ERP Upgrade Lecture 9 PDF

ERP Upgrade Lecture 9  ERP Upgrade Enhancing Business Efficiency THE IMPORTANCE OF STRATEGIES FOR CHALLENGES, RISKS, ERP UPGRADES SUCCESSFUL UPGRADES AND FUTURE TRENDS Organizational Change after ERP Implementation 3 STAGES of CHANGE:...

ERP Upgrade Lecture 9  ERP Upgrade Enhancing Business Efficiency THE IMPORTANCE OF STRATEGIES FOR CHALLENGES, RISKS, ERP UPGRADES SUCCESSFUL UPGRADES AND FUTURE TRENDS Organizational Change after ERP Implementation 3 STAGES of CHANGE: Productivity decline (3-9 months): Jobs redefined, new procedures established, ERP fine tuned, organization learns to process new information streams. Productivity gain: Develop new skills, structural changes, process integration, add more functionality to expand ERP system. Payoff: Transform organizational operations to efficient level. Then What? Then What? Upgrade Retirement Why Upgrade ERP? Benefits Increased efficiency and reduced costs Performance Reasons for upgrading ERP systems Outdated technology unable to meet modern demands Scalability requirements for growing businesses Enhanced compliance with industry standards New Business Functions New Business Processes Discontinued Vendor Support Stakeholder Problems in Linked Systems  Preventive: Monitor response time, errors, track maintenance activities. Corrective: ERP Incorporate vendor patches, fix problems. Maintenance Adaptive: Implement new features, internal customization, implement interfaces. Perfective: New versions (Upgrade).  ERP Upgrade Moving your ERP system or software from one platform to another or moving your system from an older version to a newer version of the application of the same tech platform. ERP system upgrade involves migrating your existing Enterprise Resource Planning solution to the new or modern version. It requires various processes to follow to achieve the goal, unlike an update that needs a minimal or current version of the software. Reasons to Upgrade (New) Business Functions (New) Business Processes Discontinued vendor support Stakeholder Problems in linked systems Compliance with (New) (Industry) Standards New Technology (R & D). AN ERP UPGRADE IS DECEPTIVELY COMPLEX AND CAN BE DAUNTING— ESPECIALLY FOR ORGANIZATIONS IGNORANT OF THE MASSIVE EFFORT REQUIRED TO DO IT CORRECTLY. ERP II: BEST PRACTICES FOR SUCCESSFULLY IMPLEMENTING AN ERP UPGRADE Robert C. Beatty and Craig D. Williams COMMUNICATIONS OF THE ACM March 2006/Vol. 49, No. 3, pp. 105-109 ERP II Many organizations are looking to expand the capabilities of their systems by integrating new modules, or add-ons, into their core ERP system implementations. Much of the pressure to add new modules to their ERP systems seems to arise about 6 to 12 months after an organization has gone live with its initial ERP implementation. During this period, organizations begin to realize direct business benefits from their initial ERP investments. When to upgrade? A recent study by AMR Research indicates the average time between software upgrades has shrunk from three years in the early 1990s to 18–24 months. Upgrade framework 1. Build your business case on new functionality 2. Treat the upgrade like a new project 3. Keep the team together (who have implemented initial ERP system) 4. This is a business project, not an IT project 5. Watch for hidden infrastructure costs 6. Un-customize customizations 7. Test like your organization’s future success depends on it 8. Don’t skimp on training ERP upgrade Build your business case on a new functionality organizations must stop using cost savings as their sole motivation and instead focus on selling the business benefits to be gained by enhanced functionality. ERP upgrade Treat the upgrade like a new project Many organizations underestimate the time and resources required to successfully complete the project. Organizations that fail to treat the upgrade as a new development project invite disaster  ERP upgrade Keep the team together This is a business project, and not an IT project Organizations should make every effort to have The time required to successfully upgrade the the same team of key employees who planned system shifts to business units. and implemented the firmʼs initial ERP system. The reason for shift in hours from IT personnel to business personnel is simple-system ownership. ERP Watch for hidden infrastructure costs Many organizations think that vast majority upgrade of their ERP upgrade project costs will be software and labor related. 18  Un-customize customizations During initial implementation of an ERP system, many organizations choose to ERP customize the standard ERP software modules to meet implementation dates and upgrade to match unique business requirements. Many organizations make the mistake of over-customizing their application modules in an attempt to appease end-users of the system. 19  Test like your organizationʼs ERP future success depends on it upgrade Do not skimp on training  Types of ERP Upgrades 01 02 03 Technical Upgrades: Functional Strategic Upgrades: Focus on enhancing Upgrades: Align ERP the system’s Add new features capabilities with infrastructure (e.g., and improve user organizational goals. databases). interfaces.  Signs Your ERP Needs an Upgrade Poor system High maintenance Lack of support for Difficulty integrating performance (slow or costs modern technologies with other systems. unreliable processes) (e.g., mobile or cloud) Cloud vs. On- Premise Upgrades Cloud ERP: Advantages: Scalability, lower costs, regular updates. Disadvantages: Dependency on internet connectivity, data control concerns. On-Premise ERP: Advantages: Full control over data, customizable. Disadvantages: High upfront costs, limited scalability. Key Considerations Before Upgrading Assess current ERP system performance. Identify stakeholders and create a cross-functional project teams. Conduct cost-benefit analysis. Plan for data migration and user training. Challenges in ERP Upgrades Resistance to change from employees. Downtime and disruptions during implementation. Budget overruns due to unplanned costs. Data migration errors. Mitigating ERP Upgrade Risks Engage stakeholders from the start. Use experienced ERP implementation partners. Conduct thorough testing and offer continuous training. Set realistic timelines and budgets. ERP Upgrade Tools and Technologies Data migration tools: Dell Boomi, Informatica. Testing tools: Selenium, LoadRunner. Monitoring tools: SAP Solution Manager for real-time performance tracking.  ERP upgrades enhance supply chain management by: Improving demand forecasting and Impact of inventory optimization. Upgrades on SCM Enhancing supplier relationship management. Streamlining logistics and reducing costs. ERP Upgrade and Digital Transformation ERP upgrades play a crucial role in digital transformation strategies: Integration with IoT, AI, and machine learning for predictive analytics. Automation of repetitive tasks to enhance efficiency. Improved user experience through modern interfaces. Cost Analysis of ERP Upgrades Costs to consider: Direct costs: Software licenses, hardware, consultants. Indirect costs: Training, downtime. Benefits: Higher ROI through improved efficiency and scalability. User Training and Change Management Importance of user acceptance: Provide training sessions (on-site or virtual). Implement change management frameworks (e.g., Kotter's 8-Step Process). Key to success: Employee engagement and communication.