Course Code and Title: ADV01 – Enterprise System

Lesson 2: Week 2

Topic: Introduction to Enterprise System and Management (continuation)

Introduction
ERP systems are continuously changing and evolving to provide the organization with a new perspective
on business processes and decision-making. Organizations are also continuously changing to match their
environments. Both need the flexibility to adapt to each other to be successful. System implementations
are generally very complex, time-consuming, and resource-intensive. Because of its size and impact on
the organization, an ERP system only increases this complexity; therefore, before implementing ERP, an
organization has to plan and understand the life cycle of these systems. This lesson will provide a quick
overview of the ERP implementation process, which begins with business process management (BPM).
BPM lays the foundation for the remaining chapters; the ERP implementation concepts introduced in this
section will be discussed later.

Learning Outcomes
At the end of the lesson, the students should be able to:
 Understand the evolution of information systems and their historical role in organizations,
leading to systems integration and, eventually, enterprise resource planning (ERP).
 Comprehend the ethical, global, and security challenges while implementing an ERP system
and overview ERP vendors and industry trends.
 Learn about ERP systems and their evolution, components, and architecture. Understand the
benefits and drawbacks of implementing ERP systems and how they can help an organization
improve its efficiency and worker productivity
Business Process Management
Business process management is the understanding, visibility, and control of business processes. A
business process represents a discrete series of activities or tasks that span people, applications,
business activities, and organizations. BPM has a prescribed process or methodology that should be
followed to help an organization document its business processes and understand where they are being
used throughout its business. The initial stage of BPM is to create an "as-is" process map that defines the
current process. The as-is process is then used as a baseline for determining where the process may be
improved. However, simply documenting the current process does not give the business managers
control over the process. The real value of BPM comes from gaining visibility and control of the business
process.

ERP Life Cycle

As shown in Figure 2.1, ERP implementation is not a one-time implementation. Instead, it requires a
continuous cycle of product release and support. Therefore, the key to a successful implementation is to
use a proven methodology, take it one step at a time, and begin with an understanding of the ERP life
cycle. When a system implementation does not have a well-defined methodology, deadlines will likely be
missed, budgets will be overspent, and functionality will not meet the client's needs and requirements.

Figure 2.1 ERP Life Cycle

(Enterprise System, J. Motiwalla)

ERP system implementations are very risky, and using a well-defined project plan with a proven
methodology will assist in managing those risks. In addition, there must be a strong well-communicated
need to change from the existing information systems/applications to an ERP system before starting any
ERP development or implementation. There should also be clear and well-defined business objectives
written and communicated to the organization. Finally, the project methodology needs to be documented,
reviewed, and fully understood by everyone involved in the project once objectives are outlined.

ERP Implementation Strategies

ERP systems are continuously changing and evolving to provide the organization with a new perspective
on business processes and decision-making. Likewise, organizations are also continuously changing to
match their environments.
 Figure 2.2 ERP Implementation Methodology
(Enterprise System, J. Motiwalla)

An implementation with considerable modifications to the ERP software package, sometimes referred to
as "chocolate" implementation, can increase the chances of success with the users because the package
has been customized based on user requirements; however, modifications increase the investment in the
system and introduce higher implementation risk. In a purchased system like ERP, modifying the system
means that every modification will be addressed each time the system is upgraded. It is like paying for
the modification over and over again. Therefore, most purchased ERP systems today are minimally
modified (or as-is) to protect the investment in the system. This is sometimes called a "vanilla"
implementation. Every ERP vendor upgrades their system regularly, adding functionality, fixing problems,
and generally keeping the product current with the ever-changing technology innovations to remain
competitive. Product life cycles are shown in Figure 2.3.

Software and Vendor Selection

Most organizations lack the skill-set and desire to spend the time and money developing an ERP system
"in-house." However, many organizations today have chosen to purchase ERPs for many of the reasons
identified earlier.
 Figure 2.3 Product Life Cycle
(Enterprise System, J. Motiwalla)

Before selecting a vendor, the organization must carefully evaluate its current and future needs in
enterprise management systems. This needs assessment can begin very simply by looking at the
organization's size in terms of the number of employees that will be accessing the ERP applications.
Next, the assessment must look at the organization's industry and the functional areas that the ERP
application will be supporting. In addition, it must review the organization's existing hardware, network,
and Software infrastructure and, finally, the resources (i.e., money and people commitment) available for
the implementation. The criteria developed from this needs assessment can help the organization narrow
down the vendors to a select few (i.e., three or four). These vendors should be invited to submit their bids
for the project. During this phase, vendors should be asked to install their application (sandbox) on the
company's IT infrastructure and make it available to potential users for testing. In addition, the vendor
needs to be evaluated on the following.
 Business functions or modules supported by their Software
 Features and integration capabilities of the Software
 Financial viability of the vendor as well as the length of time they have been in business
 Licensing and upgrade policies
 Customer service and help desk support
 The total cost of ownership
 IT infrastructure requirements
  Third-party software integration
 Legacy systems support and integration
 Consulting and training services
 Future goals and plans for the short and long term

Operation and Post-Implementation

Going live ("Go-live") is one of the most critical points in a project's success. A lot of time and resources
have been spent to get to this point. In assessing an ERP project's readiness for Go-live, it is vital to
focus the teams' efforts to ensure that tasks and activities are completed before going live. This allows
project management to address any outstanding issues that may jeopardize the Go-live date. This
involves a readiness process that needs to include as many team members and appropriate users and
managers as possible. In addition, it helps the overall organization understand that the implementation is
near and that changes will be taking place. During a project, it seems like the system will never be
implemented. An effective readiness process lets the teams and organization know that going live is
close.
Many ERP implementations have turned into disastrous endeavors during or after the Go-live stage. For
instance, FoxMeyer Drug collapsed during the stabilization stage, following SAP implementation, in the
late 1990s and filed a $500 million lawsuit against SAP/R3. Much of the success of the implementation,
therefore, is in the stabilization and postproduction support processes. Stabilization is from Go-live to
about 90 days after, or until the number of issues and problems has been reduced. An effective response
to stabilization issues will determine how well the end-users and management accept the system. Five
areas of stabilization are important.
1. Training for end-users
2. Reactive support (i.e., help desk for troubleshooting)
3. Auditing support to make sure the new system does not compromise data quality
4. Data fix to resolve data migration and errors that are revealed by audits 5. New features and
functionalities to support the evolving needs of the organization
People and Organization
 Project Management - project management must provide strong leadership, a clear and
understood implementation plan, and close budget monitoring. Project management is the glue
that holds the project together. Project management must also follow a process that leads to
 sound decision-making and creates a high level of trust and accountability with all involved in the
implementation.
 Change Management - the process of preparing for and managing any new organizational
change. Typically during the change management process, you will prepare for the transition to a
new change, gain organizational support for whatever the change is, and deploy the change
thoughtfully over time.
 Business Process Re-engineering - Business process re-engineering is the radical redesign of
business processes to achieve dramatic improvements in critical aspects like quality, output, cost,
service, and speed. Business process re-engineering (BPR) aims at cutting down enterprise costs
and process redundancies on a huge scale.
 Global, Ethical, and Security Management –Globalization has impacted ERP systems in many
ways. First, a majority of ERP vendors are global. SAP, Oracle, Microsoft, and others have support
offices and development teams spread around the globe. Second, large ERP implementation
consultants have global offices and staff to help clients. Finally, software leasing or Software as a
Service (SaaS) is an emerging model for outsourcing for many companies that do not want to
invest large amounts of money on in-house ERP implementations. Ethics and security are other
areas that have attracted a lot of attention. There has been a widespread increase in corporate
white-collar crimes such as unscrupulous accounting and marketing practices, privacy violations,
unauthorized data sharing, spam mail, viruses, snooping, phishing, and identity theft. All these
unethical practices have indirectly impacted ERP systems due to their centrality in an organization
and direct integration with the database. Compliance management due to such regulations as the
Sarbanes–Oxley (SOX) Act and the Health Insurance Portability and Accountability Act (HIPAA)
are fast-growing software support areas, and several ERP vendors have started providing software
modules or tools to support compliance management.
 Along with additional modules, organizations are implementing security services to manage
access and control in ERP systems. They are developing awareness programs across their
organizations to help staff and management understand the seriousness of security breaches
within an ERP; however, security, unfortunately, remains an afterthought. The seamless
integration of ERP software only increases the risk of both hackers who break through perimeter
security and insiders who abuse system privileges to misappropriate assets through acts of fraud.
The ERP world requires a new way of thinking about security, namely, business transactions that
 inflict financial losses from systems-based fraud, abuse, and errors, not just the bits and bytes of
network traffic.

ERP Vendors
Key players dominating the global ERP software market include ABAS Software AG, CDC Software Inc.,
Consona Corporation, Epicor Software Corporation, Industrial and Financial Systems AB, Microsoft,
NetSuite Inc., Oracle Corporation, Plex Systems, Inc., QAD Inc., Ramco Systems, The Sage Group plc,
SAP AG, Unit 4 Agresso NV, and Visma AS, among others. This vast market can be grouped into three
tiers, as shown in Table 2-1 below.
Table 2.1 ERP Vendors
Tier 1 Tier II Tier III
SAP Epicor ABAS
Microsoft Dynamics CDC Software Activant Solutions Inc.
Oracle Sage Bowen and Groves
Oracle e-Business Suite Infor Compiere
Oracle—JD Edwards IFS Exact
Oracle-Peoplesoft QAD NetSuite
Lawson Visibility
CGS
ansa World Consona Syspro

 SAP - Founded in 1972, SAP is the recognized leader among ERP vendors, claiming the largest
current market share. Its solutions are for all types of industries and every major market. SAP is
headquartered in Walldorf, Germany, with 12 million users, 88,700 installations, and more than
1500 partners. It employs more than 32,000 people in more than 50 countries. Its products include
mySAP Business Suite, SAP NetWeaver, and solutions for small and midsize companies (e.g.,
SAP Business One and SAP All-in-One) (www.sap.com).
 Oracle - Oracle technology can be found in nearly every industry worldwide and the offices of 98
of the Fortune 100 companies. Oracle is the first software company to develop and deploy 100
percent Internet-enabled enterprise software across its entire product line, including databases,
business applications, and application development and decision support tools. Oracle provides
 solutions divided by industry category and promises long-term support for customers of
PeopleSoft, which was acquired in 2004. They have 40,000 professionals working in more than
100 countries around the world. Their three business principles are Simplify, Standardize, and
Automate. Oracle is headquartered in Redwood Shores, California (www.oracle.com)
 INFOR - This company is the world’s third-largest provider of enterprise software, with
approximately $2.1 billion in revenue. It delivers integrated enterprise solutions in the supply chain,
customer relationship and supplier management, workforce, asset management, product life
cycles, operational and business performance, and more. Headquartered in Alpharetta, Georgia,
Infor is the tenth-largest software company globally, with 8,100+ employees, 70,000 customers,
and offices in 100 countries worldwide (www.infor.com/infor).
 MICROSOFT Formerly Microsoft Business Solutions or Great Plains, Microsoft Dynamics (MD) is
a comprehensive business management solution built on the Microsoft platform. MD integrates
finances, e-commerce, supply chain, manufacturing, project accounting, field service, customer
relationships, and human resources. The key benefit of MD is that users across your organization
can use skills and products that they already know (e.g., a Web browser, Microsoft Office System
products, and Microsoft SQL Server) to access and communicate information managed within the
system. Another benefit of MD is vertical integration—Microsoft strategy provides an ecosystem of
Software on the back office and front office for an end-to-end solution. In addition, MD is easy to
deploy and configure (www.microsoft.com/dynamics).
 LAWSON - Founded in 1975, Lawson provides industry-tailored software solutions that include
enterprise performance management, distribution, financials, human resources, procurement,
retail operations, and service process optimization. Lawson is headquartered in St. Paul,
Minnesota, and has offices and affiliates serving North and South America, Europe, Asia, Africa,
and Australia (www.lawson.com).
 SSA GLOBAL - SSA Global acquired Baan in 2004 and doubled the company’s size globally.
They claim to offer solutions that accomplish specific goals in shorter time frames and are more
efficient with time. SSA Global is headquartered in Chicago, Illinois, with offices all over the world
(www.ssagt.com)
 EPICOR - This company provides enterprise software solutions for midmarket companies around
the world. The company claims to have solutions to various needs, whether a customer is looking
for a complete end-to-end enterprise software solution or a specific application. In addition, it
 provides solutions for a limited number of specific industries, including nonprofit, distribution,
manufacturing, and hospitality. Epicor is headquartered in Irvine, California (www.epicor.com).
Summary
Several ERP vendors are competing for an organization's business today. The current vendors include
SAP, Oracle, Infor, SSA Global, Microsoft Dynamics, and Epicor. Before purchasing a vendor-developed
ERP system, an organization must identify and document its needs and its vision of the future. The
selection of a system must be based on these needs and how well a vendor meets those needs now or in
the future. There are many ERP system implementation success stories, but the ones that reach the
news often fail. It is essential to learn from both. Success or failure is sometimes based on something
very small. To successfully implement an ERP system, an organization and its management must clearly
understand the implementation process. The key to this is the application of an ERP life cycle and
methodology throughout an implementation. A methodology brings about a process to arrive at well-
thought-out decisions.
References:
Motiwalla, L.et.al (2012). Enterprise System, Second Edition

Business Process Re-engineering

https://kissflow.com/workflow/bpm/business-process-reengineering/

What is SAP? Why do we need ERP? Beginner Tutorial

https://www.youtube.com/watch?v=lYCEQqSM08I