Principles of an ERP implementation

Phases in the ERP life cycle

the implementation phase the production or run phase
Phases in the ERP life cycle
• Phase 1 : Ex ante evaluation
In this phase, the direction is set for the further course of the
implementation. A business case is created in which the objective and
the approach for the implementation are described. On the basis of this
business case, a go-no go decision can be made for the next phases of
the implementation.
• Phase 2 : The configuration & roll out
In this phase, the business logic is built into the ERP system: the best
practices that the organisation intends to use are configured, the
system is localised where needed, and adaptations are programmed.
Moreover, the conversion of data from existing systems into the new
integrated database is prepared, and interfaces between the ERP
system and other computer systems are developed
Phases in the ERP life cycle
• Phase 2 : The configuration & roll out
Several methods are available for configuration & roll out of ERP
1. Accelerated SAP (or: ASAP)
Its purpose is to help design SAP implementation in the most efficient
manner possible. Its goal is to effectively optimize time, people,
quality and other resources, using a proven methodology to
implementation.
2. Stepwise
which was developed by the company Intentia for the implementation
of their ERP system Movex, and has by now been used for more than
twenty years [Intentia, 2014]. Methods for configuration & roll out are
often not suitable for all ERP systems, they have exclusively been
developed for one specific ERP system.
Phases in the ERP life cycle
• Phase 3 : The go live
In this phase the users start working with the ERP system for their daily
work. The project team that has carried out the configuration & roll out
phase is gradually dissolved, the implementation partner finalises its
work and the application server provider assumes its responsibility for
keeping the ERP system up and running.
• Phase 2 : Onward & upward
This is the longest phase of the ERP life cycle. During the onward &
upward phase the system is kept up and running and the users are
being supported. Within this phase, new implementations are carried
out regularly: new modules are being implemented, new versions of
the ERP system are being rolled out, or newly acquired subsidiaries start
using the ERP system.
Principle preceding an ex ante
evaluation of ERP
ex ante evaluation phase is crucial for the whole ERP life cycle.
After all, an organisation sets the scene for the whole ERP life
cycle in the ex ante evaluation. It is also important that the
organisation makes up its own mind on the next phases of
ERP independently, and that therefore ERP suppliers and
implementation partners with their potentially conflicting
commercial interests keep a certain distance
Principle preceding an ex ante
evaluation of ERP
1. The preselection of potential parties
Although the generic approach for supplier selection is not suitable
for ERP, an adapted form can be used as the basis for carrying out a
preselection. As the choice for a specific ERP supplier to a large
extent determines the options for the implementation partner and
the application service provider
2. The sourcing basis
The costs of the implementation partner constitute a large
proportion of the total costs of the ERP implementation, and the
quality of the implementation partner to a large extent determines
the success of the implementation. Clear agreement on the tasks
and responsibilities of the implementation partner is therefore of
the utmost importance for the ERP implementation project.
Principle preceding an ex ante
evaluation of ERP
2. The sourcing basis
The sourcing basis have two extreme shapes:
a. the turn-key approach
The full configuration is done by external consultants, the
interfaces between the ERP system and other applications is built
by them, they convert the data into the ERP system and they train
the users. The employees of the organisation are only involved
when this is unavoidable
Advantage:
• Enables quick progress
implementation consultants do not have operational tasks in
the organisation and can therefore concentrate fully on the
implementation project
Principle preceding an ex ante
evaluation of ERP
• Less painless
the configuration of the business logic is executed by
experts who know the ins and outs of the ERP system
and will make optimal use of its functionality
Disvantage:
• the extra time required by the end of the
implementation for knowledge transfer
• a strong dependence on external consultants
Principle preceding an ex ante
evaluation of ERP
b. the do-it-yourself approach
The organisation carry out all implementation activities that
they can reasonably be asked to do. They configure the
business logic, design and develop the required interfaces with
other applications and the data conversion programs, and train
the users. The implementation consultant only supplies the
expert knowledge of the ERP system
Advantage:
• commitment
employees that configure the ERP system build their own
future working environment. Another advantage is the fact
that the configuration is based on optimal knowledge of
the own business processes
Principle preceding an ex ante
evaluation of ERP
• Cheaper implementation
implementation partners have high rates. Potential
downsides of the do-it-yourself approach are a longer
implementation time span
Disvantage:
• the risk that employees that are trained to become ERP
experts are popular on the labour market and may be
recruited by other organisations.
Principle preceding an ex ante
evaluation of ERP
3. The model-building strategy
develop a number of ERP models that are specifically tailored to the
requirements.
Three well-known model-building strategies exist;
a. one instance strategy
With this strategy, all ERP users work with one model in which the
business logic is configured, independently of their geographical
location, the market they serve or the business unit they work for.
They also use the same physical IT architecture, and they work in the
same ERP database
This strong form of standardisation is suitable for organisations that
have limited variety in their businesses, or for organisations that are
willing to impose the requirements of one location or business unit
on all users of the system.
Principle preceding an ex ante
evaluation of ERP
b. the kernel strategy
This model-building strategy is suitable for organisations that
want to have a well-controlled centralised financial consolidation
process as well as flexibility at local level to foster
entrepreneurship.
This strategy has two steps. In the first step, a basis ERP model is
developed: the kernel model. This normally takes place on
corporate level or by staff divisions. The kernel often contains the
financial chart of accounts that is the basis for all financial
processes in the organisation, and could also contain
standardised customer, supplier or product codes. In the second
step, each geographical location or business unit extends the
kernel with its own business logic
Principle preceding an ex ante
evaluation of ERP
c. the multi-model strategy
This strategy does not enforce standardisation. Each
geographical location or business unit is free to model its own
business logic.
This model-building strategy is suitable for organisations that
want to have a well-controlled centralised financial consolidation
process as well as flexibility at local level to foster
entrepreneurship
Principle preceding an ex ante
evaluation of ERP
4. The go live strategy
This strategy determines in which sequence the new users start
using the ERP system for their daily work. A go live strategy has
to be selected for every unit of the organisation that starts to
use ERP operationally
The go live strategy have two strategy:
a. the the big bang
all users start using the new ERP system for their daily work
at the same moment. It is obvious that this is a risky
strategy, especially when users are spread over
geographical locations and the ERP system covers a large
part of the operational processes of the organisation.
Principle preceding an ex ante
evaluation of ERP
b. the go live per function
As a first step in the go live the users in a certain function, often
the financial department, apply the new ERP system. All other
users continue to use their original applications. As soon as the
new system’s operation is considered stable and reliable for this
one function, the other functions in the organisation, such as
manufacturing and sales & marketing also start using it. With
this strategy, the risk of the go live is mitigated.
In each go live strategy, it is important to determine which data
and processes are supported by which system or application at
any time during the go live, and which temporary interfaces are
required to make sure all applications are fed with the required
data.