERP in a way that will achieve the business objective and bring business benefits. The layout of this book follows the same mode of thinking. In the first chapter, we focus on the business objective and the business benefits that we propose the executive decision-maker should use as the anchor when thinking about ERP. In chapter two we present a useful clas- sification mechanism, the Degrees of Freedom Framework, to quickly position any particular organizations ERP ambitions in one of four classes depending on their business objective. Dif- ferent strategies for selecting, implementing and operating ERP follow directly from this clas- sification and we devote chapters three, four and five respectively to each. We recommend that all the chapters of the book are read in sequence by any executive decision-maker who is thinking about ERP. T H I N K I N G A B O U T E R P
10. T H I N K I N G A B O U T E R P Doing the work of executing the strategy the tactics is not covered in this book.We believe that once the strategy has been set, exploitation of the vast amount of literature available at the tactical level becomes more manageable.We present some specific collateral material at the website address: www.iplan.co.za/thinkingabouterp which serves as a companion to this book. More guides, as well as acknowledgement of sources, are referenced at the end of the book. This book was commissioned by SYSPRO,an ERP solution provider,and was written by a number of individuals from iPlan, a consulting firm. The concepts described draw on the Intellectual Property (IP) of iPlan; which retains ownership of such IP and the copyright thereto. The opinions expressed by the authors in the book do not necessarily reflect the position of SYSPRO. Abr Pienaar, Johan du Toit,Altrina Viljoen,Wessel Wessel, April 2008