Modern ERP Life Cycle Implementation

Modern ERP

Select, implement, and use today's advanced business systems.
This is the second edition of the material.

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 switching software packages, keeping issues minimal.
ERP Instance: Necessary for running software.
Sandbox/Development Instance: Used for configuration, development, and testing of customizations (even after "go live").
Testing Instance: Where testing/Quality Assurance (QA) occurs.
Production Instance: The live system.
- Sandbox instance is a type of software environment isolated from the main system for testing or development without impacting live operations.
Configuration: Adjusting business/functional settings in the ERP system to align with customer needs, without changing the core software code.
- Enables tailoring specific aspects of the system to match business processes.
- Examples include pricing methods, credit management, and default currencies.
Customization: Alterations to ERP to support unique business processes or provide a competitive advantage.
- Can be necessary for complying with regulatory, reporting, or legislative requirements that the ERP system does not meet directly.
- Requires programming.
Two main types of customization:
- Enhancement: Adding fields, changing screen appearance, or extra steps in the business process.
- Modification: Changes to the core code of the system to adapt to specific needs that cannot be configured.
Testing: Confirming the software behaves as expected and meets customer expectations.
- Dedicated development instance is used for testing.
- Conference room pilot (CRP) - conference rooms used temporarily for development and testing; employees execute transactions.
- Specific types of testing:
  - Unit testing: Testing small functional increments or individual objects.
  - Integration testing: Testing complete business-to-business processes.
  - Customer acceptance testing: User testing using realistic business scenarios.
  - Security testing: Testing user roles and security aspects.
Change Management: Addresses change within an organization.
- Guides employees from "Point A" (pre-change) to "Point B" (post-training, new processes in place).
Change Agent: Individual designated to lead change management initiatives.
- Must have clout, conviction, and charisma to drive change and keep employees engaged.

Top Ten Principles of Change Management

Address the "human side" systematically
Start at the top
Involve every layer
Make a formal case
Create ownership
Communicate the message
Assess the cultural landscape
Address culture explicitly
Prepare for the unexpected
Speak to the individual

ERP Life Cycle: Implementation (Additional Points)

Interfacing with Other Systems: Addresses time, cost, and political constraints in connecting with other systems beyond the ERP.
Training: Includes teaching new processes, not just the software interface.
- Project teams prepare training curriculums.
- Six keys to effective ERP implementation training for employees:
  - Focus on business processes, not transactions.
  - Relate to the existing environment.
  - Leverage multiple ERP training tools.
  - Implement a "trainer approach".
  - Allocate plenty of time for training.
  - Reinforce training with more comprehensive organizational training.
Consultants: Assist the project team with various tasks including developing business cases, package selection, process documentation, change management, training, project management, and functional knowledge.
- When choosing a consultant, consider their experience in the user's industry, the number of successful implementations, ongoing support services, and whether a single implementation or follow-up training is needed.

ERP Life Cycle: Implementation - Benefits and Risks of Using Consultants

Benefits:
- Unbiased and objective approach, fixed contracts reducing bias, knowledge of vendors and best practices.
- Implementation experience, focus on big picture, innovative opportunities, senior management endorsement.
Risks:
- Biased toward favored software, lack of knowledge of the client's business processes, advocacy of certain best practices, expensive costs, unawareness of process details to the client's team.

ERP Life Cycle: Implementation - Implementation Methodologies

Phased Implementation: ERP rollout by area (function, division or geographical), allowing other areas/departments to continue with existing processes.
Big Bang Implementation: Replacing all business processes and/or entire legacy systems at once.
Franchising Implementation: independent ERP systems in each business unit, linking operations across different units.
On-Demand Implementation (SaaS Model): ERP system hosted; no software installation needed.

ERP Life Cycle: Implementation - Comparison of Different Approaches(Table)

ERP Life Cycle: Operation and Maintenance

Stabilization period: Initial dip in performance due to ongoing training and process adjustment.
- Project teams should conduct a post-implementation review ("postmortem").
Maintenance Activities:
- Preventative maintenance: Regularly scheduled tasks to keep the system running smoothly.
- Emergency maintenance: Urgent tasks to address critical issues.
- Software updates: ERP vendors regularly fix bugs, implement new practices, and adapt to customer feedback.

ERP Life Cycle: Operation and Maintenance - Reasons for Upgrading

Competitive advantage: New features and capabilities.
Edge over competitors: Superior features.
Globalization: Enhance the flow of information to customers/business partners.
Increased ability to operate globally: Increased reach and efficiency.
Improved integration: Better flow of information between different systems within a company.
Improved operational efficiency: Enhance overall company processes.
Best practices incorporation: Using updated industry best practices.
Cost reduction: Lowers administrative overhead.
Better support: Improved vendor support.
Lower operating costs: Improved efficiency and cost savings.