Hour 6:
ERP Implementation & Training
User Training
Maintenance
BENEFITS OF ERP
Shang and Seddon, AMCIS 2000 Proceedings

•
•
•
•
•

Operational
Managerial
Strategic
IT Infrastructure
Or...
Organizational Benefits
•
•
•
•
•

Cost reduction
Cycle time reduction
Productivity improvement
Quality improvement
Custom...
Managerial Improvement
• Improved resource management
• Better decision making
– Hard to prove

• Better planning
• Perfor...
Strategic Improvement
• Support business growth
• Support business alliances
– If they have the same system

• Build busin...
IT Infrastructure Improvement
• Build business flexibility
– ??? ERP inherently a rigid system

• IT cost reduction
– The ...
Organizational
• Support organizational change
– FORCE organizational change!!

• Facilitate business learning
– BPR does ...
Organizational Change from ERP
1. Productivity decline
•

Jobs redefined, new procedures established, ERP fine
tuned, orga...
ERP Project Failure
FoxMeyer Drug

Bankrupt

Hershey’s

19% drop in profit
29% increase in inventory

City of Oakland

Err...
Critical Success Factors
• What the organization must do well to
succeed
• For IS Projects:
– Top management support
• Inh...
CSF Taxonomy
Al-Mashari et al. (EJOR 2003)

• SETTING UP
– Management & Leadership
– Visioning & Planning

• IMPLEMENTATIO...
IMPLEMENTATION
• Financial
– ERP package selection

• Behavioral
–
–
–
–

Communication
Process management
Training & educ...
Features of Successful ERP
Implementation
Willcocks & Sykes [2000]

•
•
•
•
•
•
•
•
•

IT Leadership
Business systems thin...
Factors to Reduce Risk
Martin & Cheung [Business Process Management Journal, 2000]

• Business case
– Justify need for sys...
ERP Critical Success Factors
Umble et al. [EJOR 2003]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Clear understanding – strategic goal...
Levels of IS/IT Failure
• Corresponding failure
– Don’t meet design objectives

• Process failure
– Not on time &/or not w...
Factors in ERP Implementation
Failure
Willcocks & Sykes [2000]
Scenario

CIO/IT Focus

Typical outcome

Technological
dete...
Strategies to Attain Success
User vs. Specialist focus

Users over IT staff

Governance & Staffing

High level of support
...
User Training
• Focus on business processes
– Not on using system

• Explain why
• Don’t skimp on time
• Show why new syst...
Training Delivery Formats
•
•
•
•
•

Web-based virtual training
Computer-based training
Video courses
Self-study books
Pop...
Implementation Strategy Options
Markus et al. [2000]
• Business Strategy
–
–
–
–
–

Total local autonomy
Headquarters cont...
Implementation Strategies
Mabert et al. [2000]

Strategy

Months

%

Big bang

15

41

Phased rollout by site

30

23

Pha...
Implementation Strategies
• Big bang seemingly cheapest
– Dangerous
– Often makes sense in ERP if carefully planned

• Pha...
ERP Maintenance
Nah et al. (2001)
• Corrective
– Incorporate vendor patches, fix problems

• Adaptive
– Implement new feat...
ERP System Migration
• Over time, need to adopt changes
– Minor modifications
– Maybe system replacement
– Vendors change ...
User Reasons to Migrate
•
•
•
•

Added functionality
Compliance with new standards
Discontinued vendor support
Customer pr...
Summary
• Time, cost, functionality tradeoff
– In ERP, functionality the most important

• Critical success factors
– Top ...
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ERP implementation and trainig

  1. 1. Hour 6: ERP Implementation & Training User Training Maintenance
  2. 2. BENEFITS OF ERP Shang and Seddon, AMCIS 2000 Proceedings • • • • • Operational Managerial Strategic IT Infrastructure Organizational
  3. 3. Organizational Benefits • • • • • Cost reduction Cycle time reduction Productivity improvement Quality improvement Customer services improvement
  4. 4. Managerial Improvement • Improved resource management • Better decision making – Hard to prove • Better planning • Performance improvement
  5. 5. 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
  6. 6. IT Infrastructure Improvement • Build business flexibility – ??? ERP inherently a rigid system • IT cost reduction – The main reason CEOs adopt ERP • Increased IT capability
  7. 7. 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
  8. 8. 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
  9. 9. ERP Project Failure FoxMeyer Drug Bankrupt Hershey’s 19% drop in profit 29% increase in inventory City of Oakland Erroneous paychecks Miller Industries Inefficient ERP – operating loss WW Grainger Inc Earnings dropped $11 million
  10. 10. 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
  11. 11. CSF Taxonomy Al-Mashari et al. (EJOR 2003) • SETTING UP – Management & Leadership – Visioning & Planning • IMPLEMENTATION • EVALUATION – Performance evaluation & management
  12. 12. IMPLEMENTATION • Financial – ERP package selection • Behavioral – – – – Communication Process management Training & education Cultural & structural changes • Technical – – – – Project management Legacy systems management Systems integration Systems testing
  13. 13. Features of Successful ERP Implementation Willcocks & 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
  14. 14. Factors to Reduce Risk Martin & 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
  15. 15. ERP Critical Success Factors Umble et al. [EJOR 2003] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Clear understanding – strategic goals Top management commitment Project management implementation Great implementation team Cope with technical issues Organizational commitment to change Extensive education & training Data accuracy Focused performance measures Resolution of multi-site issues
  16. 16. 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
  17. 17. Factors in ERP Implementation Failure Willcocks & Sykes [2000] Scenario CIO/IT Focus Typical outcome Technological determinism Technical Fail to gain business benefits Supplier/consultant Disregarded driven Cost overruns Outdated relationships & capabilities Chaos Insufficient talent
  18. 18. Strategies to Attain Success User vs. Specialist focus Users over IT staff Governance & Staffing High level of support Champion present Time-box philosophy Short (6-9 months if can) Dolphins, not whales Supplier/consultant role controlled
  19. 19. User Training • Focus on business processes – Not on using system • Explain why • Don’t skimp on time • Show why new system superior to old
  20. 20. Training Delivery Formats • • • • • Web-based virtual training Computer-based training Video courses Self-study books Pop-up help screens
  21. 21. Implementation Strategy Options Markus 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
  22. 22. Implementation Strategies Mabert 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
  23. 23. Implementation Strategies • Big bang seemingly cheapest – Dangerous – Often makes sense in ERP if carefully planned • Phased rollout reduces risk – Especially good for large organizations
  24. 24. ERP Maintenance Nah 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
  25. 25. 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
  26. 26. User Reasons to Migrate • • • • Added functionality Compliance with new standards Discontinued vendor support Customer problems in linked systems
  27. 27. 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

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