Why, when, and how?
Of many reasons to implement an ERP solution, the chief reason is the need for a common IT platform. Other reasons include a desire for process improvement, data visibility, operating cost reductions, increased responsiveness to customers, and improvement in strategic decision-making.
ERP is certainly acting as an impetus for the replacement of a mix of an aging legacy system with a common platform. This reputation of a legacy system with a common platform has become imperative for several reasons. Mainly because a mix of aging legacy systems had led to high-cost support, and the firms expected business benefits such as process improvements and data visibility to result in cost reductions.
Implementation methodology
Assuming a decision on an ERP has been taken, the implementation normally consists of five stages:
1. Design
2. Implementation
3. Stabilization
4. Continuous improvement
5. Transformation
The structured implementation program can speed system deployment and return on investment. This can be done in the following manner:
• Conducting an effective gap assessment
• Business and technical processes
• Organizational measures
• Data conversion and data clean-up
• Agreeing on the implementation boundaries
• Project sponsorship and governance
The implementation strategy is ultimately built on a foundation of people, processes, and product
ERP implementation: when, why, and how?
Methodical implementation of the ERP system starts from the preliminary analysis of the ERP readiness audit for the client. What is discussed here is the key issue concerning the implementation methodology. The current business performance of the client, forthcoming strategic plans, investment potentials, culture, and general human resource characteristics, expectations, and objective settings for ERP should be included in this analysis. Once the study report is submitted based on the above analysis, the client has to accept the recommendations emphasized in it.
Keeping with the current trend, it will be very risky for the client side to reject ERP based on poor readiness audit results. To sustain competitiveness ERP cannot be substituted by fragmented legacy systems. The only way out is the proper reengineering program for ERP adoption. Though may seem critical, this is the main focus of the methodology.
A blueprint should be drawn with details of migration and other things and scientific analysis of 'to be adopted' and its phase execution to be discussed thoroughly. The activities for the overall implementation program should be planned with time units. The consulting firms overlook the time required for data collection and policy decisions in master settings. ERP master setting can be regarded as the heart of ERP implementation.
Sufficient time must be allocated to identify, clarify, validate, and simulate the exact information about all the master-level entries. In India, such exercise is the only opportunity for the companies to do for their lifetime better performance. It would not be false to say that an organization of size more than 1000 crores should take at least three months to set up Item Master. No consulting company or client will agree on such figures in today's jet age. The idea is to sell ERP quickly and start utilizing it.
One more important element is parallel user training and knowledge upgrading. The best practice that resources recommend is to take users to the actual ERP-implemented sites to show them the process flow. What you see is the best training you ever thought of, especially when you have no idea or clue about such concepts.
What is to be kept in mind while going live is, the time to be planned properly and the organization should be equipped with abilities to face whatever shortcomings they may encounter with. There are ideal implementation methodologies, that not only will keep the customer satisfied, but also will boost the confidence of the users. One of the methods used is mentioned here for readers' reference.
The method was applied in one of the manufacturing companies. It was recommended ten transactions every day be carried out in ERP without any entry into the legacy system. Then it generated all the documents from ERP as supporting papers for the manual entries and reports. The rest of the entries in a day used to be carried as manual entries in the legacy system. Soon users understood ERP is better on all the grounds. This formula worked wonderfully well for generating confidence and reducing resistance in users' minds.
Another question is, should ERP implementation be carried out module-wise or all the modules in one go? The answers to these questions are case-specific. It will be difficult to generalize the theory for it. Mostly decision on this depends on the readiness audit result, available strength of consulting human power - both internal and external - relevance of ERP at various sites, timeframe, and the budget. But it is highly recommended that the organization should go for the implementation of all the modules at one site, and then go for a roll-out strategy for all sites.
Finally, there is a wrong concept about the BPR and ERP system. The main doubt that persists in the mind of many decision-makers is whether the organization should first carry out BPR and then implement ERP, or vice versa. One has to understand that the physical form of the BPR concept is the ERP system. In some organizations where BPR is carried out first then ERP is implemented. In all these places, the BPR document was thrown into the dustbin and a new 'to document' was prepared suitable for ERP.
Such cases clearly show that BPR benefits as such don't exist without ERP reference, and ERP just cannot be carried out without proper BPR. What we assume is that the BPR must be the outgrowth of ERP implementation and, therefore, it should be carried out during implementation only. However, the major element of BPR is the change in the mindset, which can be initiated before ERP adoption, maybe during the preliminary analysis by way of user training. The best thing to do in these situations is to carry 'noiseless BRP' which triggers the implementation smoothly.