The document discusses various aspects of implementing an ERP system, including strategies, challenges, and approaches. It describes the big bang approach where all modules go live at once, replacing the old system entirely. Alternatively, a phased approach implements modules sequentially. A parallel approach runs the old and new systems simultaneously before a switch. Key factors in choosing an approach include company size, centralized processes, and urgency of the ERP solution. Successful implementation depends on careful planning, change management, training, and addressing challenges like resistance to change.

1. CHAPTER 2
ERP and
Implementation
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2. Contents…..
• ERP implementation and
strategy,
• Implementation Life cycle,
• Pre-implementation task,
• implementation methodology.
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3. ERP implementation and strategy
financial
H.R
logistic
Maintenan
ce mgmt
sales &
marketing
QM
Material
mgmt
Strategic &
operational
ERP
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5. What is Strategy
It’s not just COPY and PASTE
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7. Why ERP
• Simplification of business processes
• Enhance productivity , flexibility and Efficiency
• Enhance new business and growth strategy
• Reduces cost
• Continuous improvement
• Extend your business using internet
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8. ERP implementation Challenges
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9. •Hershey’s Implementation
Failure :
–Testing and Scheduling
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10. ERP implementation Challenges…..
• Inadequate definition of requirements
• Resistance to change
• Inadequate recourses
• Inadequate training and education
• Lack of top management support
• Unrealistic expectations of benefits and ROI
• Poor communications
• Poor projects design and management
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11. ERP implementation Challenges…..
• Inadequate definition of requirements 46.5 %
• Resistance to change 43.9%
• Inadequate recourses 43.1%
• Inadequate training and education 36.2%
• Lack of top management support 32.4%
• Unrealistic expectations of benefits and ROI 30%
• Poor communications 27.4%
• Poor projects design and management 16.8%
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12. ERP implementation and strategy,
• Implementing an ERP system is
among the most expensive,
time-consuming and complicated
tasks an IT department can take
on.
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13. ERP Implementation Mistake
•Poor planning:-For this internal audit should be
done
•Not properly vetting ERP vendors : check
background of vendor
•Underestimating the time and resources required.
•Not having the right people on the team from the
start
•Not investing in training and change
management.
•Taking the kitchen sink approach
•Not having an active load testing environment
• Ignoring third-party support alternatives
•Not having a maintenance strategy.
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14. kitchen sink approach
• Most common mistakes made during ERP
implementations is to assume that ERP can be
used to run a business end to end.
• To avoid this costly mistake, companies should
focus on implementing ERP to optimize value
chain and to trace costs. Everything else
should be a secondary goal.
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15. ERP implementation
• ERP implementation – installation of a software
package that integrates all data and processes
into a centralized, unified database.
• Cross functional and company wide
• Organizations rely on software for cohesiveness
• Can lead to cost savings, more efficient
processes
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16. ERP implementation
• Depends on several factors
– Size, industry, sales volume
• Common basic factors
– Physical Scope, Resource Allocation
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17. So ,three pillars of ERP
Implementation
Process
People
Technology
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18. ERP implementation and strategy
Big Bang
Phased
Parallel
Process line
Hybrid
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19. Big Bang
•What is the “Big Bang” approach?
•“A straightforward ERP Implementation
approach. It means all ERP modules, such as
financials, manufacturing, and human
resources, etc, are implemented in all business
units at all geographic locations at the same
time.”
•It will push the entire organization to use the
new system at the same time.
•The old system will be entirely shut down.
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20. The Big Bang Advantages
 The entire organization reaps the benefits of the deployed
system as this enforces process change.
 Installing the ERP by Big bang approach may help the
company to get quicker return on the investment.
 Easier integration and reporting.
 No temporary interfaces required.
 Lower cost of running the systems as legacy systems are
retired simultaneously.
 Faster implementation timeline.
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21. Disadvantages
High capital and human resource investment.
 Any technical performance issue affects the
entire user population.
Requires training of the entire user population.
Complex deployment and testing.
there can be lot of pressure because the
deadline must be met.
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22. Implementation Processes
--- Converting the system.
Planning, convert data from old system, load data in new system, test
data in new system, execute off-line trials, and check to verify validity.
--- Releasing parts of the system.
Release converted database, release produced application, release
infrastructure.
--- Training the future users.
Create main buffer of experienced staff, training all users.
--- Releasing the whole system.
Turn down the old system and load the new system.
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23. Who should choose the “Big bang”?
The Big bang is difficult to manage for very
large organizations.
It is easier in organizations that are
centralized.
It is less risky with simple processes.
It is easier for small, simple organizations.
It can be used in the situation where an
immediate erp solution is needed
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24. Finance
Manufacturing
HR
Material Management
Quality Mgmt
Marketing ,Sales
Finance
Manufacturing
HR
Material Management
Quality Mgmt
Marketing ,Sales
Legacy System New ERP System
Go Live
Big Bang Transition
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25. Big Bang Variants
•Mini Big bang : It takes a single big bang approach and break it
into two or more sections
•Mega Big Bang :It refers to the large companies ,with multiple
sites , all going live at the same time using a big bang strategy
•Multi Big Bang : This uses multiple big bang sequenced in order
for different geographical facilities . This approach can be used
for large corporations that have multiple divisions served by
centralized IT group
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26. Phased Approach
•The alternative approach to Big Bang is to
adopt some level of phasing – whether by
region, country, site, line of business, functional
area or by business priority.
•For most small organizations a big bang
approach is feasible, while for larger and more
complex organizations some degree of phasing
is inevitable -
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28. Phased Approach
• Changeover occurs in phases over an extended
period of time. Users move onto new system in a
series of steps.
• The phase approach is also goes by the name of the
modular , functional and sequential.
• The method of implementation goes after one ERP
module at a time.
• This approach suits to the company where they do
not share many common processes across
departments or business units.
• Implementation is done first and then the integration
is done
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29. Advantages & disadvantage of Phase
approach
• It allows the company to implement one
functional module at a time.
• Many companies prefer to take this stepping
stone approach.
• Recourses needed will be less.
• The overall cost and time needed for this
approach is more
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30. ERP Implementation at Nestle
•The business case for implementing an ERP system can be seen by examining any
one of three Nestle stories. Nestle SA is the parent company of the candy-making
giant and is headquartered in Switzerland (Konicki, pg 185). In 2000 Nestle SA decided
that it wanted to leverage its size and begin acting like the giant it is. To do so, it
signed a $200 million contract with SAP to roll out an ERP system to its 230,000
employees in 80 countries around the world (Olson, pg. 53). In addition to this sum,
Nestle SA also committed to an additional $80 million to be spent on consulting,
maintenance, and upgrades (Konicki, pg. 185). Executives at Nestle SA realized that
the company needed to standardize its business processes if it wanted to be
competitive. The rollout was scheduled to take three years for Nestle SA’s largest
sites with the others to follow. Included in the implementation were the mySAP.com
financials, accounts payable, accounts receivable, planning, production management,
procurement, direct procurement, supply-chain, demand planning, fulfillment, and
business-intelligence modules (Konicki, pg. 185).
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31. Parallel Approach
• This approach keeps both legacy system and
the new ERP system active simultaneously for
a length of a time.
• The advantage of this approach is that it has a
good recovery options in case something goes
wrong.
• This approach consumes more recourses than
other techniques in transition
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32. • in this method, the old system and new
system run at the same time, users learn
the new system while still working on the old
and when requirements for the new system is
met, the switch is made.
Parallel Approach
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33. • Pro:
• Least risky
• Users learn the new system while working on the
old
• Slower pace than the big bang but faster than a
phased roll-out
• Con:
• Most expensive
• Employees have to enter data in both systems- this
can be inefficient and breed data-entry problems
Parallel Approach
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34. Process line
• This approach is commonly used on product lines or
process flows and related assets.
• The first product line is first transitioned from the
legacy to the new ERP system and its success
monitored.
• Upon a successful implementation, the second product
line is similarly moved to the new system and its
success measured.
• This approach is useful when you need to build
industrial faith on a new system with the goal of
increasing its overall success prospects.
• Usually, the more complicated and challenging process
lines are transitioned last after successes with the
other lines.
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35. Hybrid
• This is a combination of the above-mentioned
implementation strategies.
• The decision on what method to use tends to be based on
the study of the ERP team members and other necessary
information.
• The size and type of business or corporation also
contributes to the simplicity or complexity of a hybrid
strategy.
• Large conglomerates will no doubt have complex hybrid
systems compared to small single-site businesses.
• Hybrids are most preferred where flexibility in adapting to
specific needs is needed. They also allow for exclusive
adjustments based on industry needs.
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36. So what now? How do you
choose?
•Many companies don’t choose, they use a combination
of the above ERP implementation strategies; this is
another viable method. It is important to choose the
strategy that will provide a low cost, low risk situation,
but is different for each company. Conditions such as
number of plants/offices, number of support employees,
number of divisions, if you are international, complexity
of your requirements, etc. all play a role in which
strategy will be best for you.
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37. Survey Results – Updated April 1st
• Author[1] recently hosted a survey to find out which
ERP implementation strategies are the most popular
and most successful. With the help of Twitter and our
favorite industry bloggers, he received 85 responses
from organizations that have been involved in an
implementation. His survey was brief and informal with
just four simple questions:
– Which implementation strategy did your organization
choose? Big bang, phased rollout, parallel adoption,
combo of big bang and phased rollout, or other.
– If you selected other, please describe the strategy you
chose.
– Was the implementation a success?
– If you selected no, please explain why.
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38. which ERP implementation strategies are used ??
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41. Implementation Life cycle
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42. • ERP implementation lifecycle focus on the ERP
project which is carried out to make ERP up
and running.
• ERP project is likely to go through different
phases like any other project.
• Most often these phases do not necessarily
depend on one another in a sequence, i.e. one
phase might start before previous phase has
finished.
ERP Implementation Life Cycle
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43. ERP Implementation……..
• Also all phases that will be discussed may not
be applicable in all cases.
• The different phases of ERP implementation
are:-
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44. Pre-
evaluation
Screening
Package
Evaluation
Project
Planning
Phase
Gap-
Analysis
Reenginee
ring Configurat
ion
Implementat
ion Team
Training
Testing
Going Live
End-user
training
Post –
implement
ation
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45. Pre-evaluation Screening
 When the company has agree to
implement ERP, they have to search for
the convenient & appropriate ERP
package.
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46. Package Evaluation
•The objective of this phase is to find the package
that is flexible enough to meet the company’s need
or in other words, a software that could be
customised to obtain a ‘good fit’.
•Once the packages to be evaluated are identified,
the company needs to develop a selection criteria
that will permit the evaluation of all the available
packages on the same scale
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47. Package Evaluation
• To choose the best system, the identification
of the system that meets the business needs,
and that matches the business profile.
• Some important points to be kept in mind
while evaluating ERP software include:
– Degree of integration between the various
components of the ERP system.
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48. Package Evaluation
– Flexibility and scalability
– Complexity
– User friendliness
• It is better to have a selection committee that
will do the evaluation process.
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49. Project Planning Phase
•This is the phase that designs the implementation process. Time
schedules, deadlines, etc. for the project are arrived at.
•The project plan is developed in this phase.
•In this phase the details of how to go about the implementation
are decided. The project plan is developed, roles are identified
and responsibilities are assigned.
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50. Project Planning Phase
• The organizational resources that will be used
for the implementation are decided and the
people who are supposed to head the
implementation are identified.
• The implementation team members are
selected and task allocation is done.
• The phase will decide when to begin the
project, how to do it and when the project is
supposed to be completed.
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51. Project Planning Phase
• The phase will also plan the ‘What to do’ in
case of contingencies; how to monitor the
progress of the implementation;
• The phase will plan what control measures
should be installed and what corrective
actions should be taken when things get out
of control.
• The project planning is usually done by a
committee constituted by the team leaders of
each implementation group headed by CIO.
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52. Gap Analysis
• This is the most crucial phase for the success
of the ERP implementation.
• Simply it is the process through which
companies create a complete model of where
they are now, and in which direction they
want to head in the future.
• The trick is to design a model which both
anticipates and covers any functional gaps.
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53. Gap Analysis……….
• Analyze the gaps in existing outcome and
desired outcome.
– Identify the existing process and the outcome(part
of req. analysis in proj planning)
– Identify the desired process and desired outcome
– Document the gap
– Develop the means to fill the gap
• Gap analysis can be done by
– prototype , questionnaire
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54. Reengineering
• This phase involves human factors.
• In ERP implementation settings, reengineering
has two connotations. The first connotation is
the controversial one, involving the use of ERP
to aid in downsizing efforts.
• In this case ERP is purchased with aim of
reducing the number of employees.
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55. Reengineering
• Every implementation will involve some
change in job responsibilities as processes
become more automated and efficient.
• However it is best to regard ERP as investment
and cost-cutting measure rather than a
downsizing tool.
• ERP should endanger business change but not
endanger the jobs of thousands of employee.
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56. “As-is to to be” process reengineering
Gap
document
Requirement
analysis
To be
process
Modify
process
Introduce
ERP
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57. Configuration
• In this case business process have to be
understood and mapped in such a way that
the incoming ERP solutions match up with the
overall goals of the company.
• It is not required to shut down company
operations while you do a mapping process.
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58. Configuration
• This is the main functional area of ERP
implementation.
• The Holy Grail (unwritten rule) of ERP
implementation is, synchronizing existing
company practices with the ERP package
rather than changing the source code and
customizing it to suit the company.
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59. Implementation Team Training
 This is the segment where the
company trains its employees to
implement and later run the system.
 For the company to be self-
sufficient in running the ERP
system, it should have a good in-
house team that can handle the
various solutions.
 Thus the company must realise the
importance of this phase and
selects right employees with good
attitude.
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60. Testing
 Testing segment is the the point where you are
testing a real case scenarios. This phase must be
designed to specifically to find the weak links in the
system and these bugs should be fixed before going
live.
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61. Going Live
• This is the phase where all technicalities are
over, and the system is officially declared
operational.
• In this phase all data conversion must have
been done, and databases are up and running;
and the prototype is fully configured and
tested.
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62. Going Live
• The implementation team must have tested
and run the system successfully for some
time.
• Once the system is ‘live’ the old system is
removed and the new system is used for doing
business.
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63. End-User Training
• This is the phase where the actual users of the system will be
trained on how to use the system.
• The employees who are going to use the new system are identified
and their skills are noted.
• Based on their skill levels are divided into groups.
• It starts before the system goes live
• Training is must as resistance to change to the new system from old
fro employees.
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64. End-User Training
• Then each group is given training on the new
system.
• This training is very useful as the success of
the ERP system is in the hands of end-users.
• The end-user training is much more important
and much more difficult than implementation
team training since people are always
reluctant to change.
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65. End-User Training
• “You can have the best technology in the
world, but if you don’t have a community who
wants to use it and who are excited about it,
then it has no purpose.” Chris Hughes Co-
Founder of FaceBook.
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66. Post – Implementation (Maintenance
Mode)
• This is the very critical phase when the
implementation phase is over.
• There must be enough employees who are
trained to handle the problem that might
occurred when the system is running.
• There must be technical people in the
company who have the ability to enhance the
system when required.
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67. Post – Implementation (Maintenance
Mode)
• Living with ERP systems will be different from
installing them.
• Projects for implementing the ERP systems get
a lot of resources and attention.
• However an organization can only get the
maximum value of these inputs if it
successfully adopts and effectively uses the
system.
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70. Higher Education ERP system
• Human Resources/Payroll Module
• Financial System/Accounts Payable Module
• Financial System/Accounts Receivable
Module
• Customer Relationship Management Module
General/Overall Module
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71. Higher Education ERP system
1. Recruitment Module
2. Admissions Module
3. Student Maintenance Module
4. Student Registration Module
5. Student Curriculum Planning Module
6. Student Financial Aid Module
7. Student Accounts Receivable Module
8. Student Graduation Module
9. Alumni Module
10. University Administration Module
11. University Grants Module
12. University Faculty Module
??
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73. Pre-implementation task
• How do u want to run your business?
• What problems need to be resolved?
• Do we know and understand our priorities?
• Do we fully understand our “as-is” condition
versus our “could be" process??
• What task will be accomplished and by what
date?
• Who will implement ERP and make it work.
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74. • So, ”Do it right at first time”
•As it requires a vast amount of recourses
like,money,personal,hardware,software,communica
tion network etc…and can result in huge loss if not
done properly.
•Planning process is important in pre
implementation task.
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75. Tasks in Project planning
Assembling
stakeholders
Feasibility study
Project vision , mission
statement
Determination of org.
structure
Determination of
modules to be
implemented
Creating the core team
Training
Establishing the data
migration strategy
Established interface
Time and cost
estimation
Identify Constraints
Establishing policies &
guidelines
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76. Business Processes
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77. What is Business Process ?
• A business process is collection of activities that
takes one or more kinds of inputs and creates an
output that is of value to the customer.
• A business process is a collection of linked tasks
which find their end in the delivery of a service or
product to a client. A business process has also
been defined as a set of activities and tasks that,
once completed, will accomplish an
organizational goal.
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80. Business processes are cross functional in nature
• For ex. Sales & warehouse , sales and accounts etc…
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81. Types of processes
• Procurement or purchasing process (buy)
• Production or Manufacturing process (make)
• Fulfillment process (sell)
• Financial management process
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82. Specific terms for this processes
• Product data management process(design): support the
design and development of the products for the initial product
idea stage through the discontinuation of the product.
• Product planning stage(plan) : it uses historical data and sales
forecasts to plan which material will be produced and in what
quantity and when.
• Inventory management process (store) : It is used both to
store and track both the raw materials and finished goods
• Customer service process : It is used to deliver after sales
customer service.
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83. Procurement
Send Payment to Supplier
Receive and Verify Invoice from Supplier
Update Inventory Database
Receive and Inspect Material form Supplier
Send PO to Supplier
Create Purchase order (PO)
Create Purchase requisition for Material not in Stock
Check Material Availability with respect to Bill Of Material
Create Bill Of Material
Create master production Schedule
Warehouse
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85. Production Planning
• Input by the marketing department in the form of market
trends and sales forecasts.
• Quantity of different products sold in the previous years
• Orders in hand
• Stock in hand and recorder levels
• Production and inventory costs
• Time require for production and for purchase the material.
• Production capacity
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86. Production Planning
Create Bill Of Material
Create Master production Schedule(MPS)
Determine quantity of Products to be Produce
Analyze Sales forecast and market trends
Receive Bill Of Material Receive MPS
Production
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87. Production Process
Create master production schedule and Bill of Material
Receive Bill Of Material
Send Raw material and components as per BOM to Production
Receive MPS & BOM
Set up the layout & Make the preparation for production
Receive material from warehouse , verify with BOM and start production as per
MPS
Receive and Inspect and Store finished goods and Update Inventory
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88. Fulfillment Process
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89. Inventory management process
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91. Implementation Methodology
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KULKARNI

92. Most critical phases of ERP life cycle
Adoption Decision
Acquisition
Implementation
Use and maintenance
Evolution
Retirement
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93. Adaption Decision
 Here managers must question the need of new ERP
system.
 Profile of the ERP vendors.
 It includes the definition of system requirement , its goal
and benefits and an analysis of the impact of adoption at
business and organization levels
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94. Critical phases of ERP lifecycle
 Acquisition: This phase involves, selecting the product that best fits to
the requirement of the organization to minimize the need of
customization.
 Implementation : This phase deals with the customization and
parameterization of adaption of ERP packages acquired to meet the
needs of organization
 Use and maintenance : This phase consist of use of the product in a
way that returns excepted benefits and minimize disruption .
 Evolution : in this additional capabilities are integrated into system to
obtain additional benefits
 Retirement : When the new technology appear to the ERP system or
becomes inadequate to the need of the business, managers decide if
substitute another information system approach that is more adequate
to the organizational need of the moment
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95. ERP Implementation
 The nature of ERP implementation is such that it is best handled
within project management context.
 The organization of project team that is best for managing the
implementation takes the following format :
The CEO leads the steering committee and sponsors the
project
The person who manages the implementation is the project
manager
He reports the steering committee, who reviews progress and
resolves any territorial ,resource policy disputes.
The PM has the implementation team reporting to him
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96. Implementation strategy should be
decided based on the following
Speed of implementation
Availability of people for carrying out the
implementation task
Availability of time for training all users
Cost
Confidence in the new system
Disruption to operations
Total timescale
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97. Implementation Plan
 Before implementation an ERP system in an organization or
project, it is very crucial that the implementation process be
planned.
 The implementation plan documents the
who,what,why,where,when and how of the project. It is the
outcome of discussion with affected people and involves
negotiations over resources, timescales and cost and their
agreement.
 The most basic plan will be identify all the activities, those doing
them and the time frame
 A project plan will enumerate the major task, the estimated
duration .Resources required and people who will doing the task.
 There are two types of plans,
 High level plan will give an overview of the project
 The project manager will develop a detailed project plan , where
the high level plan is broken down into lot more detail with the time
window being weeks or days rather than months
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98. Risk , Budget and Cost
Risk analysis is a must phase for the project as project plans can
go astray for events that could have been anticipated and
prevented
The aim of risk analysis is to anticipate possible problems ,
access their likelihood of appearance and their intensity of impact
and finally to established how they can be prevented.
Risk assessment should be carried out at the outset of the
project and should be regularly reviewed, revise and updated.
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99. Performance Measurement
It is carried our to measure the success of ERP
implementation and effectiveness of its operation.
The performance related measures are cost, time and
benefits
The project plan has detailed information of task , people
responsible for the task and time frame for the task. So the
project plan can be used to track the ERP implementation.
At every step, measure the deliverables which will give the
picture of ongoing process.
It is important to remember that the measurable provide a
means to access progress and attainment, they in themselves
do not determine success.
Performance measurements only provide reference for
further actions
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100. Problems and system issues
 It is desirables that there should be agreed procedure for
recording issues and their resolutions.
 The technical issues include installation and commissioning
of both hardware and software.
 Some of the technical issues are..
How does the system performance under heavy load?
How quickly the storage space will get consumed when the
system is live?
What is backup procedure ?
How the password managed?
What user menus need to be generated and how will be this
handled?
Whats is the disaster recovery procedure?
 The technical issues should be resolved as smallest issue
can be hurdle in the smooth working of system
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101. ERP implementation methodology by
vendors and consultants
A methodology is a roadmap to the implementation. The
purpose of this is deliver an implementation on time, according
to specification and in given budget.
Most vendors have their own methodology.
Some methodologies of ERP implementation are……
Accelerated SAP
The total solution by Ernst & Young LLP
Fast track work plan by Deloitte & touché
At last the experienced project ,manager should manage the
project so that the ERP system methodology will be best suited
for his organization.
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102. ERP implementation hidden cost
Some cost are more commonly overlooked or
underestimated than others
The hidden cost of ERP system are…..
Training
Customization
Integration and testing
Data conversion
Data analysis
Consultants
maintenance
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