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case about ERP

case about ERP

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Published by Deepanshu Kaushik

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Published by: Deepanshu Kaushik on Apr 15, 2011
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11/14/2013

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Company ABC is a $2 billion global organization with research stations andproduction plants located all over the world.Their ERP implementation was a 5-year project involving an initial implementationwith 2 go-live dates scheduled one year apart, followed by an immediateupgrade.Approximately 2400 licensed users access one or more modulesincluding finance, production, human resources, warehouse management andinventory.Company ABC migrated from dozens of home-grown systems to its ERP system.Company ABC used the ³Big Bang´ approach, shutting down all old systems andconverting to the ERP system right out of the gate.During the implementation, there was a need to run duplicate parallel processesand systems for about three months until everyone came up.Some countries only implemented certain modules. Smaller countries used athird-party financial system that was compatible with the ERP system.Prior to the ERP system, each plant had its own unique processes, and frequentlyits own vocabulary. Everyone was attached to their own way of doing things, sostandardizing processes was a big change for the organization.
Project Benefits
There were two types of benefits from this project.Company ABC definitely benefited from its investment with improved financialsand standardized processes.There were also organizational benefits, including improved working relationships.Specific benefits included:
Immediate data availability
: This is incredibly valuable in the supply chain.
Better traceability
: Company ABC can tell you exactly where any product orcomponent is across the globe.
Improved sales knowledge
: Sales now knows their projected revenue andsales volumes earlier than ever before. Company ABC recorded a record year in2001. It has been suggested this was, in part, as a result of the ERP system.Much
less duplication of effort
across the company.
Improved business discipline.
A
mazing global perspective
.
M
ore consistency
.
S
pringboard for organizational change
. (see section below)
I
S
and the business are now merging
. IS people are now moving intobusiness roles, vice versa. The cross learning and breaking down of organizationalsilos can be a huge benefit of implementing the ERP system.
 
O
rganizational Change
This is the time to enact change.
This initiative will bring significantorganizational change as well. As your major processes and systems change, usethis as your opportunity to review roles and responsibilities as well.
Be prepared for fear of change.
At Company ABC, everyone had their own ³spreadsheet´, their own way of doing things. And, as such, they became the ³owner´ of that information or process. Knowledge is power. With an ERPsystem, you can¶t ³hide´ data or create your own processes any more. Thosewho have been ³gatekeepers´ of selected data in the past can see this as athreat.
Expect criticism, and communicate responses
. At first, many in the businesswere critical of the investment and skeptical of its value. Continually explain therationale, and use your critical success factors/key performance indicators todemonstrate the project¶s contributions, both projected and actual.
ecognize that you can¶t please everyone.
Some people will have to give upfunctionality or certain processes for the good of the overall organization. Tellthose people, ³I hear where you are coming from, but this is what we need to dofor good of the global business.´ 
Build expectations for project roles and responsibilities into performanceevaluations of all employees, including managers.
At Company ABC,training expectations were built into employee performance forms andevaluations, but not for managers. This caused a lack of alignment around goals,which proved disruptive for the organization.
Training
Don¶t underestimate the need, the time, and the resources for training
.
U
se business people as trainers
. In its first year, Company ABC relied ontechnical and outside trainers, because the business would not allocate peoplefrom the functional areas to be trainers. Once they saw the value, there wereample volunteers the next year, and the training was more effective and overalltraining costs were reduced.
Focus on business process, rather than technical procedures
. CompanyABC focused on procedural training the first year, which was a mistake. Helppeople first understand the business process flows²they will pick up standardoperating procedures quickly.
Build training expectations into employee and manager performanceevaluations
. Everyone needs to be aligned around the same goals. Trainingmust be a requirement for all end users. Managers must also be expected toattend at least high-level orientation and business process education.
H
ighlight the integration inherent in the system
. Since ERP systems areintegrated, one change in data or functionality can impact something elsedownstream. Business users need to understand this to appreciate theimportance of their role in data entry, and, the reasons why certain functionalitycan or cannot be adjusted.
 
L
essons
L
earned
This is not just another IT project.
While Company ABC spoke this, it did notnecessarily show this in its action. In order for this project to be successful, itneeds to be viewed as a business project, not an IT project. Company ABCalmost allowed the business people to toss it back to IT as ³just a system´²makesure there are always owners in the business involved. These owners need tocontinue their roles after go-live.
G
et support from the very top.
There will always be parallel initiatives. Makesure everyone is clear that this is a priority project, and has appropriateresources to be successful. At Company ABC, the VP of finance was the ultimateproject champion that helped drive this home. All of the executives, from theCEO on down, need to understand the critical nature of this project.
 
G
o-live is not the end of the project
. Keep your project team intact for awhileafter go-live. Company ABC let 1/3 of its experts go back to the business onemonth after go-live, and it caused issues, both from a work productivity andfunctionality perspective, but also on an emotional and motivational level.
Focus on data entry.
There can be extraordinary amounts of data entry neededinitially to load the system. Company ABC under-estimated the time andresources this takes.
A
ddress reporting early
. Company ABC did not. (note: ERP reporting is morerobust than when Company ABC did the implementation.) The more you plan nowfor reporting, the better will be the perceptions and reception of the end usersonce you go live.

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