ERP Implementation, Go-Live, and Maintenance
Modern ERP: Select, Implement, and Use
Authors
Marianne Bradford, Ph.D.
Chapter 6: ERP Implementation, Go-Live, and Maintenance
Objectives
Differentiate among the various ERP implementation strategies
Understand what is meant by organizational change management
Be aware of the various types of customizations made to ERP systems
Know the types of testing performed on the ERP system
Identify the steps in data migration
Be aware of reasons why some ERP implementations fail
Be familiar with issues that must be addressed leading up to go-live and during maintenance
ERP Implementation Strategies
An ERP implementation strategy determines how the project gets organized, as well as the resources and time required for its implementation.
The main ERP implementation strategies are:
Phased
Big Bang
Hybrid
Parallel
Criteria for choosing an implementation strategy:
Company size and complexity
Urgency to implement
Risk tolerance level
Resources applied to the project
Project scope
Phased Implementation
Phased implementation (incremental, waved):
The project team gradually implements the ERP system by module, business unit, or geographical area over time.
This is the slowest implementation approach but minimizes risk.
Implementation is easier to manage and puts less strain on the project manager and project team.
Can lead to "change fatigue" and burnout.
If rolling out by business unit, implement the system in a relatively easy, but not atypical, business unit first.
Big Bang Implementation
Big bang implementation (direct cutover):
Entails rolling out all modules at the same time, resulting in one go-live (or cutover) date.
Disadvantages:
More intense and requires a substantially higher concentration of resources.
Higher risk due to forcing too much change at once.
Advantages:
Generally can go live with less time and cost.
Reduces the need for temporary interfaces.
Less change fatigue.
Hybrid Implementation
Hybrid implementation:
Combination of the phased and big bang approaches (along with on-premise and cloud).
Companies may use big bang for smaller business units and a phased approach for larger business units.
Companies could use big bang for "must-have" core modules and phased for extended modules.
Parallel Implementation
Parallel implementation:
Runs both legacy systems and the new ERP system simultaneously for a time post-go-live.
Advantages:
The least risky of all strategies; can revert back to legacy in case of problems.
Disadvantages:
Most labor-intensive, costly, and confusing.
Can stunt change management progress.
Seems to have been replaced with more rigorous testing prior to go-live.
Which Implementation Strategy is Right for You?
Large, global enterprises with multiple business units complying with diverse rules and regulations may find big bang too difficult.
Small to medium-sized companies in one country with generic business processes could easily execute a big bang implementation.
Other considerations:
Level of executive leadership
Consultant expertise
Extent of project scope
Organizational Change Management
Organizational change management (OCM):
A structured approach for minimizing the risk that a new system will be rejected by end users.
The more time devoted to OCM, the smoother the implementation will be.
Anticipate and manage hesitancy or resistance through techniques including:
Education
Training
Communication
Three Facets of OCM
Education:
Understanding the “why” behind ERP fosters ownership and enthusiasm rather than fear and uncertainty.
Communication:
Should be creative, consistent, and frequent, reiterating what changes are coming and their effects on employees’ jobs.
Training:
Often overlooked and underbudgeted; could employ a train-the-trainer method conducted by super users.
Principles of Change Management
Address the "human side":
Employees are resistant to change; ensure they feel comfortable sharing concerns. Focus on job changes rather than reductions.
Start at the top:
C-suite behavior sets tone for the project's importance.
Involve every layer:
Leaders should be identified at every level.
Make the formal case:
Outline and communicate the ERP business case organization-wide.
Create ownership:
Involve users in identifying problems and developing solutions with incentives.
Communicate the message:
Convey key messages in multiple formats to engage the workforce.
Assess the cultural landscape:
Navigate organizational politics and personalities for positive results.
Allocate plenty of time for training and coaching:
Use multiple rounds of training and start early.
Leverage a multitude of training tools:
Consider web-based tutorials, hands-on simulations, etc.
Focus on business processes, not just transactions:
Train end users on technical use and new business processes, not just transaction entry.
Configuration vs Customization
Configuration
Configuration:
ERP vendors embed configurable options that companies can select to tailor the software to their needs.
Major task during implementation, does not entail the addition of software code.
Customization
Customization:
Involves altering existing code or adding code to make the ERP system fit unique company requirements.
Should be limited to functions that are unique or provide competitive advantage.
Vanilla implementation:
Requires few customizations; primarily configuration.
RICEF
RICEF components:
Reports: Custom reports that need to be designed.
Interfaces: Connecting systems for data exchange.
Conversions: Migrating data from old systems to new formats.
Enhancements: Adding to ERP code using predefined exits.
Forms: Customized output documents, e.g., sales order forms.
Drawbacks to Customizing ERP Software
Custom code requires extensive testing, often rushed due to deadlines, risking system stability.
Customizations are costly due to development and testing time.
Can lead to automating outdated processes (“paving the cow paths”).
Customizing does not inherently add value; it can subtract value due to costs.
May complicate integration with other systems and lack vendor support for non-standard code.
Bolt-On Technology
Bolt-on:
An artificially intelligent execution system that adds specific capabilities to an ERP system via interface.
Example technologies include:
Radio frequency identification (RFID)
Bar code scanning
Electronic data interchange (EDI)
Conference Room Pilot
Conference room pilot (CRP):
Simulates business processes to ensure functionality.
Key benefits:
Define/document end-to-end workflows for configuration.
Identify gaps for customization needs.
Assess organizational impact and training needs.
Test system prior to go-live.
Testing
Ensures that configured processes work as expected, covering all potential issues.
Types of Testing:
Unit testing: Checks discrete steps meet business requirements (e.g., entering a sales order).
Integration testing: Ensures entire business processes run smoothly (e.g., purchase-to-pay).
User acceptance testing: Final validation by process owners before go-live.
Performance testing: Assesses system efficiency under workload.
Data mapping testing: Verifies data exchange between systems.
Authorization testing: Checks if users have correct permissions.
Backup and recovery testing: Ensures data can be copied, stored, and retrieved successfully.
Roles in ERP Implementation
Super Users
Super users are extensively trained on the ERP system and business processes.
They prepare and assist others in training before and after go-live.
Require strong communication skills to liaise among end users, IT, and systems integrators.
Systems Integrator
A system integrator (e.g., Deloitte) is often needed to fill gaps in internal expertise for ERP implementation.
Should staff the project with knowledgeable professionals.
Companies should guard against allowing consultants to take full decision-making control.
Using a Systems Integrator
Approaches:
Self-Directed:
Customer is responsible, using consultants on an as-needed basis.
Collaborative:
Customer partners with integrator, sharing implementation responsibility.
Turnkey:
Company delegates most tasks to the integrator.
Pros of using a system integrator:
Vendor independence, temporary partnership, specialized expertise, potential for higher ROI.
Cons:
Possible bias, high costs, risk of poor knowledge transfer, and risk of contract entanglement with poor performers.
Data Migration
Data migration:
Moving data across locations and formats, also known as ETL (Extract, Transform, Load).
ETL process:
Extract data from legacy systems, transform it for accuracy and format, and load it into the ERP system’s database.
Steps in Data Migration
Data collection: Compile data not already in digital format.
Data extraction: Export data from legacy systems/databases.
Data cleansing (data scrubbing): Identify and correct inaccurate, obsolete, or duplicate records.
Data harmonization: Standardize data from different sources into a cohesive format.
Data transformation: Convert data into the needed format.
Data loading: Import the data into the ERP database.
Risk Management
Risk management:
Involves identifying, analyzing, assessing, and eliminating unacceptable risks.
Develop an ERP risk management plan during planning to enhance project success likelihood.
The chief risk officer (CRO) oversees competitive, regulatory, and technological threat assessments and mitigations.
Causes of ERP Failures
Resource failure: Insufficient personnel or budget for implementation.
Requirements failure: Poor or incomplete requirements gathering.
Goal failure: Incomplete business case.
User contact failure: Ineffective OCM and poor training/communication.
Governance failure: Lack of leadership from management.
Project management failure: Incompetent project management.
Size failure: ERP project too large/complex given organization’s capabilities.
People management failure: Lack of effort and personality clashes.
Methodology failure: Failure to follow proven methodologies.
System integration failure: Poor advice or execution by integrator.
Center of Excellence (COE)
COE:
Best practice to establish a command center dedicated to supporting the ERP system post-go-live.
Should include members of the project team and super users.
ERP Maintenance
Maintenance is essential to keep the ERP system running effectively.
Types of maintenance:
Applying software updates and service packs to improve technology.
Enhancing business processes and user experiences.
Adding customizations or changes to configurations.
Regression testing:
Involves re-running tests to ensure previous systems function properly after changes.
In emergencies, a temporary firefighter role may be assigned to fix issues expediently.
Upgrading
An ERP system should undergo major upgrades every five to seven years to ensure functionality, performance, and compliance.
Downsides:
Employees may grow weary of change, retraining is crucial, and top management support can be problematic.
Skipping upgrades defers the costs and efforts related to future upgrades.
Success vs failure in an upgrade hinges on strategic planning and solid project management.
Upgrades must follow Development and Testing stages.