Hour 6:ERP Implementation & Training
User TrainingMaintenance
BENEFITS OF ERPShang and Seddon, AMCIS 2000 Proceedings
• Operational• Managerial• Strategic• IT Infrastructure• Organizational
Organizational Benefits
• Cost reduction• Cycle time reduction• Productivity improvement• Quality improvement• Customer services improvement
Managerial Improvement
• Improved resource management• Better decision making
– Hard to prove• Better planning• Performance improvement
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
IT Infrastructure Improvement
• Build business flexibility– ??? ERP inherently a rigid system
• IT cost reduction– The main reason CEOs adopt ERP
• Increased IT capability
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
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
ERP Project Failure
FoxMeyer Drug Bankrupt
Hershey’s 19% drop in profit29% increase in inventory
City of Oakland Erroneous paychecks
Miller Industries Inefficient ERP – operating loss
WW Grainger Inc Earnings dropped $11 million
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
CSF TaxonomyAl-Mashari et al. (EJOR 2003)
• SETTING UP– Management & Leadership– Visioning & Planning
• IMPLEMENTATION• EVALUATION
– Performance evaluation & management
IMPLEMENTATION• Financial
– ERP package selection• Behavioral
– Communication– Process management– Training & education– Cultural & structural changes
• Technical– Project management– Legacy systems management– Systems integration– Systems testing
Features of Successful ERP ImplementationWillcocks & 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
Factors to Reduce RiskMartin & 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
ERP Critical Success FactorsUmble et al. [EJOR 2003]
1. Clear understanding – strategic goals2. Top management commitment3. Project management implementation4. Great implementation team5. Cope with technical issues6. Organizational commitment to change7. Extensive education & training8. Data accuracy9. Focused performance measures10. Resolution of multi-site issues
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
Factors in ERP Implementation Failure
Willcocks & Sykes [2000]
Scenario CIO/IT Focus Typical outcomeTechnological determinism
Technical Fail to gain business benefits
Supplier/consultant driven
Disregarded Cost overruns
Outdated relationships & capabilities
Insufficient talent Chaos
Strategies to Attain Success
User vs. Specialist focus Users over IT staff
Governance & Staffing High level of supportChampion present
Time-box philosophy Short (6-9 months if can)Dolphins, not whales
Supplier/consultant role controlled
User Training
• Focus on business processes– Not on using system
• Explain why• Don’t skimp on time• Show why new system superior to old
Training Delivery Formats
• Web-based virtual training• Computer-based training• Video courses• Self-study books• Pop-up help screens
Implementation Strategy OptionsMarkus 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
Implementation StrategiesMabert 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
Implementation Strategies
• Big bang seemingly cheapest– Dangerous– Often makes sense in ERP if carefully planned
• Phased rollout reduces risk– Especially good for large organizations
ERP MaintenanceNah 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
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
User Reasons to Migrate
• Added functionality• Compliance with new standards• Discontinued vendor support• Customer problems in linked systems
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