1. Hour 6:
ERP Implementation & Training
User Training
Maintenance

2. BENEFITS OF ERP
Shang and Seddon, AMCIS 2000 Proceedings
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Operational
Managerial
Strategic
IT Infrastructure
Organizational

3. Organizational Benefits
•
•
•
•
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Cost reduction
Cycle time reduction
Productivity improvement
Quality improvement
Customer services improvement

4. Managerial Improvement
• Improved resource management
• Better decision making
– Hard to prove
• Better planning
• Performance improvement

5. Strategic Improvement
• Support business growth
• Support business alliances
– If they have the same system
• Build business innovations
– ? System can be constraining
• Build cost leadership
• Generate product differentiation
– ?? Over time, only if you customize
• Build external linkages
– ? If they have the same system

6. IT Infrastructure Improvement
• Build business flexibility
– ??? ERP inherently a rigid system
• IT cost reduction
– The main reason CEOs adopt ERP
• Increased IT capability

7. Organizational
• Support organizational change
– FORCE organizational change!!
• Facilitate business learning
– BPR does a good job of this
• Empower employees
– Within the system!!
• Build common vision
– FORCES common vision

8. Organizational Change from ERP
1. Productivity decline
•
Jobs redefined, new procedures established, ERP fine
tuned, organization learns to process new information
streams
2. Productivity gain
•
Develop new skills, structural changes, process
integration, add bolt-ons
3. Payoff
–
Transform organizational operations to efficient level

9. ERP Project Failure
FoxMeyer Drug
Bankrupt
Hershey’s
19% drop in profit
29% increase in inventory
City of Oakland
Erroneous paychecks
Miller Industries
Inefficient ERP – operating loss
WW Grainger Inc
Earnings dropped $11 million

10. Critical Success Factors
• What the organization must do well to
succeed
• For IS Projects:
– Top management support
• Inherent in ERP
– Clearly stated objectives
• Inherent in ERP
– End User involvement

11. CSF Taxonomy
Al-Mashari et al. (EJOR 2003)
• SETTING UP
– Management & Leadership
– Visioning & Planning
• IMPLEMENTATION
• EVALUATION
– Performance evaluation & management

12. IMPLEMENTATION
• Financial
– ERP package selection
• Behavioral
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–
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Communication
Process management
Training & education
Cultural & structural changes
• Technical
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Project management
Legacy systems management
Systems integration
Systems testing

13. Features of Successful ERP
Implementation
Willcocks & Sykes [2000]
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IT Leadership
Business systems thinking
Relationship building
Have needed technical platform
Ability to troubleshoot
Informed buying
Contract efforts coordinated
Suppliers held accountable
Long-term relationships with suppliers

14. Factors to Reduce Risk
Martin & Cheung [Business Process Management Journal, 2000]
• Business case
– Justify need for system, establish objectives
• Benchmark
– Import best practices
• Implementation strategy
– Align system with corporate strategy
•
•
•
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Project management
Change management
BPR
Installation

15. ERP Critical Success Factors
Umble et al. [EJOR 2003]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Clear understanding – strategic goals
Top management commitment
Project management implementation
Great implementation team
Cope with technical issues
Organizational commitment to change
Extensive education & training
Data accuracy
Focused performance measures
Resolution of multi-site issues

16. Levels of IS/IT Failure
• Corresponding failure
– Don’t meet design objectives
• Process failure
– Not on time &/or not within budget
• Interaction failure
– System not used as designed
• Expectation failure
– Return not what stockholders expected

17. Factors in ERP Implementation
Failure
Willcocks & Sykes [2000]
Scenario
CIO/IT Focus
Typical outcome
Technological
determinism
Technical
Fail to gain
business benefits
Supplier/consultant Disregarded
driven
Cost overruns
Outdated
relationships &
capabilities
Chaos
Insufficient talent

18. Strategies to Attain Success
User vs. Specialist focus
Users over IT staff
Governance & Staffing
High level of support
Champion present
Time-box philosophy
Short (6-9 months if can)
Dolphins, not whales
Supplier/consultant role
controlled

19. User Training
• Focus on business processes
– Not on using system
• Explain why
• Don’t skimp on time
• Show why new system superior to old

20. Training Delivery Formats
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Web-based virtual training
Computer-based training
Video courses
Self-study books
Pop-up help screens

21. Implementation Strategy Options
Markus et al. [2000]
• Business Strategy
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Total local autonomy
Headquarters control – financial only
Headquarters coordination
Network coordination
Total centralization
• Software Configuration
– Single/multiple financial/operations
• Technical Platform
– Centralized/Distributed
• Management Execution
– Big bang/Phased rollout

22. Implementation Strategies
Mabert et al. [2000]
Strategy
Months
%
Big bang
15
41
Phased rollout by site
30
23
Phased rollout by module
22
17
Mini big bang
17
17
Phased rollout by module & site
25
2

23. Implementation Strategies
• Big bang seemingly cheapest
– Dangerous
– Often makes sense in ERP if carefully planned
• Phased rollout reduces risk
– Especially good for large organizations

24. ERP Maintenance
Nah et al. (2001)
• Corrective
– Incorporate vendor patches, fix problems
• Adaptive
– Implement new features, internal customization,
implement interfaces
• Perfective
– New versions
• Preventive
– Monitor response time, errors, track maintenance
activities

25. ERP System Migration
• Over time, need to adopt changes
– Minor modifications
– Maybe system replacement
– Vendors change products
• WHY
– The longer the time between upgrades, the harder
– Easier to support a smaller number of software versions
– Migrations can increase sales of seats, add-ons

26. User Reasons to Migrate
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•
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Added functionality
Compliance with new standards
Discontinued vendor support
Customer problems in linked systems

27. Summary
• Time, cost, functionality tradeoff
– In ERP, functionality the most important
• Critical success factors
– Top support & clear objectives inherent in ERP
– Need User Involvement
• Phased implementation reduces risk
– but increases time
• Once installed, still many pitfalls
– Vendors change products
– User training critical