Sunday, June 29, 2008
-Harley Davidson case was about ERP vendor choice and regarding process. We as well inducted such an hypothetical benefit/cost analysis for the last 3 providers in the class. At last we chose upon 5 decision criteria but the process revealed to be difficult if it was implemented in full scale in a more realistic and comprehensive way. Harley Davidson chose provider2 (ref: supplement of the case) at last but the project was stated to be a failure.
-Last discussion was about the future of ERP sector especially in Turkey. Very low implementation rates (despite the need) among SMEs imply growth potential for this industry.
The course was very instructive for me, thanks to all who were involved.
Saturday, June 28, 2008
I understood that why this implementation process takes this much money. Understanding business, understanding ERP solution, training users, forcing users to use properly is very difficult and needs time and money.
In the second part of the day4 we tried to make a solution for Harley Davidson case. This part was interesting that even if everything is OK defining the selection criteria and talking on the concepts/coverage/meaning of a criterion is very difficult and needs proper training and same language for the implementation team. In addtion to this, finding the cost of the parameters is another difficult point about the selection, since every one realize different about cost. Some people think license fees, setup costs as cost, some of them consultancy cost, etc.
Nevertheless, it was a good course for me although I think that I know many things about SAP. Articles, cases and trying to solve the problems in the class as a team was a good experience that forces to think.
Wednesday, June 25, 2008
- ERP solution selection for a company necessitates preparation of a selection model which takes companies existing business practices, future expectancies in terms of business process and benefits of each ERP solution.
- Any transaction in a module of the ERP systems effects at least several other modules. Thus customization of the ERP system to a company requires very experience employees to get involved.
1) Keep Legacy
2) Best of Breed
a. (+) Company retains bargaining power
b. (-) Customer Support may be difficult
c. (+/-) Cost may be higher or lower
4) In House developed solutions
Decision Cycle for an ERP Implementation
0) Workshop on possible solutions
1) Current State Analysis
2) Evaluate possible future states you can reach with ERP systems
3) Determine Future State
4) Choose system and solution provider
Organization Change management is a hard stuff indeed
Refresher courses for the newcomers into the company
The way you define what kind of access to each person is given is determined by roles, like roles of sales people, pm people etc… Include people’s managers in this process. Since it is not a perfect process, new security request may come, and you may give extra access to users…
Organization Change Management
Super Users – idea is to distribute support within system rather than having a single source. They constitute about 10% of the users.
Business Process and Procedures
Independent accounting units have different codes
different sales terms
subdivision of a distribution channel
physical locations have different numbers
Master & Transaction Data
Master data is relatively fixed
Transaction data is unique to a particular transaction
Contains all the customer related data necessary to processing orders, deliveries, invoices
sold to party
ship to party
bill to party
Contains all data required to define and manage a specific item or material
Integrates data from: Inventory Manufacturing etc.
All data required for financial statements
Highly customizable. Is carried out automatically
Flow of Sales documents
material quantity time etc
check credit limit
reduces credit & inventory
make material requirements plan (MRP)
Delivery note pick/pack/post goods issue
Tuesday, June 24, 2008
The photographic supplies distribution company is trying to install J.D. Edwards ERP system.
- The core team composed of 8 members and its first duty was to analyze business, specifying all business requirements and research an appropriate ERP package/provider
- It is hard to customize existing system and also existing system was no longer supported those are some of the reasons of changing system.
- In order to keep the task manageable, the team worked one module at a time (to have successive starts before the previous modules went live).
- First three modules took 14 months and six months for 4th one Order Management.
- Because of the complex workflow in ordering and also fair degree of flexibility of JD Edwards, it is hard to implement order module.
- Tom thoughts that if just a conceptual model is needed for pricing than accounting people can do pricing no need for marketing but then he also states the importance of marketing to decide prices.
- Pricing matrix taken out from the meeting with marketing but it is not agreed that JDE is good enough to use it in a no disciplined and no controlled area.
A Framework for Evaluating ERP Implementation Choices
- By appropriately modifying both the ERP system and business process can be result as good implementation of the system. Sometimes software some times process needed to be changed
- Successful ERP implementation requires fit between ERP system and business process.
- Adaptation of the organization to the ERP system is also very important to have a successful implementation. Associated organizational changes should be done because ERP systems change the ways of doing jobs.
When the system is customized to fit the process = Technical Customization
- Module Selection: Companies choose modules to be used, provider adapts modules to the system
- Table Configuration: according to organizational needs the chosen table types adapted to the system
- Code Modification: In order to satisfy required functionalities the source code of ERO system is changed
Module to Code; risk, and cost increase, it is not guarantied that there would be improvements.
- No Change
- Incremental Change : improvements only in tasks and resources
- Radical Change: fundamental rethinking and resign of some parts of business process.
ERP Customization Choices
- No Customization
- Process Adaptation
- Process Conversion
- Fit System to Process
- Mutual Adaptation
- Fit Process to System
- System Conversion
- System Conversion and Process Adaptation
- System and Process Reengineering
o Table II Customization Choices (pg 326)
Technical Change Capability
- Overall ability to customize ERP
- Understanding of default ERP system
- Ability to develop and modify large-scale software in a networked database environment
- Organizations ability to manage large scale systems development projects
o Tech. Chan. Cap. Consists of scope and depth of its ability to understand ERP
Process Change Capability
- Ability to customize business process
- Ability to design new or changed business process
- Organizations must be capable of large scale business process changes
- Combination of technical change capabilities and process change capabilities, so that the total of capabilities that are explained up to now.
1- Keep Legacy & Improve
2- Best of Bread
a. Different Applications
4- In house development
There are two main states:
1- Current State
2- Future State
In-between these states there are options and ERP provider selection should be done there.
That means after choosing ERP the next stage is choosing providers.
- Providers come and do their presentations
- Analyses of competitor’s ERP providers
- every type of questions should be asked to the providers
Best of Bread as an alternative solution to ERP has some disadvantages:
May have cost disadvantage, needs different types of consultants, may have upgrade problems
Before implementation companies should complete their homework. Homework is to analyze their system enough to have right choices.
Some of the salesmen do not like ERP applications because they think that their know how; the information about customers are their most important properties. However, when all of the information of customers collected by an ERP system firms can fire a salesman without thinking any loss of customer information, which is very useful for firms. Also taking commissions makes salesman do not want to share their information.
Organization Change Management OCM
An ERP system change the way of doing jobs so this change should be managed as wall as ERP implementation process. The culture of the firm is very important; it can be very easy to change the organization in some companies where it had caused someone to be fired.
Welch Allyn, which is a family business, is a good example for us to see how OCM is done.
There are 2300 employees where 600 are trained and they had implemented SAP at 2004. They are using HR, SD/CS, MM/PP, FI/CO, PLM, and BW Modules.
The organization change management is divided into 5 parts.
Training: Core team training
End User training
Training needs analysis (how many people to train)
Develop course content
Deliver training courses
After training-practice before go live. (Examinations to see users are ready or not)
Communication: ERP cause fair and insecurity in between company so that before the implementation process starts and also during the implementation the employees should be informed. First to get buy in for all levels in organization.
Security/Role Development: There is a common data base and it is used by everyone so that some limitation should be given to the user. To do that the roles of each employee should be defined and relevant access should be given.
Super User Development: They are chosen to ask some questions about new system because they are given a response to help employees in their department. They are chosen because they are better than others in terms of new system. And they are given more training then others. It is not a easy job; they need to search a lot to answer questions.
Business Process Procedures: The documentation process of business should be managed; document specification.
All of these parts should be managed very well to have an efficient organizational change.
- The company sells 1000 different raw items and they are repackaged into over 12000 different end products each they 300 to 500 orders are shipped in the same day.
- The company’s pricing strategy is different. They apply different discount strategies for different users. They had an 10 year old ERP system that is highly customized and that system could not meet their requirements.
- They were implementing one module at a time and there was problem in Order management. While implementing order management they expect that ERP system will calculate the prices automatically for different customers.
- When billing their customers, the firm did not use objective approach. In the article it can be seen that there is no organizational standards applied, and they want to implement ERP to that company. In order to implement ERP into pricing module there should be some standards. If there is no control, no discipline, and no organizational standard it would not be beneficial to implement ERP.
A Framework for Evaluating ERP Implementation Choices
ERP sector is one of the fastest growing sectors. While implementing ERP, companies fail most of the time. Reasons of failure is spending more money then the company can afford, being incompatible with strategic partners, conflicting with its management partners, style and structure.
Any successful ERP implementation requires a fit between ERP system and organizational processes.
Customization in ERP Implementation:
a) Technical Customization
1. Module Selection: Companies use the modules using the default configuration set by ERP vendors.
2. Table Configuration:
3. Code Modification: Source code of the ERP is changed for organizational needs.
b) Process Customization
Fit can be achieved by changing the process. Process customization is the degree which business process is changed to fit the system.
It has 3 categories: No change, incremental change, radical change.
c) ERP Customization Choices
Mutual adaptation, process adaptation, System conversion, process adaptation
Capability Requirements for ERP Customization
a) Technical Change Capability
Technical change capability is an organization’s ability to customize ERP systems. Companies can develop and modify large-scale software in a networked database environment. Other thing is an organization’s ability to manage large-scale systems development projects.
b) Process Change Capability
Organization’s overall ability to customize business processes.
There are system solutions
1) Keeping Legacy Systems
No change in the existing systems.
2) Best of Breed Systems
Writing different applications and trying to integrate them
4) In-House Development
In pre- ERP process company should create questions.
You should negotiate with different ERP vendors and invite salespeople to come to your company and make presentations. Usually implementation people do not come to companies in that process
Waiting documentation from companies makes consultant to understand if the companies do their homework or not. In this process consultants try to figure out the potential problems of companies.
After that process, company should select the provider.
Organizational Change Management
It is perceived as soft stuff; however it is usually a hard stuff. Using right people for that process is important. Key issue in that process is communication within the company.
There are five parts of Organizational Change Management. These are:
Training has several elements:
Core team training
End user training.
Elements of the communication plan is
What is the content/ message
Who is the audience?
How do we tell them?
What is frequency?
Who will deliver?
Security and Role Development
Giving permissions to people to view appropriate data or doing things.
Super User Development
Helpful person who has computer skills is called super user. Literally, it is 10% of the end users. They are educated to tell other users how to use the system.
Business Process Procedures
A document to define steps how each transaction is used within ERP system in your company.
It is strategy and tactics to capture, document and control business process procedures.
Why this procedure is hard stuff?
Because changing individual behaviors and changing company is first perceived as soft stuff.
An important argument topic regarding ERP systems is the issue of the alignment between an organization’s business processes and the ERP system. The ERP solutions, in general, come with ‘best practices’ and many times, an organization simply adapts its processes to the ERP system. Sometimes, however, some portions of the ERP system are customized to use the unique business processes of the organization. The question, then, is how to find an appropriate match between customizing the ERP system and changing the business processes in the organization. The fit between business processes and ERP systems and among business processes is believed to be critical to the success of ERP implementation.
In order to ensure the fit between business processes and the ERP system, an organization can either play with its processes, or with the system, or with both. We can call customization on the ERP system as technical customization, where we call customization of business processes as process customization.
There are three possible technical customization options, which are module customization, table customization and code customization. Code customization is the most technical and detailed customization among them. Similarly, there are three possible process customization options, which are no change, incremental change and radical change. An organization should first analyze its technical change and process change capabilities in order to choose an appropriate combination of customization options. An organization with high technical capabilities can go for even code customization, where one with low technical capabilities should definitely not.
It is highly difficult to implement in environments where there is resistance to change. It takes a lot of effort to establish a fit between business processes and the ERP system, if the business processes are unique, as in Photographic Supplies Distribution Company. Different parties’ differing and conflicting interests and awareness levels on specific problems incur problems that are hard to be addressed.
-Although ERP systems usage are growing rapidly, for individual companies it is challenge to implement those systems. Most common failure reasons are exceeded budget, incompatibility between the company and the vendor/its software from cultural perspective, too comprehensive organizational change and necessity to improve and upgrade ERP and its infrastructure.
-Unlike traditional software, which is fitted upon any process, ERPs are more likely to urge the organization to change its processes in accordance.
-The crucial part is to determine a system customization vs. business adaptation /re-engineering point to decrease costs, time, applicability etc.
-ERP system "best practices", which are processes dictated by he software upon business processes, are not universal but country, culture, company specific. They are readily tailored for industry, though.
-Misfits between ERP capabilities, embedded "best practices" and company processes can be classified in three categories: data, process, output.
-Technical customization vs. process customization
-Technical customization may involve module selection. Since ERPs are modular softwares a specific company may select which modules to implement. This is, however, is not effective in fitting the system on business since it just provides a minimum number of alterations.
-It may involve table configuration. Without coding and leading to cease of vendor support, a company may determine what variables are for what and modify tables and hence table-driven ERP.
-Another option is code customization. This is done by changing the source code of software. The way a system communicates with others changes or a functionality may be augmented.
-Business process is a logical path that is performed to achieve a desired output by using company resources. These processes may also be customized to fit to ERP "best practices".
-If the process customization involves changes in tasks and/or resources, it is classified as "no change" and Little effort is necessary.
-In incremental change, relationships between tasks and/or between tasks and resources change but performance indicators or logic behind the process remain unchanged. TQM applications are examples.
-Radical changes, on the other hand, involve changes in the performance measures and/or logic.
-Capability to change processes is process change capability.
-First process change capability is about understanding current business processes and environments. Second is about designing and implementing new processes. Third is about managing and coordinating large-scale process changes.
-To find a optimum point in ERP implementation, the paper prepares a 3x3 ERP Customization matrix which combines process and software customizations.
-Technical Change capability is an organizations ability to modify the software.
-The first capability is about understanding the software and recognizing built-in options and modules. The second capability is about modifying an integrated large-scale software. The third capability is about the ability to manage large-scale software modification/development projects. i.e. matching and allocation necessary resources efficiently
-This combination of change choices and capabilities result in ERP Customer Evaluation Framework, which consists of another similar 3x3 matrix. This time indicating necessary human and IT(tangible and intangible) resources.
-The paper provides a case study which is an example of controversy to "conventional wisdom". Conventional wisdom states that firms should convert or re-engineer their processes to fit ERP best practices.
-Understanding ERP implementation as a series of projects.
Configuring an ERP System: Introducing Best Practices or Hampering Flexibility?
-Implementing ERP in non-systematic environment is very difficult. ERP implementation , ordering module in particular, will cut the flexibility and since flexibility in pricing is a strategic competency of PSDC, it should have been considered at the first place.
-In PSDC there was considerable resistance to change in sales department. It makes implementation even more difficult. We also see that key people from departments should be involved in the process to increase communication and define processes better.
-PSDC war team configured tables thoroughly to introduce some discount options that were normally not available but the process was difficult and it still did not satisfy sales people. But it showed that implementations can be a means of revising departmental strategies, procedures etc.
There are alternatives for ERP software
- Keep Legacy system, and improve it
- Best of Breed Applications, and try to connect them.
- Use ERP
- In House development. Deal with your own problems
When implementing there are 5 steps
- You must check your options, do workshops
- Prepare today’s SWOT
- Prepare future’s SWOT
- Learn about the systems
- Select Your Provider
Organizational Change Management
- It is Who, Why, How, Where, When of your implementation plan
- Sample Case Welch Allyn
- 17 Consultants from capgemini
- 23 Project members
- Peoplestuff: training, communications, security,authorization, super user authorization, business process procedures. These all change behaviours. Of people
- Peoplestuff is therefore hard stuff.
Core team training is called Training period, you teach your members.
Where in management seminars you give your message t your superior executives, share your vision.
End user training grants the ability to your employees who will face the software on a daily basis.
What must be done is to practice the software before it goes live. Support people with the help of super users, who will act as local leaders and knowledge centers.
Keep in mind that people will have to do the loads of work when they will be back from training, so give them room but remind them practice makes it perfect.
It is important to define a connection between ERP system and organization’s business processes for an organization. There must be a good supportive system for the ERP implementation decision-making process and this paper provides a framework for a relevant support system including customization choices and the capabilities required to accomplish these choices. ERP systems are packaged software solutions rather than customized systems with built-in assumptions and some best practices. However, mostly these assumptions and practices do not match with the company and therefore, appropriate customization up to some level is required and crucial. There are various customization possibilities in order to achieve a successful ERP implementation and various capabilities required for technical ERP customization options and process change capabilities needed for process customization.
ERP Customization Choices:
Fit System to Process
Fit Process to System
System Conversion and Process Adaptation
System and Process Reengineering
Technical Change Capability:
Understanding of default ERP system processes, configurations and built-in options
Ability to develop and modify large-scale software
Ability to manage large-scale systems development projects
Process Change Capability:
Ability to understand company’s own existing business processes and their business environment
Ability to design new or changed business processes
Ability to manage and coordinate large-scale business process changes
Overall Capability in implementing and customizing ERP systems:
Novice Organization => Low technical change capability, low process change capability
Technician Organization => High technical change capability, low process change capability
Organizer type of organization => Low technical change capability, high process change capability
Expert Organization => Low technical change capability, high process change capability
Configuring an ERP System: Introducing Best Practices or Hampering Flexibility? by Olga Volkoff
The case is an example of an ERP implementation which is similar with Welch Allyn’s ERP implementation project that we cover in day3. Therefore many issues are similar such as the project team, who are involved in team. The team of 8 worked on implementing the order management and set up a pricing module. In the end, Tom Brown, Director of Finance and Accounting, made the best point: it is not easy, if not impossible, to make work a system like JDE in an organizational environment where there is no control, no discipline, no desire for change or resistance to change. Here, it is possible to refer lecture learning where we discussed a lot about communication and importance of communication before, during and after ERP implementation in order to release stress and anxiety, and break the resistance against ERP systems.
A Framework for Evaluating ERP Implementation Choices
- The paper proposes the balance of degree of customization for ERP software and processes
- A successful ERP implementation requires fit between software and business processes
- ERP systems are packaged, which indicates they target the market, not individual companies. So, the work with assumptions of their clients. These create
- Differences between ERP capabilities and Company requirements are company-industry-country specific, and can be categorized as in 3 groups, data, output and process.
- ERP projects are more riskier than IT projects because they are Company wise
- Module Selection, table configuration and code modification are the 3 steps of ERP customization.
- Design, implementation, stabilization, continuous improvement, and transformation are 5 steps that companies experience with ERP.
- Primary reason to customize ERP implementation is to fit processes that are supported with ERP to ERP system. Technical customization deals with that.
- Fit can be achieved by changing processes other than the system. Process customization deals with that
- Modules, tables and codes may have different degree of customization, ERP customization choices depends on the degree of fit between ERP system and the company’s requirements.
- When the degree of change and the capabilities of the companies to handle that change are low, project team’s development level must be high.
- The research helps companies understand the customization decisions given the company’s capabilities.
Configuring an ERP System: Introducing Best Practices or Hampering Flexibility
- Large number of orders, quick response is needed, too many employees are included.
- Implementation team is experts in their departments, external consulting is acquired but not in terms of customization
- Team is handling 1 department out of 6 at one time.
- Order management is complex because of difference of products and customers.
- Order management module was too complex to handle with only customizing the ERP software
- So the team decided to find a way between reengineer their customer dealings (business processes) and the software together.
There are three approach to automate business processes:
- Keep legacy:
- Best of breed solutions
- In house development
What should be the time for doing a Gap Analysis? First we should make a SWOT analysis for the current situation without defining a specific solution. After that should make gap analysis for different solutions.
There is an order to make an implementation:
- Workshop to learn different solutions
- Curent State SWOT
- Requirement Anlaysis SWOT
- Options (ERP solutions)
- Sales guys comes and make presentations
- Internet search
- Other companies that implemented
- Ask creative questions
- Is there any enough consultants
- Is there any other fee
- Does it do this...
- Do I need to make customization
- It may be cheaper or expensive than a single solution
- Finding consultants that knows the two sides of the integration points is difficult
- Upgrades of one of them may require upgrade of the integration implementations.
We can understand that if the company did its homework or not, when we look at the documentation that defines the business processes.
Implementing a system is not important if it is not used properly. In a CRM solution implementation, sales people do not want to enter their sales data to the system.
- Sales people do not want to share
- Sales people use personal relations
- Entering sales data to the system is not easy, since it is not a formatted data.
-Why is OCM first perceived as the “Soft Stuff” and why does it always finish as the “Hard Stuff”
Coomunication and getting commitment is important
because changing individual behaviours and changing company culture is first perceived as soft
This is a software project we can deal with human problems.
Welch allyn Company overview, diagnostic and medical devices, patient monitoring sytems,
Implemented nearly all SAP modules
There are 5 different initiatives of OCM:Training, Business Process Procedures,
Super user development, Communications, Security rules
-values,beahviours, beliefs and norms
-behaviours of employees
-company or department leadership sets the overall tone
Training has several elements
--Core team training, to understand the capabilities of the syste
--End user training
--Training needs analysis(ho many people do we have, how many will take this course...)
--Develop course contents(
Deliver training courses(make exams, give certificates)
-After training practice before go live
elements of Communication plan:What is happening with the project giving information to stakeholder
--what is content
--who is the audience
--who will deliver
--caos, insecurity, anxiety, fear
-You cannot give permission to see/change everything
-How can you define the roles
--talk key managers
-- do they need other modules 2)Forecasting
2)Cust. Service Rep.
Super user development
develop super user organiztion, look for people who are natural leaders or change agents- target 10% of users
Organize Super User workshops – seek their help to improve SAP.
super userlara bonus verenler var. Boyle birsey verilemiyorsa yemektir falan ayarlanabilir.
Business Process Procedures
-Strategy and tactics to capture document and control business procedures
-What docs to control&store, where and how to control &store
However, implementing an ERP system is not the only option. The second option is the ‘best-of-breed’ solution. For example, an organization may choose to implement the best SCM (Supply Chain Management) from one solution provider, the best HR application from another solution provider and a CRM from another one. Then, the organization tries to tie these different applications so that information integrity is maintained. This approach incurs several concerns, beside advantages. By installing the best applications for different functions, an organization gets the best possible individual solutions and capabilities. However, the amount of time and effort, in addition to cost, needed to ensure the integrity of information is tremendous. The organization has to deal with the complex tasks of handling upgrades and monitoring any integrity problems, thereby employing increased number of technical staff.
Another option available is in-house development. Depending on the complexity of business processes and information needs of an organization, the success rate of in-house development approach diminishes. ERP solution providers, or solution providers in general, have the expertise and know-how in solving information needs successfully. Implementing an ERP system is a serious job, and requires professionalism, expertise and know-how. In addition, the organization needs to employ a huge number of technical staff.
Organizational Change Management is the most important aspect of an ERP implementation. The organization may implement the most appropriate ERP solution, yet information needs may not be met. An ERP system changes the way people do their jobs. Therefore, the human factor comes into play significantly. Resistance to change occurs if the organization does not manage the change process. The soft stuff in fact, is really the hard stuff. Organizational Change Management can be summarized as a series of initiatives to prepare the organization and the individuals. Five steps can be categorized as training, security/role development, super user development, communications, and business process procedures.
System solutions options:
1) keep legacy system and just improve the quality
2) best of breed and connect them if you can (it can be part of ERP or not)
4) In-house development
You can do SWOT analysis and define your current situation then you can estimate future state and do SWOT for this estimation you can see the GAP and you can talk about the options that may help us to close the gap in between. Rather than focusing on ERP like doing SWOT pre-ERP and post-ERP, doing just SWOT is better because only since then you can think about options and choose or have the chance to choose among the option.
When you decide ERP is best and you decide to implement ERP you select the provider.
To do that you look at the options and you look at your requirements. You can look at companies like yourself to decide which provider is best for you, you can talk about the systems with people who come to your firm to present their solutions (these are salespeople of vendor).
But salespeople are not implementation people; it is not a good idea to trust them and their knowledge only.
If you are using an ERP system with modules coming from different providers but there will be some problems such as integration problems, upgrading problems, also you need to improve higher in-house abilities since your people must know about more than one system. Also cost is an issue, but it is difficult to say it will be cheaper or more expensive. An advantage may be you may obtain best solutions for each application.
If there is no documentation about business processes there is the probability that the firm did not do their homework and did not define their business processes and define their needs. Then it is extra job for consultant firm to define these things and then build a system accordingly.
There are three reasons for failure in persuade salespeople to enter their sales experience:
* Time consuming
* Do not want to share their valuable info
* The need for evaluation
According to the general tendency the hard part is the implementation part, many companies do not think about the organizational change management- it is not a easy process as the companies usually think.
It is important and necessary to learn what can go wrong.
People’s jobs change, there is a gap you should close, and communication is a key concept in change management.
OCM is a series of initiatives to prepare your organization
Welch Allyn – family business that sells diagnostic medical instruments, they have patient monitoring systems
They have 2300 employees world-wide
The company was growing organically and also by mergers and acquisitions but their old IT system was not supporting this growth.
They wanted to implement all the system once at a time.
23 full time project members from Welch Allyn and there are 17 system integrators. The medical industry was highly regulated by food and drug ad. There was six team leads.
Technical issues: blueprinting, configuring, client strategy, transports, testing, code changes
OCM – five initiatives
Business process procedures
Security and role development
Super user development
Culture eats strategy for breakfast everyday… => values, behaviors, beliefs and norms that permeate the group
Expressed through the words and behaviors of each employee
Company or department leadership sets the overall tone
Often influenced by the customers you serve
Most often revealed in the way companies approach and solve their problems
Entrepreneurial vs. bureaucratic
Team focused vs. independent initiatives
Risk taking vs. conservative
Aggressive vs. not
Loyalty vs. what have you done here lately
View points go hand in hand with culture, people may react to ERP training according to the culture in the company.
Ex: viewpoint => I’ve learned other systems before, I’ll figure this out
Culture => Management under-estimates complexity before Go Live – “ready-fire-aim”
Once we decide to implement ERP system
* We send the functional team to training in order to make them learn the needed functions. (on-site and off-site training)
* Management seminars are important and thereby managers ,CEOs and other executives can decide their roles and can be more supportive
* End user training- is like an implementation project it is like an HR project
o Training needs analysis
§ Survey end users; ask them questions
§ What do they know and what do they need to know?
§ What are the ways they learn best determine courses, cost estimates
o Develop course contents
§ Time schedule
§ The content
§ Course material who will do this
§ How will this be accomplished
§ Resources, funding, review tests and etc.
o Deliver training courses (to end users)
§ Identify and train instructors
§ Locate training rooms
§ Set schedule, manage invitations and attendance processes
o After training – practice before go live
§ Adhoc organized practice sessions, prepare for proficiency tests
§ Administer tests, score them, offer retest opportunities, and postpone security access as required.
Element of Communication plan
What is the content/message?
Who is the audience?
How do we tell them?
What is frequency?
Who will deliver?
Where will it come from?
When are delivery dates?
You use communication first to explain the change process in order to erase the anxiety, chaos and fear. You also keep people at speed what is going on at that specific time of the project.
The impact of SAP must be emphasized in order to show in-house people the importance of the project.
Lunch and Learn sessions are very helpful as a communication channel since there are business people involved in the project with IT people and their attendance to the regular meetings during the process is very important.
ERP is a packaged software and is developed for a market not an individual customer, there is a time to market pressure on the developers ad usually the developers are not related to the customers.
Therefore the fit of an ERP system to an organization is difficult.
Traditional software is tailor made and developers are involved first hand.
Best practices are hardly universal, culture and country specific applications are present
Larger, global, more complex, associated with higher risk.. ERP is regarded as a standard
Adaptation involves customization, positive correlation between initial fit and implementation success. Different types of customization are;
Table configuration is difficult since there are many tables, and relations and they should be understood very well and also it is time consuming however if the system is tailored this way full vendor support and ease of future upgrades remain.
Code customization has greatest flexibility, highest risk highest cost; incompatibility with higher versions.
The decision on which customization to choose depends on the capabilities both of the software and the company.
Technical change capabilities
1) understanding of ERP systems
2) ability to make desired system changes
3) ability to develop system management projects
Process change capabilities
1) understand business processes
2) ability to design and change business processes
3) ability to manage large scale change projects
Configuring an ERP System: Introducing Best Practices or Hampering Flexibility?
When configuring a system people knowing the business processes must be involved. Also in order to be able to benefit form an ERP system and avoid resistance key people from departments who will be using ERP after going live should be convinced and participate in the process.
- Development opportunities for a company:
- Keep legacy & improve whtever needs improvement
- Best of breed solutions (for SCM, CRM , etc.)
- In-house development
- In best of breed solutions, you don't lose bargaining power wrt software vendors. Probably, you can achieve better performance for each function as you are able to use more specialized products for these functions. However, you should possibly deal with lots of upgrades for each different functional software you have.
- Organization Cahnge Management : "The Soft Stuff is The Hard Stuff'"
Overview of SAP project:
- Company goal is to increase sales revenue with new product development.
- IT platforms would not suppot growth.
- Project lasts two years with 40 people ( 23 from Welch Allyn, 17 from Capgemini)
- Vice president of the company is the champion of the project.
- Technical stuff includes blueprinting, configuring, testing, code changes and so on.
- People stuff includes training, communication, security authorization, business process procedures.
- 5 main initiatives for OCM are training, business process procedures, super user development, security and communication. All these 5 initiatives are interrelated with one of another initiatives.
- In the last two hours, we have chance to experience a real SAP system in the labratory. System seems to be a little complicated due to involving so many functionalities and surely, using the system efficiently necessitates so much practice.
- ERP systems are packaged softwares, a little bit customization required for both erp system and business processes.
- There are process and technical customization options and also technical and process change capabilities.
- ERP software is developed for all market, not for an individual company. ERP implementation requires data entry and integration
- ERP best practices are generic solutions and are not universal.
- ERP implementations are company wide and generally contains all company business processes.
- ERP system customizations are module selection, table configuration, code modification, another defines this by bolt-ons, screen masks, extended reporting, workflow programming, user exits, ERP programming, interface development, package code modification.
- ERP implementations goes into 5 stages, design, implementation, stabilization, continous improvement, transformation.
- module selection
- table configuration
- code modofocations-- which is great flexibility bu backward compatibility injures.
- no change
- incremental-- relationships among tasks are customized
- radical change
- comprehensive understanding of ERP vendor reasons underlying
- developing an enterprise software or networked database software
- managing a large scale software project
- wide rang of understanding business processes and the evaluation of the process
- creative thinking for redesigning business processes
- need for large scale organizational change management
- Framework let a company resides in appropriate cell and thus figures out effort needed
- A variety of modules implemented using customization options mentioned in the article.
- Case is about implementing order management module while other modules are already implemented.
- they formed a war team that is appropriate for such project
- the existing software would be changed without any business reengineering.
- They thought they had enough expertise to implement ERP by themselves.
- In JD Edwards order processing tables are totally different identified.
- Grouping orders, customers is needed to manage discoutns or incentives.
- But marketing people have totally different and not organized procedures.
- Software system needed to make standardize pricing strategy of marketing.
Key performance indicator
Before and future analysis and compare them,
ERP implementation alternatives
In house developed solutions
Best of breed Find best for each kinf of system and combine them if possible
Keep legacy system
Current State --------------------? Fıtıre State
Figure out each of alternatives options. Then after choosing right solution then select the provider,
How do we select the provider,
-we can go and visit them
- we can have some presentations from different vendors, benefits and options can be explained by them
-That gives a basic overview of what a system will look like.
- ask a lot of questions or visit other companies who has an experience from that company,
SAP has user groups that can be questioned about other companies’ experiences.
Best of breed implementation
Advantage? you have bargaining power, functionality advantage
Disadvantage? upgrade difficulties, integration, different kinds of experience, cost disadvantages, integration point support can be difficult
How an ERP consultant can understand a company did not do his homework,
--lack of documentation
--must know business processes
--if they do not do that consultant must work extra hours to extract business processes
ERP system comes with its own practices somehow customizable,
-- first company must pass through the ERP systems’ best practices to get a taste of the system.
-- the way the erp system goes for the companies’ business processes.
We talked about physical infrastructure of an ERP system. Servers such as web, gateway, database, sybel.
We talked about Sybel software clients.
What would be reasons a salespeople would not use an ERP system
--Salespeople would not want to share their experience
--Salespeople use personel relations
--Depending on sales differnt things can be thought,so it is not easy to computerize the data
--It is not easy for a salespeople to enter data into a computer.
Organization Change Management
1- Organizational change management looks like soft but it is really the hard stuff.
2- The goal is to learn what can go wrong
3- Organizational cahnage is to change the functions of the organizational units.
4- The key part of change management is communication, to take commitments.
5- İs there a dedicated team for organizational chane.
We talked about WelchAllyn.
6- We talked about general structure of SAP implementation on WelchAllyn
7- There were differnt consultants , and everytime a different person came to team meetings. This was very disrupting.
8- There were to kinds of challange, technical stuff and people stuff
9- Five dimesnsions
b. Role development
c. Super user developments
e. Business processes
10- Culture eats strategy for breakfast every day.
11- People do not want to learn purposes, just the stuff they will use
12- They think thet do not need any practice
13- Some other wants to learn the purposes.
14- Core team is trained to understand core functions, and they will be used to train other people at the company.
15- Training is a huge HR project in itself that goes with the big project hand in hand.
16- There is a huge process in documentation.
17- Arranging rooms, schedule, manage invitations is not easy.
18- After training practice sessions are arranged.
19- Tests, scoring...
20- Training is just training, real life situations are harder to manage.
After training, communication comes into picture
21- İnternal project level communication involves project team people communication
22- End user needs communication handling
23- İn order to take support from different departments, we need to communicate.
24- To prevent fear, insecurtiy, some type of chaos, we use communication, no need to be afraid, this gonna make good use, better process, we will have trainin sessions.
Securtiy/ Role Development
25- New responsibilities after SAP
26- New jobs evolve
27- New SAP transactions to do their jobs
28- When we think about authentication, we talk with roles.
29- We develop roles and security acess codes, than assign these to people
30- But there would be changes, when the system goes to live.
31- Super users and/or power users must be identified and trained.
32- 10% of end users, must be natural leaders
33- As super users leran over time, there will be fewer calls to HelpDesk
34- It is hard to prospect super user issues for the typical first weeks.
BUSİNESS PROCESS PROCEDURES
35- Strategy and tactics to capture, document and control business process procedures
36- What docs to control and store, where and how to control ans store
37- Web sites for easy access, to SAP On line Help.
38- BPP – Business Process Procedure – a document to define steps – how each transaction is used within SAP system as configures in your company.
39- These documentation is a concurrent process to implementation.
Strategic alternatives are; keeping legacy systems with no change, employing "best of breed" solutions packages which are not thoroughly integrated, employing an ERP or utilize in house development team to devise an ERP or non-integrated solutions package. Among these ERP implementation has the difficulties of requirement of change in the organization and an extensive process to adopt ERP. Best of breed solutions, on the other hand, will require many consultants, a larger group of admins and maintaining personnel, potentially higher costs and more comprehensive work to upgrade the system whereas it does not offer integration between functional groups. It is important to note that a best of breed application may be implemented to a compatible ERP system, if it is more desirable to do so.
In the vendor selection process, a core team will assess the potential vendors. This, of course, requires an awareness of vendors and their products at the first place.
Typically, a firm will learn about opportunities via vendor presentations, mouth-to-mouth or attending seminars. Sales people are to be communicated carefully though since they probably are not familiar with implementation and compatibility issues. Another key issue is to map your business processes before starting the implementation as consultants for implementation will need them and success will mostly depend on "doing your homework"
We talked about difficulties in making sales people adopt CRM and some other cons of it.
Organizational Change Management
This is perceived as a last and easy step; "soft stuff". But typically it will turn out to be the "hard stuff" as people will realize that changing other people is the most difficult part. Since most employees will be afraid of losing their job or doing something that they are not used to do, there will be friction in the organization. This is not a solely technical issue and it is about culture. Using right people for it is important.
We analyzed OCM process in Welch Allyn which is an Syracuse medical company dealing with medical diagnosis devices. There are five parts of OCM.
-Training: It involves core team training, which is about presenting the system with its capabilities and opportunities, goes on with management seminars and end-user traning to support adoption and ease of usage. Practice course must be the main element with theory.
Attendance and attention to courses should be followed via surveys or simply taking attendance.
-Communication: It should involve bottom-up and top-bottom parts. Communication must be devised so that fears will be overcome and adoption of program will be successful.
Of course, communications should be designed on a audience basis.
-Security/Role Development: It involves grouping different tasks and transactions and giving authority to appropriate person to view appropriate data. There will be many requests to examine other transactions than previously planned ones but as long as job did not change, it should be rejected.
-Super User Development: Super user is a computer literate, helpful person who is responsible for communicating the system to people and for helping fellow employees to use the interface. The person does these along with his/her regular tasks. This is an important part to over come friction in the organization via communication. Super users should be trained further, though.
- Business Process Procedures: It is mapping business processes of the company (workflows) so as getting ready them before training. Also, pre-ERP business processes and post-ERP processes should be mapped along with implementation.
In-house developed systems
Best of breed approach – taking the best systems from different vendors
Keep legacy system and improve whatever needs improvement
1st stage: Current SWOT analysis
2nd stage: Future SWOT analysis
3rd stage: Options in order to reach future desired and estimated state
4th stage: Choose the provider and the system
These vendors come to the potential companies and talk about their systems.
Companies should ask lots of questions in order to understand the exact benefits of the vendor system since there could be extra costs or different needs in order to use that feature.
Sales people do the presentations most of the time, implementers are different people. So, sales people do not care much.
Best of breed: bargaining power is the main advantage; hopefully you take the best products of each vendor so you can achieve a better system at the end.
But you have to manage the upgrades of different companies. You always have to manage the integration points.
Cost disadvantage since you need different consultants for each product.
If there is no clear documentation of business processes, then it means they do not know the business processes in detail.
When you buy an ERP system, it comes with some business processes in mind. So consultants have generally in depth knowledge in terms of generic business processes.
Sales people generally do not want to use information systems:
Since they are paid in terms of their sales amount so they do not want to share the information with others within the company
In most of the companies, they do not have good evaluation systems so they are not interested in seeing the reports of sales people
Moreover, sales people are only interested in sales and if reporting is not a part of the evaluation process they would not report.
Organizational Change Management Presentation
In many ERP projects, most of the companies did not consider the organization change part of this project.
Communicating expectations is a key part of OCM.
OCM is a series of initiatives to prepare your company to the change.
Commitment of the employees is also important for OCM.
Technical stuff vs. people stuff
People stuff is training, communications, security authorization, super user organization, business process procedures. These are all initiatives that involve changing people behavior.
Technical stuff is blueprinting, configuring and etc.
Which one is harder to change?
Company culture really matters in strategic changes and decisions. Culture includes values the company holds, behaviors, leadership, and customers.
Culture and the view points really affect the success of the project.
Training has several elements:
Core team training is important so they will be involved more and understand the features of the system
Management seminar – ensure management understands what is going on
End user training:
Training needs analysis
Develop course contents
Deliver training courses
After training – practice before go live
Getting employees to see SAP as an organization and business process change
When training is approached as a software project, participants focus on “how to perform their own transactions”
1st part of the OCM is the training and the 2nd part is the communication.
It is important in order to take support and commitment of every department and user.
Security / Role Development
At the beginning defining the end users access needs could be a difficult task.
Super User Development
Use these people to increase the communication within the organization. Also, we can use these users for training purposes. Super users could be used to elevate problems. To distribute support within the organization is the main idea.
You want people who know about the process.
You select the key users – good workers. They need to be helpful. You need to ensure that super users know where to get help.
Super user workshops can be useful in terms of improving the ERP system.
Super user trainings can be organized so they will transfer their knowledge to the regular users.
Business Process Procedures
BPP is a document to define steps – how each transaction is used within SAP system as configured in your company.
OCM initiatives are inter-related – support and enhance each other.
OCM is hard stuff because you are talking about changing people.
Do plan the OCM and have a significant budget. At least 10% of implementation cost should be put apart for this purpose.
* We need to find a match between the ERP and system processes through customizing both the system and the organization.
* Technical customization: Changing the system à this includes module selection, table configuration and code modification. As you move towards code modification, the cost increases.
* Process customization: Changes in tasks and resources, incremental changes in relationships, rethinking and radical redesign. As you make more radical changes, customization increases.
* Determine where your business fits within these customization options and make your decision accordingly (matrix, 3 levels on process change capability, 3 levels on technical change capability-Tables II,III and IV in Luo and Strong).
* Volkoff article talks about the difficulties in implementing different pricing strategies to the ERP system and hence the difficulties faced by the firm in billing its customers. However, it also mentions a culture that has no discipline, no control and no desire to change at all. With these in mind, they would like to implement ERP and find solutions for the pricing module. In my opinion, it is a mistake to implement ERP in such an organizational culture.
* We have learned about the SAP software in general, which was a different experience. I experienced that the SAP is pretty complicated and difficult to use for first timers. No wonder people have high resistance against using it! However, it would be nice to simulate a business flow using different modules, so that we could see how convenient SAP makes people do business.
* Sales people think ERP is a waste of time and do not want to use it.
* OCM: Organizational Change Management. Communication is essential. Changing organizations and people seem easy, but actually people can be very resistant against change. The first-hand example is me, who was resistant to use the SAP during the lab session, when I experienced how difficult it is to use it. That is why OCM exists and companies depend highly on it.
* We learned about Super Users. I remember that from every department a super user is picked and those people form the core team for the ERP system. They wear different t-shirts and hats to distinguish themselves in a funny way within the organization.
* Business Processes and Procedures: Deciding on which documents to control and store, where and how to control and store these documents.
The key personnel from the key departments related to the ERP module should be placed in the ERP implementation project team in order to assess the suitability of the ERP system to the process.
Employees, departments and end users of ERP systems should be convinced related to the benefits of ERP implementation before the implementation starts.
ERP projects could be beneficial in terms o f assessing and determining the main business strategy of the related departments since before the implementation every department should analyze and re-examine their processes in detail in order to match the process and the system.
Highly customization of ERP systems could be risky in terms of obtaining future help and upgrades. Moreover, excessive customization could be very costly for the company.
Systems used for core activities of the firms should be examined in more detail before the implementation since they are the strategic ones.
In order to integrate the activities, business process rules must be carefully specified and data must be defined in ways that make sense for different department users.
Key department should certainly be involved in order to sustain the future health of the ERP system because if they were not involved then, they would not know the essentials of the system. Therefore, they will create new stuff that does not fit with the system.
To conclude, implementing an ERP system in an environment with no control, no discipline and no desire to change would not work.
A Framework for Evaluating ERP Implementation Choices
The most important issue in ERP implementation is catching the match between the ERP system and the business processes of the firm.
In order to match these two things, companies should assess their technical and process change capabilities and the overall capabilities.
Traditionally, systems were developed and designed in order to fit with the current business processes of the firms but now many experts suggest that it is less costly and easier to change the business processes for the ERP systems.
ERP implementation is a very challenging task since it results in large-scale organizational changes.
Every ERP system has a generic best practice in mind but as discussed in the paper these best practices are not universal and there exist some cultural differences between companies.
After the review of the previous class
- Siebel is CRM software product of Oracle.
- With CRM software, customer data such as transaction frequency and habits is stored in a database.
- Using this data and after analysis with relevant tools, sales and profitability figures can be increased substantially.
- There were too many details about the infrastructure of Siebel which were not so relevant to the course material, in my opinion.
- ERP is just a tool, so it does not guarantee to make good results. Therefore, companies should carefully decide on whether they need ERP or not as it is an expensive software!
- A company can need an ERP system for:
- Data integrity and data sharing
- Accurate Accounting
- High control level
- Before the decision to implement an ERP system, two main analysis should be conducted: SWOT analysis and GAP analysis.
- Internal (strensths and weaknesses) and external (opportunities and threats) analysis are both of the interest of SWOT analysis.
- We should conduct SWOT analysis both for current position of the company and for the position after a possible implementation of ERP system. By this way, we will be able to see the benefits and additional capabilities related to implementation of ERP system.
- In the GAP analysis, the company determines where it want to be and currently where it is now. Then, the company decide on the proper strategy or steps to reduce this gap between current and desired states.
- Elevator speech is a speech by which someone try to transfer its ideas to probably his executive in just a few seconds or very short time. As it goes on only within a very short time, it is informal and it does not include details of the idea.
Problems may arise in environments where there is no control.
Also, there should be a need for change for a successful implementation
match erp system & business pocesses
change system: technical customization
change busines: process customization
module selection, table configuration, and code modification
as you move right, cost increases
changes in tasks & resources, incremental changes in relationships, fundamental rethinking and radical redisgn of elements
as you move right, customization increases
make matrix of these 6 items 3x3 and determine where a business fits
technical change capability:
overall ability to customize ERP systems; 3 levels
-understanding of default ERP system processes, configurations, and built-in options
-develop and modify large-scale software in a networked database environment
-organization’s ability to manage large-scale systems development projects
process change capability:
overall ability to customize business processes; 3 levels
-understand their existing business processes and their business environment
-design new or changed business processes, as well as implement these designs
-managing and coordinating large-scale business process changes
make a matrix 3x3 and see what an organization can do
no worries, training & hiring consultants help to improve these capabilities
do the feasibility using the 2 matrices and decide what to do
Similar to the lessons learned from the class discussions and other articles, implementation of ERP will not help unless you have a certain strategy with well-defined business processes, plans, and discipline. In this case, benefiting from each flexibility capability of the system makes things more complex and does not lead to anywhere. Rather, flexibility capabilities of the systems should be utilized in line with the organization’s business units’ strategies, plans, and rules.
Also, having employees in each business unit ready for implementation by believing that there is need for it is crucial in the success of the implementation project. In this case, design and implementation of the order management module became too difficult since marketing people – the key personnel knowing the flow well – were not enthusiastic and motivated for implementation. They did not believe in the benefits of ERP to their business and therefore were not helpful to the project team.
We have discussed the importance of having people knowing the flows well in the implementation project teams. It has been pointed out that from each key business unit related with each module to be implemented, people who know the work flows, processes, and the general practices well should be involved. This issue’s importance is also seen in this PSDC case. Order management is well known by marketing and sales people since they do the daily practices, but for reasons I have mentioned above, they do not get involved in the implementation preparation work. Rather, a manager in finance gets responsibility for this. However, the work gets stuck after a point since nobody in the team really knows the marketing-ordering-pricing procedures. So, it is understood that for every implementation case, people form the related departments should be involved.
A Framework for Evaluating ERP Implementation Choices:
Different from our class discussions, in describing ERP, the risks involved with its implementation, its benefits and the reasons for failure; the article points out that there is a gap between the producers of the system and the implementers. Sales staff of the ERP vendor and third party consultants physically contact with the organization (the implementer) rather than the system writers.
As another issue, it is pointed out that ERP is a package solution and it is designed for serving as many customers as it is possible. So, it is not a tool that is designed for individual organizations; rather, it is an industry best-practice application. Also, the article points out some researchers thinking that the systems are actually not universal indeed.
The success of the implementation relies upon the fit between business processes and ERP systems. There is a positive correlation between the success and the fit. Accomplishing this fit is the main goal of customization.
Customization is defined in two parts: technical customization (adapting the system to the current business processes) & process customization (vice versa).
Technical Customization: There are three types: (1) module selection, (2) table configuration, and (3) code modification. Module selection consists of the least level of customization; there is no altering of the system but it is usually not sufficient for the needs of the organizations. Table configuration contains risk and necessitates a well understanding of the configurable options within the system. Code customization is the extreme of customization where the codes are re-written for some processes. While it provides the greatest flexibility to the organizations, it involves the highest risk among the technical customization options.
Process Customization: The categories are: (1) no change, (2) incremental change, and (3) radical change. If the company does not prefer to change the relationships among tasks and configurations of resources, then it goes with the no-change option. If improvements are decided to be made between the relationships among tasks and configurations of resources, it is the incremental change category. Or, the company may go with an extreme change of its processes; radical change. (Table 2 in the article).
For customization, it is clear that organizations must have some capabilities. These are classified under two headings in the article: Technical change capability & Process change capability; each related with technical customization and process customization, respectively.
Technical Change Capability: It is the overall capability for technical customization of the ERP systems. It includes understanding ERP configurations, options, the ability to develop large-scale software in every aspect, and the ability to manage this system with enough resources.
Process Change Capability: The capability to customize the organization’s business processes consists of having a ‘change’ capability on the enterprise scale with a design capability and creative thinking. As in the technical change capability case, it also necessitates managerial abilities for organizational change and project management.
Table 3 summarizes well that how the overall capability for customization is evaluated by the article.
These capabilities are not static; they can be improved in time by learning from experiences.
The Public University (PU) case shows that different levels of customizations according to the related capabilities of the organization may be applied for each module of the system. There is not only one way to customize general for the whole modules of the ERP system to be implemented since ERP implementation is actually not a single individual project. Rather, it is a portfolio of projects.
In conclusion, before implementation, the organizations should: (1) identify the fit between its own business processes and the selected ERP system, and (2) evaluate its own ability to manage these changes.
We have also discussed when choosing the provider, how can a firm get to know the provider firm. We have talked about the presentations, seminars, meetings, etc. by giving the SAP Users Group.
It was also noted in the discussions that, there is the risk of losing your bargaining power as an organization once you signed the contract with the provider – especially, with a major provider in the sector. This again brings us to the discussion that being a small customer of a major provider may include high risks associated. In order not to lose the power within the relationship, the company may choose to work with a small vendor, but as we discussed in the first two days, this has its own disadvantages too.
We have discussed about the “homework” of the organizations before the implementation. This includes to analyze your business processes well by making workshops and to ensure the knowledge exchange with the consultants during the implementation. If the organization has not done its homework, the consultants should be making them to do that.
Organization Change Management (OCM)
· It is clear that organizations go into a radical change when ERP implementation decision has been made. The change should be managed as well as the implementation project itself. The change should be treated as an individual project and be managed accordingly. There should be a dedicated team / leader to the change management.
· We have discussed the Welch Allyn case that OCM has been applied very successfully; but it was clear that managing it (with the trainings organized, the communication capabilities involved, business processes analyzed & documented) isn’t actually as simple as it seems.
· In the Welch Allyn case, OCM was implemented in five parts: (1) Training, (2) Communication, (3) Security/Role Development, (4) Super User Development, and (5) Business Process Procedures (BPPs).
· In analyzing the change, the culture of the organization should be emphasized. It may prevent the implementation of the strategy as it is. This may be seen in all of the five parts of OCM. When trying to manage the change, strategy may cause things to change from planned: “Culture eats strategy for breakfast everyday”.
· Training: Training is so important that, it should be treated and managed as an individual project itself. There are several stages of training: core-team training, management training, and end-user training. Culture, as mentioned before, plays a significant role in the success of training programs. Training and getting efficient results from it is indeed difficult since the employees would be reluctant for training due to their busy jobs and workloads. Also, the training materials and the design of the classes/class hours, the shifts should all be organized well and according to people’s programs. Training materials should include thing for practice as well as the theory of the system.
· Communication: It is needed very importantly in order to gain the commitment of everyone within the organization. Having a communications plan is a must; it states the communication channels defined for each group of audiences within the company and the schedules. Communication channels differ according to the audience and the specific goals of the communication with that audience group. In the Welch Allyn case, the success of the communications plan was not tested, but, in the class, we have discussed that it can be tested through different measures.
· Security/Role Development: This includes identifying the accesses of every employee to the system and it comes with defining the roles of everyone within the system. In order to define the roles, the transactions should be grouped and analyzed by looking at each individual and their participation of each flow. Then, we may decide about their roles and the relevant accesses to be given to them. Accesses may differ as monitoring access, modifying access, deleting access, etc. Each line manager should be included in this process since they are knowledgeable about the processes. Also, there needs to be a process to change or modify the accesses after they have been assigned to everyone – there should at least someone assigned for this because needs for modification will definitely occur after implementation as people start to practice their everyday-jobs with the system.
· Super User Development: It is the key component for communication. Super user means a person responsible for leading the implementation and helping to the people to start to use the software in their everyday practices; on a departmental basis. Approximately 10% of end-users should be chosen as super users to help others. This also reduces the otherwise significant workload on the helpdesk. Super users may be selected among best knowledgeable people; but not always, since they may not be enthusiastic; the motivation of the employee to become a super-user is in most of the cases more important. There should also be some super-user workshops and trainings and some benefits (like bonuses or additional fringe benefits) may be given to the super-users in order to motivate them and to make their job more appealing.
· Business Process Procedures: They are the documents specifying business processes; that are, specifying how each transaction is used within SAP system as configured in the company. This is about documentation management; documenting the workflows/business processes.
· The meaning of the workflow is similar with that of the business process.
· Preparing the business processes should be a concurrent process with implementation. The goal is to get them ready for training purposes and Go Live use; the output of BPP is an input for training.
· Plan for OCM should have a separate budget; at least 10% of the implementation budget.
· Identifying key people is crucial in OCM.
· The main failure would be to consider OCM as solely a technical project.
- Best of breed (best solutions/modules from different providers and their comination)
- Customized development (in-house development)
- Keep going and improve whatever needs to be improved
- Convert everything to MS Excel
yERP so what?
The first task is to select the provider; for this you,
Invite/presentations, let vendors talk
Look at what others do
You should not rely on the presentations; ask a lot of questions about features etc; price and licenses..
Extras, costs, man hours should be asked for.
There are SAP groups where you can learn about what I should ask my vendor
You should keep in mind that vendors are not implementing
Best of breed solutions have certain disadvantages as;
Difficulty in managing upgrades
Different systems, different admin skills (coding language or what)
Cost disadvantage? Different types of consultancy costs will incur
Best of breed, is it the best in terms of functionality? Some people claim this however this might not be the case.
To be successful in the implementation prior to the ERP your homework is to analyze your processes. As a consultant in order to find out if they did their homework look if they ask questions, if they say yes to everything, if they don’t know why they implement ERP, if they don’t have documentation of business processes. If they don’t have it you should have them go through this. Workshops can be conducted for this.
ERP comes with certain flexibility, and when consultants come there is some exchange of knowledge/information.
For the selection process it seems infeasible to check whatever is possible with that solution. Vendor presentations, and talking to people who use ERP is what you can do.
After selection go through courses/trainings to see how it goes with your functions.
Sales people keep track of information about their customers.
They don’t want to share information because you work on commissions, they build personal relationships which makes them powerful, salespeople don’t take this process as a part of their job it just looks like time consuming task with no benefits to them.
There needs to be a mechanism for evaluation and make people write down the information.
Organization Change Management
OCM is regarded as soft stuff but turns to be hard, since appropriate resources are usually not allocated.
OCM initiative can improve company’s success levels.
What is OCM?
Serious set of actions
People’s job changes
Communication is a key point
Ask questions, why are you here, what’s your involvement, do you have a dedicated team
In the example given the company was growing and the IT was not supportive enough.
A single global system was to be implemented.
The project was led by the VP as Champion.
Security and role development
Business process procedure
Super user development
- Culture eats strategy for breakfast every day
Culture should allow (make room for) change (entrepreneurial vs. bureaucratic, risk taking conservative, trust vs. fear, etc.)
Underestimation of the complexity leads to unsuccessful projects.
There is not so much time, they have work plus training and on the top practice is required
Learn as less as possible, just what you need.
Just tell me the answer
Question the purpose
- Training starts with the core team training. (information exchange, understand the capabilities)
- Management seminar
- End user training (training needs, contents, delivery, after training-practice) exams, qualifiers before giving access.
Refresher courses are necessary for newcomers.
Courses are though, you have to prepare courses, write down material, come up with exercises and the set up must be done.
Who will train? Do you have your own key people managers that can contribute to the training, who could deliver the training?
An outsider specialist does not know your company, and your processes, they need to be backed up about the process.
Hire documentation specialists
Arrange training and manage back up for your functions.
Sending invites, make sure people come to class.
1 administrator and one database for the training
Is all communication the same?
We need to communicate with end users, other plants, organizations.
Main goal is the consensus; avoid fear anxiety, insecurity among employees.
In a communications plan: stakeholder and audience, channel, objectives, frequency, communicator, date and time should be included.
Team lunch, impact project management team meeting, impact newsletter, weekly sire leader, cost of meetings
Branding, banners, boards
How to measure effectiveness is difficult.
Do people show up?
Polls? Might be ways of measurement
No time, there is real work to do is the people’s attitude.
Role development and security
You look at what people do at a company, define transactions and group them. These groups are your roles.
Then you look at the individuals and assign roles to them.
There are also view roles only.
When you go live you need to modify access, and change security roles.
Roles are built from scratch there might be templates
Super users are knowledgeable, you go to them when you have questions, they help elevate problems, 10% about all users. They also need help and learn throughout time.. they learn with the helpdesk, helpdesks know about all transactions.
When you go live there should be a certain level of understanding.
You select super users there are more than one, and they are chosen on departmental basis.
Super user location and function matrix.
Super user workshops and trainings separately, so they can help others.
BUSINESS PROCESS PROCEDURES
Documentation creation and management.
Not the same as configuration management.
If you do after implementation you won’t be able to use it for training.
The goal is to get them ready concurrently.
Difference from business blue print? Transactional, blue print is a managerial tool. You don’t use blue prints for documentation, blue print is mapping your procedures.
Security will determine training courses
BPP output is training document input.
Super users are key communication, key feedback on security
KEY learning points
Plan budget and resources! At least 10% for OCM
You need to focus on people even though this is a software project