Oct. 26th, 2006. ERP Implementation

This week’s we covered the phase 5 (transition) of ERP implementation.
Transition: Most complex and difficult step in the ERP life cycle and involves high risk. It is basically the switch over from the legacy system to the new ERP system. The three pillars of any implementation are:

Process: Best Practices, Modeling tools, BP improvement
People: Management, Project Team and Consultants
Technology: State of the art infrastructure.
It is very important for all these three pillars to stand together and work together for any implementation to be successful. There are 4 different implementation options based on scope and function.
1) Incremental: One module at a time.
The fundamental behind this approach is improvement overtime, by testing the software in modules.

2) Process Phasing: Few modules at a time.
The key behind this implementation is running the old and new system in parallel, so as to avoid any data losses due to bugs in the new system. The legacy system then, acts as kind of back up system. This gives the advantage of more resources to fewer modules being implemented, with freedom to explore the new system, because the legacy works as a backup. All these features thereby reduce the risk of failure of the mundane processes.

3) Big Bang: Entire suite at a time.
A Three step process; all processes implemented, system is tested, legacy system is pulled out. The advantage of big bang is that it does not require interaction with the legacy system, and thereby saves on costs of running and maintaining two systems. I think, cost is one area where this approach takes a leap over the phased implementation, but also takes a risk of failure along with it. There is no doubt that this approach is the fastest way to implement and maintains the integrity of the project team.

4) Business Unit Phasing: This approach takes geographical considerations in implementations.

A Survey by Mabert et al. [2000] shows that 41% of the companies go with a Big Bang approach followed by 23% phased rollout by site. Phased rollout by module and mini big bang contribute 17% each.

Certain objectives like time to implement, Scope, Available Resources, Complexity, Risk and benefit of an implementation can have a great impact on the success of ERP.

Rest, To be continued in the next class…