This document discusses the benefits, implementation, and maintenance of enterprise resource planning (ERP) systems. It notes that ERP systems can provide operational, managerial, strategic, infrastructure, and organizational benefits to companies if implemented successfully. Key factors for a successful implementation include top management support, clear objectives, end user involvement, effective project management, and training. The document also cautions that ERP implementations carry risks and failures are common, emphasizing the importance of change management and addressing technical and organizational challenges.

1. Hour 6:
ERP Implementation & Training
User Training
Maintenance

2. BENEFITS OF ERP
Shang and Seddon, AMCIS 2000 Proceedings
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Operational
Managerial
Strategic
IT Infrastructure
Organizational

3. Organizational Benefits
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Cost reduction
Cycle time reduction
Productivity improvement
Quality improvement
Customer services improvement

4. Managerial Improvement
• Improved resource management
• Better decision making
– Hard to prove
• Better planning
• Performance improvement

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. IT Infrastructure Improvement
• Build business flexibility
– ??? ERP inherently a rigid system
• IT cost reduction
– The main reason CEOs adopt ERP
• Increased IT capability

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. Organizational Change from ERP
1. Productivity decline
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Jobs redefined, new procedures established, ERP fine
tuned, organization learns to process new information
streams
2. Productivity gain
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Develop new skills, structural changes, process
integration, add bolt-ons
3. Payoff
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Transform organizational operations to efficient level

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. 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. CSF Taxonomy
Al-Mashari et al. (EJOR 2003)
• SETTING UP
– Management & Leadership
– Visioning & Planning
• IMPLEMENTATION
• EVALUATION
– Performance evaluation & management

12. IMPLEMENTATION
• Financial
– ERP package selection
• Behavioral
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Communication
Process management
Training & education
Cultural & structural changes
• Technical
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Project management
Legacy systems management
Systems integration
Systems testing

13. Features of Successful ERP
Implementation
Willcocks & Sykes [2000]
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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. 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
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Project management
Change management
BPR
Installation

15. ERP Critical Success Factors
Umble et al. [EJOR 2003]
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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. 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. 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. 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. 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. Training Delivery Formats
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Web-based virtual training
Computer-based training
Video courses
Self-study books
Pop-up help screens

21. Implementation Strategy Options
Markus et al. [2000]
• Business Strategy
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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. 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. 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. 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. 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. User Reasons to Migrate
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Added functionality
Compliance with new standards
Discontinued vendor support
Customer problems in linked systems

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