MSIS 488 -- Fall, 2002

ERP Implementation Methodologies

Paul Bruges

A methodology is a roadmap to an implementation. The purpose of a methodology is to deliver an implementation on time, according to specifications and within budget. Most vendors, especially in the software industry, have developed their own methodologies. Consulting companies also developed their own methodologies in relation to a product. Vendors primarily use methodologies as a marketing tool in order to alleviate the fears of the upper management when they are considering implementing a major software application (Enterprise Resource Planning, Supply Chain Management, Customer Relationship Management…). Nowadays, ERP methodologies are beyond just marketing tools. They are now useful because vendors have gained from experience, and these methodologies have lived through several generations. Methodologies are now applied and used by project managers and their teams. If we just look at the ERP methodologies: they range from vendor-specific methodologies, such as “AcceleratedSAP” (ASAP) from SAP, to consulting firm products such as “The Total Solution” from Ernst & Young LLP and the “Fast Track Workplan” from Deloitte & Touche.

First, let’s take a closer look at a these ERP methodologies:

AcceleratedSAP (ASAP)

The ASAP Roadmap is a detailed project plan by SAP that describes all activities in an implementation. It includes the entire technical area to support technical project management and address things like interfaces, data conversions and authorizations earlier than in most traditional implementations.

The ASAP Roadmap consists of five phases:

Project Preparation,
Business Blueprint,
Realization,
Final Preparation and,
Go live and support continuous change.
ASAP provides examples, checklists, or templates as samples. They are used as a starting point to avoid "reinventing the wheel." ASAP calls these things “Accelerators.”

Phase 1 - Project Preparation: Proper planning and organizational readiness assessment are essential which entails a determination of the following:

Full agreement that all company decision makers are behind the project;
Clear project objectives;
An efficient decision-making process; and
A company culture that is willing to accept change.

AcceleratedSAP's “Project Estimator” can be used to guide the project team through a series of predefined questions, and drives interviews with senior executives and key operating managers about their expectations of R/3 and the speed of its deployment.

Phase 2 - Business Blueprint: The “Engineer” delivers a complete toolkit of predefined business processes. During the Business Blueprint phase R/3's broad scope is narrowed to fit the industry-specific processes. Using questionnaires and the models from the “Business Engineer,” the business processes are documented to reflect the future vision of the business. Industry templates further accelerate the process by predefining industry best business practices. The result is a comprehensive blueprint of the business. During this phase training begins on R/3's integrated business systems. Level 2 hands-on training provides a step-by-step education of R/3 business process skills. The “Business Blueprint” is a visual model of your business' future state. It will allow the project team to clearly define the scope, and only focus on the R/3 processes needed to run the business.

Phase 3 – Realization: Based on the “Business Blueprint,” a two-step process is begun of configuring the R/3 system. First the baseline system will be configured. Second the system is fine tuned to meet all of the business process requirements. Because the initial configuration is based on the blueprint, the baseline system gives a real-world view of how the business transactions will actually run.

Phase 4 - Final Preparation: In this phase, the R/3 system is fine-tuned. Necessary adjustments are made in order to prepare the system and the business for production start-up. Final system tests are conducted and end-user training is completed. Initial audit procedures are developed.

Phase 5 - Go Live and Support: In this phase, procedures and measurements are developed to review the benefits of the R/3 investment on an ongoing basis. SAP support and services are provided to ensure that the system continues to run smoothly. The Online Service System (OSS) provides electronic support using a remote connection. The “Implementation Assistant” provides answers for most questions that may arise. it is an easy-to-use repository of information defining what to do, who should do it, and how long it should take.

The Total Solution (Ernest & Young)

Ernst & Young LLP has developed a system re-engineering approach called “The Total Solution.” The Total Solution approach has five components:

Phase 1 - The Value Proposition: Building the business case. The key before any process can begin is to make sure it makes sound business sense. The following questions should be answered before the process is started:

· Is the technology investment justified?

· Does it match the company's objectives?

· Does management understand what change means, and does that change have full support?

· What is the framework for making decisions?

· What milestones will measure the project's progress?

· Is value being delivered throughout the process?

Phase 2 - Reality Check: Assessing an organization's readiness for change. Since many people oppose change: it is something that needs to be anticipated. Status quo is easy; change is not. Therefore, the following questions need to be asked:

· Is the organization ready for change?

· Are there any hidden agendas? If so, how will they be managed?

· Is everybody on board with the nature, scope, and pace of the change?

· What are management's expectations?

How those questions are answered will adjust the implementation approach. Knowing the answers upfront helps to avoid a possibility that the change does not match the client's reality.

Phase 3 - Aligned Approach: Setting expectations. Delivering short-term and long-term value. Short-term as well as long-term benefits are key to any project's success. Even if change is uncomfortable for some, it is easier to accept if progress is visible. In this approach, the following tasks are performed:

· Evaluate alternatives to a comprehensive reengineering project;

· Craft a "best-fit" approach that allows the implementation to proceed in well-defined modules;

· Communicate expected results to management. Keep communicating throughout the project so no surprises surface at the end. This approach helps keep the entire project on time, on budget and on management's agenda for success.

Phase 4 - Success Dimension: The right blend of people, skills, methods, and management is important to the project’s success. The implementation team should include people with skills in process management, change management, knowledge management, and industry skills. Teamwork is very important.

Phase 5 - Delivering Value: Measuring results and celebrating success. A project that does not show measurable results throughout the process is going to flounder. People will lose enthusiasm and the expectations of a new way of doing business becomes just another broken promise. It would be wise to make sure that every project pays continuous "value dividends" all along the way to minimize the risk of change.

The Fast Track Workplan (Deloitte & Touche)

Deloitte & Touche Consulting Group believes that their Fast Track implementation methodology can enhance and accelerate ERP software implementations no matter if your business objective involves global reengineering, process improvement or software replacement. The five phase Fast Track workplan with its specific activities help achieve a rapid high-quality business transformation:

· Scoping and Planning: Project planning is initiated;

· Visioning and Targeting: Vision and targets are identified;

· Redesign: Software design and development are started;

· Configuration: Integration is planned.

· Testing and Delivery: System is delivered.

Fast Track is designed to reflect and integrate decisions regarding business redesign, organizational change and performance, training, process and systems integrity, client/server technologies and technical architecture. Fast Track identifies five areas (groups) as an individual thread to be woven into a cohesive fabric through its five phase workplan. The areas and a list of the functions performed are as follows:

· Project Management which includes project organization, risk management, planning, monitoring, communications, budgeting, staffing, and quality assurance;

· Information Technology Architecture which includes hardware and network selection, procurement, installation, operations, software design, development, and installation;

· Process and Systems Integrity which includes security and audit control;

· Change Leadership which includes organizations design, change readiness, policies and procedures, and performance measurements;

· Training and Documentation which includes training design and delivery for project team, management, end-users, operations, and helpdesk.

Now that we know more about implementation methodologies, let’s take a look at the ERP lifecycle. The ERP lifecycle is structured in phases, which consist of the several stages that an ERP system goes through during its whole life within the hosting organization. The stages are:

Adoption Decision,
Acquisition,
Implementation,
Use and Maintenance,
Evolution, and
Retirement phase.

Let’s look at each of the phases in more detail:

Adoption Decision Phase: In this phase, managers must question the need of a new ERP system while selecting the general information system approach that will best address their critical business challenges and improve the organizational strategy. This decision phase includes the definition of system requirements, its goals and benefits, and an analysis of the impact of adoption at a business and organizational level.

Acquisition Phase: This phase involves selecting the product that best fits the requirements of the organization to minimize the need for customization. A consulting company is also selected to help in the phases of the ERP lifecycle that follow, especially in the implementation phase. Factors such as functionality, price, training and maintenance services are analyzed and the contractual agreement are defined. In this phase it is also important to analyze the return on investment of the product selected.

Implementation Phase: This phase deals with the customization or parameterization and adaptation of the ERP package acquired. to meet the needs of the organization. Usually this task is performed with the help of consultants who provide implementation methodologies, know-how, and training. Although training is present in all the phases, the largest training investment is made during the implementation phase.

Use and Maintenance Phase: This phase consists of the use of the product in a way that returns expected benefits and minimizes disruption. During this phase, functionality, usability, and adequacy to the organizational and business processes are important. Once a system is implemented, it must be maintained. Because malfunctions have to be corrected, special optimization requests must be met, and general systems improvements have to be implemented.

Evolution Phase: In this phase, additional capabilities are Integrated into the ERP system to obtain additional benefits. The extensions can be classified in two types:

Evolution "upwards". Functionality is oriented to decision making with applications such as advanced planning and scheduling, data warehouses, and business intelligence systems;
Evolution "outward" to the system’s environment, with applications such as customer relationship management, supply-chain management, inter-organizational workflow, and electronic commerce.

Retirement Phase: When new technologies appear or the ERP system or approach becomes inadequate to the business’ needs, managers decide if they will substitute another information system approach that is more adequate to the organizational needs of the moment. Some organizations already passed through this phase for reasons such as strategic changes, lack of trust in the ERP vendor or the implementation partner, or bad implementation experiences.

If we try to generalize from the previous methodologies: a proven methodology is a complex tool that has been used over the years, and trial and error has perfected it. It usually comes from a reputable vendor that can afford to sustain this positive feedback loop that makes its methodology better. It is specific to the product or solution you are implementing. It is not a one-size-fits-all. Otherwise, it defeats the purpose. It needs to be adapted to your business, or at least to your industry. If we take a deeper look at ASAP, ASAP used to be “the one” SAP methodology. Now SAP has 21 industry-specific solutions ranging from mining to healthcare. SAP has taken its original ASAP and customized it for most of these 21 industries. The business needs of the mining industry are far different from the business needs of the healthcare industry. The methodology needs to be further adapted to your business. Being specific to your industry is not enough. The healthcare industry covers a broad range of businesses, from a few million dollars private practices to several billion dollars conglomerates, from single location offices to pharmaceutical companies with headquarters on different continents. Therefore, the project team will have to fine tune the methodology. This can be done internally, but it’s usually done by a consulting firm or the vendor. A few words of caution -- methodologies are expensive, so upper management has a tendency to enforce a strict compliance to the methodology during an implementation. But even though methodologies are customized, they are still roadmaps. The blueprint is not the house; it is a simplification of the house so that it can be built. It does not always make sense to do everything the way it is written. An experienced project manager should be able to step back from the methodology in order to look at the reality of his/her business’ needs.

The three methodologies that we discussed earlier seem to ignore the evolution and retirement phases. This might be due to the fact that they are primarily implementation methodologies. They are mainly focusing on adoption decision, acquisition, implementation, and use and maintenance phases. Companies using an ERP need to take into consideration these two last phases because they will live with their system for the next five to ten years. They need to take into consideration the ERP lifecycle. So, ERP methodologies need to go beyond the implementation and cover the complete ERP lifecycle.

References

www.umsl.edu/~sauter
www.jdedwards.com
www.baan.com
www.oracle.com
www.peoplesoft.com
www.sap.com
www.microsoft.com
www.ey.com
www.deloitte.com
www.bearingpoint.com

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