ERP Implementation

Chapter One
Why Study ERP Systems?
Enterprise Resource Planning Systems, D. E. OLeary, 2000
ERP Affects Most Major

Corporations in the World
SAP is used by more than 60% of the major
firms.
Almost every company is more or less in
its hands. Arthur D. Littles Global
Strategy Leader.
ERP Impacts Small and

Medium Enterprises (SME)
In 1995 SAP generated 90% of their
revenues from global companies
In 1997, roughly 35% of SAPs revenues
were from customers with revenues less
than $200 million
ERP Affects Competitor

Behavior
On June 24, 1996, Oracles Application Division
announced that Several companies went live with
their Oracle Applications implementations during
the quarter, including Silicon Graphics, Inc. and
Quantum Corporation, both of whom successfully
deployed large-scale implementations. at the
same time, Oracles Application Division
announced that among the customers added that
quarter included ... Western Digital .... Western
Digital was a direct competitor of Quantum.
ERP Affects Business Partner

Requirements
Adopting an ERP system makes firms more
information agile, able to more easily
meet the information demands made upon
them
As they become more agile they expect
more from their customers, possibly
integrating across the supply chain
ERP Provides A Key

Reengineering Tool
In 1990 Hammers highly influential article on

reengineering, got the corporate world interested in
obliterating existing processes. Unfortunately, after
things were obliterated many firms had no idea what to
replace them with.
ERP provides perhaps the primary tool to guide those
efforts, so much so that Gendron (1996) called ERP
(particularly SAPs) the electronic embodiment of
reengineering and Hammer (1997) commented that
SAP equals forced reengineering.
6
ERP has Diffused Many Best

Practices
ERP systems are based on so-called best practices - the

best ways of doing processes. SAP has over 1,000 of
them! What this means is that any firm that installs has
access to a wide range of best practices. Further, business
practices are being added all of the time. As new best
practices are found and embedded in particular
applications, they can become available for inclusion in
new versions of SAP. As they become available, other
firms install them. As a result, there is this cycle of finding
best practices, building them into the software and
diffusing them out to new users.
7
ERP Facilitated Adoption of

Client Server Computing
In the early 1990s client server computing
was an available technology, that offered
many advantages over existing mainframe
solutions. Unfortunately, there was limited
software available to exploit the advantages.
ERP changed all that becoming one of the
dominant, initial corporate applications of
client server computing.
8
ERP Changed the Nature of the

IS and Accounting Functions
ERP systems are replacing major portions of most
firms software needs. This changes the basic
nature of the information systems function from
one where systems analysts and programmers are
needed, to one where knowledge of existing
software packages is now critical.
Not only have needs changed, but personnel have
become more mobile.
ERP has Changed the Nature of

Jobs in All Functional Areas
or
IT (information technology) professionals in

manufacturing say ERP systems are blurring the lines
between IT and users. There is a huge demand for users
line-of-business personnel who also have professional
level IT skills. But traditional IT types who know only
about technology and nothing about the business are
not needed now as they once were. Understanding the
business is probably the most critical (aspect) Its more
important to understand how you want things to flow
through your factory than [to have] the skill of
programming -- except for the few places where SAP
doesnt do whats needed so you need coders.
10
Cost is High
After cost of ownership is $15 million,
typically at a cost of $53,320 per user,
according to a Meta Study.
ERP costs can run 2-3% of revenues
11
ERP Systems Can Create Value
Integrates Firm Activities

Allows Use of Best Practices
Enables Organizational Standardization
Eliminates Information Asymmetries
Provides On-Line and Real-Time
Information
Facilitates Intra and Inter Organization
Communication and Collaboration
12
ERPs Integrate Firm Activities

As noted by Hammer, Integration is the
defining characteristic of SAP
ERP processes are cross functional, forcing
the firm out of traditional, functional and
locational silos.
Formerly diverse systems are integrated in
ERP systems
13
ERPs Employ Best Practices

ERPs employ processes that are known to
work and that integrate with each other
Those processes can be used to improve the
way that firms do business.
14
ERPs Enable Organizational

Standardization
The same best practices can be employed a
t
multiple locations.
This allows firms to bring those locations with
substandard processes in line with other more
efficient locations.
Now clients can see the corporation the

same way, even if a firm has multiple
locations.
15
ERPs Eliminate Information

Asymmetries
What is an information asymmetry?
Since all information goes into a single
database, accessible to many, means that
many information asymmetries disappear.
If you dont do your job, I can see that
something hasnt been done
16
ERPs Provide On-Line and

Real
Time Information
Since data is widely available and available online and in real time, all have access to the same
information
As a result,
information is available
Anytime!
Anywhere! to
Anyone!
which can facilitate more consistent planning.
17
ERPs Facilitate Inter/Intra Organization

Communication and Collaboration
Increasingly firms are opening up their
databases to facilitate procurement and
other functions, thus ERP facilitates
collaboration
Since the ERP has all the transaction
processing information in it, communicatio
n
is facilitated.
18
Chapter 2
Systems and Technology
Background
What Technologies Are Of
19
Direct Interest?

Networks
Relational Databases
Software
Reengineering
Systems Analysis
20

SAPs client server system has its root in its
mainframe system
SAP was one of the first client server
packages generally available
Nature of client differentiates some ERP
systems
E.g., Oracle is thin client oriented
Client/Server Configuration
21
Distributed
Presentation
(Thin Client)
Remote
Presentation
Distributed
Application
Remote
Data Mgmt
Distributed
Presentation
(Fat Client)
Data
Management
Data
Management
Data
Management
Data
Management
Data
Management
Application
Function
Application
Function
Application
Function
Presentation
Presentation
Presentation
Data
Management
Application
Function
Application
Function
Application
Function
Presentation
Presentation
Presentation
22
Networks
Local Area Networks (LAN) link computer
s
together over small geographical areas, suc
h
as a building
Metropolitan Area Networks (MAN) link
computers together across a city.
Wide Area Networks (WAN) link
computers together over larger geographical
areas, such as across different states
23
Bandwidth and TCP/IP

Bandwidth is a networks transmission capacity.
The greater the bandwidth, the greater the
capacity.
Capacity and availability are key issues
TCP/IP - Transmission Control Protocol and

Internet Protocol, are standards associated with
transmissions across networks.
SAP uses TCP/IP standards
Relational Databases
ERP systems sit on top of a database
Currently, ERP software is organized based
on relational databases
24
A relational data base is a set of related

tables
Related using key attributes
For examples ...
25
A Table
Salesperson #
Last Name
0001
Jones
Address
123 Sunnyvale
...
.
A row is a set of related attributes

Primary Key
attribute is a
unique identifier
for each row
Non-key
attribute represents a
unique characteristic
of the salesperson or
entity instance
26
Customer Table
Customer #
0005
Sales Person Table

Salesperson #
Customer ...
Lastname
0001
OLeary
A set of
related tables
Sales Order #
0001
Customer #
0005
Salesperson #
0001
Last
Name
...
Jones
...
Sales
Event
Table
27
Data Warehouse
Is a single place located across a
corporation where a user can get the latest
data, efficiently organized
They are large repositories of data
Typically, they include multiple years of data
so that trend analysis can be done
28
Software
Legacy Software
Package Software
Versions of Software
Database Management Software
Operating Systems
29
Legacy System
Typically refers to the software that is in
use prior to the new ERP software
Oftentimes, the legacy system is mainframe
software
30
Package Software
In the same sense that personal computing
software has moved toward a standard set of
package options, corporate enterprise
computing also has moved toward
packages.
Now, some argue that the primary problem
is one of choosing the right package
31
Versions of Software
Software has different versions
Windows, 3.1, 95, 98, 2000, ME
SAPs R/3 has a number of different

versions, 3.0, 3.1, 4.0, 4.5, 4.6
32
Database Management Software

DBMS is designed to facilitate use of
database structures, e.g., relational database
systems.
SAP supports a number of database systems
Oracle is most frequently used
There is a cost associated with having a data
base work with an ERP system
33
Operating Systems
ERP systems are designed to run under
different operating systems, e.g., Windows
and Unix
For some systems, the operating systems for
presentation, application and database can
be all different
34
Software Layers
ERP Applications
Database Management System
Operating System(s)
35
Reengineering
ERP can be used as a tool for reengineering
Technology Enabled
ERP contain many best practices

What is a best practice?
Reengineering provides one theory base

for viewing ERP
36
Systems Analysis
Understanding and modeling flows of
information
Many different tools used to model different
views of enterprise models
37
Chapter 3
Enterprise Resource Planning
Systems: Background
38
Some Selected Questions ...
What is an Enterprise Resource Planning (ERP)

System?
What does it look like?
MAPs (Models, Artifacts and Processes)
What are some sample modules?
How Does An ERP System Work?
What does it mean to talk about best of breed?
What is the basic ERP Life Cycle?
Who are the ERP Companies?
Which Consultants Do ERP Systems?
Why the demand for ERP?
39
What is an Enterprise Resourc

e
Planning (ERP) System?
Ideally, ERP is seamlessly integrated
software for the entire organization,
including financials, human resources,
operations and logistics and sales and
marketing
Generally, all in the firm access portions of the
same underlying relational database, where
information is gathered once and the database
has few redundancies
40
What does it look like?

Typically, screens look just like regular
Windows applications
Reports look like reports ...
41
How Does An ERP System

Work?
Information is input one time and selected
information cascades through the system, rather
than requiring re-inputting
e.g., Sales call information, cascades to sales
information, which cascades to billing info.
Business events are integrated into processes

Associated with order processing are a number of
functions, including Sales and Distribution, Planning
and Production, Materials Management, and Financials
42
Order Management Process

Propose
Commit
Configure
Check
Credit
Deliver
Bill
Collect
Sales & Distribution

Production
Planning
Financial
Materials
Mgmt
Accounting
43
MAPS: Models
A number of models are embedded in ERP
systems, e.g., Organizational Models.
Benefits, include ability to model substantial
detail and capture reality
Costs, include development and maintenance o
f
those models. Firms with volatile models may

find that keeping them up-to-date can be costly
Can force structures and accountability into
organizations (e.g., Microsoft)
44
MAPS: Artifacts
Examples include documents
Formally, an interface between the
computer program and the world in which
the system functions.
Provide structure the unify the enterprise,
e.g., chart of accounts, vendor lists, etc.
45
MAPS: Processes
Processes are flows of activity and
information to accomplish a particular task
or set of tasks.
Typically, there are multiple ways to do things.
Some will work better than others in particular
organizations.
Typically, cut across functional areas.
46
What are Some Sample

Modules?
Names of modules depend on the particular
package, e.g., SAP
AM (fixed asset management)
CO (controlling), which includes CCA (cost center
accounting), PC (product cost controlling) and ABC
(activity-based accounting)
FI (financial accounting), which includes GL (general
ledger), AR (accounts receivable) and AP (accounts
payable)
HR (human resources), ...
47
What does it mean to talk about

Best of Breed?
Mix and Match, choose modules from
multiple vendors in order to get the best of
each module
HR from PeopleSoft, Accounting from SAP,
Advantage: ideally maximal functionality

Disadvantages: search costs, interface costs
,
look and feel differences, need for a
diversified implementation team, ...
48
ERP Life Cycle
Deciding to go ERP
Choosing an ERP
Designing an ERP
Implementing ERP Systems
After Going Live (Stabilization Period)
49
Who Are The ERP Companies?

SAP is the dominant player, with 35% 40% of the market
Big five (BOPSE) Baan, O racle
(Applications) P eopleSoft, SAP and, J.D.
E dwards
Additionally, other firms have generated
interest, e.g., QAD and Lawson, Great
Plains
50
Which Consultants Do ERP

Systems?
You name them and they probably do something
in the area!
Generally, Accenture and the Big 5
accounting/consulting firms each specialize in a
few ERP systems.
However, some of them have consultants that deal
with all of the ERP systems
51
Why The Demand For ERP?

Demand for tools to increase productivity
Reengineering gained headway, just when
client server came on the scene at a time
when many mainframes were due for
replacement.
Change in to whom software is sold
Y2K was one of the big reasons
52
Chapter 4
ERP Data Input
53
Data Input
Sources of Benefits and Costs Due to Data
Input
Too Many Screens, Too Much Time to
Input Data?
ERP System Design
Data Input as Ease of Use Measure
54
Sources of Benefit and Costs Du

e
to Data Inputs
How Much Data?

Gather Data Once!
Gather More Data!
Gather Data Straight into a Computer-based
Environment!
Gather Data where it is generated!
Gather Data with a process focus!
55
How Much Data?

How much data?
Huge! A sample system had over 40,000 tables
in a relational database system
How many attributes in a table?
...
56
Gather Data Once

It generally is more cost effective to gather
data once
All use the same data
In a relational environment only need it once
Gathering once may decrease the number of
people required for data input
Have to make sure it is correct
57
Risks of Gathering Data Once

...
pre ERP, warehouse clerks knew they could let a
truck
leave the loading dock without checking off the go
ods
shipped on the packing slip; the slip would be there and
if
the clerks forgot about it, at some point, acc
ounts
receivable would call them up and yell. Not anymore.
If
the clerks dont account for everything when the tr
uck
leaves, the customer will never get an invoice, because th
e
ERP system has no record of the goods

ped.
Accounts receivable wont ever know that
er
received the goods and wont be able to act
er
upper anymore -- no more wake up calls
ding
dock.
being ship
the custom
as a sweep
to the loa
58
Gather More Data

What data is gathered?
Generally, a broader base of information
e.g., data can include time spent on a sales call
Gathering Data Straight to the
59
Computer
How is data gathered?
We are taking folks who have recorded some
information on pieces of paper, and putting
them on PCs
At the end of the day, many data input
requirements are similar to legacy systems
... To the average PC user (SAPs) R/3 looks
like
any other database entry form. Blank cells are
labeled quantity, price or description.
60
Where is data gathered?

Where it happens ... e.g., on the loading dock
In some cases pushes data input out of accountin
g
to operational departments
Gets rid of cleric accountants
... workers can look in the new system and

make
certain decisions themselves -- and record them
straight from the shop floor.
However, this may cause problems, e.g., SAPs user
interface was confusing to loading dock workers who
had to enter the quantity of chemicals coming in or
going out.
61
Gathering Data with a Process

Focus
Sample triggers ... Classic Events
Sales Activity from contact of customers

Goods receipts
Reservations of material for planned use
Goods Issues, i.e., withdrawal of material
Transfer postings (title change among
departments)
Goods movements
62
Too Many Screens, Too Much

Time?
ERP systems are general system structures,
designed for implementation across a broad
number of system requirements
Not surprisingly, many firms do not need all t
he
capabilities
Configuration may expand the number of
screens required to input data. For example,
prior to SAPs R/3 4.0, it was not possible to
move data fields to a single screen.
63
Too Many Screens, Too Much

Time?
At one firm, the legacy system took about
20 seconds to process each order, with all
the data on a single screen. When the SAP
system was adopted, the processing time
increased to 90 seconds, with data on six
screens. Since the firm had ~ 1,500 per da
y,
there was a substantial change in order
processing time
64
Process Change and Data

Personnel Change
ERP system changes can lead to changes in
processes and who does data gathering
There is a double edge sword between
benefit in shifting data gathering and
change from legacy systems
See next slide
65
Different
Same
ERPvs.LegacyProcess
Process Change and Data Input People Change
Same
Different
Data Gathering Personnel

66
Too Many Screens and Too

Much Time to Input
At Hydro Agris Canadian stores, it used to take about 20
seconds to process a farmers order. However, after they
installed SAPs R/3, the processing time went to roughly 90
seconds. Since Hydro Agri has about 30,000 orders every fou
r
weeks, the new system was requiring huge resources for data
input. Prior to R/3 every four weeks required 600,000
seconds, but after R/3 required 2,700,000 seconds of order
processing time. Information technology staff were forced to
take orders.
Large
Number of Input Screens (or Time Differen

ce)
and Number of Transactions
Small
RatioofNumberofDataInput
Screens(orTimeDifference):ERP/
67
Small
Large
Number of Data Entry Transactions

68
Why did the Number of Screens

and Time Increase?
Change from a functional approach to a
process approach can change the number of
screens.
In some cases legacy systems may be
developed to exploit functional information
specialization.
69
ERP System Design

There have been at least two criticisms
leveled at ERP system builders and there
why their system designs are not easy to use
Insufficient focus on user interface
Design focus is from the database outward,
rather than the user inward.
70
Insufficient Focus on User

Interface
The developers of these (ERP) packages,
without exception, approach things from a
system point of view, not a user point of
view. ... (The system forces the users to
decrease productivity by requiring windo
w
thrashing) ... The software drives people
back and forth, and it is driving them nuts.
71
Design is Database Out

(ERP developers) ... generally have
designed from the database out, and not the
user interface in.
As a result, the screens have been the last
part of the whole process.
72
Data Input as Ease of Use

ERP Vendors have incentive to make
systems easier to use
If not as easy to use as other ERP systems, the
n
that might lead to lost sales
Systems are sold based on number of seats.
If users find the system difficult then they may
not sell as many seats, since firms may try to
get information out in other venues (e.g.,
intranets)
73

Some ERP systems are easier to use
PeopleSoft is very appealing when you look
at
the screens, while R/3 looked rigid
However, PeopleSoft is not necessarily easier
to use than legacy systems
Workers have to contend with a dozen PeopleSoft
screens compared to just two or three with the old
system.
74

ERP Developers are Trying to Make ERP
systems easier to use
I want people to be able to use parts of SAP
with zero training
Has led to the EnjoySAP designed to make
the system easier to use
75

Is Ease of Use in Eye of Beholder?
I didnt know how the old system worked ...
in my mind thats an advantage.
Either way, perception is reality, hence, if

users believe that a system is difficult to use
then it is!!!
76
Chapter 5
Output: ERP Reports, Data
Warehouses and Intranets
77
ERP Input Issues and Tools

Value Creating ERP Information
Capabilities
ERP reporting capabilities
ERP query capabilities
Data Warehouses
Intranets
Integrating ERP and Knowledge
Management Capabilities
78

Capabilities
Information drives the processes
If the information breaks down, we break
down
In contrast to classic accounting systems, wher
e
in some cases, reports are generated and never

used
Information is available faster

Firms cut end of year closing time from three
weeks to four or five days to 6 hours (Cisco)!
79

Capabilities
Information is available providing
empowerment
Workers can look in the new system and mak
e
certain decisions for themselves -- and record
them straight from the floor.
Information is integrated
Systems are based relational database systems
so data can be made made available in an
integrated form
80

Capabilities
Information is Transparent
If you dont do your job, I can see that
something hasnt been done
Accordingly, ERP systems facilitate
elimination of asymmetries of information
81
ERP Reporting Capabilities

ERP systems have a wide range of standard
reporting capabilities.
However, use of ERP systems can be hard to use
for anyone other than expert users and firms may
incur costs as a function of number of seats.
As a result, firms have pursued other alternatives,
such as database queries, data warehouses and
intranets
82
ERP Database Query Capabilities

Database Queries
ERP systems sit on top of a relational database
system, so queries can be built to provide report
capabilities
ERP systems have database query capabilities
so that the database can be bypassed
83
Downside of Queries
In some cases, queries are treated as transactions. However, t
he
more queries that run, the higher the probability that the syste
m
will become over loaded.
reports are taking a heavy toll on ERP systems
everywhere because for the first time hundreds, eve
n
thousands of employees are going to ERPs single,
integrated database and pulling out huge piles of
data ... This is the number one technology fire that
ERP project teams have to put out after the new
system goes in.
84
What if reporting and query

capabilities are not enough?
Intranets
Data Warehouses
85
Intranets
A number of firms, basically differentiate
expert and casual user groups, allowing
experts to have direct access to ERP
systems and casual users intranet access to
reports.
Can be facilitated through Lotus Notes or
Web technology.
Typically, reports are updated each day
86
Data Warehouses
Data warehouses provide a way of
facilitating generation of non-standard
reports
We needed something that would allow an
inventory manager to track inventory without
running a report request through the IS

department.
Typically on another computer so they

dont put strain on transaction processing
systems
Data Warehouses
Data warehouses can serve as a meeting
point between ERP and other applications
... the impacts of the (ERP) project were so
much greater than expected .... Before the
systems had tended to communicate directly
87
with one another (i.e., point to point), a new

approach would now be employed in which all
data communication would take place via a dat
warehouse.
88
Integrating Reporting and

Knowledge Management
As firms have begun to employ database
queries, data warehouses and intranets, ERP
firms have pushed to maintain control
The approach is to integrate knowledge
management and some electronic commerce
with the ERP systems
89
Knowledge Management and

ERP -- Portals
Portals have many definitions, but generally
are jumping off points for information and
knowledge, aimed at specific users
Can make a range of information available,
including discovered knowledge
90
91
Electronic Commerce and ERP

Some ERP firms see portals as an
opportunity to make information about
related product information available to
users through the portals
E.g., mySAP.com has forms that vendors
can fill in to make information about them
available through the portals
92
Chapter 6
Technology Enabled vs. Clean
Sheet Reengineering
93
ERP and Reengineering

SAP implementation equals forced
reengineering
its rare when you dont have to do some
kind of reengineering
ERP is the electronic embodiment of
reengineering
94
Reengineering Tools and

Technologies in 1994 (CSC Index 1994)
Tool
USA
None
41%
Process Value Analysis 36
Benchmarking
34
Competitive Analysis
25
Activity-Based Costing 20
Other
16
Europe
36%
27
36
28
17
17
Currently, ERP is the dominant tool!

95
Technology Enabled
(Constrained) Reengineering
Enabled vs. Constrained
Which term? Why?
A particular technology (or portfolio of

technologies) is chosen as a tool to facilitat
e
reengineering.
Thus, reengineering choices are a function of
the technologies chosen.
The technology drives the reengineering.
96
Clean Slate Reengineering

Process design starts with a clean slate
Also referred to as starting from scratch
Theoretically, no limits
Somewhere Between the Two

In actuality, there are few projects that are
purely clean slate or technology enabled
More of a spectrum
97
Technology
Enabled
Clean
Slate
Advantages of Technology
Enabled
ERP provides a tool to facilitate change

ERP helps structure complex reengineering efforts
Tools help explain and rationalize efforts
ERP bounds the design, limiting overload
Design is feasible
98
There is Evidence that the design will work

Designs likely are cost effective
Designs likely can be implemented in a timely manner
There is software available
99
Advantages of Clean Slate
Not constrained by a particular tool

Not constrained to a limited set of processes
Evolution is not limited by a particular technology
Can develop a design that others cannot access
There is evidence that firms think they should
reengineer and then implement
May be the only option
100
Which Firm Should Use Which
Approach?
Depends on
Firms Size
Available Resources
Time Pressure
Strategic Gain
Uniqueness of solution
101
Large Firms
Have the resources to do clean slate
Are often industry leaders and thus,
generally have time
Are likely to use processes as a competitive
advantage
Are more likely to need a unique solution
102
Firms with Deep Pockets

Clean slate requires substantial resources
In some cases, clean slate will lead to many
starts and stops before the final design is
found
103
Firms with Time

Clean slate takes longer so only firms that
have the time can really do clean slate
approaches.
104
Firms for which Processes are a
Strategic Advantage
The more unique a firm in terms of its
industry, processes, customers or other
factors, the more likely that they see their
specific processes as a competitive
advantage, and thus use some clean slate
approach.
Firms that Seek a Unique
105
Solution
Technology enabled approaches are easily
copied and diffused
Clean slate approaches are not as rapidly or
as easily copied.
106
Which Approach is Used the Most?
(Original Implementation Strategy)

Approach
BPR and SAP Simultaneously

BPR before SAP
BPR after SAP
BPR before and after SAP
No BPR Needed
Original After
48%
16
3
1
33
51%
35
33
1
10
107
Chapter 7
Deciding to Go ERP
Business Case Rationales
108
Business case rationales typically fall into

four categories
Technology
Business Process
Strategic
Competitive
Why is the Rationale or busine

ss
109
case important?
Want to make the right decision, so
develop a good business case
Business case can facilitate choice of
processes or evaluative measures
Gives guidance to the design team
Business case can provide a basis for the

evaluation of the quality of the
design/implementation
110
Technology Motivations
Motivation
Systems not Y2K Compliant
Disparate Systems
Poor Quality Systems
/Visibility of Information
Business Processes or
Systems Not Integrated
Difficult to Integrate
Acquisitions
Obsolete Systems
Unable to Support Growth
No. of Firms
42
37
26
Percent
27%
24
17
19
12
12
11
8
7
5
111
Technology Rationales: Y2K

We really sold (ERP) on the Year 2000. ... If you
have
systems that are 20, 25 or 30 years old, the Gartner Gro
up
... has indicated that it will cost you anywhere from
$1.10
to $1.65 per line of code to change for year 2K. If you
have 4,000,000 lines of code you are talking about a lot
of
money. Additionally, the legacy systems are not there,
there is nobody there to maintain them and there is nobo
dy
who understands them. So if you had to fix it up for th

e
year 2K it would take you millions and millions of dolla
rs,
with a terrific risk. In essence we sold this system on a
year 2 K basis.
112
Technology Rationales:
Disparate Systems
Disparate systems limit the ability of firm
s
to integrate different business units. Reca
ll
Geneva Steel
we have ... a mainframe ... (and)... a primitive
accounting
system ... we have lots and lots and lots of different
kinds
of computers. They have a hard time talking to each ot
her.
We have a large number of mini computers out there tha

t
are different kinds, that have different software .... Our
system is a road map from hell. ..
113
Poor Quality Existing Systems
We (Microsoft) had just had a very bad budget
process. ITG (the Information Technology
Group) and Finance had developed a new budge
t
tool and it didnt work. .... It was not fun. ...
I
was just back from vacation, and Steve Ballmer
was just back from Wal-Mart. Steve knocked
and
opened my door. I knew it was Steve, he has a
really distinctive knock. He walked in and said,
You guys [expletive deleted]! I got the
message.
114
Difficult to Integrate Acquisitions
We wanted more insight into how our
processes were doing. ... Your processes
have to change. As a company that
acquired so many companies, [Brown
Ferris] didnt have uniform processes. Part
of our challenge was to get 500 places using
standard procedures.
115
Measurement
Oftentimes technology rationales are measured
on
a yes-no basis
Is the new system Y2K compliant?
Does the new system allow us to eliminate this road

map from hell?
Can we get rid of our existing budgeting system wit
this new software?
Typically can specify particular measurement

goals.
116
Business Benefits
Benefit
Personnel Reductions
Inventory Reductions
IT Cost Reduction
Productivity Improvements
Order Management Cycle Time
Cash Management
Revenue/Profit
Procurement
Financial Cycle Close
Maintenance
Number of Firms
44
42
27
23
19
16
15
12
10
8
Percent
20%
19
13
11
9
7
7
6
5
4
117
Business Process Rationales

Designed to aim at specific improvements
in efficiencies or cost savings or revenue
enhancements.
Typically include a specific number
For example, decrease inventory by 40%
Can provide guidance regarding design
118
Business Process Rationales:

Personnel Reduction
We will have fewer accountants and
probably have fewer information systems
people. Because one of the things we are
considering is contracting out a chunk of
that function. A great deal of what we do
,
we have cost accountants do, lots of thing
s,
not just by hand, it is not that primitive, t
hey
do a lot of work that wont need to be do

ne
once SAP is implemented.
119

Productivity Improvements
To get the project (cost) justified we intention
ally
focused on the tangible items the board would
understand and that we could clearly articulate a
nd
make commitments to deliver. (Owens Corning
)
A one percentage point cost reduction deriving from global
economies of scale in raw material purchases
A one percentage point cost reduction deriving from fewer
warehouses and lower freight cost
Improvement in reliability-oriented maintenance generating
lower plant maintenance costs
120

Financial Close
Firms often specify speeding the closing
process as a goal
One firm wanted to cut their closing time from
24 days to 6 days.
121
Strategic Rationale
Choose ERP to implement a specific
strategy
As part of an E-business strategy, a firm could
implement an ERP system
As part of a strategy to focus on the consumer,
a firm could implement Available to Promise
(ATP)
122
Competitive Rationale
A lot of ERP purchases are premised on
the need to just stay in business.
The competition has it can take two
approaches
if
Implement because the competition has it

Focus on why the competition has it and see
it fits your company and what benefits can b
e
gathered
123
Competitive Rationale
On June 24, 1996, Oracles Application Divisio
n
announced that Several companies went live w
ith
,
ed
their Oracle Applications implementations durin

the quarter, including Silicon Graphics, Inc. and
Quantum Corporation, both of whom
successfully deployed large-scale
implementations. In addition, at the same time
Oracles Application Division announced that
among the customers added this quarter includ
... Western Digital ....
(Quantums Competitor)
124
Business Case Rationale

Can be used as a guide to help design and
evaluate success.
Why is it being implemented? Use this as a
basis to assess the quality of the
implementation
How Does a Firm Decide
125
Whether or Not to Go ERP?

Hard vs. Soft Data
Use of the Measurement Criteria
Organization Culture
126
Role of Top Management

What is the role of top management in
deciding to go ERP?
Only a few executives in a firm can make such
a big decision
Voice of Change must include domain area
since processes will change
127
Hard vs. Soft Data

Whether the data is hard or soft can
influence the decision
The Y2K data was hard data.
management) believed that data.
They
(top
Measure Costs Throughout the
128
Life Cycle
Measurement of project costs is necessary
to provide a budget and actual for the
project
Costs start in the decision to go ERP and
move in thru the rest of the life cycle,
through the stabilization period
129
Organization Culture
Some organizations use detailed analysis,
whereas others do not
In some cases it is a matter of the
organizations culture
130
Cost Benefit Analysis

Use it, but keep in mind ...
Costs can be disguised or hidden or
inaccurate
Benefits can be fuzzy or unanticipated
131
Chapter 8
Choosing an ERP System
132
Two Basic Approaches

There are two basic approaches that are
used as bases of choosing ERP software
Requirements Analysis (As Is)
Best Practices Analysis (To Be)
133
As Is Analysis
As is refers to the current system and its
current capabilities
The system as it is right now
134
Requirements Analysis (As Is

)
As Is the ways things are.
Organization determines what their
processes and artifacts currently are and u
se
that as is model to establish requiremen
ts
that software is judged against.
Typically, the software that best meets the
requirements is the one chosen by the fir

m
135
Requirements Analysis Evaluating Features

Typically, requirements are features that the
software must have
In addition, sometimes would like to have also is
gathered.
Likely to use a numeric scale of say 1-5 for each
feature, based on how important the feature is
For missing features, typically changes to the

software are seen as a gradation of change, e.g.,
enhancement or customization
136
How many requirements?

Timberjacks requirement analysis took six
months and generated > 1,000 requirements
Another firm took eight months and
generated 1,500 requirements
If it takes a long time, then requirements
can (will?) change
137
How long will it take?

Can be a substantial effort and take a while!
Typically 1 - 3 months
138
Who Should Be Doing Analysi

s?
Trade-off between current employees who
know how work is done, and managers,
who see work from a different perspective
.
...
Which processes should be captured:
Past
Current, or
New?
139
Help for Doing Requirements
Analysis
Consultants specialize in requirements
analysis, e.g., Big 5
There are existing packages that facilitate
requirements analysis, e.g., The
Requirements Analyst
140
Requirements Analysis Granularity

Requirements are not equal granularity.
Some are whole best practices, while othe
rs
are fields (e.g., date)
Able to manage orders following best practic
e
methods of placement, control and expediting
Able to Use EDI with Certain Vendors
Able to set up vendor schedules
Able to track actual date
141
Advantages of Requirements
Analysis
Classic System Choice Process, so it is
generally understood
Establishes a bench mark that can be used
to judge fit of software
Provides a document that can be used for
communication and to generate buy-in
142
Disadvantages of Requirements
Analysis
As Is analysis can be very
time consuming, slowing the implementation
costly (e.g., one firm spent $100,000)
May (will) be impossible to specify all

software requirements
If there are too many requirements then
vendors may not fully respond to the RFP
143
Disadvantages of Requirements
Analysis
Lose chance to reengineer by focusing on
the As Is model
Cements existing processes without evaluation
as to their quality
Requirements are not stable, so it is likely

that requirements can only chase reality
Requirements are only a snap shot
Format
Typically a list, along with a relative
ranking of the importance (1,2,3,4,5)
Scripted
144
Loosely Scripted -- show me what you have

Tightly Scripted -- can you handle this data?
145
To Be Analysis
Process of determining which best practices
should be used by a particular organization, i.e.,
how should the organization process information,
and choose the software on that basis
Focuses, not on where the organization is, but

where it wants to be.
Search often includes Big 5 best practices, and
ERP best practice capabilities
146
Gap Analysis
Match AS IS and TO BE to determine
if any gaps.
How do we evaluate gaps?
Count them?
Rate importance?
...
Both Requirements Analysis and Gap Analysis

Ignore Important Issues
Cost
Installation time
Flexibility
147
User interface
Upgradability
Implementation Personnel
Reliability
148
Cost Factors - Mini Case:
Which Do You Choose?

Upgrade
Oracle
SAP
Implementation
M
$3-5 M
$4-8 M
$6-10
Software Development
$2-4 M
$1-3 M
minimal
No. of Users (Seats)
15-20
10-15
8-10
149
Both approaches ...

basically assume that majority wins. How
do you choose, the software that has the
most requested features or the most
valuable features or ..?
can focus on artifacts (e.g., invoice) rather
than processes
150
Emerging Approach
Increasingly, consultants are promulgating
the approach where no as is model is
developed, no gap model is developed
Go straight to the to be model, since t
hat
is what really counts
Typically, with this approach the consulta
nt
knows both your organization and the
software
151
Emerging Approach
Instead, just choose one of the better ERP
packages and choose the best practices
available within that package.
Systems are so good that any of the systems
will have processes that are good enough
How do firms choose?

A Case Study
Company: Chesapeake Display and Packaging
(CDP)
They used a five step approach, including a vot
e
as to which everyone preferred.
152
Form Blue Ribbon Committee

Contact Vendors to Arrange Demos
Ask Vendor for Proof of Rapid Implementation
Vote
Make Choice
153
1. Form Blue Ribbon Team

A Blue Ribbon Team (BRT) was chosen for
their knowledge of the business and
business processes
There were some big picture people
The committee was limited to no more than
ten people
2. Contact Vendors to Arrange
154
Demos
A limited number of first tier vendors we
re
chosen, contacted and asked to prepare a
demo for the BRT
Vendors were given unlimited access to t
he
BRT for three weeks.
Demos lasted 1-2 days
Vendors choose the hardware and softwar
e
that they preferred
155
3. Ask the Vendor for Proof of

Rapid Implementation Ability
Vendors were asked ...
Show your software can handle our business
Show you can implement in the time required

Show expertise in understanding the industry
4. Vote
After the demos, there were three
candidates, Baan, J.D. Edwards and SSA.
In order to choose, the BRT was asked to
156
rank 1 to 3 based on Best functional fit

and Best implementation personnel
157
5. Software Recommendation
J.D. Edwards was seen as offering
Superior financial capabilities

One integrated solution
Human resources and payroll
Advanced object oriented tool set
A planning module that allowed for scheduling
on a cost basis
So, What do you ...

Like about the way they selected their
system?
Not like about the way that they selected
their system?
158
159
Chapter 9
Designing ERP Systems
Part I
160
Customize Applications or Change

Business to Fit Software?
Choose Application to fit
business and customize a bit
37%
Customize Applications to fit business
5%
Reengineer Business to fit application
41%
No Policy
17%
161
On the Relevance of As Is a
nd
To Be Modeling
Since As Is analysis generates models
of
existing processes, the relevance of As I
s
modeling is dependent on the extent to
which processes stay the same
Since To Be analysis generates models

of
processes chosen to be implemented, its
relevance depends on the extent of change
to be made in existing processes.
162
As Is
If a firm is planning extensive reengineeri
ng
(>40%) from survey were, then the As I
s
model is not very important. Instead the
to
be model drives the process.
However, if minimal reengineering is
planned then it can be critical to do an
As
Is model so that the proper software can

be
chosen.
163
LooseFit
TightFit
QualityofFitofSoftwaretoAsIs
As Is Requirements
Analysis is not
Necessary
As Is Requirements
Analysis is Critical
Minimal
Extensive
Extent of Change to Organizational Processes Planned

164
As Is
Consider a firm that performs an as is analys
is
and finds a loose fit between existing processes
and the ERP software they choose.
be
ght
If minimal reengineering is planned, then there may

a lost chance to choose software that matches their
processes
If extensive reengineering is planned and there is a ti
fit with existing processes, then that close match can
limit their ability to do reengineering and may result
in
backsliding.
165
LooseFit
TightFit
QualityofFitofSoftwaretoAsIs
Lost Chance to
Choose Software
that Meets Needs
Potential to BackSlide to Existing

Processes
Minimal
Extensive
Extent of Change to Organizational Processes Pla

166
nned
To Be
If there is only limited change of the
software planned then the To Be model
is
basically constrained to the processes
available in the software
If the software is to be modified, then the
to be model becomes more like a clean
slate analysis, since the choices are beyon
d
the software.
QualityofFitofSoftwaretoToB
LooseFit
TightFit
167
To Be Analysis
is Clean Sheet
Reengineering
To Be Analysis is
Technology-Enabled
Portfolio Choice
Minimal
Resource Pl
, D. E. OL
Extensive
Extent of Change to Software Planned
168
Two Dimensions ...

There are two dimensions of change
Change in Software
Change in Organizational Processes
Resulting in reengineering ranging from

little r to big R reengineering.
Extensive
Big R
Minimal
ExtentofChangetoOrganizatio
169
Small r
Minimal
Extensive
Extent of Change to Software

170
ChangetoOrg.Processes
Minimal
Extensive
Minimal Organization and

Software Change
Small r reengineering offers fast and
cheaper implementation
However, with small r, you miss the chan
ce
to be a champion
B
i
g
R
S
m
a
ll
r
Minimal
Extensive
171
Extensive Organizational and

Minimal Software
Minimal
Extensive
SAP customers often have to change the

ir
businesses to use the software, but the cos
t
and the change is worth it because the
software lets the company operate more
efficiently.
Big R
Small r
Minimal
Extensive
E
x
t
e
n
t
o
f
C
h
a
n
g
e
t
o
S
o
f
t
w
a
r
e
172
Extensive Organizational and

Minimal Software
Minimal
Extensive
Trash Hauler industry taking SAP software to the

dump. Allied Waste and Waste Management have
abandoned their SAP initiatives because
SAP expects you to change
your business to go with
the way the software
Big R
works.
Small r
Minimal Extensive
173
Minimal Organizational an
Extensive Software
A project manager at Nestles indicated that their
choice of processes for their SAP implementations
included best practices beyond those included in
the software.
Some of their existing processes
and best practices from their consultants
database of best practices
were chosen, forcing a
change in the software.
Minimal
Extensive
Big R
Enterprise
D. E. OLea
Small r
Minimal Extensive
174
Disadvantages
We have learned the hard way, if you modify the softw
are
there will be a cost. The cost comes when you do the
modification initially, when you do an upgrade, and whe
n
you support the software over time. ...
Customization to different divisional requirements also
can
make it difficult to implement the software in other
divisions. Although the manager of SAP services at De
ere
ns
Co. indicated that for their ERP project, the customizatio

went well, it was also noted (Lamonica 1998)
... what hasnt worked well is establishing standards and
templates that can be rolled out to other divisions.
175
Extensive Organization an
Extensive Software
Minimal
Extensive
Boeing and BAAN What was the payof

f?
As noted by one Boeing
consultant (Busse 1998),
Big R
Prior to ... (the new system)
... people had tunnel vision,
now people see up and
downstream ...
Small r
Minimal Extensive
Extensive Organization and

Extensive Software
Advantages: First mover advantages for t
he
adopter; development of a package that ca
n
be sold to similar firms to the ERP firm;
costs and risks are shared by both
Disadvantages: Changing software is
expensive and inhibits ability to get to ne
xt
176
version. Adopters are likely large firms

with market power.
177
Evolution from Big R to Small

r
Reengineering
In some cases, ERP firms partner with
implementing firm in an effort to expand
the product capabilities.
Extensive software changes can result in
industry specific versions of the software
As the software is made to conform with
unique industry requirements, it becomes
small r for those on the third or fourth wa

ve.
178
Implementation Failure and

Success Factors
The highest probability of a successful
implementation is when there is minimal
change to both organization and software.
This does not mean all organizations should
pursue that approach.
Change to organization processes can me

an
resistance to change, choice of the wrong
best practices, etc.
179
Implementation Failure and

Success Factors
Extensive change to software draws heavily
on the organization to implement large IT
projects and IT change management
See diagram
Bottom line, firms must assess what will
make their implementation successful?
180
Which Quadrant Which

Approach?
Extensive
Potential Project
Failure because of
Process Changes
Potential Project
Failure because of
Process Changes and
IT Changes to Software
BIG R
Minimal
Depends which is best for your firm?
Highest Probability
of Successful
Implementation
Potential Project
Failure because of IT
Changes to Software
Small r
Minimal
Extensive

181
Chapter 10
Designing ERP Systems
Part II
182
What are MAPs?

Models
Organization models (e.g., B2C, B2B,
Auctions, Centralized, Decentralized)
Artifacts
(e.g., Charts of accounts and Vendor numberi
ng
schemes)
Processes
(Sales order, Customer management,
Procurement)
183
Why are MAPs important?

MAPs (Models, Artifacts and Processes)
The quality of the MAPs will have a huge impact
on the overall success of the ERP implementation.
MAPs that are not efficient or effective for a particular
firm can drag down the overall performance of that

firm.
Similarly, MAPs that meet the needs of a firm can push
it to better performance, giving it a competitive edge.
Where do MAPs come from?
Nestles decided that it would implement common MA
Ps
in all three of its United States divisions.
Each of the three divisions existing MAPs became
184
candidates, that would be evaluated.

Both SAP and the advising consultants best practices
databases were used to generate candidates MAPs.
In some cases, hybrid MAPs were developed, based on
multiple sources of information.
A multifunctional team used both sets of inputs to deci
de
on company standard artifacts and business processes.
185
Why didnt firms have common

MAPs prior to ERP systems?
There are at least three reasons:

1) technology,
2) exploitation of local differences, and
3) divisional control.
Technology limitations meant each division made their own
decisions
Since each made their own decisions they exploited local
phenomena (e.g., few vendors)
Even common software and computing was hard to integrate
Why do firms need common

MAPs for ERP?
Basically, the software requires it

Improved customer response
To get control of an out of control process
Generate a common view of the data
Create value and reduce costs
186
187
Software Requires it
Owens-Corning traditionally had operated as a
collection of autonomous fiefs. Each plant had
its own product lines, says Domenico Cecere,
president of the roofing and asphalt units. Each
plant also had its own pricing schedules, built u
p
over the years of cutting unique deals with
customers. ... (SAPs) R/3, however,
effectively
demanded that Mr. Ceceres staff come up with
a
single product list and a single price list.

188
Improved Customer Response

Up until now, customers called an Owens Corning shingle plant to get a load of shingles,
placed a separate call to order siding, and anoth
er
call to order the companys well-known pink
insulation.
(The companys new vision was that) Owens Corning should offer one stop shopping for all t
he
exterior siding, insulation, pipes and roofing
material that builders need.
(SAPs) R/3 will give Owens-Corning the
ability
to make that happen by allowing sales people to

see what is available at any plant or warehouse
and quickly assemble orders for customers.
189
Get Control of Out of Control

Processes
Vandelays sites operations practices were as varied as

their information systems. There was no uniformly
recognized best way to invoice customers, close the
accounts at month end, reserve warehouse inventory for
customer order or carry out an of the hundreds of other
activities in the production process that required comput
er
usage or input. ...To alleviate ... problems with systems
and
practices, Vandelay decided to purchase and install a sin
gle
ERP system, which would incorporate the functions of a

ll
the previously fragmented software. The company woul
d
also standardize practices across sites.
190
Common View of the Data

Elf Atochem North America Inc.,
Philadelphia ... is moving 13 business
units
over to SAP software. ... he came to SAP
because its various companies had been
reorganized to work as one. (As a result,
the company) ... had inherited a lot of
different computer systems, a lot of
different ways of doing business, and a lot
of hand-offs. A common view of
diverse
d
a
t
a
w
a
s
i
m
p
o
r
tant
Planning Systems, D. E. OLeary, 2000
Enterprise Resource
...
191
Value Creation and Cost

Reduction
As noted by Pirellis director of information
technology The more standardization there is, t
he
easier it is to implement new ideas and respond
to
new opportunities. In addition, Andreoni notes
that standardization can reduce costs. As an
example, before standardization, Pirelli had a ful
l
service back office and customized software in
each of five countries. ERP software was used
to
replace the multiple back office staffs with a

single back office staff in Switzerland, cutting
costs by 25%.
192
Why is it difficult to choose

common standards?
A Vice President of Red Pepper Software,
who
admits that standard ERP artifacts are ...
useful
where financial viewers want to conso
lidate
information across diverse operating units, but
...
the common view may not be optimu
m for
individual divisions.
Although standardization coming from

implementation of enterprise software by
standardizing processes and artifacts has global
benefits, it comes from sacrificing local
customized capabilities.
193
How seriously do divisions tak

e
the choice process?
SAP, however, effectively demanded that
Mr. Ceceres staff come up with a single
product list and a single price list. The st
aff
initially fought ceding control over pricing
and marketing to a computer-wielding
central command. My team would have
killed if wed let them, he says.
194
What are some choice

motivations?
Maximize corporate benefits (global good
)
Minimize divisional change costs (self
interest)
st
Rather than maximizing corporate benefits, a

division may work to minimize its change
costs, such as training or hiring.
Divisions unsuccessful in getting their MAPs
adopted can still work to get the MAPs close
to theirs adopted
195
Choosing Standard Artifacts and

Processes
Within an ERP, virtually the same processes and artifacts

are used in all locations, i.e., processes and artifacts are
standardized
As a result, potentially this can lead to conflicts
between different business units regarding the choice of
processes & artifacts
Firms refer to this choice as common ... and global
Firms make the choices to facilitate communication and
coordination
Chapter 11
Implementation:
Big Bang vs. Phased
196
197
Big Bang vs. Phased

Implementation
Big Bang and Phased are two prima
ry
ways of implementing ERP systems
What do these terms mean?
What are properties of each?
What are the advantages and disadvantages o
f
each?
How do we take into account organizational
factors with respect to big bang or phased

?
What are some additional terms?
198
Big Bang
In a full big bang, an entire suite of ERP
applications is implemented in all locations
in a matter of days.
Big Bang employs a three step process.
Virtually all processes and artifacts are chosen and
implemented in the software (e.g., 8 months)
System is tested by process and then by interfaces
between processes (e.g., 8 months)
Old system is turned off. New system is then
implemented and minor changes made.
199
Phased
At the extreme, modules are implemented one at a
time, possibly one location at a time
For example, one implementation did the following:
Phase 1 - Finance, controlling, accounts receivable, accounts
payable, and purchasing (12 months)
Phase 2 - Materials management, production planning and quality
planning (7 months)
Phase 3 - Remainder (5 months)
in
Using a phased approach, the new system is implemented

a structure of legacy systems.
200
Advantages of Big Bang

No Temporary User Interfaces
Limited Need to Maintain and Revise Legacy
Software
Some Risk is Lower
Functionality Linkage
Shorter Implementation Time
Continuity of Personnel
Cost
201
No Temporary User Interface

Temporary interfaces must be developed
and maintained for the duration of the
multiple systems with a phased approach,
however, with a big bang approach, there is
no need to build legacy system interfaces
and there is no need to change legacy
systems
202
Limited Need to Maintain and

Revise Legacy Software
With Big Bang there is limited need to
maintain and revise legacy software.
As a result, all resources can be spent on the
development and testing of the new system.
203
Some Risk is Lower

The phased approach is riskier, because
you wont get everyone involved.
Since people are not involved they can lose
interest
There is no back-up system with big

bang,
so there is little risk of the attitude, Oh,
lets just forget it.
Attrition of critical personnel is lower
204
Functionality Linkage
ERP systems modules are tightly linked.
Some capabilities require multiple modules
be implemented
As a result, in some cases the fastest way to
get full functionality is a big bang approach.
205
Shorter Engagement
Implementation Time
Since there is no time spent on temporary
interfaces, the engagement duration time
can be shorter
As a result, there is less time for legacy system
maintenance is required
First Movers advantage is more rapidly attained
Catch-up can be facilitated
206
Continuity of Personnel
Since engagement duration time is shorter
there is less likelihood of workers leaving in
the middle of the engagement
Also, since experience is not whole till
implementation, there is likely to be less
turnover, during the actual implementation
207
Cost
Which approach is least costly?
If all goes well the big bang approach is
least costly since there are fewer costs for
interfaces, etc.
208
Advantages of Phased
Peak Resources are Lower
More resources can be devoted to a particular
module
Some risk is lower
Legacy System Fallback
Personnel gain knowledge in each phase
Project managers can show the system works
Time between development and use is small
209
Peak Resources are Lower

If a firm has limited resources, then a big
bang approach may not be feasible.
With a phased approach resource
requirements can be spread across multiple
time periods.
210
More Resources can be Devoted

to a Particular Module
If the organization is resource constrained
then a big bang approach may not be
possible because of those resource
constraints
However, with Phased, the resource
requirements can also be phased.
211
Some Risk is Lower

One malfunctioning module in a big bang
can make the implementation fail. Since the
phased approach puts in one module at a
time, that risk is mitigated
If the implementation fails, the phased
approach always has the legacy system in
place until the very end.
212
Legacy System Fallback

In a big bang, the legacy system is turned
off, there is no alternative if things dont go
well.
With a phased approach an organization can
see if the system works and then turn it off,
or it can run the systems in parallel in order
to check the results.
213
Personnel gain Knowledge in

Each Phase
In a phased approach, workers gain
knowledge with each phase.
They can use knowledge gained in phase i,
in phase i+1.
214
Project Managers can show the

System Works
With a phased approach, managers have a
chance to show that the implementation is
working and/or being accepted. As a result,
they can use these results to demonstrate the
quality of the investment to top
management.
215
Time Between Use and

Development is Small
The linkage between doing the work and
when the module goes live is much tighter
with phased than big bang.
As a result, developers can more easily see the
linkages and the results of their work.
216
When should you use Big Bang?

When you have top managements support
When there are sufficient peak resources
available
When capabilities are needed ASAP.
When there is limited time to implement the
system, e.g., first mover or catch up.
217
When should you use Phased?

When you need to generate support from
top management
When there are insufficient peak resources
When the all or nothing risk of Big Bang is
too high
When there is plenty of time
218
Organization Characteristics an
d
Implementation Approach
Size vs. Complexity
Complexity derives from a number of source
s
including an organizations products and
customers. Large customers can dictate
processes, artifacts, etc.
Size of a firm can relate to a number of fact
ors,
such as revenues, number of offices, geograp
hic
regions, number of products or number of
c
u
s
t
o
m
e
r
s
.
219
OrganizationComplexity
Large and Complex

Organizations
Simple
Complex
Its too difficult--especially for large (and

complex) companies--to run a big project ...
and the risks in terms of project
management are huge. ... Huge do-it-all at
once deals are quite tough, and most people
are looking for smaller piece-by-piece
implementations.
Linkages Between Organization Size and
220
Complexity and Implementation Approach

Phased
Big Bang
Small
Large
Organization Size
221
Organization Characteristics an
d
Implementation Approach
Both Organization Structure vs. Organization
Controls influence whether a big bang or phased
would work better.
Organization structure can be very flat or tall and
hierarchical
Organizational controls can be loose or tight
If a company has a flat organization that is not tigh
tly
controlled, its very difficult to sustain commitment
throughout a phased implementation.
Tall
Flat
OrganizationStructure
222
Linkages Between Organization Hierarchy
and Control, and Implementation Approach

Phased
Big Bang
Loose
Tight
Extent of Controls
223
Many
Number of Modules
Firms dont always put in all the modules.
With few modules, they can almost guarantee
the ability to go big bang
Extent of Reengineering, e.g., System Fit

Few
NumberofModulesintheImplem
System Change and

Reengineering
To what extent does the system meet the needs

of the company as is?
Linkages Between Implementation
224
Approach and ERP Modules

Phased
Big
Bang
Minimal
Extensive
Extent of Change To Be Made

Enterprise ResourceERP ModulesLeary, 2000
To
Planning Systems, D. E. O
225
Alternative Implementation
Issues
Waved Approach
Aggressive Implementation
Running in Parallel
Many big bangs
226
Waved Approach
Each wave delivers functionality to a
different business unit or geographical area
Example:
Year One - implement G/L
Year Two - Convert A/R and cost management
227
Waved Approach
Advantages of Waves
g
n
Waves provide feedback as to how the

implementation is proceeding
Employees learn in the beginning of the wav
and leverage that learning
Each successful wave keeps momentum goin
Waves are flexible. If new releases occur the
they can be embedded in the waves
228
Aggressive Implementation
Not big bang, but more aggressive than
phased
Temporary links really are temporary.
Aggressive plans are made to release legacy
system
229
Run in Parallel
If the legacy system is allowed to run at the
same time as the new system then the two
systems can run in parallel.
There are some advantages and
disadvantages of this approach
Advantages: can go back, can check results
Disadvantages: costly, may inhibit new system
230
Multiple Big Bangs

Increasingly, firms are beginning to say that
they are doing a big bang implementation,
in phases.
This is a break from the classic big bang
and phases, basically big banging around
the world, from one division to another.
231
Chapter 12
Post-Implementation
232
The Stabilization Period

Lasts from 3 to 9 months
Most companies should expect some dip in
performance at the time they go live and should
expect that theyll need to manage through that
dip.
Why?
New software and processes for users
System bugs
Technical issues
233
Post-Support from ERP Team
Detecting and responding to system bugs

Answering user questions
Changing system parameters
Responding to changing reporting needs
Upgrading the software/hardware
234
What Remains to be Done?

Data conversion (migration of data from
legacy to ERP system)
Cleansing data
Reconciling data
Process Bottlenecks
Talk to users about problems
Analyze error and complaint logs
Documentation and Training

Linkages, Upgrades &
235
Extensions
Creating interfaces and linkages to other
systems
Upgrading to different system versions m
ust
be made so that additional features can be
implemented
Building-in new features and functions
beyond upgrades
236
Evaluate Success
Timing
When benefits could be realized and measure
d
During the 1st or 2nd year AFTER going live
Determining if the system meets the crite

ria
set out for it in the beginning (choice
rationale)
Independent measures or a weighted
portfolio of measures?
237
Weighted Portfolio
To
Attribute
Ease of use
Speed of closing
Internal Integration
Customer Satisfaction
Duration
Cost
Benefit
Rating
Product
(1-5 Scale)
4
3
5
4
4
2
3
tal
Weighting
(P
os
.10
.20
.15
.20
.10
.15
.10
.40
.60
.75
.80
.40
.30
.30
si
bl
e
5.
0
po
ints)
1.00
3.65
238
Actual vs Expected Project Factors
(Austin and Cotteleer 1999)
< 50%
50% - 100%
100% - 124% 5
125% - 149% 4
150% - 174%
175% - 199%
> 200%
Duration
Cost
0.0
25.0
27.5
25.0
3.0
16.5
3.0
0.0
13.5
43.0
24.5
8.0
2.5
8.0
Benefit
6.0
65.5
8.5
14.5
0.0
3.0
3.0
239
Balance Scorecard
Financial
Learning &
Growth
Customer
Internal Business
Processes
240
Post-Implementation Budget
There must be a budget and corresponding
plan to support the complete project.
Complete project management means
managing through the entire project life
cycle.
241
Chapter 13
Training
242
Importance of Training
The easiest mistake to make is underestimatin
g
the time and cost of training end users.
An implementation will be a failure if the softw
are
runs perfectly, but employees dont know how t
o
use it.
Despite the importance associated with the need
for ERP training, a recent survey found that in a
Benchmarking Partners survey of 150 sites, 43%
indicated that the amount of training was the
biggest surprise encountered.
243
FAQ Regarding Training

How should user training be timed?
How much training should users get?
How do you make up time spent on training?
When should you do training?
How do you get employees to do training?
How much should training cost?
What is in the training material: information technology
or
business materials?
How should you structure training?
Can you develop faster training?
244
How Should Training Be Timed

?
Training that occurs too early before the
go
live date will be forgotten.
Training that occurs too late, will not be
done in time, and can cause a lengthy
stabilization period.
As one example of trying to find the righ
t
time, Purina Mills started to train users fo
ur
months in advance on SAPs R/3.

245
How Much Training Should

Users Get?
The amount of training required is a function o
f
the particular module for which users are being
trained.
to
In some cases it can take up to six months for users

get comfortable and proficient with the ERP software
.
P
As another example, at Purina Mills during their SA
R/3 implementation, a group of finance workers spen

t
seven hours per day during the last month before the
system went live.
246
How Do You Make Up Time

Spent on Training?
Time spent on training is time not spent on day
-today activities.
Not surprisingly there have been a number of
different solutions used to ensure that workers g
et
enough time off for training.
At Purina Mills managers put in extra hours in order
to
accommodate training hours.
At Microsoft users were expected to do both jobs by
putting in extra hours.
Still other firms have made use of temporary
employees.
247
When Should You Do Training

?
Training scheduled during working hours
indicates the importance of the training. Trainin
g
scheduled outside working hours suggests traini
ng
is not as important as day-to-day
responsibilities.
A CIO was told by corporate that eighty hours of

education was necessary. However, he felt that the
eighty hours of education would not be necessary for
his employees and that the training could not be don
during normal working hours. As a result, he was
planning for his employees come in on Saturday and
Sundays on three successive weekends in order to th

e
training.
248
How Do You Get Employees t

o
Do Training?
User ERP training might get pushed aside if fir
ms
do not ensure that users take it seriously. As a
result, firms have introduced different penalties
and incentives.
For example, during Microsofts SAP implementatio
n,
d
ein
training was deemed mandatory for certain critical

users. Users that did not attend training were
threatened with having their computer accounts turne
off. As noted by a senior accounting manager (Bash
et al. 1997, p. 71), We only had to turn of 20 or so

accounts.
249
How Much Should Training Cost?
How close was the cost of user training and other ERP
deployment expenses to your original estimate?
More than 50% above expectations

10% to 50% above expectations
Within 10% of expectations
More than 10% below expectations
Dont Know
2%
8%
26%
58%
6%
Based on 50 large United States Companies surveyed in August 199

8.
Source Forrester Research. Inc., Cambridge Massachusetts.
250
What is in the Training Material

s:
IT or Business?
Training users on how to use an ERP system is
a
mix of technology, processes and domain area
content in order to provide a context for the
system.
ERP Hokey Pokey, where users are advised, you
put your right hand on the ...,
As part of the Microsoft SAP implementation, a seni
or
),
accounting manager noted (Bashein et al. 1997, p. 71

Ive taught a six hour course on entering journal
entries into SAP 20 times now. It was as much a
general ledger course as a system tool course.
251
How Should You Structure

Training?
One approach that consistently is well accepted
is
when a member or a group of members of the
client organization are chosen as super users,
who then can be responsible for training others.
This approach has been found to facilitate buy-in
from
the users, because the people doing the training are
people that the users know.
Because there are super users, the other users see tha
t
learning about the system can be important.
Developing super users develops an important
understanding at the user level.
252
Can You Develop Faster Training

?
Because ERP engagements often are behind
schedule, firms try to speed their training.
the
The ability of firms to speed up training depends on

firms needs, personnel and previous training. Some
personnel are likely to be quicker learners or able to
spend more time than other personnel. Further, in so
me
cases if system use is similar to other systems that ha
ve
been used then training is likely to be able to go fast
er.
However, trying to speed training is potentially
dangerous, with a high cost of failure.
253
Chapter 14
ERP: The Backbone of
Electronic Commerce
Purpose of this Talk
254
The purpose of this talk is to discuss how

... ERP is a building block of Ebusiness
(Director of E Business Applications-3Com)
Outline
Building Blocks of E-commerce

ERP and Customer Ordering
ERP and Vendor Managed Inventories
Integrating with Resellers
255
Building Blocks of E-Commerce

E-commerce functions best if there is
Real Time Information
Ability to Communicate System to System
System Use is Widely Available
Can ERP meet those demands?
256
Real Time Information

ERP provides a clearing house of real tim
e
up-to-date information necessary for
e-commerce
Inventory Information (so they know what is
available to sell)
Pricing Information
Configuration Information (necessary for
requirements planning)
257
Communication Between
Systems
Historically, EDI (electronic data
interchange) has been the source of
communication of information
Increasingly, WFT (web forms technology)
is the source of communication of
information
258
EDI
EDI uses data in standard chunks, sequence and
format (e.g., invoices)
EDI is typically done using a VAN (value added
network)
EDI is so important that in one survey it was

found to be the added on to ERP systems more
than any other additional solution.
Large-scale business-to-business customers will
integrate their purchasing and ERP systems with
our systems, so it will be completely computertocomputer. (Dell Computer)
259
Problems with EDI

Since EDI is really a serial process and basica
lly
dictates certain times that you do things, we will
eventually have to migrate to an Internet/webbased type of transaction with our suppliers and
our customers. (Compaq)

Midsize and small businesses wont have
elaborate hookups ..., so theyll use Premier Pag
es
(WFT) as one of their predominant methods.
(Dell)
Traditional EDI is too costly. Increasingly firms
are using EDI over the Internet.
260
WFT
WFT is typically used in an Internet/
Intranet/Extranet environment
WFT may not be directly interfaced with
other applications and databases
WFT use has exploded
261
Problems with WFT

WFT is primarily useful in those settings were t
he
originator has only a few orders, but the receivin
g
firm has many orders.
If the originator firm has many transactions then
the WFT ordering process may be too costly and
time consuming.
Not only must the order be made using WFT to the
vendor by the customer, but then the originator must
update their own system.
Thus, using WFT can cause double the data entry tim
e,
and require a larger number of people.

262
Widely Available and Easy to

Access
Ideally, users can access the ERP system
over the Internet in order to place orders.
Fujitsu PC Corporation uses its ERP and oth
er
er
d
configuration software to allow the user (eith

a Fujitsu sales representative, a reseller or en
user) to order over the web.
Cambridge Partners recently commented
that at the moment you need to be in the

office to use ERP.
263
Emerging Environment
One approach has been to provide a different ki
nd
of access to client server in an environment whe
re
the user only needs a browser and Internet acces
s.
The user has Internet access to a time shared
client, that interacts directly with a server in an
appropriate standard environment.
in
Using this approach, eliminates much of the

standardization that can be required at the user level
client server computing. This approach also extends

classic client server to a timesharing model that is
analogous to mainframe computing.
264
ERP and Customer Ordering

Facilitating commerce is one of the most
important tasks in commerce
Unfortunately, it often is filled with errors
.
of
For example, Cisco found that 25% to 33%

the orders made by faxes had errors in them.
How could e-commerce solve the

problem?
What was the problem?

265
What is the Impact of Errors?

Errors ultimately can delay the shipment or cause
an error in the pricing.
As customers found out about errors in the orders,
they found it necessary to contact Cisco about
their orders to make sure that orders got in the
system correctly
These requests required increases in Ciscos personnel
in order to respond to customer inquiries, raising costs
and slowing down the process of getting goods to the
customer.
266
One of Ciscos first ECommerce Applications

Using the web, customers were able to gather
information from Ciscos ERP system that woul
d
allow them to track and price their orders to see
if
they were correct and to see what the status was
Information was available seven days a week and
twenty-four hours per day.
This reduced Ciscos need to have personnel availab
le
ns.
to help track the orders and answer customer questio
Customer support had been shifted to the customer.
267
What was the next step?

Should it have been first?
Perhaps a more important question was
How can you eliminate errors to begin
with? In Ciscos second year, their goal
was to eliminate the errors and allow the
customer to make anytime anywhere
ordering over the Internet
Accessing information from the ERP
customers were permitted to originate,
configure, price and place the order.
268
How did they get customers to

use it?
Cisco guaranteed that pricing and
configuration would be accurate, if the
customer used the web application. Within
only four months in 1996, 10% of the orders
were done over the Internet. By 1999, 85%
of the orders came in over the Internet
269
How did they do it?

The systems accuracy derives from the
configuration engine (CE). The CE
examines orders to find common errors. I
f
errors are found then the engine wont let
the customer make the order. The CE
examines all available account information
and purchase information, in order to find,
e.g., incorrect part numbers.
What else can be done to facilitate orders

?
270
Problem
Purchasing is done using Ciscos system
and not the customers system so the
customer needs to put the same information
in their own ERP system.
Solution: Eliminate Need for
271
Duplicate Entry
Cisco began working with their biggest custom
ers
to integrate order information into the customer
s
purchasing system, e.g., the customers ERP
system.
Once a day, new configuration, order and pricin
g
information is made available to those special
customers.
Now those customers can place orders from the
familiar systems that they use every day.
272
ERP and Vendor Managed

Inventories (VMI)
Under Ciscos model, the customer does
the ordering.
However, in many settings, the order
process has been shifted from the custome
r
to the vendor.
For example, in the case of Procter & Gambl
e
nd
n
(P&G), P&G ultimately monitored demand a

took responsibility for keeping its products o
t
h
e
s
h
e
l
v
e
s
273
How is VMI Accomplished?

VMI is accomplished by providing vendors real
time access to necessary information.
Access must be electronic and the information must be
up-to-date or else the quality of the inventory decisions
can be limited, a particularly important limitation when
the vendor is managing the inventory.
In an ERP-based world there are two solutions

designed to facilitate VMI:
Integrating through access to ordering data
Direct ERP to ERP connection.
274
Provide Vendor with Direct

Access to Data Warehouse
Weve also custom-developed some
tools
that sit on top of the SAP ... system to
give
us a data warehouse capability. ... We
developed an EDI capability that feeds int
o
our data warehouse. Every week our
suppliers use EDI to report on their delive
ry
capability and status (Compaq)
275
ERP to ERP Connections

Colgates plan is to use its network to get a
peek at customers stockpiles, while
allowing its supplier to look at Colgates
inventory as well. The company is even
supplying its most critical suppliers with
computers loaded with R/3 system and
plugged directly into the Colgate system.
276
BTF or BTI vs. BTO

BTF--Build to Forecast; BTI--Build to
Inventory
BTO -- Build to Order
Wait till there is an order before the goods are
built, e.g., computers.
BTO replaces inventory with information
systems technology
277
BTO and ERP

A critical part of BTO is the configuration engi
ne,
that provides the detailed inventory items in the
product that is being built. For example, if a
computer is being built the configuration engine
would detail the processes, hard drive, etc.
The new configuration model links to Compaq
s
SAP model with information on capacity to buil
d
and components on hand. On-line real time
capability of ERP is necessary to provide the
information needed for BTO.

278
ERP to ERP BTO

Now picture an integrated world, where
essentially the ... customers ERP system
automatically creates an order. It is by definitio
n
correct. The order cant be technically incorrect
because the systems are talking to each other -theres no human element. The order goes
straight down to the production line and,
potentially 20 seconds later, the machine starts
getting built, so youve eliminated a terrific
amount of cycle time.

279
ERP to ERP BTO

On the back end of that, the moment the
machine is finished being built, it gets
shipped to the customer. The invoices get
electronically transmitted right back into t
he
customers system, so the credit collection
period starts immediately. The only limit
is
how long it takes to physically build the
machine. (Dell)
280
Integrating with Outsourcers or

Resellers
Rather than forwarding resellers orders
directly to the plants, orders can be routed
to a distributors ERP system. That way a
distributor can add features, such as offering
the reseller a discount if it purchases a
certain number of products. (Cisco)
281
E-Commerce
Effective e-commerce happens because of
information availability
ERP provides a wide range of information
availability in real time
ERP is the backbone of E-commerce
282
Chapter 15
ERP Risk
283
Types of Risk
Risk occurs throughout the ERP life cycle
Types of risk and extent of their impact vary as
we move through the ERP life cycle
Three basic types of risk

Technical
Business
Organizational
284
Risk Matrix
Deciding to
go ERP
Technical
al
Business
Choosing an
ERP System
Designing
Implementing
After Going
Live
Training
Organization
285
Risk Definitions
Technical risk - risks arising due to
information processing technology, sensor
technology, and telecommunication technology
Business risk - risks deriving from models,
artifacts and processes adopted as part of ERP
Do they match? Are they consistent? Do partners
processes match up?
Organizational risk - risks deriving from the
environment in which the system is placed including personnel and organization structure
286
What is the perceived risk of

ERP projects? (%s)
Risk
Very Low
Low
Moderate
Technical
Business
10.5
22.5
39.5
4.5
23.0
32.5
Organizational
1.5
8.5
18.5
High
Very High
15.0
11.5
26.0
14.5
37.5
35.0
287
Summary of Survey Findings

Organization risk is the biggest risk -- the
most likely to be seen as high or very
high
Business risk is the next biggest risk
Technical risk is the smallest of the bunch,
with 72.5% rated very low to moderate.
Technical risk is also the easiest to fix, e.g., just

choose more power.
Technical Risks
As the firm adopts new technologies, ther
e
are a number of risks that are common to
each phase of the life cycle
Operating Systems
288

Network Capabilities
Database
Links to other systems
289
Operating Systems
Operating systems include Unix, Linux,
Windows NT, Windows 2000
Different systems require different
knowledge
Need to employ people who understand that
operating system
Microsofts SAP implementation was the

first to use NT as an operating system
290
Client Server
Dominant form of computing used in ERP
However, firms expertise may be with
mainframe computing
As a result, there may be a limited set of personnel for
the new computing environment
Mainframes are typically bullet-proof, whereas

client servers are frequently at the opposite end of
the spectrum in terms of controls.
291
Client/Server Configuration
Distributed
Presentation
(Thin Client)
Remote
Presentation
Distributed
Application
Remote
Data Mgmt
Distributed
Presentation
(Fat Client)
Data
Management
Data
Management
Data
Management
Data
Management
Data
Management
Application
Function
Application
Function
Application
Function
Presentation
Presentation
Presentation
Data
Management
Application
Function
Application
Function
Application
Function
Presentation
Presentation
Presentation
292
Network Capabilities
Issues include security and capacity of the
network to facilitate use of the ERP system
293
ComputingandNetworkEnviro
Highest Risk
(Highest Potential Gain)
Integrated
Stand Alone
Lowest Risk
(Lowest Potential Gain)
Not Linked
Linked
Linked to Other Applications

294
Technical Risks and

ERP Life Cycle
Deciding
Technical
Business
Organizational
Choosing
Designing
Implementing
Going Live
Training
Deciding to go ERP
Firms that have kept up with technology are likely to
better understand the risks associated with ERP
systems.
Try to see what has worked in the past
295
Technical Risks and

ERP Life Cycle
Deciding
Technical
Business
Organizational
Choosing
Designing
Implementing
Going Live
Training
Choosing an ERP system

Virtually all software choice can be manipulated, since
it is a political process
Requirements change as new technology becomes
available.
296
Technical Risks
and ERP Life Cycle
Deciding
Technical
Business
Organizational
Choosing
Designing
Implementing
Going Live
Training
Designing
One company designed an ERP contract based
on computing capacity, so the vendor had to fix
any problems with insufficient capacity
297
Technical Risks
and ERP Life Cycle
Deciding
Technical
Business
Organizational
Choosing
Designing
Implementing
Going Live
Training
Implementing and Going-Live

Upon implementation and going-live, capacity
six transactions a minute 360 per hour
or 3600 for a ten hour day was not enough
Needed more network capacity
298
Technical Risks
and ERP Life Cycle
Deciding
Technical
Business
Organizational
Choosing
Designing
Implementing
Going Live
Training
Training
Risk that mainframe IS personnel might have to
be re-tooled to client-server technology
ERP system may require different technical
people with different skills
299

Technical
Business
Organizational
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training
Deciding whether or not to do ERP

Must have the resources to do the project
Firms get going on ERP and then find that they
dont have the resources.
This typically means that either the organization
fails or the project fails.
Must meet needs of the business

What is needed by the firms partners?
300
Technical
Business
Organizational
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training

Determine specific requirements, e.g.,
transaction handling capabilities
s,
Fox Meyer - system could do 10,000 invoice line

but they needed 420,000
The business risk is that the ERP Vendor can

not meet the companys needs
301
Technical
Business
Organizational
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training
ERP Design
risk
Design is a political process. As a result, there is a

that the design is sub-optimal.
There is also the risk that processes designed by one
group in the organization will not interface well with
processes designed by other groups.
There is the risk of project stopping
This project would have changed how people work and
reduced staffing by half. It was the easiest thing to cut beca
use
people did not have the stomach for it
302
Technical
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Implementing
The project will take longer than expected
The project will cost more than expected
303
Technical
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Going Live
If the ERP is not working properly, there could
be problems with customers and suppliers.
Hershey Foods Inc. lost most of their
Halloween, Thanksgiving and Christmas sales
due to a poorly functioning ERP system.
304
Technical
Deciding
Business Risks
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Training
Training should provide users with process and
system information
The main business risk is that timing is too
short and too late.
305
Technical
Deciding
Organizational Risk
s
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Deciding whether or not to do ERP

Reportedly, one of the biggest risks is that top
management is not involved.
Another risk is that the domain areas are not
involved and committed (Microsoft)
306
Technical
Deciding
Organizational Risk
s
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational

Choosing the right consultant is the biggest
challenge (Risk)
307
Technical
Organizational Risks
Deciding
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
ERP Design and Implementation

Models of organizations are built into the
software, as a result, there are risks that the
models do not match (e.g., Microsoft)
308
Technical
Deciding
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Going Live
Cultural issues that relate to big R
reengineering create organizational risk.
One firm went from compensation based on number
of units sold to salary to accommodate the ERP
system
309
Technical
Deciding
Choosing
Designing
Implementing
Going Live
Training
Business
Organizational
Training
Employees not accustomed to data input will
take on the task.
If users dont know how to use the system, it
will fail.
There may be inadequately trained personnel
after implementation due to poor training or
attrition.
310

ERP Implementation

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Chapter One

Why Study ERP Systems?

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP Affects Most Major

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP Impacts Small and

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP Affects Competitor

ERP Affects Business Partner

ERP Provides A Key

In 1990 Hammers highly influential article on

ERP has Diffused Many Best

ERP systems are based on so-called best practices - the

ERP Facilitated Adoption of

ERP Changed the Nature of the

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP has Changed the Nature of

IT (information technology) professionals in

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP Systems Can Create Value

Integrates Firm Activities

ERPs Integrate Firm Activities

ERPs Employ Best Practices

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERPs Enable Organizational

Now clients can see the corporation the

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERPs Eliminate Information

ERPs Provide On-Line and

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERPs Facilitate Inter/Intra Organization

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

What Technologies Are Of

Client Server Computing

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Client Server Computing

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Bandwidth and TCP/IP

TCP/IP - Transmission Control Protocol and

Enterprise Resource Planning Systems, D. E. OLeary, 2000

A relational data base is a set of related

A row is a set of related attributes

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Sales Person Table

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

SAPs R/3 has a number of different

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Database Management Software

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

ERP contain many best practices

Reengineering provides one theory base

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Enterprise Resource Planning Systems, D. E. OLeary, 2000

Some Selected Questions ...

What is an Enterprise Resource Planning (ERP)

What is an Enterprise Resourc