Lessons Learned, Week 2

Decision on whether to use ERP:
- The initial need for ERP arises from several reasons such as; growth in the company, current systems not handling the load, increase in business complexity, to improve processes and to reduce costs, to increase financial control, to obtain better information about operations, for accounting purposes, or as a system to maintain data integrity with increase in efficiency.
- On the other hand, some companies may prefer not to implement ERP due to the following factors: resistance to change, high costs of implementation and additional modules, high development and integration costs, ERP implementation is not in line with company strategy, the company has its own compatible software, costs do not justify the benefits, or company does not have enough staff to work on ERP implementation project.

Success of ERP: 80 percent of ERP projects fail in implementation phase, meaning they do not meet one of the following 3 criteria for success: meeting the needs and requirements of customers, meeting the budget, meeting the timeline.

ERP vendor firms are now moving on to Europe, Middle East and Asia because US market is in maturity phase now. They initially target larger and medium sized companies but they will move toward smaller sized firms in time.

There are 2 main potential analyses before deciding to implement ERP: SWOT and GAP Analysis. SWOT Analysis is about strengths& weaknesses of the company(internal analysis)and opportunities& threats in the environement that the company operates(environmental analysis). GAP Analysis involves both business and technology analyses, is about where I am (as-is), where I want to be and how can I go there. ERP is a possible resource to move on to the target situation. GAP analysis is related to Enterprise Architecture (EA) concept developed by Zachman.
- EA is the analysis and documentation of an enterprise in its current and future states from a strategy, business and technology perspective. It helps to integrate and manage IT resources from a strategy and business driven viewpoint.
- From the EA Cube Framework options, it is important to choose the one that is the most understandable. Also its components should be checked to see if it fits your company’s strategy and structure. Also the level of detail should be in line with company needs.

EA and ERP comparison:
- EA and ERP are not competing applications; EA can help you decide if ERP is beneficial for your firm.
- Both EA and ERP need change management, strategy alignment, and continuous maintenance activities (ERP involves adding new modules in time, EA should also be reviewed periodically.)
- Both EA and ERP need insider information as well as external expertise to implement.

Business Involvement in ERP:

- To provide resources and show commitment, putting corporate VP’s and functional sponsors in project steering team is important.
- Business process owners who are responsible in business processes and who has right to change business process, should be employed.
- Successful people within organization should be trained first and used as internal consultants in training other employees. (these people are called super-users)
- Some workers should be assigned as role profile owners, approving security requests and deciding who has access to what information.

Organizational Change Management:

- ERP Organizational Change management has 5 initiatives which are; training, business process procedures, communications, super-user development and security/role development
- About 25% of ERP budget should be spent in change management
- EA organizational change management initiatives include; top supervision, training and communication.