Hour 6: ERP Implementation & Training

User Training Maintenance

BENEFITS OF ERP
Shang and Seddon, AMCIS 2000 Proceedings

Operational Managerial Strategic IT Infrastructure Organizational

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

Managerial Improvement
Improved resource management Better decision making
Hard to prove

Better planning Performance improvement

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

IT Infrastructure Improvement
Build business flexibility
??? ERP inherently a rigid system

IT cost reduction
The main reason CEOs adopt ERP

Increased IT capability

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

Organizational Change from ERP

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

2. Productivity gain

3. Payoff

ERP Project Failure

FoxMeyer Drug
Hersheys City of Oakland Miller Industries WW Grainger Inc

Bankrupt
19% drop in profit 29% increase in inventory

Erroneous paychecks
Inefficient ERP operating loss

Earnings dropped $11 million

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

CSF Taxonomy
Al-Mashari et al. (EJOR 2003)

SETTING UP
Management & Leadership Visioning & Planning

IMPLEMENTATION EVALUATION
Performance evaluation & management

IMPLEMENTATION
Financial
ERP package selection

Behavioral
Communication Process management Training & education Cultural & structural changes Project management Legacy systems management Systems integration Systems testing

Technical

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

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

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

Levels of IS/IT Failure

Corresponding failure
Dont 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

Factors in ERP Implementation Failure

Willcocks & Sykes [2000]
Scenario Technological determinism CIO/IT Focus Technical Typical outcome Fail to gain business benefits Cost overruns

Supplier/consultant Disregarded driven

Outdated relationships & capabilities

Insufficient talent

Chaos

Strategies to Attain Success

User vs. Specialist focus
Governance & Staffing Time-box philosophy Supplier/consultant role

Users over IT staff

High level of support Champion present Short (6-9 months if can) Dolphins, not whales controlled

User Training
Focus on business processes
Not on using system

Explain why Dont skimp on time Show why new system superior to old

Training Delivery Formats

Web-based virtual training Computer-based training Video courses Self-study books Pop-up help screens

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

Implementation Strategies
Mabert et al. [2000]

Strategy
Big bang

Months
15

%
41

Phased rollout by site

Phased rollout by module

30
22

23
17

Mini big bang

Phased rollout by module & site

17
25

17
2

Implementation Strategies
Big bang seemingly cheapest
Dangerous Often makes sense in ERP if carefully planned

Phased rollout reduces risk

Especially good for large organizations

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

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

User Reasons to Migrate

Added functionality Compliance with new standards Discontinued vendor support Customer problems in linked systems

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