Summary Session 9-10

Implementation Strategies (Session 9-10)

Preview

In any ERP implementation strategies, we need to identify and plan all the implementation components

ERP Components

-       Hardware

An ERP system will require a powerful set of servers for development, testing, and production environment.

Key Resources

·         Servers: High-end multiprocessor systems, several gigabytes of main memory and several terabytes of secondary storage

·         Clients: People who use ERP systems (ex: end-users, IT support staff)

·         Peripherals: Such as print servers, printers, back-up power supply equipment, and networking hardware

-       Software

A set of operating instructions and logic called programs that control and direct the computer hardware to perform its functions.

Key Components

·         System Software: Operating system platform (ex: Microsoft Windows Server, Linux)

·         Database Management System (DBMS): Such as Oracle, Microsoft SQL

·         Application Software: Such as project management software, development software, remote access software

-       People Resources

·         End-users: Such as employees, clients, vendors, and others who will potentially use the system

·         IT specialist: Such as database administrators, IT operations support, developers, change management, trainers, and others in IT

·         The project manager: Puts together a harmonious team, works with top management in getting support and resource, and deliver the system and its benefit to the end-user

Virtualization

Virtual Machine (VM) server: technique to run multiple and isolated virtual servers on a single physical device, thus optimizing hardware usage. Two common models used for mission critical application are hardware virtualization and paravirtualization.

ERP Vendors and Virtualization

-          Microsoft: The two virtualization choices available are Microsoft virtual server and Microsoft virtual PC

-          Oracle: Same like Microsoft, Oracle VM uses paravirtualization architecture based on the Xen open-source technology that brings with it both Linux and Windows support

-          SAP: Providing tools, code tweaks, and support needed to ensure their SAP virtualization projects go smoothly

Benefits of virtualization

-          Enhanced hardware utilization allowing an organization to consolidate underutilized servers

-          Makes provisioning and deploying more agile

-          Through consolidation, virtualization can lower total cost of operations at the data center by the following:

·         Deferred purchase of new servers

·         Smaller data center footpring

·         Lower maintenance costs

·         Lower power, ventilation, cooling, rack, and cabling requirements

·         Lower disaster recovery costs

·         Reduced server deployment costs

-          Enhances business continuity and availability

Drawbacks of virtualization

-          Tendency to squeeze more performance out of a physical server by creating too many virtual machines leading to significant concerns when the server is operating at peak loads

-          Security problem: If a hacker compromises the security of the hypervisor, he or she might get access to all VM running on the host server

Third Party Products

Add-on software components either make system operate or add missing functionality

-          Integration with ERP

-          Strategic partners: Assist in addressing integration and interface issues with third party products

-          Middleware: Assist with the development of reporting databases that use extract translate and load tools

-          Support: Third party products support

Database Requirement

For an ERP system to perform up to expectations, the update or transactional component and the reporting component must respond in a timely fashion. Large ERP system implementations require robust relational database system (such as Oracle, DB2, Sybase, Microsoft SQL).

Selecting a relational database:

-          Availability of software applications

-          Availability of skilled, trained technical staff

-          Overall functionality of the database itself

Staffing and database administration: including the use of full time staff and consultants

ERP Approaches – Governance

Governance should outline and define committees and workgroups that are responsible for the different components of the implementation, their interaction and decision making.

Components:

-          Technical development

-          Hardware and software installation

-          Functional components

-          Communications and reporting

-          Change management

-          Project management

-          Project owners and sponsors

-          Budget management

-          Issue escalation process

Roles and Responsibilities

-          Owners (consisting of Senior Management): Determine overall policy, budget, and scope of the project

-          Project Executive: Oversees project activities, provides broad project oversight, resolves policy level issues, and ensures that the project stays within scope

-          Steering Committee: Oversee the project’s efforts and ensure appropriate leadership

-          Application Steward: Works with the other business owners to develop an overall business direction of the system, developing consensus, and resolving functional issues raised to the steering committee

-          Chairperson: Oversee the activities of the steering committee, ensuring that the committee functions in accordance with the overall project oversight. This includes budget, resources, deliverables, risk, and expectations management

-          Project Management Office (consist of the project executive, business and technical project manager, and the implementation partner.): Manage the day-to-day aspects of the project

-          Project Teams: Provide direction and ERP application knowledge with respect to business process design, configuration, conversion, testing, training, reporting, and implementation.

The following teams will exist:

·         Cross-functional component team

·         Functional component teams

·         Technical Infrastructure team

·         Development team

·         Change management team

·         Conversion team

·         Reporting team

-         Project Team Leads: Provide leadership and overall direction for the implementation, ensuring the quality of deliverables and adherence to the project plan and milestones. In addition, inform the project managers of any and all issues that are identified by their respective project team

-         Cross Functional Team: The integration team will consist of the module or project team leads from the business modules and the development leads. This group will meet as needed to discuss and resolve cross-module issues

Sample Set of Meetings

-         Project Sponsors Meeting

-         Steering Committee Meeting

-          Project Management Office Meeting

-         Module or Project Leads Meeting

-         Module or Project Team Status Meeting

-         Issues Meeting

-         Cross-Functional Module Meeting

-         Database Planning Meeting

Implementation Methodology

When a system implementation does not have a well-defined methodology, deadlines will likely be missed, budgets overspent, and the functionality may not meet the client’s requirements. ERP system implementations are very risky, but a well-defined project methodology will assist in managing those risks. The selected methodology should be able to address all components for the entire project including project start-up through system stabilization

Implementation Strategy

1.      Vanilla Implementation

When a company chooses not to modify or customize the system, but instead to change business practices to fit the system.

Reason to consider vanilla implementation.

-          Businesses with relatively straightforward business practices that are not unique

-          Businesses that are not skilled or experienced at building or changing systems

-          For a company using a purchased ERP system where the financial component is critical for reporting

-          All of a company’s branches are running the same system in a single instance, and entering and retrieving data in a similar fashion

-          For a competitive advantage, it is important to know the ability of what and where things are around the world with the business.

2       Modifying an ERP

Businesses that have highly skilled IT developers and a proven process for managing modifications can choose to change the system to match their processes.

Benefits:

-          A single-system instance is easier to maintain and support.

-          Assessing organizational change along with modifying the system to meet the needs of the business will help to minimize risk.

Drawbacks:

-          If a system is modified, each modification will need to be analyzed in light of the upgrade to see if it needs to be incorporated in the upgrade or removed.

-          An upgrade can sometimes turn into a re-implementation, which requires more resources and time.

Platform Issues

-          Servers: As an infrastructure, it will need to grow as the system grows and expands with enough storage to ensure data is quickly retrievable

-          Network: Businesses need a reliable and secure network

-          Security: Several components must be installed and implemented to ensure that the system is secure from unauthorized access

-          Disaster Recovery and Business Continuity: Planning for a disaster and providing business continuity

Implications for Management

Successfully implemented ERP system, may create opportunities for a business to grow and change for the better. Decisions around the hardware, software, governance, methodology, and level of modifications need to be based on the goals set out for the purchase of the ERP system.

Two initial management decisions

-          Use of an implementation methodology

-          Whether or not to modify the system

Management must decide on whether or not to customize prior to the start of the implementation process and it must be communicated to all on the project.

Summary Session 7-8

Development Lifecycle (Session 7-8)

·         SDLC includes a systematic process of planning, designing, and creating an information system for organizations.

Rapid SDLC approach

a.       Prototyping

·         It implements a skeleton or a prototype of the actual system with a focus on data input and output.

·         The idea is to demonstrate the system functionality to the users.

·         This approach has proven to be very effective with user interactive systems because the prototype is eventually converted into a full-scale system.

b.      End User Development (EUD)

·         Users are trained to develop their own applications (e.g., a departmental employee tracking system with an Access database).

Differences between ERP and Other Software

a.      ERP

·         Millions of dollars

·         Mission critical

·         One to several years

·         Requires significant change management strategy from beginning to end for success, business process change, training, communication, etc.

·         Requires in-house employee time, consultants and vendor support in million of dollars

c.       Other packaged software

·         Hundreds to Thousands

·         Support or productivity improvement

·         Almost instantly

·         Requires some training and support

·         Requires little or no consulting support or vendor technical support

ERP Implementation Plan

•         Comprehensive

–        Involves implementation of the full functionality of the ERP software in addition to industry-specific modules.

•         Middle of the road

–        Involves some changes in the core ERP modules and a significant amount of business process re-engineering.

•         Vanilla

–        Utilizes core ERP functionality and exploits the best practice business processes built into the software.

Traditional ERP Life Cycle

·         Scope and Commitment Stage

–        In addition to conducting the feasibility study, a scope of the ERP implementation is developed within the resource and time requirement

–        Develop a long-term vision for the new system and a short-term implementation plan and top management’s commitment.

•         Analysis and Design Stage

–        Map the differences between the current business process and the embedded process in the ERP software.

–        Design a change management plan, a list of embedded processes, user interface screens, and customizable reports in the ERP software.

–        Data conversion.

–        System conversion.

–        Training.

•         Acquisition & Development Stage

–        Purchase the license and build the production version of the software to be made available to the end-users.

–        The tasks identified in the gap analysis are executed at this stage.

–        Data team similarly works on migrating data from the old system to the new system.

–        Finally, the ERP system needs to be configured with proper security.

•         Implementation Stage

·         Focus is on installing and releasing the system to the end-users and on monitoring the system release to the end-users.

·         System conversion (4 Phases)

·         Phased. Implementation is conversed phased, part of the system is conversed part per part

·         Pilot.

·         Parallel. Implementation is conversed by operating the old and the new system at the same time, by checking the new system if the new system conversion success then we replace the old system with the new system

·         Direct Cut or big bang. Implementation is conversed directly changing the old system into the new system, this implementation is very risky, if there is a problem it can overwhelm the organization operation.

·         Operation Stage

o   Handover or knowledge transfer is the major activity as support for the new system is migrated to the help desk and support staff.

o   Training of new users to the system as ERP modules are released.

o   Managing the software contract with the ERP vendor.

Role of Change Management

•         System failures often occur when the attention is not paid to change management from the beginning stages.

•         SMEs and other internal users have the role of working with the team and to guide the implementation team on all the activities of change management.

•         Support of the top management as well as skills of the change management team are essential for successful implementation.

Agile Development

•         Agile methodologies start with smaller sets of requirements, they start small and deliver functionality incrementally in a series of releases.

Project Management

•         A clear project plan and reporting structure will better ensure that the project receives the attention and accountability needed to be successful.

•         The project owners, a project steering committee, and project executive must develop the hierarchy and determine responsibilities.

•         The functional, technical, and change management staff for the project will likely consist of existing staff from the business, new hires, and consultants.

Implications for Management

•         It is critical to have solid top management commitment.

•         It is important to have strong and experienced program management.

•         It is a good practice to minimize the type and number of customizations that are implemented.

•          It is critical to emphasize training and change management.

Summary Session 5-6

Enterprise System Architecture (Session 5-6)

·         Once ERP systems are integrated and implemented successfully in a company, they become the cornerstone of the organization because every single transaction will be processed through this system.

·         In addition to the Systems Integration, it is also necessary to focus on:

o   Business process architecture.

o   Business requirements.

o   Budget.

o   Project management.

o   Commitments from top management.

o   Continuous communication with employees informing them about future changes.

Why Study Enterprise System Architecture ?

·         Help management and the implementation teams understand in detail the features and components of the enterprise system

·         Provide a visual representation of the complex system interfaces among the ERP application and databases, operating systems, legacy applications, and networking

·         Management can develop a better IT plan if the requirements for system infrastructure, training, change management, and business process reengineering are clarified.

Components of the Enterprise Systems Architecture

•          Functional

–        Defines the ERP modules that support the various business functions of the organization. Examples include:

•          Accounting

•          Human Resources

•          Procurement

•          Fulfillment

•          System

–        Defines the ERP architecture through the physical components of hardware, software, and networking angle

Enterprise Systems Architecture (ESA) Model

 

Overview of Modules

•          Production

–        Helps in the planning and optimizing of the manufacturing capacity, parts, components, and material resources using historical production data and sales forecasting.

•          Purchasing

–        Streamlines the procurement process of required raw materials and other supplies.

•          Inventory Management

–        Facilitates the processes of maintaining the appropriate level of stock in a warehouse

•          Sales and Marketing

–        Implements functions of order placement, order scheduling, shipping, and invoicing.

•          Finance

–        Can gather financial data from various functional departments and generate valuable financial reports.

•          Human Resource

–        Streamlines the management of human resources and human capitals.

•          Miscellaneous Modules

–        Nontraditional modules such as business intelligence, self-service, project management, and e-commerce.

Benefits of Key ERP Modules

•          Financials

–        Ensure compliance and predictability of business performance.

–        Gain deeper financial insight and control across the enterprise.

–        Automate accounting and financial SCM.

–        Rigorous support for financial reporting—SOX Act.

•          HR Management

–        Attract the right people, develop and leverage talents, align efforts with corporate objectives, and retain top performers.

–        Increase efficiency and help ensure compliance with changing global and local regulations by using standardized and automated workforce processes.

–        Enable creation of project teams based on skills and availability, monitor progress on projects, track time, and analyze results.

–        Manage human capital investments by analyzing business outcomes, workforce trends and demographics, and workforce planning

•          Procurement and Logistics Execution

–        Sustain cost savings for all spending categories by automating such routine tasks as converting requisitions into purchase orders and by allowing employees to use electronic catalogs to order products and services.

–        Reduce costs through process automation, integration of suppliers, and better collaboration.

–        Improve resource utilization with support for cross-docking processes and data collection technologies. (RFID and bar codes).

–        Enhance productivity of incoming and outgoing physical goods movements.

–        Reduce transportation costs through better consolidation and collaboration

•          Product Development and Production

–        Shorten time to market.

–        Deliver higher quality products and ensure timely delivery.

–        Real time visibility and transparency (availability check).

•          Sales and Service

–        Higher number of sales orders processed and reduction in administrative costs.

–        Easy access to accurate, timely customer information.

–        Cost-effective mobile access for field employees.

–        Reduce travel costs by using online functions.

–        Adhere to environmental, health, and safety reporting requirements.

–        Improve the management of incentives and commissions.

–        Realize more effective real estate management.

Three-Tier Architecture

•          Benefits

–        Scalability - Easier to add, change, and remove applications.

–        Reliability - Implementing multiple levels of redundancy.

–        Flexibility - Flexibility in partitioning is very simple.

–        Maintainability - Support and maintenance costs are less on one server.

–        Reusability - Easier to implement reusable components.

–        Security - IT staff has more control system to provide higher security.

A Three-Tier ERP Architecture

Service-Oriented Architectures

•          SOA is a software development model based on a contract between a consumer (client) and a provider (server) that specifies the following:

–        Functional description of the service.

–        Input requirements and output specifications.

–        Precondition environment state before service can be invoked.

–        Post condition environment state after service has been executed.

Error handling when there is a breakdown.

Benefits of Service-Oriented Architectures

•          Business-level software services across heterogeneous platforms.

•          Complete location independence of business logic.

•          Services can exist anywhere (any system, any network).

•          Loose coupling across application services.

•          Granular authentication and authorization support.

•          Dynamic search and connectivity to other services.

•          Enhances reliability of the architecture.

•          Reduces hardware acquisition costs.

Drawbacks of Service-Oriented Architectures

•          SOA implementations are costly and time-consuming.

•          Requires complex security firewalls in place to support communication between services.

•          Performance can be inconsistent.

•          Requires enterprise-level focus for implementation to be successful.

•          Security system needs to be sophisticated.

•          Costs can be high because services needs to be junked very often.

Cloud Architecture

•          Cloud computing is basically a software service provided over the Internet, securely, by a service provider on a monthly or yearly lease.

•          Companies leasing CC services save money by replacing their purchased software that requires a license fee per seat.

•          Some cloud computing providers also let you build your own applications using their engines and then they would host those applications for you as part of the service.

•          The cloud computing platform provides a great alternative for organizations that do not want to:

•          Purchase, install, or maintain software applications.

•          Worry about security, privacy and legal issues associated with data storage.

•          The cloud computing platform is risky for organizations as it forces them to rely on external vendors for reliability, security, and continuity of enterprise applications

Benefits of Cloud Computing

•          Pay for subscription, not for licenses and upgrades.

•          Reduced capital and operating expenditures for IT equipment and support personnel.

•          Accessed from everywhere, as long as you have an Internet connection.

•          No need to install anything on the user’s computer.

•          Dynamic scalability available on demand.

•          No maintenance fees for software or hardware.

•          Promotes green computing environment as servers in cloud run on clean energy.

•          Guaranteed reliability.

Drawbacks of Cloud Computing

•          Data security.

•          Vulnerability.

•          Possible conflict of interest, if the company who stores your applications decides to create a similar application to what you created on their servers.

•          Not suited for all highly competitive industries like biotech where intellectual property cannot be protected easily.