Modern ERP Chapter 6: Implementation and Maintenance

MODERN ERP

Select, implement, and use advanced business systems
Second Edition
Chapter 6: ERP Life Cycle: Implementation and Operation and Maintenance

ERP Life Cycle Stages

Planning (Chapter 5)
Package Selection (Chapter 5)
Implementation (Chapter 6)
Operation and Maintenance (Chapter 6)

ERP Life Cycle: Implementation

Installation - mechanics of changing software packages while minimizing problems. ERP software installation requires an existing instance.
Sandbox Instance (development instance) - used for configuration testing and development of customizations, even after going live.
Testing Instance - used for testing/quality assurance.
Production Instance - the live system. A sandbox instance isolates testing from the live environment.
Configuration - adjusting business and functional settings to meet customer needs, without changing core code, using configuration tables. Allows customization for specific business processes (pricing, credit management, default currency).
Customization - altering the system to support unique business processes, due to compliance, regulatory, reporting, or legislative requirements. These alterations can involve programming. Two main types are:
- Enhancement- adding new features (fields, screen changes, extra steps).
- Modification - changing core code to accommodate specific requirements.
Testing - crucial to ensure the software meets expected and customer expectations. It typically includes:
- Dedicated development instance for testing.
- Conference Room Pilot (CRP) sessions use conference rooms as temporary testing locations for employees to execute transactions with proposed system configurations.
- Unit testing - testing small functional increments or individual objects.
- Integration testing - testing the end-to-end flow of business processes.
- Customer acceptance testing - users test using realistic business scenarios, to verify acceptability.
- Security testing - testing all user roles and permissions.

ERP Life Cycle: Implementation (Change Management)

Change Management - A body of knowledge to address change in an organization, training employees on new processes. Moves employees from Point A (pre-change) to Point B (fully trained and new processes in place).
Change Agent - Individual responsible for leading organizational change, essential to keep employees engaged. This individual needs clout, conviction, and charisma.
Top Ten Principles of Change Management - addressing the human element systematically, starting at the top, involving all levels, making a strong case, creating ownership, communicating the message, assessing the cultural landscape, addressing any cultural issues explicitly, preparing for unexpected events, and communicating to individuals.

ERP Life Cycle: Implementation (Additional Aspects)

Interfacing with Other Systems - Addressing interfaces to other systems due to time constraints, gaps in functionality, and political issues.
Training - teaching new processes, not just the software interface. Project teams should develop a training curriculum; Six Keys to Effective ERP Implementation Training for Employees include: focusing on business processes, relating new processes to the existing environment, leveraging multiple tools, using train-the-trainer approach, allocating sufficient time, and reinforcing the training with comprehensive organizational strategies.
Consultants - Assisting the project team in various activities like developing business cases, selecting packages, documenting processes, managing changes, training, project management, and functional knowledge. Considerations when selecting consultants include industry experience, successful implementations, ongoing support, and whether additional consultant help is required for future software rolling out.
Benefits and Risks of Using Consultants - Benefits include unbiased opinions, knowledge of vendors, best practices, experience with implementations, providing big picture focus, innovation, and senior management endorsement. Risks include bias towards certain software solutions, lack of knowledge of client's business, advocacy of specific practices, expense, unfamiliarity with process details, and hesitant to critique management.

ERP Life Cycle: Implementation Methodologies

Phased Implementation - rolls out the ERP system by functional area, geographical area, or division. Project teams focus on one area while other areas maintain normal operations.
Big Bang Implementation - replaces all business processes and/or the entire legacy system at one time.
Franchising Implementation - utilizes independent ERP systems for different business units, connecting shared common processes.
On-Demand Implementation (SaaS Model) - uses hosted software as a service, with no software to install on-premise.

ERP Life Cycle: Implementation (Comparison of Approaches)

Comparison of different implementation approaches. Approaches include Balanced, Turnover, Customer Driven, and A la carte methods.

ERP Life Cycle: Operation and Maintenance

The operation and maintenance stage involves a period of stabilization and fine-tuning, with continued training needs. A "postmortem session" conducted by the project team is beneficial.
Maintenance Activities - This includes preventative and emergency maintenance. Preventative maintenance involves regularly scheduled tasks to keep the system running smoothly; emergency maintenance addresses any immediate, critical issues.
Software Updates - ERP vendors continually address bugs, implement best practices, and incorporate feedback from customers in software upgrades.

Five Ways to Reduce ERP Maintenance and Support Costs

Negotiate lower software license fees.
Limit software customization.
Explore third-party support and maintenance options;
Negotiate lower ongoing professional services rates.
Quantify total direct and indirect maintenance and support costs.

ERP Life Cycle: Operation and Maintenance (Upgrading)

Applying fixes, updates, and improvements to the ERP system due to competitive advantage, new features, capabilities, globalization, increased ability to operate globally, integration, increased operational efficiency, best practices, cost reduction, and lower operating costs.