ERP261 - ERP Implementation PDF

1 BELGIUM CAMPUS © BELGIUM CAMPUS 2025 What is the process to obtain a driver’s license? How can this process be improved or redesigned? The traffic department decided to try an online appointment system. This is a significant rework of their existing processes....

1 BELGIUM CAMPUS © BELGIUM CAMPUS 2025 What is the process to obtain a driver’s license? How can this process be improved or redesigned? The traffic department decided to try an online appointment system. This is a significant rework of their existing processes. © BELGIUM CAMPUS 2025 Sometimes an existing process needs a significant redesign. What other examples can you think of? © BELGIUM CAMPUS 2025 Business Process Reengineering (BPR) Business Process Reengineering was first developed by Michael Hammer, a former MIT professor, in the 1990s. He argued that a "radical redesign" of business processes was needed to keep up with the fast-paced changes in markets and technology occurring during that decade. Mallach defines BPR as a radical redesign that is especially enabled by new technology. It is also known as business process redesign or business transformation. © BELGIUM CAMPUS 2025 Business Identify processes Process Reengineering (BPR) Implement new Review, update, analyse current process process Business process reengineering is the main way in which organizations become more efficient and modernised. A process is identified that needs a radical redesign in order to benefit the organisation in some way. When a business adopts a new ERP system, Design new process that could be seen as part of BPR. Let’s see what the BPR process looks like: © BELGIUM CAMPUS 2025 Moving to an ERP system. A large company that has decided to move to an ERP system is undergoing BPR. This is a huge change with multiple considerations and is not without risk. © BELGIUM CAMPUS 2025 What benefits does an ERP system have? A major benefit of an ERP system is the seamless service and centralised data it provides that interconnects all departments. What other benefits can you think of? © BELGIUM CAMPUS 2025  Advantages of ERP systems Reduce operating costs Facilitate day-to-day management Scalability ERP software attempts to Simplifies the daily tasks done by With ERP you are able to expand and integrate business processes staff and centralises functions reduce your system as needed. ERP across departments onto a such as sales and accounting. systems are incredibly flexible and, single enterprise-wide even if the changes are considerable, information system. your existing system is able to grow with you. © BELGIUM CAMPUS 2025  Advantages of ERP systems Real-time reporting Improved customer service Forecasting You are able to track performance Improved coordination of sales and Since the ERP system contains data across finance, manufacturing, centralising of customer information across departments, stored in a customers, etc. If you’d like to know leads to better customer service and single database, the historical data which product sold the most this increased sales. can be used to predict future month, it’s a few clicks away on your demand or profit. ERP system. © BELGIUM CAMPUS 2025 ERP systems and data This is one of the greatest advantages of a single ERP system: having a central database which means every module is using the same data. This greatly reduces data redundancy and maximises data integrity since everyone across all departments is accessing the same data. For example, if a customer’s address is updated via the CRM module, the SCM will already have access to the new address without have to be updated separately. © BELGIUM CAMPUS 2025  How much does it cost? See if you can find out how much an ERP system would cost for an average business. Check if any open-source ERP packages are available. © BELGIUM CAMPUS 2025  Costs of implementing ERP systems Choice of Deployment External Non-monetary Hidden modules method Assistance costs costs Choosing to use only If you choose an ERP This includes the This includes These are expenses the core modules vs system that you’ll host consulting and training something like time. It you cannot define adding additional on your own hardware costs to implement the is estimated that concretely. If there is modules such as the costs will be higher ERP package. adopting a new ERP an error or you need ordering or warehouse compared to choosing system results in the ERP vendor’s tech modules (dependent an ERP system that is reduced productivity support, that will likely on the needs of the cloud-based. and lost time for at mean additional business) least 6 months. expenses. © BELGIUM CAMPUS 2025 Consider a small/medium enterprise (SME). At what stage of growth should a SME switch to using an ERP system? While it is expensive, many ERP vendors can now provide custom solutions for smaller businesses. How do you know it’s time to upgrade? © BELGIUM CAMPUS 2025 When is it time to upgrade? Struggling to meet customer demands Complicated inventory management Disorganised data from multiple sources Too many manual processes Software integration issues © BELGIUM CAMPUS 2025 Is an ERP system really necessary? An ERP system is not necessarily a necessity. Some parts of a company might prefer to remain separate. Which parts of a company might prefer to stay separate from the ERP system? © BELGIUM CAMPUS 2025 Which would you prefer? Would you rather have an Apple iPhone, Apple iPad, Apple Mac, and Apple Watch? Or would you prefer a Samsung phone, Lenovo laptop, Windows PC, and Android watch? What are the advantages of each? © BELGIUM CAMPUS 2025 Single ERP system vs Multiple systems (EAI) Similarly, you can choose a single ERP solution, or you can select separate products. Oracle and SAP, the 2 biggest vendors, provide a single solution that covers all functional areas. This would be a single solution. However, it is also possible to select modules from separate vendors. Using separate applications is known as Enterprise Application Integration (EAI). © BELGIUM CAMPUS 2025 EAI Advantages It can be difficult to determine whether your company needs a single enterprise solution or whether it’s better to use separate systems. A smaller business might also start out with separate systems and then transition to an integrated, single solution ERP. Easy to replace in a One system can Maintenance on one The best solution can system-by-system freeze, but the others system can be done be selected for the approach; which can continue. without affecting the actual demand. decreases risk. others. © BELGIUM CAMPUS 2025 EAI Disadvantages Potential for Requires knowledge Requires contact and Potentially poor duplicate data of many systems and relationship integration between platforms. maintenance with separate systems many suppliers. © BELGIUM CAMPUS 2025 ERP Advantages All data available in Contact with one Online data from all one system. supplier functional areas is always accessible. Requires knowledge of Vendor continuously Large suppliers with only one system or develops new significant resources and platform. releases/updates. international support. © BELGIUM CAMPUS 2025 ERP Disadvantages Perhaps not the best A release update affects the Requires significant internal possible functionality entire system; which can resources from the entire in all areas. make it more complex to organization for implement. implementation. See Mallach (2021) p. 204-205 for a more detailed comparison. © BELGIUM CAMPUS 2025 ERP implementation An ERP system affects all stakeholders. When employees clock in or request sick leave, they’re using the ERP system. When a customer places an order and it’s manufactured, packed, and shipped, that’s the ERP system at work. Implementing an ERP system is therefore a huge undertaking. The article below tells the story of an ERP implementation that failed. Go through the article and highlight the reasons this implementation was unsuccessful. Provide guidelines on how to ensure effective implementation of an ERP system. Failed ERP implementations Failed ERP implementations Once you’ve completed that, see this book, Chapter 1, page 15 for a list of problems and mistakes. Common errors Common errors Adopting an ERP When it comes to implementing an ERP system there are 2 main components. Firstly, there’s the decision regarding which software package to use. Secondly is the implementation of this system. Usually, a company will have a designated ERP team who will be responsible for managing this entire process. Who do you think should be included in this team? © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning – Conduct an analysis of your current business processes, gap analysis, weak points, and strengths. 2 3 4 5 © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning 2 Evaluate the technical integration – An ERP system is a business initiative but is also a technical venture. Does your current infrastructure fit? If you mostly use Microsoft, perhaps their ERP will be the best fit. 3 4 5 © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning 2 Evaluate the technical integration 3 Determine your business requirements – Your enterprise will have process-based needs which you can further divide into mandatory, value-added, and nice-to-have. 4 5 © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning 2 Evaluate the technical integration 3 Determine your business requirements 4 Select a few ERP vendors - choose a software provider based on cost, reputation, and experience. 5 © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning 2 Evaluate the technical integration 3 Determine your business requirements 4 Select a few ERP vendors 5 Demonstration and selection – Based on your shortlist of vendors, request demonstrations based upon which you’ll make your final decision. Remember to negotiate. An ERP is a long-term commitment and vendors’ goal is to sell. © BELGIUM CAMPUS 2025 Selecting ERP software There are 5 phases to selecting software: 1 Project Preparation and Planning 2 Evaluate the technical integration 3 Determine your business requirements 4 Select a few ERP vendors 5 Demonstration and selection © BELGIUM CAMPUS 2025 Implementation Now that we’ve selected a new ERP system, we have to implement it. ERP implementation can be a hazardous journey since it affects the entire enterprise and can bring significant changes. © BELGIUM CAMPUS 2025  Implementation of a new ERP system Prepare Schedule Migrate data Develop an ERP Create an implementation Your data is currently likely scattered implementation plan with a schedule that considers all the across various platforms. Successful dedicated team and create a processes that will be affected. It migration of your data to the ERP- budget for implementation can take between 6 months and 2 specific data is crucial to effective and software. years for implementation to be implementation completed. © BELGIUM CAMPUS 2025  Implementation of a new ERP system Train Test Launch & evaluate Employees are trained on using As part of your testing, consider After going live, is your company still the system on a day-to-day network stability and speed, surviving? After successful basis. This training is usually backup procedures, and obtain implementation you should see better provided by the vendor. in-depth feedback from all profit, higher productivity, and less testers. human error. © BELGIUM CAMPUS 2025 Implementation Methods There are several ways to move from an old system to a new system. An old system is often referred to as a legacy system. Moving to a new system is a challenging endeavour. Read and study the section on Implementation Methods on BC Connect. Select a small or medium business and recommend an implementation method. Justify your choice. © BELGIUM CAMPUS 2025 Project Management: Discussion Project management is a key role filled by the project manager. It is a complex field and a great deal of research has been done. You will learn more about project management during PMM261 but, for the purposes of ERP implementation, we will briefly look at the PERT technique. At its core, this looks at the various tasks required and predicts the time it will take to complete. It takes an optimistic view of completion time and a pessimistic view of completion time. For example, if nothing goes wrong, there are no delays, and no employees make mistakes, the optimistic time for data migration might be 4 weeks. But if we assume people will be sick, networks will crash, data will be corrupted, the negative prediction might be 14 weeks. Do some research on the Project Evaluation and Review Technique (PERT) and apply it to the 6 stages of ERP system implementation. Think of what could go wrong during each stage that might result in a delay. You can post your answers on the Project Management Discussion forum. © BELGIUM CAMPUS 2025  35 Barker, T. and Frolick, M.N. (2003) ‘Erp Implementation Failure: a Case Study’, Information Systems Management, 20(4), pp. 43–49. doi:10.1201/1078/43647.20.4.20030901/77292.7. Chuck C.H. Law, A. (2019) Managing Enterprise Resource Planning Adoption and Business Processes: A Holistic Approach. Newcastle upon Tyne, UK: Cambridge Scholars Publishing. Available at: https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=2098074&site=ehost-live Lambert, D.M. (2014) “Supply chain management – processes, partnerships, performance,” Dimensionen der Logistik, pp. 553–572. Available at: https://doi.org/10.1007/978-3-8349-6515- 8_29. Sanjay Kumar, Jose Esteves and Elliot Bendoly (2011) Handbook of Research in Enterprise Systems. New Delhi, India: Sage Publications Pvt. Ltd (Response Books). Available at: https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=385314&site=ehost-live Unless otherwise stated all images are obtained under the Creative Commons License from www.unsplash.com and www.pexels.com