MODULE III

ERP IMPLEMENTATION
 Implementation Challenges

• ERP is one among the few information systems

whose design and implementation challenge a
company.
• ERP implementations are more likely to fail, be
delayed, cost more than forecast or fail to
deliver full functionality than they are to
succeed.
• When considering ERP as a potential solution to
specific organizational challenges, we must be
aware of the strengths and weaknesses and the
nature of important implementation challenges
The main challenges of an ERP implementation are
• Inadequate definition of Requirements
• Resistance to changes.
• Inadequate resources.
• Inadequate Training and Education
• Lack of Top management Support
• Unrealistic Expectations of Benefits and ROI
• Miscalculation of time and effort
• Poor Communications
• Software –Business Process incompatibility
• Poor Project Design and Management
• Poor ERP Package Selection
• Inadequate Requirements Definitions: The requirement
definitions should clearly specify the issues and problems that
the ERP system is supposed to solve , the additional capabilities
expected out of the system and so on. It will help in selection of
proper ERP package, with areas where functional process
customization is needed.
• Resistance to Change: Implementation of ERP is a change and it
is human to resist change. ERP is first an attitude, then a system.
So if employees are not convinced about the importance of ERP
and benefits of using an ERP tool and system they will not be
cooperative.
• There is misconception that it will increase their workload., it
will hinder creative work etc. Management must educate users
about ERP. To reduce resistance create champions, who are well
respected potential user of the technology. The champion
becomes the expert user , facilitator, and trainer of the tool
• Inadequate Resources: ERP implementation is a costly affair that
requires a variety of resources–money, people and software,
hardware and so on. There will be many items that will be
missed during the preparation of the budget but will consume
money during the implementation. The long implementation
period ( usually 8-20 months) will escalate many costs. Another
resource that is always in short supply is skilled and motivated
personnel from the organization.
• Inadequate Training and Education: ERP projects seem to have a
six month learning curve at the beginning of the project. At a
minimum , every one who uses ERP system needs to be trained
on how they work and how they work and how they relate to the
business process early in the implementation process.
Companies should provide opportunities to enhance the skills of
the employees by providing training on a continuous basis to
meet the changing needs of the business and employees
• Lack of Top management Support: The roles of top management
in IT implementation include developing an understanding of the
capabilities and limitation of IT, establishing reasonable goals for IT
systems, exhibiting strong commitment to the successful
introduction of IT and communicating the IT strategy to all
employees. The importance of top management support was
instrumental in the success of all ERP implementation.
• Inaccurate expectations are the norms: Most ERP
implementations today result in cost and schedule overruns. As
per study 10% ERP implementation succeed with full functionality,
within forecast time and cost frames and 55% are implemented
with cost and time overruns and remaining 35% are cancelled.
Cost overruns average 178% , while schedule overruns average
230%. On an average the ERP are implemented with only
41%functionality
• Another statistic not well understood is that, the return on
investment(ROI).For most organizations runs almost three
years. A metagroup study indicated that the median annual
savings from the new ERP average $1.6 million /annually on a
(roughly) $30 million investment one year after
implementation is complete.
• Poor communication and cooperation: Communication is the
oil that keeps every thing working. Communication is essential
within the project team, between the team and the rest of the
organization and with the client. ERP systems requires a
corporate culture that emphasizes the value of sharing common
goals over individual pursuits and the value of trust between
partners, employees, managers and corporations.
• Poor package selection: The choice of the package involves
important decisions regarding budgets, timeframes, goals and
deliverables that will shape the entire project.
• Software –Business Process Incompatability : There are four basic choices
to customization (a) modify the ERP to match the organizational processes
or data structures (b) modify the organizational processes or data
structures to match ERP (c) perform some choice of choice (a) and choice
(b) (d) ignore the problem. Organizations face many challenges in ERP
integration – the challenges of integrating various functional ERP modules ,
the challenge of integration with other eBusiness software applications and
challenge of integration with legacy systems.
• Poor Project management: A project scope that is too broad or ambitious
can cause severe problems. Customization increases the scope of an ERP
project and adds time and cost to an implementation.
• Miscalculation of cost and effort :As per survey two troubling facts about
organizational data quality (a) only 15% of the companies are very confident
of the data received from other organizations (b)Only one in three companies
are very confident about quality of their data. Poor quality data can be fatal
to ERP projects
• There are many items that are missed or that will consume more money than
allotted while preparing the implementation budget. If the company does not
have sufficient reserves to bear additional expenditure, the implementation
ERP implementation (Transition) Strategies
The three pillars – People, Process and Technology support
any ERP implementation.
Failure to use any one of them in best possible manner can
result in improper Implementation
An ERP transition strategy determines how the ERP system
will be installed. There are several transition strategies but
most of them are variants of the four basic types
• Big bang,
• Phased,
• Parallel,
• Process line
• Hybrid.
 BIG BANG STRATEGY
• In the big bang strategy the company moves from the
existing or legacy system to the new ERP system on a
specific date. All the business functions performed in
the legacy system across the entire enterprise are
simultaneously transferred to the new legacy system
during a period of one day or a weekend.
• The Installation of ERP systems all modules happen
across the entire organization at once.
• The big bang strategy is seldom used and often not
recommended by ERP vendors, system integrators
and service providers.
• With careful planning and preparation, companies using
the big bang strategy can be just as successful (if not
more) as with any other approach. The big bang strategy
offers advantages if properly used:
• The overall cost of implementation is less because no
interface programs are required to communicate
between the legacy system and the new ERP system
• Big bang eliminates all of the sequencing and decision-
making of implementing one module at a time
• It is well-designed for rapid implementations
• It creates a strong central focus for all the ERP team
members
• It can avoid complex integration issues
 But there are disadvantages also. Some of the
disadvantages of the big bang include:
• The amount of time and cost of careful planning and
preparation for the go-live.
• Bottleneck of critical resources, like lack of funds, non-
availability of professionals, etc. during the
implementation can result in failed implementations
• The recovery process, if something has gone wrong is
more difficult in this approach; it is a do-it-right-the-first-
time project
• The consequences of a failed implementation can range
from anything such as a huge financial loss to the
company going out of business
Big Bang Transition
Big Bang Variants
There are several variants of the big bang
strategy
mini big bang
mega big bang
multi big bang
The mini big bang strategy takes a single big
bang approach and breaks it into two or more
sections. Each section consists of several software
modules. Common sections, sometimes called
suites, for a mini big bang strategy include
financials, distribution and manufacturing.
For example, the distribution section would
include purchasing, inventory and sales.
The mini big bang strategy contains some
phasing but is still not considered a pure phased
implementation.
ERP providers, system integrators and service
providers often refer to the mini big bang
strategy as a phased implementation.
The mini big bang strategy tends to be quite
popular with varying degrees of success.
Mini Big Bang Transition
 The mega big bang strategy refers to a
large company, with multiple sites, all going live
at the same time using the big bang strategy.
Some corporations have taken this approach as
a "do or die" motivator for lingering ERP
projects.
In situations like this, the senior
management will issue a termination date for
the legacy ERP in which all legacy ERP services
will be terminated regardless of the readiness of
any functional unit.
• The multi big bang strategy uses multiple big bangs
sequenced in order for different geographical
facilities.
• This approach can be used for large corporations that
have multiple facilities or divisions served by a
centralized information technology group.
• This group will help implement the new ERP system
for one geographical location.
• After completion they will then move on to the next
one and so on until they are all completed.
• In other cases, the multi big bang strategy will be
used because different divisions of the corporation
contain their own information technology groups but
still share the same software and hardware resources.
• Big bang has application for several situations.
• It can be used in situations where an immediate ERP
solution is needed, e.g. companies who need to go to
the new ERP system immediately because their legacy
ERP system has suffered a catastrophic malfunction such
as physical destruction or database corruption.
• In general, the big bang approach seems to be better
suited for smaller companies where all the critical
resources of the project can fall within the immediate
control of a project manager.
• The big bang strategy applies to any situation where a
limited amount of time is available combined with an
immovable go-live date. This was the situation faced by
many companies just prior to the year 2000 as they
raced to implement new ERP systems to replace their
systems that were not Y2K complaint.
 PHASED IMPLEMENTATION
• The phased approach , implements one
functional module at a time, in sequential order.
• The phased approach also known by the names
modular, functional and sequential. The
method of modular implementation goes after
one ERP module at a time.
• This limits the scope of implementation usually
to one functional department.
• This approach suits companies that do not
share many common processes across
departments or business units.
• Independent modules of ERP systems are
installed in each unit while integration of ERP
modules takes place at a later stage of the
project.
• This has been the most commonly used
methodology of ERP implementation. Modular
implementation reduces the risk of installation,
customization and operation of ERP systems by
reducing the scope of the implementation.
• The successful implementation of one module
can benefit the overall success of an ERP project.
• Interface programs are common in their use for the
phased approach or any situation that contains phasing.
• These interface programs are required to bridge the gap
between the legacy ERP system and the new ERP system
until the new ERP system becomes fully functional.
• A good example is where the financial modules go live
on the new ERP software while the inventory module
still remains active on the legacy ERP system. Through
the use of interface and conversion programs, the
financial activity that occurs in the inventory modules is
exported to the new financial system in a format that
can be understood by the new ERP system.
• Financial functions are usually implemented before
distribution and manufacturing functions.
• The phase approach is closely related to the big
bang technique.
The advantage of this approach is that:
• It allows companies to implement one
functional module at a time before another is
at­tempted
• Many companies feel more comfortable taking
this stepping stone approach
• The total number of resources needed at any
one given point in time may be less
• Additional flexibility may also be gained in the
scheduling of people
• There are disadvantages too. These are as
follows:
• This approach needs a large amount of technical
resources. Technical resources are usually
needed in this kind of approach because of the
conversion and interface programs that are
required between the two ERP systems
• The overall cost and time to implement is usually
higher using this approach
• Higher turnover rate can also be expected among
key ERP team members because of the lengthy
durations that usually accompany this approach
 Phased ERP Implementation
Legacy System New ERP System

Past Go Live Date Future

• The highly phased approach is often used in situations
that lack strong centralized coordination in the ERP
project. Without strong leadership and coordination in
a project, the functional managers or assigned team
leaders tend to take over the direction for their
particular functional area. Because no one functional
manager has more power than another, each is
allowed to determine his or her own deadlines.
• Implementations that last a long time, greater than 18
months, usually use the phased approach. A variant of
the phased approach includes the mini phased
approach. In this case, two or more functional
modules are combined into one sub-implementation
for one single go-live date
 PARALLEL IMPLEMENTATION
• The parallel approach keeps both the legacy system and the new
ERP system active simultaneously for a length of time.
• The amount of time the systems are both in operation ranges from
one day to several months. Portions of the same functional
business areas (including software) such as finance, manufacturing,
marketing, etc. are operating at the same time for both the legacy
and ERP systems..
• An advantage to the parallel approach is that it has good recovery
options in case something goes wrong. Because both the legacy
ERP system and the new ERP system are in operation at the same
time for a particular module, the company's business processes will
not be interrupted if the new ERP system malfunctions.
• Because of the high failure rates of ERP systems the concept of
running parallel to protect against implementation malfunction can
provide a significant psychological cushion for the organization.
• The parallel approach consumes considerably more
resources than other techniques during the transition.
All functional interaction with the legacy system must
also be duplicated exactly in the new ERP system.
Confusion often erupts when people do not interact
with both systems in exactly the same way.
• Once errors are detected, the process of investigation
begins to determine whether the differences resulted
from the new ERP system not functioning properly or
the users not interacting with the new system
correctly.
• This process of investigation to determine where the
error occurred often exceeds an ERP team's resources
during a go-live situation.
• The parallel approach is ideally suited for mission critical
situations that cannot survive a major malfunction of an
ERP system. It also works well for business environments
that require the utmost in stability of an ERP system such
as financial (banking and insurance), pharmaceutical or
medical companies.
• The parallel approach does not work well in situations
where the legacy system has an expiration limitation that
is within the needed amount of time for the system to
operate in parallel mode.
• A classic example or this was the year 2000 situation.
Because many legacy ERP systems had fatal year 2000
programming flaws, they could not continue beyond
December 31, 1999, their expiration date. It would of
course, be impossible to run in parallel mode beyond this
date.
 PROCESS LINE TRANSITION STRATEGY
• The process line strategy is conceptually
similar to the mini big bang; however, it breaks
the implementation strategy to manage
parallel business process flows
• An example includes a company making two
products where both products are
manufactured in the same plant and a few
1 Go Live

resources are shared between them.

Future
Past
Product
2

• The process-oriented implementation focuses

on the support of one or a few critical
business processes, which involves a few
business units.
• The initial customization of the ERP system is
limited to functionality closely related to the
intended business processes.
• The process-oriented implementation may
eventually grow into a full-blown
implementation of the ERP system.
• This approach is utilized by many small to mid-
sized companies, which tend to have less
complex internal business processes.
• Using the process line strategy, the first product
line and all related resources go first in making
the transition from the legacy system to the
new ERP system.
• Once this transition is achieved successfully, the
second product line is moved from the legacy system
to the new ERP system.
• When using the process line strategy the smaller
process lines, which pose less risk and have a higher
probability of success, usually go first. This initial
success victory helps to build organizational trust in
the new ERP system, increasing its overall probability
of success.
• Upon completion of the first process line, resources
are then loaned to the more difficult and challenging
process lines. This same concept can be applied for
service organizations except that it would be
implemented along focused service lines instead of
product lines.
 Some important points to be kept in mind while evaluating ERP software
include:

• Functional fit with the company's business processes

• Degree of integration between the various components of the ERP
system
• Flexibility and scalability
• Complexity
• User friendliness
• Quick implementation
• Ability to support multi-site planning and control
• Technology-client/ server capabilities, database independence, security
• Availability of regular upgrades
• Amount of customization required
• Local support infrastructure
• Availability of reference sites
• Total costs, including cost of license, training, implementation,
maintenance, customization and hardware requirements
• It is always better to form a selection or evaluation
committee that will do the evaluation process.
• This committee should comprise of people from the
various departments (the functional experts), top
management (preferably the CIO or CEO) and
consultants (package experts).
• The selection committee should be entrusted with the
task of choosing a package for the company.
• Since all business functions are represented and the
management is involved, the package that is selected
will have company-wide acceptance.
• The package experts or the consultants can act as
mediators or play the role of explaining the pros and
cons of each package.
• Project Planning Phase

This is the phase that designs the implementation

process. It is in this phase that the details of how to go
about the implementation are decided.
Time schedules, deadlines, etc. for the project, are
arrived at. The project plan is developed.
Roles are identified and responsibilities are assigned. The
organizational resources that will be used for the
implementation effort are decided .
The people who are supposed to head the
implementation are identified.
The implementation team members are selected and
task allocation is done.
This phase will decide when to begin the project, how to
do it and when the project is supposed to be completed.
It will also plan what to do in case of contingencies; how
to monitor the progress of the implementation, what
control measures should be installed and what
corrective actions should be done when things get out of
control.
A committee constituted by the team leaders of each
implementation group usually does the project planning.
The committee will be headed by the ERP in-charge
(usually the CIO or CEO). It will meet periodically (during
the entire implementation life cycle) to review the
progress and chart the future course of actions.
 Gap Analysis

This is the most crucial phase in the success of the ERP implementation. It
is the process through which companies create a complete model of
where they are now and where they want to be headed.
The trick is to design a model, which both anticipates and covers any
functional gaps. It has been estimated that even the best ERP package,
custom tailored to a company's needs meets only 80% of the company's
functional requirements.
The remaining 20% of these requirements present a problematic issue for
the company's BPR. One of the most affordable, but painful, solutions
entails altering the business to 'fit' the ERP package. Of course, a company
can simply agree to live without a particular function (the cheap but
annoying solution). Other solutions include:
• Pinning your hopes on an upgrade (low-cost but risky)
• Identifying a third-party product that might fill the gap (hopefully it also
partners with the ERP packages, keeping interfacing to a minimum)
• Designing a custom program
• Altering the ERP source code, (the most expensive alternative; usually
reserved for mission- critical installations)
Reengineering
It is in this phase that human factors are taken into
account. In ERP implementation settings, reengineering
has two different connotations.
The first connotation is the controversial one, involving the
use of ERP to aid in downsizing efforts. There have been
occasions where high-level executives have invoked the
reengineering slogan and purchased an ERP package with
the aim of reducing significant numbers of employees.
While every implementation is going to involve some
change in job responsibilities, as processes become more
automated and efficient, it is best to treat ERP as an
investment as well as a cost-cutting measure, rather than
as a downsizing tool.
ERP should engender business change but should not
endanger the jobs of thousands of employees.
• The second use of the word reengineering in
the ERP field (or business process
reengineering (BPR) as it is usually called),
refers to an ERP implementation model
initially designed and used with much success
by the major ERP consulting firms.
• The BPR approach to an ERP implementation
implies that there are really two separate but
closely linked implementations involved on an
ERP site: a technical implementation and a
business process implementation.
Customization
This is the main functional area of the ERP
implementation.
The main objective of ERP implementation is
synchronizing existing company practices with the ERP
package. In order to do so, business processes have to be
understood and mapped in such a way that the arrived-at
solutions match up with the overall goals of the company.
But, companies cannot just shut down their operations
while the mapping processes take place. Hence the
prototype—a simulation of the actual business processes
of the company—will be used.
The prototype allows for thorough testing of the "to be"
model in a controlled environment. As the ERP
consultants configure and test the prototype, they
attempt to solve any logistical problems inherent in the
• ERP vendors are constantly striving to lower
customization costs
• ERP system provides a set of customization
tools which includes a software development
kit and a customizer.
• Similarly, almost all the ERP vendors offer
some tools that automate at least some part
of the customization process. Many third-
party companies offer customization tools to
make the task of customization as easy as
possible
• Implementation Team Training
At the same time that the customization is taking place,
the implementation team is being trained, not so much
on how to use the system, but how to implement it.
This is the phase where the company trains its
employees to implement and later run the system.
The ERP vendors and the hired consultants will leave
after the implementation is over. But 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
situations. So, it is very vital that the company
recognizes the importance of this phase and selects
employees with the right attitude—people who are
willing to change, learn new things and are not afraid of
technology—and good functional knowledge.
Testing
This is the phase where we try to break the
system. A point is reached where we are testing
real case scenarios.
The system is configured and now we must
come up with extreme case scenarios—system
overloads, multiple users logging on at the
same time with the same query, users entering
invalid data, hackers trying to access restricted
areas and so on.
The test cases must be designed specifically to
find the weak links in the system and these
bugs should be fixed before going live.
Going Live
This is the phase where ERP is made available to
the entire organization.
On the technical side the work is almost complete:
data conversion is done, databases are up and
running and on the functional side, the prototype
is fully configured and tested and ready to go
operational.
The system is officially proclaimed operational even
though the implementation team must have been
testing it and running it successfully for some time.
But once the system is 'live' the old system is
removed and the new system is used for doing
business.
End-user Training
This is the phase where the actual users of the system
will be given training on how to use the system.
This phase starts much before the system goes live. The
employees who are going to use the new system are
identified. Their current skills are noted and they are
divided into groups based on the current skill levels.
Then each group is given training on the new system.
This training is important, as the success of the ERP
system is in the hands of the end-users. So, these
training sessions should give the participants an overall
view of the system and how each person's actions affect
the entire system. In addition to these general topics,
each employee is trained on the job or task that he/ she
is supposed to perform once the system goes live
 It is human nature to resist change. Also many
people are afraid of computers and other new
technologies. Hence, there will be resistance to
change.
Another factor is that not all people will be
successful in making the changeover. The company
management should address these concerns and
should take necessary actions to avoid failure.
End-user training is much more important and much
more difficult (since most end-users are not thrilled
at having to change) than the implementation team
training. Companies are beginning to take this phase
seriously as there is now statistical evidence, which
shows that most implementations fail because of a
lack of end-user training.
Post-implementation (Operation & Maintenance)

One important factor that should be kept in mind is that

the post-implementation phase is very critical. Once the
implementation is over the vendors and the hired
consultants will go.
To reap the full benefits of the ERP system, the system
should get enterprise-wide acceptance. There should be
enough employees who are trained to handle the
problems that might crop up.
There should be people within the company who have the
technical prowess to make the necessary enhancements to
the system as and when required. The system must be
upgraded as and when new versions or new technologies
arc introduced.
Here, the organization should think in terms of the
incremental benefits of the new enhancements
because with any upgrade or enhancements, there
will be a lot of other aspects like user training that
have to be considered.
So, instead of going in for upgrade as and when a new
version is announced by the vendor the organization
should first analyze the costs and benefits. The post-
ERP organization will need a different set of roles and
skills than those with less integrated kinds of systems.
The training will never end; it is an ongoing process;
new people will always be coming in and new
functionality will always be entering the organization.
• Implementation Methodologies
Critical Phases of ERP Lifecycle
The important phases of the ERP lifecycle are:
1. Adoption decision — This phase includes the
definition of system requirements, its goals and
benefits and an analysis of the impact of adoption at a
business and organizational level.
2. Acquisition — This phase involves selecting the
product that best fits the requirements of the
organization to minimize the need for customization.
3. Implementation — This phase deals with the
customization or parameterization and adaptation of
the ERP package acquired, to meet the needs of the
organization.
• 4. Use and maintenance — This phase consists of
the use of the product in a way that returns
expected benefits and minimizes disruption.
• 5. Evolution — In this phase, additional capabilities
are integrated into the ERP system to obtain
additional benefits.
• 6. Retirement — When new technologies appear
or the ERP system or approach becomes
inadequate to the needs of the business,
managers decide if they will substitute another
information system approach that is more
adequate to the organizational needs of the
moment.
• The project plan can be handwritten, prepared
using a spreadsheet or using specialized project
management software.
• There are two types of plans—high-level plan
and detailed plan.
• 1. The high-level plan will give an overview of
the project and can be used by the top
management for monitoring the project.
• 2. The project manager will develop a detailed
project plan, where the high-level plan is
broken down into a lot more detail with the
time windows being weeks or days rather than
months.
• Risk, Budget, Cost

• • Even the most detailed of project plans can go astray

for events that could have been anticipated and
prevented and hence it is prudent to carry out a risk
analysis.
• • The aim of risk analysis is to anticipate possible
problems, assess their likelihood of occurrence and their
intensity of impact and finally, to establish how they can
be prevented or best handled if prevention is not
possible.
• • Risk assessment should be carried out at the outset of
the project and should be regularly reviewed, revised
and updated. Process developments and changes in
project conditions may raise the profile of risks that
• After the costs of the ERP implementation are
identified (during the planning stage), a budget is TO
be established. The budget should have provisions
for unanticipated problems and unforeseen issues
that are likely to result in additional expenditure.
• The total cost of ERP ownership includes the costs of
packaged software, hardware, professional services
(for ongoing maintenance, upgrades and
optimization) and internal costs (training cost, re-
location costs, cost of temporary employees, etc.)
• The costs of the ERP implementation, operation and
maintenance should be budgeted and all budget
should be reviewed and revised periodically.
• Performance Measurement
• Performance measurements are carried out to measure
the success of the ERP implementation and the
effectiveness of its operation. Three performance related
measures are costs, time and benefits.
• The project plan have detailed list of the tasks, the
people responsible for each tasks and the timeframe for
the completion of the tasks. The project plan can be used
to measure the progress of an ERP implementation.
• For each step or series of steps of the implementation,
objectives can be defined which, if achieved, represent
progress. By achieving these deliverables there is less
likelihood of problems arising at a later date as a result of
an earlier event.
• The four measurables — cost, time, benefits and
deliverables — present different dimensions for
measuring the performance of an implementation.
•It is important to remember that while
measurables provide a means to assess progress
and attainment, they in themselves do not
determine success.
• Performance measurement only provide reference
points for further action.
• Performance measurements are not a substitute
for managing people in such a way that they give
their best and more.
• Problems and System Issues
• • During the implementation there will be many issues
which are raised and which will require resolution. The
danger is that some of these issues, having been identified
are forgotten, only to surface at a later date, perhaps after
the system is live. Thus, it is desirable that there is an
agreed procedure for recording issues and their resolution.
• • The technical issues include the installation and
commissioning of both hardware and software.
• Some of the technical issues are:
• 1. How does the system perform when the ERP application
is under heavy use?
• 2. How quickly will storage space be consumed when the
system is live?
• 3. What is the back-up procedure?
• 4. Does the system lock and if so how is it
unlocked?
• 5. Do the locations of PCs and printers require to be
changed?
• 6. How are passwords managed?
• 7. What user menus need to be generated and how
will this be handled?
• 8. What is the disaster recovery procedure?
• The technical issues should detected earlier and
should be resolved as a small problem like lack of pre-
printed stationary can prevent the system from
operating smoothly.
• ERP Implementation Methodologies by Vendors and
Consultants
• • A methodology is a roadmap to an implementation. The
purpose of a methodology is to deliver an implementation
on time, according to specifications and within budget.
• • Most vendors, especially in the software industry, have
developed their own methodologies. Consulting
companies also developed their own methodologies in
relation to a product.
• • Some of the ERP implementation methodologies by
vendors and consultants are:
• 1. Accelerated SAP (ASAP) from SAP
• 2. The Total Solution from Ernst & Young LLP
• 3. Fast Track Workplan from Deloitte & Touché
• Methodologies are expensive and even though
methodologies are customized, they are still
roadmaps.
• An experienced project manager must manage the
projects so that he can use the methodology to
implement the ERP system in the best possible way
and in the best interests of the organization.
• ERP Implementation—Hidden costs
• Although different companies find different hurdles
and traps in the budgeting process, those who have
implemented ERP packages agree that some costs
are more commonly overlooked or underestimated
than others.
• The hidden costs of ERP implementation are:
• 1. Training
• 2. Customization
• 3. Integration and testing
• 4. Data conversion
• 5. Data analysis
• 6. Consultants
• 7. Brain drain (employee turnover)
• 8. Continuing maintenance
To avoid getting blindsided by unexpected expenses,
veterans recommend assembling cross-functional
teams to identify the costs up-front.
 ERP Deployment Methods
What is ERP Deployment?
• ERP or enterprise resource planning deployment is
the process of ensuring that the ERP system is
operationally acceptable. As part of ERP system
deployment, on-site installation, check out,
integration, and testing must be carried out to
ensure that the system is fit to be deployed into
the field and/or put into an operational context.
• It includes all of the steps, processes, and activities
that are required to make an ERP system or
update available to its intended user.
• Today, there are different ERP deployments with
different ways to be implemented for the user. Each
deployment requires different skills and works for
different purposes. Therefore companies must
carefully consider the right type of ERP deployment.
• Such considerations for the deployment and use
must be thoroughly planned and analyzed by all
parties that are included during the project.
• Also, it is important to know that, not every ERP
vendor provides all types of ERP deployments.
Some might be specifically focusing only on one
type of deployment.
• Why is ERP Deployment Important?
• ERP deployment is one of the most important
aspects of any ERP project.
• Each type of ERP deployment has its pros and cons
and you should carefully evaluate which one fits
your needs and budget the most.
• However, it is always best to discuss your needs,
requirements, and budget with your ERP vendors
as they can suggest a more suitable option for you
depending on your feedback.
• Because you might think that a certain type of ERP
deployment might seem like the best fit, ERP
vendors might suggest you a different one based
on industry knowledge and experiences and your
 3 Types of ERP Deployment
1. Cloud ERP
2. On-Premises ERP
3. Hybrid ERP
• Cloud ERP or also called SaaS ERP is hosted and managed in
an offsite server typically managed by your ERP vendor or
hosting vendor if you rent the server. With Cloud ERP
deployment, most heavy IT work is done for you, such as
upgrading the system, keeping the system alive, and disaster
recovery.
• ERP systems in the cloud help companies to shift their focus
towards their business rather than IT administration because
everything is done for you. The automatic upgrades ensure
you are always running on the latest version of the system
having access to the latest technology.
• Thus, this can give you an edge against your competitors
as having access to new technology means better business
outcomes and outpacing your competitors.
Some benefits of having a cloud ERP system.
• Data security is in the hands of the vendor. This means
ERP vendors like Microsoft provides enterprise-level
security for each of their cloud ERP system.
• Offer great stability and continuous updates from the
vendor because of less customization.
• Organizations can work with vendors to see what changes
can be made.
• Typically, less time to implement and a faster time to go
live with the system.
• Predictable costs over time that can be changed based on
your requirements.
• Some of the disadvantages of having an ERP system
in the cloud:
• May end up spending more money throughout the
system life cycle.
• Data security is in the hands of the vendor. Some
organizations may not find it suitable.
• Less customizable in general because of the
continuous upgrades
• If you are having customization, you might need to
continuously update those as new system update
might break those customizations.
On-Premises ERP

• The second type of ERP deployment is on-premises ERP.

• An On-premises ERP system is a solution that is controlled and

managed by your own IT infrastructure. This generally gives your
company more room to customize your solution as per your needs.
This is especially important to companies in specialized industries like
certain types of manufacturing to manage their unique processes.

• Many organizations find ERP solutions on-premises more suitable as

on-premise ERPs put more control in the hands of the organization,
up to and including the security of its data.

• However, this can limit access to the server, and technologies like
mobile ERP can pose an issue for on-premises deployments. These
often require a third-party client to communicate between a mobile
device and the on-premises software.
Some of the Pros of having an On-premises ERP system:
• Reduce the initial price of the system
• Data security is in the hands of the organization
• Greater ability to customize
• The organization has more control over the
implementation process.
Some of the Cons of having an On-premises ERP system:
• Upfront investment can be seen as riskier
• Data security is in the hands of the organization. Due
to high governance and security protocol, some
organizations may not have the resources
• The implementation process can take significantly
longer
• Hybrid ERP
• Hybrid ERP is a combination of both Cloud and On-Premises
ERP systems. Many organizations especially large companies
use on-premises ERP that at some point will require further
investment to keep up with current requirements and
growing business.

• Therefore, companies integrate cloud ERP solutions to further

extend their ERP capabilities like eCommerce, CRM,
collaboration tools, and others.

• This bi-modal strategy also presents the least amount of risk

because the known core, on-premise ERP can be trusted to
work reliably while the cloud can be used to add specific,
limited functionality one project at a time to avoid major
problems, delays, and unacceptable additional cost.
 TRAINING PHASES
• The training strategy should include two phases
of training—one before implementation and the
other during and after implementation.
• The implementation of the project commences
with the training of the project team so that
they are able to carry out their tasks.
• During the implementation and after the
implementation the end-users are trained on
ERP basics, process changes and how to use the
ERP system.
Pre-implementation Training
• Implementation of the first phase of the training
strategy is the training activity ,that relates to the
training of the project team and the system
administrators.
• The focus of the training for the project team will be
upon understanding the functionality of the
software.
• Training on best practices, process mapping, training
skills and documentation may be provided by the
vendor, but this will vary from vendor to vendor.
• The training of the system administrators will focus
upon technical aspects of system installation,
maintenance, report writing and any other
 Content
• The first true exposure to the software comes
when it becomes necessary to make the
functionality do what is required of it.
• There are various levels of knowledge and skills
required by the project team in order for them
to develop business processes that utilize the
software.
• Each member requires knowledge about how
to navigate around the system and the detail of
the functionality of concern.
• The vendor's consultants should be the experts
on how the software functions
• It must be expected that these consultants will sit
with team members, going though the screens
and fields for the processes of interest.
• This training mode tends to be hands-on. This is
an ideal opportunity for the team members to
learn.
• In time, each person should build-up a good
understanding about specific parts of the
application. Their aim is to be able to experiment
with different ways of using the software and to
transfer this knowledge to others.
• These key users are responsible for ensuring that
they learn as much as they can about the
functionality.
Planning
• Despite the informal nature of some of this training, it can
all be planned. Dates can be established and people and
locations organized. The emphasis of this phase is upon
organizing and planning the training.
• External trainers carry out this delivery. The training is likely
to comprise a mixture of formal workshops in a group
environment and informal individual sessions. Most of the
training will take place at the client's site in the project
team room and will be delivered by the vendor.
• More than one person should develop the necessary skills
in each area as this reduces dependency upon that one
person and prevents delays arising because of that person's
other commitments.
• When completed, this training plan will become part of the
project implementation plan and be monitored accordingly.
 User Training (During and After
Implementation)
• The end-users and managers are trained
during implementation and after the
implementation.
• The aim is to disseminate throughout the
organization the project team's knowledge
and skills relating to the application and the
new processes.
• The expected outcome is the trainees being
able to use the system.
 Content
• For this phase, a program can be developed which
covers all the areas required. It can be organized
into different themes to reflect different topics and
audiences.
• A general overview will appeal to everyone, the
specialist areas will only be relevant to a limited
number of people.
• Some areas that will be relevant to everyone are
ERP basics, business process, changed business
procedures, automation of tasks by ERP, and
fundamentals of computer usage like passwords,
encryption, security, etc.
• Two audiences can be distinguished—end-users and managers.
• While the former will be interested in how to use the system,
the managers will be more interested in how to get
information from the system.
• The users can be further differentiated into casual users,
normal users and reflective users.
• The interest of casual users is limited to being able to perform
certain tasks when required of them.
• Normal users are regular users of a specific suite of functions.
Their main interest is using the system to do their job.
• Reflective users will want a deeper understanding of how the
system works so that they can solve problems and make
improvements. Thus, it may be appropriate to distinguish two
levels of training: that essential to carry out tasks and a more
detailed session on the finer points of the system.
• The timing of the training should be such that there is
not a long gap between receiving training and using
the application.
• A refresher course may need to be considered as a
contingency. The cost of the training should be
monitored against budget.
Planning
• At the detailed level of each individual session, its
preparation will be strengthened by its plan.
• The training plan should include the training
objectives, trainer, trainer qualifications, audience,
level and computer literacy of the audience, time,
location, facilities required, content and content
structure, method, resources/ materials and cost.
Training, Assessment and Review
• The training is complemented by an assessment
to ensure that it has been successful and the
knowledge assimilation is satisfactory.
• During the training, the trainer will be confronted
by a mixture of attitudes and expectations.
• Thus, the trainers need to be aware that they
may not be well received and be able to respond
accordingly.
• This highlights the importance of the trainers
being trained in the training process.
• After each session has been completed, it should be
reviewed in order to reflect upon the problems and
assess what worked and what could have been done
better.
• The issues raised may be concerned with the material
being presented and highlight the need for its revision.
• Sometimes, it may highlight issues with people and the
need to establish a strategy for handling them.
• Each situation will be different, but each will contribute
to an accumulating wealth of experience, which when
continuously fed into subsequent training sessions,
should make these sessions more successful learning
experiences for the trainees.
 TRAINING STRATEGY
• A training strategy can be developed defining the training policy
and outlining the training program.
• The strategy will provide an overview of the training objectives,
identifying the people involved, the different streams and the
content of each stream, organized into courses and sessions.
• A plan will provide an overview of where, when and how the
training will be delivered. Learners knowledge and skills are
assessed. Effectiveness of training is assessed. Finally, the
projected cost will be calculated.
• These costs can then be used to set a budget. The resultant
strategy provides a framework within which to go about the
training activity.
• If the company accepts the strategy, it can be implemented. If
the strategy is not accepted then it needs to be reviewed. The
right balance needs to be struck between getting the training
right and the training being cost-effective.
• The training strategy has two objectives—the transfer of
knowledge from the vendor's personnel and external
consultants to the organization's key personnel and the
dissemination of this knowledge throughout the
organization
• The members of the project team need to develop such
knowledge and skills that will enable them to establish how
to best use the functionality for the operation and
maintenance phase.
• Since the members of the project team will become the
trainers of other employees, they need to develop the skill
to be able to formulate and deliver a training course.
• The users need to have the skill for using the functionality
relevant to their roles. They should understand the basic
concepts of ERP and also how to perform the day-to-day
activities in the ERP system.
Others who require training include managers, who
should have at least an appreciation of what the system
does. Ideally, the project manager should have a good
understanding of all aspects of the system so that he can be
effective in dealing with any issues raised.
A select number of people will require more specific
technical training so that they can design databases, write
scripts, manage users, generate reports and query the
database for specific ad hoc requirements.
The system administrators need to be able to setup the
system and then maintain it. They will require knowledge
about how to handle system security and deal with
technical problems. They will need to develop a level of
understanding of the functionality so that, at some stage
after implementation when the project team is disbanded,
they are able to manage the system smoothly
 Data Migration
• Data migration is the process of translating data from one
format to another. Data migration is necessary when an
organization decides to use a new computing system or
database management system that is incompatible with
the current system.
• When implementing a new ERP system you need to start
data migration from the existing legacy business systems
as soon as possible.
• A real configuration of an ERP system can only happen
when there is real data in the system. Data loading and
data conversion is not a-project that can be done after
everything else is ready.
• Extracting and cleansing the data from the existing system
can be the single largest task in the project.
• In early days, data had to be manually entered. This was
a time-consuming, expensive and error-prone process.
• But today's data migration tools are designed to make
this process as easy and simple as possible. The wizards
in data migration tools make tasks like loading the data
from the existing system, reviewing it for quality,
accuracy and completeness and then importing the
data directly into ERP database very easy.
• Good data migration tools provide complete data
understanding prior to conversion and migration. This
ensures that the integrated data has the highest
possible level of integrity and reliability.
• This reduces project risks and lets the organization
create and complete consistent and accurate
information from raw, chaotic source data.
 DATA MIGRATION PROCESS

• Data migration encompasses all the necessary steps to

cleanse, correct and move data into the new system.
• Technological changes, change in providers, software
updates or data warehousing/ data mining projects make
such delicate and critical operations necessary.
A good data migration solution allows one to:
• Reduce risk
• Lower operational expenses
• Improve data quality
From a user perspective, the data migration solutions
should make sure that a strategy is put in place to achieve
maximum flexibility and quality. This entails taking a number of
measures and actions, including:
• Iteration—Data is iteratively identified and cleansed. The aim
should be to give the users one or more 'iterative'
opportunities to identify corrupt data and then rectify it either
using the existing application functionality, or automatically
cleanse the data within the data mi­gration functionality. The
different iterations of the data cleansing process would take
place several weeks before the live data migration run
• Weeding—Data weeding within the data migration
mechanism allows for better identifying candidates and non-
candidates to migration
• Inspection—Users should be able to inspect data that has
been archived, which is particu­larly important where users no
longer have access to their source application and data follow­
ing migration
• A generic data migration mechanism can be used across the
majority of application mi­grations exists.
 MIGRATION METHODS
• Two primary methods arc used for migrating
data from the legacy systems to the new ERP
database—manual and electronic.
• In the electronic method, some type of
database conversion process is used.
• The manual approach does not seek to use an
electronic method, but instead involves
human intervention. The manual approach
will use a non-technical human resource to
examine the data on the legacy system and
decide how to enter the information into the
ERP system.
• Data can either be manually typed or
electronically transferred. The former is
obviously slower being labor-intensive and
more costly. Although the data can be checked
for errors prior to entry, there is no guarantee
that the manual input is error-free. Electronic
transfer is in principle faster and cleaner,
particularly for large amounts of data.
However, there are various considerations.
• First is the assumption that, the data can be
produced on the old system in a format that is
accessible.
• Second, having accessed the data, additional
data may be required before it can be
accepted by the new system.
• Factors that determine whether to use one
approach or other include
• Availability of Technical and human resources
• Quality of legacy data
• Nature of OS and platforms
• Database size, Time constraints, ,Budgets
• Electronic Method
In this method we start with raw data in a legacy
system. Using data migration tools and programs
create a migration strategy to export data to the new
ERP system
• Manual Method
In the manual approach, the implementation team
members and data entry personnel do the data
migration. Here also we start with the legacy system
and manually data is entered into the new ERP system
In many cases a manual editing and cleanup process
must take place after an electronic migration. Data
migration whether electronic or manual usually begin
in the early to mid phases of the ERP implementation.
Vendors, Consultants and Users
• Developing an ERP package is a very complex and time-consuming
process, which needs a lot of skilled manpower and other resources.
• Many companies have personnel in their IT departments who can
absorb the necessary knowledge and who have experience in
developing sophisticated systems.
• The problem is that such specialized computer work is not the main
business of these companies. They should be directing all their available
resources into improving their own products or services so that they
can remain competitive, serve their customers better and continue to
grow.
• Since designing and implementing integrated software packages is not
the business of most companies, or a focus of their executives, the
systems that their in-house team come up with will never equal in
quality, scope, functionality or technology those systems created by
software firms whose business this is.
• These software firms (ERP vendors) can produce sophisticated packages
and provide their clients with products that allow them to maintain a
focus on their own chief activities, thus improving revenues, profits and
In-house Implementation – Pros and Cons
• The probable question that many people ask is: why cannot the
company carry out the ERP implementation by itself?
• To successfully set up and implement as ERP package, which
functions perfectly, is not an easy task.
• One cannot go in for a trial-and-error method of implementation
strategy due to the huge amount of investments involved. The
consequences of a failed ERP implementation can be quite
catastrophic. It might put the organization out of business.
• The ERP implementation process cannot go on for a long time. It
has to be completed within a reasonable time.
• To carry out the implementation within a reasonable timeframe
successfully, the in-house people who are designated to do the job
should possess a certain amount of knowledge and skill.
• To start with, the company should have people who are familiar
with the ERP package and with the technical issues.
• Implementing the ERP software means, assigning the
optimum values to the various parameters and the
variable elements of the system. Experience has proven
that a good professional needs at least one year to
become reasonably good in an ERP system and that this
one year should be hands-on practical experience.
• It is not possible to become an expert by reading product
brochures and on-line help files.
• We have to have practical implementation experience.
Many software vendors have their own team of
consultants, whose responsibility is to ensure that their
software package, follow a standard approach or
methodology.
• Definitely, these people know the product and can be of
great value during implementation. However, developing
a good software package and successfully implementing it
• A good package vendor need not be good at implementing
its own product. Also each group of people in an
implementation project (vendors, consult-ants, in-house
team, users and so on) have definite roles to play in the
implementation. If the same party is performing multiple
roles, it can create problems when a conflict arises.
• Besides having a very good knowledge of the product, the
people who are to implement the ERP system should
possess the following skills:
• Knowledge of how to organise and run a project of this
magnitude .
• This calls for good organisational skills, project
management skills, team management skills and
knowledge of scientific methods of software project
management
• Vendors
• Vendors are the people who have developed the ERP
packages.
• They are the people who have invested huge amounts of time
and effort in research and development to create the
packaged solutions.
• Now with the ERP market place becoming crowded with more
and more players entering the market and the competition
becoming hot, today’s ERP packages have features and
functionality to cater to the needs of businesses in almost all
sectors. Enterprise Resource Planning Systems. The ERP
vendors spent billions of rupees in research to come up with
innovations that make the packages more efficient, flexible,
and easy to implement and use.
• Also with the evolution of new technologies, the vendors have
to upgrade their product to be able to use the best constantly
and latest advancements in technology.
• Role of the Vendor
• Vendors will perform following role:
• Supply of product
• Primarily the vendor should supply the product and its
documentation as soon as the contract is signed. Only after the
software is delivered, can the company develop the training and
testing environment for the implementation team.
• Solve problems
• The vendor is responsible for fixing any problems in the
software that the implementation team encounters. Therefore,
the vendor should have a liaison officer who should constantly
interact with the implementation team
• Training Another role the vendor has to play is that of the
trainer to provide the initial training for the company’s key
users, people who will play lead roles in the implementation of
the system. These key users are the ones who will define,
together with the consultants, how the software is to serve the
company.
• In other words, these in-house functional experts will decide
how the functionalities are to be implemented as well as how
to use or adapt the product to suit the company’s unique
requirements.
• Therefore, it is very critical that these key users are given a
thorough training on the features of the package. Vendor’s
training should achieve the goal of showing the key users how
the package works, what are the major components, how the
data and information flows across the system, what is flexible,
and what is not, what can be configured and what cannot,
what can be customised, and what should not, what are the
limitations, and what are the strengths and weaknesses, etc.
• The objective of the vendor training is to show how the
system works, not to show how it should be implemented.
• This means that the vendor demonstrates the product as it
exists and highlights what are the possible options available .
• The company’s employees who are participating in the vendor training
should try to understand the characteristics of the package and the impact
of the system on their business processes.
• The trainees should use these training sessions to question the vendor on
all aspects of the system.
• The consultants also have a role to play during this vendor training. They
should participate in the training sessions to evaluate how the users react
to the reality that is starting to take shape from the detailed presentations
and demos.
• Consultants should also ask questions that the vendors are trying to avoid
and the users are unaware about. This is the best way to present the real
picture to the users and it will prevent the vendors from making false
claims.
• Quality control
• The role of the package vendor does not end with the training. The vendor
also plays an important project support function and must exercise the
quality control with respect to how the product is implemented.
• It is the vendor who understands the finer details and subtleties of the
product and can make valuable suggestions and improvements that could
improve the performance of the system
• Consultants
• Business consultants are professionals who specialise in developing techniques
and methodologies for dealing with the implementation and with the various
problems that will crop up during the implementation. They are experts in the
administration, management and control of these types of projects. Each of
them will have many person-years of implementation experience with various
industries and would have time-tested methodologies and business practices
that will ensure successful implementation.
• They will be good at all phases of the implementation lifecycle, right from
package evaluation to end-user training.
• The only problem with them is that they are very expensive.
• Many of the big consulting firms, having forecasted the ERP boom, invested a
great deal of money in developing a range of consulting services in this field and
assigned many of their professionals to become specialists in the various aspects
of ERP packages and their implementation.
• These firms researched the various products and developed an in-depth
understanding of each product’s strengths and weaknesses, worked by the side
of the ERP vendors, confirmed that the vendor’s package worked and learned
the tricks and techniques of the trade, found out the pitfalls and mistakes that
should be avoided and thus created a pool of experts who could handle the ERP
• Thus, consultants are people who have made the business of ERP
implementation their business and have invested huge amount, of money
and manpower for that purpose.
• The consultants will be expensive, so the company will have to formulate a
plan regarding best optimum utilisation of the money spent on consultants.
• If we study the statistics, we can see that a well-selected, integrated system
that was successfully implemented and which is successfully working usually
pays for itself in a relatively short period between 10 and 30 months.
• If we analyze the cost break-up, we will find that the most expensive part of
the implementation was the consultation charges.
• For a typical ERP implementation, the cost of consultants is 1.5 to 3 times for
every rupee invested in the software product.
• But the fact is that the product has to be the right one and the
implementation has to be successful. That is why the expertise of the
consultants becomes invaluable and the money spent on good consultation is
never wasted. So finding the right consultants people who have the
necessary know-how, who will work well with the company personnel,
people who will transfer their knowledge to the company’s employees and
people who are available in case their ser vices are required again-is very
important.
• Role of Consultants
• The consultants should • guarantee the success of the project and
should be able to show the results quantifiable results like reduction in
cycle time, increased response time, improved productivity and so on)
to the satisfaction of the company management.
• Consultants are responsible for administering each of the phases of the
implementation, so that the required activities occur at the scheduled
time and at the desired level of quality and with effective participation
of all those who must participate.
• For keeping the promises that the consultants have made during the
negotiations, they have to transform their approaches and
methodologies into detailed work plans. The methodology will have to be
converted into tasks and should be allocated to the right people.
• Consultants should also know how to remain impartial while questioning
current company processes in an effort to promote better businesses
practices and better implementation results. They should strive to
improve the company’s business processes so that the software package
can be used as it was originally intended by its developers.
• Refining the company’s processes can only optimise the performance of
the system and maximise future user satisfaction.
• The consultants are also responsible for analyzing and clearly addressing
the customization issues. They must be able to distinguish between the
‘must have’ and ‘nice to have’ items and decide on the level of
customization.
• It is the duty of the consultants to present the advantages and drawbacks of
each area and reach a consensus decision, which should also be the right
one.
• Consultants need to position themselves in such a way as to balance their
loyalty to the client and the project, with that of defending the package
vendor, when such defense is technically correct.
• It is the duty of the consultant to understand the total context and scope of
the envisioned work and to know when to alert the company management
about actions and decisions that must be undertaken so that the job will
not be compromised and the implementation will not be jeopardized.
• Maintaining technical documentation on the project also falls within the
duty of the consultant. The consultants will leave once the project is
complete, but the knowledge of the project must stay within the
organization.
• Therefore, the consultants should create a knowledge base and should train
enough people so that the work they have started is continued.
End-Users
• These are the people, who will be using the ERP system once it is
in place. These are the people, who were doing the functions that
are being automated or computerised by the ERP system.
• With the implementation of the ERP system, the old job
descriptions will change, the nature of the job will undergo drastic
transformation.
• It is human nature to resist change. When we are talking about
implementing an ERP system, we are talking about change in a
very massive scale.
• Employees will fear that system will replace existing jobs, as many
functions will be automated and people will be afraid of the
amount of training they have to undergo and learning they have to
do to use the new system.
• Job profiles will change, job responsibilities will undergo drastic
alterations, and people will be forced to develop new skill sets. If
these fears are not addressed and alleviated well in advance, it will
cause trouble for the organisation.
• It should be worth noting the fact, that while the ERP systems
eliminate many existing jobs, it creates many new ones with
more responsibilities and value addition.
• It is easy to see that the automation of the business processes,
through technology, can eliminate the jobs of many
employees whose function it is to record, control, calculate,
analyze, file or prepare reports. But it must be pointed out to
the employees that the same automation creates many more
opportunities for them, because they can get away from the
monotonous clerical work and transform themselves into
highly valued individuals, in a new and challenging working
environment using modern technology.
• If the company can succeed in making its employees accept
this fact and assist in making the transformation (by giving
them training), then the major (and most critical) obstacle in
the path of an ERP implementation is solved.
MODULE 4
 Success & Failure Factors of an ERP Implementation

• Implementation of an ERP system is a major

investment and commitment for any organizations.
• The size and complexity of ERP projects are the
major factors that impact the cost of ERP
implementations.
• Different companies may implement the same ERP
software in totally different approaches and the
same company may integrate different ERP software
applications by following the same procedures.
• However, there are factors common to the success
or failure of ERP implementation regardless of the
ERP systems they implement and the
• SUCCESS FACTORS
– Project Planning
– Align the organization on the true destination
– Architectural Design
– Transition project roles to a way of life
– Data Requirements
– Apply planning and program management
practices throughout the program life cycle
– Achieve balanced people, process and
technology changes across all areas
– ERP must be driven by a business case
– Active executive direction
• Focus on capabilities and benefits, not just
going.
• Make ERP-related decisions quickly
• Put the very best people on the
implementation Team
• Phased approach
• Data conversion
• Organization commitments
• Create a partnership between your software
vendor (and implementation partners) and
your stakeholders
• Sell, sell, and continue to sell the ERP to your
• Build and leverage process expertise
• Adequately resource your project (especially in the
functional areas)
• Define metrics and manage them
• Communicate and manage expectations at go-live
• Extend capabilities beyond the ERP foundation
• Ensure the project has sufficient budget
• Encourage functional ownership of the Project
• Develop dependency-driven project schedules that
can be tracked and managed to provide early
warnings and help avoid crisis.
• Implement pre-project readiness assessment and
overall project planning
• Implement aggressive project management
processes—
• Create a project organization structure to
provide planning and quick response for
decision-making and issues management
• Make the best use of the external consultants
and experts
• Teach the organization to use new capabilities
• Implementation review.
• Assign clear ownership of benefits
FAILURE FACTORS
1. ERP implementation is, at its core, a people project
2. Employee resistance
3. Lack of top management commitment.
4. Inadequate training and education
5. Inadequate requirements definition
6. Inadequate resources
7. A poor fit between the software and users procedures
8. Unrealistic expectations of the benefits and the ROI
9. Poor ERP package selection
10. Extensive customization
11. Change management
12. Failure of accommodating evolution of business processes
13. User acceptance
14. Going live is not the end of the ERP journey
15. Companies should anticipate a temporary dip in performance
after going live