Enterprise Resource Planning, 1st

Edition by Mary Sumner

Chapter 4:
Planning, Design, and
Implementation of Enterprise
Resource Planning Systems

3-1
 Objective

• Understand the information systems

development process for enterprise
systems, including planning, design,
and implementation

3-2
 Traditional Systems
Development Life Cycle
• Detailed analysis of system using tools and
techniques to determine problem areas
– Process models
– Data models
• Phases
– Problem definition
– Feasibility study
– Systems analysis
– Systems design
– Detailed design
– Implementation
– Maintenance
3-3
3-4
 Traditional Systems Development Life
Cycle, continued

• In system analysis, the systems designer analyzes

bottlenecks, duplication of effort, inconsistencies and other
problem with current system
• The fundamental approach used in traditional system
development is to analyze the current systems shortcoming
and to develop a new system
• The new system builds in changes in processes and data that
will support the firms business requirements
• Automating current system is counterproductive
– Inherit old problems (redundant processes, insufficient
data) and flaws

3-5
 Traditional Systems Development
Life Cycle, continued

• The systems design provides opportunity to re-

engineer current system
• Create logical database design before details are
refined
• Once the physical design specifications are set,
then the system is programmed, implemented and
tested

3-6
 Traditional Systems Development Life
Cycle, continued

• Problem with the traditional systems development

life cycle
– Takes too much time
– Uses a great deal of resources
– Expensive (cost too much)
– Follows a waterfall approach in which there is a
sequence of steps

3-7
 New Approaches to System
Development
Three different approaches designed to speed up the
building of IS
• Prototyping
– Models shown to end-users for feedback, guidance and to
get a better idea of their requirements
– While this approach enabled end-users to specify their
requirements, it not necessarily faster development process,
including coding, testing and debugging
• End-user development
– End-users create information systems using spreadsheets
and databases
– Worked effectively for local department application
– Not effective for large-scale development requiring quality
assurance, security, documentation, backup and live
production
3-8
 New Approaches to System
Development
• Software packages
– Moved toward purchasing commercial off-the shelf
software
– Economies of scale in development, enhancement,
maintenance
– ERP systems are large-scale, integrated
commercial off-the-shelf software packages that
support the entire value chain of business
functions

3-9
ERP Systems Design Process

• Phases
– Planning
– Requirements analysis
– Design
– Detailed design
– Implementation
– Maintenance

3-10
ERP Systems Design Process

3-11
 Planning Phase

– Planning
• Needs assessment
• Business justification for purchase of the
software
• The business justifications for ERP include
tangible and intangible benefits
– Tangible and intangible benefits
» Inventory reduction
» Operating cost reduction
» Overdue accounts collection
» Process improvements
» Reduction in cycle time
3-12
Planning Phase

3-13
Requirements Analysis Phase

Requirements analysis
– Analyzing current business processes
– Identify business processes to be
supported by the ERP packages
– Use best practices models to see what the
company can gain by implanting the new systems
– “Best practices” offered by vendors
» Models of supported functions that fit the
organization’s goals and competitive strategy

3-14
 Requirements Analysis Phase
• The process of selecting the best ERP system entails working through a
Checklist of activities and factors

3-15
 Requirements Analysis Phase
• Aside of the business issues, there are a number of technology factors
to consider in selecting an ERP vendor and ERP system

3-16
 Design Phase

• One of the fundamental design

decision in implementing ERP is
whether to re-engineer the
organization business processes to fit
the software or to customize the
software to fit the organizations
business practice

3-17
 Design Phase

• Re-engineering versus customization

• Re-engineering Approach
– The team selects a commercial off-the-
shelf ERP and re-engineer business
process to fit the package

– Re-engineering can disrupt organization

• Changes in workflow, procedures and data

3-18
 Design Phase

• Re-engineering versus customization

• Customizing Approach
– The team selects a commercial ERP and
customizes the ERP to meet unique
business requirements
– Customizing can make upgrading difficult
since vendor-supplied version will be
upon vanilla versions of the software

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Design Phase

3-20
3-21
 Alternative Designs
• ERP system can be designed using various
approaches
• “Vanilla”
– Easy to implement
• Follow vendor prescribed methodology
• Employ consultants with specialized vendor
expertise
– Usually on time and on budget implementations
• Customized
– Time and costs of project increase
– Risk of successful implementation
• Because the customized software not easily integrated
into new version of ERP
3-22
Alternative Designs, continued

• Maintain legacy systems and add ERP

modules to Support specific functions
– The only advantage of this approach is that it
disrupts the organization less because users
don't need to accept changes in business
procedures
– Cost-effective because of maintain legacy
system and new ERP module
– Organization doesn't’t get full benefit of
integrated ERP that supports multiple business
functions
– Less disruptive
– Lacks integration
3-23
Alternative Designs, continued

• Outsourcing
– External vendor operates the system
• Application service provider (ASPs) provide on time-
sharing basis to its customers
• Enable client to have access to technological expertise
• Depends on reliability and stability of vendor

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3-25
 Detailed Design Phase

• Team selects the:

– models,
– processes,
– and information to be supported

3-26
 Detailed Design Phase

• “Best practices” methodology provides

models
– Select applicable business processes
– Discard inapplicable processes
– Those processes that do not match the system
will serve as foundation for re-engineering
– Identify any areas not covered as candidates for
customization
• Interactive prototyping
• Extensive user involvement

3-27
Detailed Design Phase

3-28
Detailed Design Phase

3-29
 Implementation Phase

• Implementation
– Address configuration issues
• Data ownership and management
• Security issues
– Migrate data
• Ensure accuracy
– Build interfaces
– Documentation review
– User training
– Reporting
– Testing

3-30
Implementation Phase

3-31
 Implementation Strategies

• Big bang
– Cutover approach
• Rapid
• Requires many resources
• Small firms can employ
• Mini big bang
– Partial vendor implementation
• Phased by module
– Module-by-module
– Good for large projects
• Phased by site
– Location-based implementation
3-32
3-33
 Implementation Phase

• Many risks are involved in ERP

implementation, and these can trigger time
and cost overruns.
• These risks can be reduced if the company
decides to implement a complete vendor
package because the vendor-tested
implementation technique will be followed.

3-34
 Implementation Phase

• However, if the organization does not

choose a full vendor implementation, then
risk assessment and analysis should
become part of the implementation strategy.
• One risk assessment model proposes that at
the beginning of each phase of the project,
project managers should conduct a risk
analysis to determine what might go wrong
and what strategies will be used if problems
occur.
3-35
 Implementation Phase

• Having a plan of action and external

resources available at the outset of the each
project phase can minimize the
implementation risk.

3-36
 Case: Response to Request for
Proposal for an ERP System
• Wingate Electric
– Mid-sized manufacturer of electric motors
– Owned by Dick, CEO, and Steve, COO
• MIS system
– Supports major accounting and financial
functions
• Sales order processing, inventory control, accounts
payable, accounts receivable, general ledger
– Multiple legacy systems
• Redundant data
• Inconsistent data
• Queries difficult

3-37
Case: Response to Request for Proposal
for an ERP System, continued

• Competitors adopting ERP systems

– Integrating financial and manufacturing
– Web-based front ends
• Order processing, tracking, follow-up
• RFP for ERP system
– Initially to support accounting, financials
– Additional support for production, manufacturing
– Eventual support for sales and marketing, HR, CRM,
eBusiness
– $1,000,000 budget for system
– Determination made by five executives, representing
different user groups
• 10 scored criteria
• Vendor presentations, supplemental materials

3-38
 Summary

• Traditional SDLC has been modified

by the use of prototyping, end-user
developments, and software packages
• ERP systems design process consists
of six phases: planning, requirements
analysis, design, detailed design,
implementation, and maintenance
– The design phase considers the use of
traditional methods, re-engineering, and
customization, as well as outsourcing
3-39