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