Tuesday, June 17, 2008

Lessons Learned Posting (June 16, 2008)

ERP includes integrating different business units to each other through software links as a whole business process. It was also mentioned in the class as combining right information with right people in the right time.
ERP allows real-time updates so you don’t need to update the database on a regular basis.
It may be efficient to analyze your business processes and identifying bottlenecks (reengineering) before implementing ERP. However, it can also be claimed that ERP should be well enough to enable customization according to every different business processes. Also, sometimes, identifying bottlenecks can be easier with a well-working ERP system in-house.
ERP is just a tool; it does not give way to a successful strategy. It can only help to implement your strategy more effectively.

Providers of ERP Systems:
ERP system providers are considered in four main categories (one of which has been added by one of our classmates):
(1) Major Players (such as Oracle, SAP, etc.)
(2) Smaller Ones (such as local firms)
(3) Open Source ERP System Providers (on a voluntarily basis)
(4) On-Demand ERP (SAAS)
Major Players:
Pros of making business with the major providers of ERP systems are: strong support, international know-how, the fact that high competition in the market forces these major players to provide better products and services.
Cons: for bugs, you need to wait for the next versions; you need to upgrade; and sometimes you may get more functions than you actually need.
Smaller Ones:
Pros: They are cheaper, easier to customize (hopefully). In addition, in countries like Turkey, language can be a major reason for choosing local ERP providers in order to have programs using Turkish as a main language.
Cons: reliability of these small providers is an important issue. They might go out of business.
Open Source Providers:
Pros: You can develop your system by yourself. It is free. Also, it has been discussed that support is cheaper and/or free, if available.
Cons: It has been mentioned that support is cheaper and/or free. However, most of the time, support is not available for these open source systems. If you don’t have your own developer in-house, buying open-source systems may not make sense.

Costs of Implementing ERP Systems:
· Implementation Cost: It includes consultancy costs, the time spent on implementation, etc.
· Maintenance Costs: maintenance should be made on a regular basis and these future costs should also be included in the total costs associated with ERP implementation.
· Infrastructure Costs
· License Fees: Although these amounts are too small relative to other costs, total cost of ERP systems also includes license fees.

· Patch means collecting a number of bugs and developing a set of fixes for these bugs. These patches are added to new versions of ERP systems. This is applied mostly by major providers.

SAP is a major type of ERP systems.
Applications, data, and presentations are all separate within SAP. So, you can add applications and make them use the same data.
There are different modules within SAP, each having different two-letter codes. Each module is integrated and related to each other. As an end-user, you might even not recognize that you are using several different modules while working.

Who should be involved in the implementation process of ERP?
People from inside of the company knowing the whole work flows well. These can be department/line managers, or assistant managers.
Top management / key people
Here, best would be having key people (managers) knowing the workflows well.
Consultants. Each should be experts on different modules or sets of modules.
IT manager in-house.
Champion (Assistant manager has been given as an example for Tübitak).
Not as part of the core implementation team; but earlier in the implementation process, staff should be included too as daily users of the system.
In summary, as İnanç mentioned during the class, you need both sides during implementation:
(1) one knowing the system’s capabilities (mostly technical) -- consultants
(2) one knowing the work flows and the needs – in-house people
· The benefits of this process: After the implementation period, when consultants leave the organization, we would be left with our managers and/or staff knowing the system well. So, we still have some knowledge in-house. Other ways to ensure that you have still knowledge in-house can be well documentation, high level of training, etc.

Failure of Implementation:
· First of all, definition of failure should be made well. Since each implementation can be considered as a project by itself, time and budget constraints should be included too. So, failure can be defined within four dimensions:
(1) Not meeting the requirements.
(2) Not on time.
(3) Not on budget.
(4) For any reason, resistance to use the new system within the company.
· Within the failure definition made above, more than 70% of the implementation projects are considered to be failed.
· The main reason for failure is to treat an ERP implementation project just as an IT implementation. In that case, the issues in the above section (who should be involved in the implementation process of ERP) are not considered and implementation fails. Best example for such failures can be Y2K IT implementations.


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Tani said...

It is always important to understand the benefits and costs of SAP in terms of running a business, the handle of the effective implementation.Very good information shared in this blog. Thanks

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