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1
Lecture 10
Ch.5 ERP Implementation
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Agenda
0. Why ERP?1. ERP Implementation - CSFs2. Technology3. Processes4. People Management5. Managing Change 6. Strategies for Implementing ERP7. What lessons were learned?8. Questions to Ponder9. Best Practices10. Optional Business Trends – a quality methodology11. Optional: NIBCO’s “Big Bang”
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Current Paradigm
Driving Force
Opposing Force
New Paradigm
Operations Functionality
ERP and Process Centric
Competing on Time No ERP Strategy
Customer Service
Functional Integration
State-of-the-art
Why ERP? - Force Field Analysis
No Support from Executives
Taking Too Long
Infrastructure Incompatibility
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1. ERP Implementation – Critical Successful Factors (CSFs)
Implementation of ERP is not easy. There are many factors that come into play.
We shall identify the three factors to explain ERP failures as technology, process, and people.
Samples of 1) successful companies 2) failed companies
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Implementation - Critical Successful Factors
People
ProcessTechnology
PM
PM: Project Mgt.
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It’s Working…
Enterprise Vendor Applications Organization
Cisco Systems, Inc.
Oracle Manufacturing, Financial, Order Entry
Supply Chain Networks
Pace U. SCT Banner
Student, Human Resource, Finance
Multi - Campus
Atofina Chemicals
SAP R/3 Material Mgt., Production Planning, Order Mgt., Financial Reporting
12 Business Units
Starwood Hotels
Oracle Payroll, Accounts Payable, General Ledger
750 Hotels
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It Failed…
A&P
FoxMeyer
Hershey Food (in the summer of 1999)
Allied Waste
Reasons for their failures ….
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Why it Failed?
Project ManagementOperational Reasons
Hershey
FoxMeyer
Inexperienced Managers
Expanding or Changing the Project Scope
Allied Waste
A&P
What does the enterprise need to do in the future?
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• With ERP, there is a tendency that the legacy system may be transformed or reengineered and the entire corporate cultureentire corporate culture may transform to adapt to ERP.
• The potential for organizational changes is enormous and without top management top management commitmentcommitment and support, ERP could not possibly be implemented.
• Therefore, to understand the ramifications of ERP on corporate goals, vision, and strategy, we need to look at the issues of technologyissues of technology, process and people and how they may be affected or influenced by ERP.
What does the enterprise need to do in the future?
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2. Technology
Decisions need to be made on the technologytechnology and its compatibilitycompatibility with the organization’s processes and culture.
TechnologyTechnology should be seen as a way of facilitating work process to meet the overall objective of the organization such as achieving customer satisfaction.
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A compatible technology should beshould be cost effective, adaptable to the organization, and flexible to enable the organization achieve its long-term goals.
One of the problemsOne of the problems in the early stages of ERP was that some of the technologies were not flexible or adaptable to other software products from different vendors.
Samples of Obstacles .. (to p12)
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Critical Concerns
• Nonrobust and incomplete ERP packages• Complex and undefined ERP-to-legacy
system interfaces• Middleware technology bugs• Poor custom codes• Poor system performance.
ERP software-vendors(to p13)
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Major ERP Vendors
• SAP
• Baan
• J.D.Edwards
• Oracle
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3. Processes
• The process includesincludes the methods, procedures, and guidelines for doing things. It may help to create a culture in the work place that could lead to increased productivity.
• ERP software often hasoften has their own processes and such processes may not be in congruence with the company’s process.
• Business processes supportsupport the strategic opportunities of the company and ERP should be seen as a means of enhancing such opportunities (to p15)
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To effectively take advantage of strategic opportunities, ERP shouldshould guide management’s actions and decisions in the following ways:
Before a company invests in ERP, it must first scrutinizescrutinize itself by taking a good look at its processes, business strategy, and work culture.
UnderstandUnderstand your business and how you are positioned against your competitors.
SelectSelect the right ERP software and infrastructure to support the strategic initiatives of the firm.
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4. People Management
People are the most important asset of any company and no new technology including ERP can be successfully implemented without the support of the people.
People are often resistant to change because its outcome could be uncertain and unpredictable.
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5. Managing Change
Managing change will require an articulation of why change is necessary as in the case of ERP replacing the legacy system and communicating that idea effectively to the people.
Resistance to change
Optional exercise: Change Management(to p2)
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Resistance
Appleton [1997] points out that resistance to ERP often stem from the fact that people are required to share information that once was closely guardedguarded and make decisions differently.
Ross [1998] notes that resistance may be intellectually orientedintellectually oriented, as employees may not see how they fit in with the new system.
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Change Management
Optional Internet Assignment: Visit and explore the Internet site for change management. Why is it important to understand change management before implementing any projects? Focus your discussion on organizational roles and structure, communication, training and education, performance management, and management practices.
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6. Strategies for Implementing ERP
• The Big Bang – doing all at once using re-engineering concept
• Franchising Strategy – different units adopt their ERP and then link
up together
• Slam Dunk – Focuses on few key processes and implement first
Can you evaluate their pros & cons?
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7. What lessons were learned?
Operationally Validated Theories
Application Area/domain
Project Management
ERP Competence
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8. Questions to Ponder
When implementing a new initiative such as ERP…
What are the CSFs? What major steps will we have to follow
(Hint: see next slide)? What is SAP’s Solution Manager (SM)?
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Commit (Selecting the project managers, Recruiting the project team)
Start (kick-off meeting, project team member training)
Manage (work plan, risk management)Analyze
Configure (Integrate the package)
Test
Change
Support
Convert (the data from the existing system into the new system)
Prepare (test the business process) Go-live
Improve
Typical ERP Implementation
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9. Best Practices
Prepare a summary of best practices for implementing ERP systems. Focus your discussion on people, processes, technology, partners, knowledge, outputs, and outcomes.
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10. Business Trends
Optional Internet Assignment: Visit and explore the Internet site for the Six Sigma methodology (Define-Measure-Analyze-Improve-Control). Why is it important to understand the Six Sigma methodology before implementing any projects?
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11. NIBCO’s “Big Bang”
• What have you learned from the NIBCO’s case?
• If you could do one or two things differently at strategic, tactical and operational levels, what would you do?
Internet Assignment: Download the article. Use the following key word: NIBCO’s “Big Bang”
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