1 UNIT II ERP Implementation CHAPTER 21 ERP Implementation Life Cycle :Objectives of ERP implementation Speed o Amount of time that

t a company has before the completion of the ERP implementation o Amount of the time the company would like to take. Scope o Functional and technical capabilities that the company wants to implement Resources o Everything that is needed to support the project o People ,hardware, software, technical support, consultants Risk o Factors that impact the overall success of the ERP implementation o Overall acceptance, return of investments, time to implement Complexity o Degree of difficulty in implementing, operating and maintaining the ERP system Benefits o Extent to which the company will utilize the functionality of the ERP system Different phases of ERP implementation Pre-evaluation Screening Package Evaluation Project Planning Phase Gap Analysis Reengineering Configuration Implementation Team Training Testing Going Live End-user Training Post-implementation

I.

Pre-evaluation Screening It is better to limit the number of packages that are evaluated to less than five It is better to do a thorough and detailed evaluation of a small number of packages than analyzing a dozen of packages. Pre-evaluation Screening is used to limit the number of packages that are evaluated by the committee. Eliminate the packages that are not at all suitable for the companys business process. The experience gained from implementation, the feedback by the users, the need to enter into new markets, the pressure from new competitors forced most ERP vendors to redefine and expand the scope of the activities & functionality of their products. Each package has a history (or origin) that determines the type of business which is best suited. Investigate the origin of the different packages Package Evaluation One of the most important phases of the ERP implementation Find a package that is flexible enough to meet the companys needs or find a software that could be customized to obtain a good fit

II.

3 The company should identify the system that meets the business needs and matches the business profile Important points to be kept in mind while evaluating ERP software includes : o Functional fit with the companys business process o Degree of integration between the various components of the ERP system o Flexibility and scalability o Complexity o User friendliness o Quick implementation o Ability to support multi-site planning and control o Technology- client/ server capabilities , database independence, security o Availability of regular updates o Amount of customization required o Local support infrastructure o Availability of reference sites o Total costs, including cost of license , training , implementation, maintenance, customization and hardware requirements Better to form an evaluation committee that will do the evaluation process People from various departments, top management and consultants form the team III. Project Planning Phase This phase designs the implementation process Time schedules, deadlines, project plans are developed Roles are identified and responsibilities are assigned The implementation team members are selected and task allocation is done. This phase will decide when to start the project , how to do it and when project is supposed to be completed Gap Analysis This is the most crucial phase in the success of the ERP implementation. This is the process through which companies create a complete model of where they are now and where they want to be headed. Design a model, which both anticipates and covers any functional gaps. Even the best ERP package, custom tailored to companies needs meets only 80% of the functional requirements. The remaining 20% of these requirements present a problematic issue for the companys BPO. One of the most affordable, painful, solutions entails altering the business to fit the ERP package. Other solutions include Pinning our hopes on an upgrade Identifying a third-party product that might fill the gap Designing a custom program Altering the ERP source code

IV.

4 V. Reengineering In this phase, human factors are taken into account Reengineering has 2 different connotations. The first involves the use of ERP to aid in downsizing efforts.(reducing the number of employees). It is best to treat ERP as an investment as well as a cost-cutting measure rather than a downsizing tool. The second use of reengineering in the ERP field refers to an ERP implementation model designed & used by the Big Six consulting firms. The 2 implementations involved on an ERP site are a technical implementation and a business process implementation Customization Main functional area of the ERP implementation Synchronize existing company practices with the ERP package rather than changing the source code and customizing it to suit the company. Configuring a companys system reveals not only the strengths of a companys business process but also its weaknesses Configuring the system explains what wont fit into the package and where the gaps in functionality occur. ERP vendors are striving to lower configuration costs. Strategies currently being pursued include automation and pre-configuration. Example : Baan has developed Orgware, an automated configuration tool. Implementation Team Training In this phase, the company trains its employees to implement and later, run the system. For the company to be self sufficient in running the ERP system, it should have a good in-house team that can handle the various situations. Select employees with the right attitude-people who are willing to change, learn new things and not afraid of technology and good functional knowledge Testing In this phase we test real case scenarios. The system is configured and now we have extreme case of system overloads, multiple users logging on at the same time with the same query, users entering invalid data, hackers trying to access restricted areas and so on. The test cases must be designed specifically to find weak links in the system and these bugs should be fixed before going live Going Live This is the phase where ERP is made available to the entire organization. On the technical side the work is almost complete:data conversion is done , databases are up and running On the functional side , the prototype is fully configured and tested and ready to go operational.

VI.

VII.

VIII.

IX.

5 Once the system is live the old system is removed and the new system is used for doing business X. End-user Training In this phase, the actual users of the system will be given training on how to use the system This phase starts much before the system goes live. The participants should be given overall view of the system and how each persons action affect the entire system. Each employee is trained on the job or task that he / she is supposed to performance the system goes live Post-implementation (Maintenance Mode) Very critical phase Once the implementation is over the vendors and hired consultants will go. There should be enough employees who are trained to handle the problems that might crop up. There should be people within the company who have the technical prowess to make the necessary enhancements to the system as and when required. The system must be upgraded as and when new versions or new technologies are introduced. Here, the organization should think in terms of the incremental benefits of the new enhancements. Everyone should be trained to work The training will never end It is an ongoing process

XI.

Why do many ERP implementations fail? Lack of top management buy-in, commitment and support Improper planning and budgeting Use of wrong ERP tool Lack of training Work culture of the organization

CHAPTER 24 Implementation Methodology Implementation methodologies look very much alike It is important to select implementation methodologies Company should look into minute details when comparing different methodologies Critical phases of ERP life cycle are o Adoption decision Question the need for new ERP systems Definition of system requirement, goals and benefits and the impact of adoption o Acquisition Selecting the product that best fits the requirements o Implementation Deals with custimozation o Use and maintenance Use of the product in a way that returns expected benefits and minimizes disruption o Evolution Additional capabilities are integrated into the ERP system to obtain additional benefits o Retirement When new technologies appear, substitute for another information system Managing the implementation ERP implementation is best handled within a project management context Series of activities, with finite duration, have end points Multi-disciplinary and team oriented Project management must have the right environment Organization of the ERP project team Project manager manages the implementation Project manager reports to steering committee, who review the progress and resolves disputes CEO leads the steering committee Project team works with project manager Vendors will appoint one if its consultants to provide support to project manager

Implementation Strategy Factors to be considered o Speed or uegency of implementation o Availability of people for carryinf out the implementation tasks o Availability of time for training all users o Cost o Confidence in the new system o Disruption of operations o Total timescale Big Bang approach a complete switch over Incremental approach implementation of modules are done one at a time Pilot project in organizations running multiple sites and plants, select one site and implement ERP. Pilot project should be selected carefully. ERP implementation plan Includes developing implementation strategies and schedules Who, when, what, why , where, and how of a project Enables the people to carry out a set of interconnected tasks in a coordinated manner Should address all concerns like existing system, o Effect of ERP implementation o Affect of employees o Work environment o Awareness of employee o Creation of ERP user manuals Project plan can be hand written, a spread sheet can be used or special packages like Microsoft Project can be used Risk Assessment Anticipate possible problems Assess their likelihood of occurrence and their intensity of impact Establish how they can be prevented Recognize that the project has potential to fail Prioritize the risks and its severity Budget Actual expenditure is monitored against the budget for the duration of the project If there are significant variance then ask for why? Cost Includes costs of packaged software, hardware, professional services and internal cost

8 Cost of Package software depends on scope, complexity and vendors Implementation of ERP requires the purchase of hardwares and services of many professionals Areas where process are likely to rise are o Hardware o OS o Database license fee o Core software license fee o Additional module license o Thirdpart software license o Integration of third-party software o Sontware customization o Project management o Consultancy o Training o Living and traveling expenses o Software maintenance or warranty renewal o Upgrades Few f these costs are one-off others are on going A long term perspective should be taken for a better picture of the expenditure Some of the indirect costs o Time and consequent cost of employee o Cost of temporary personals o Off-site training o Costs related to internal resources Danger arises when a budget is set but cost escalates o Area where cost is most likely to get out of controls is use of consultants o Sometime training cost Cost benefit analysis o It is useful to determine what the benefits are and whether the benefits justify the cost o Tangible benefits can be quantified o Quantification of intangible benefits is difficult Performance measurement Cost , time and benefit are performance related measures When a task is done , it achieves an objective. o The training os user results in better performance of a task and understanding of ERP concepts. If objective is achieved, it represents progress Problem Resolution It is desirable to record issues and their resolutions If an issue arises it is recorded

9 Keep track of the problems and how they are dealt with System Issues Tasks include the installation and commissioning of both hardware and software Technical supports How does the system perform when ERP application is under a heavy use? How quickly will storage space be consumed? Back-up procedure? Can live domain be duplicated? How many alternatives can be formed? Does the system locks if so how to unlock? How secure is the system? How are passwords managed? ERP implementation methodologies by vendors and consulting firms A methodology is a roadmap to an implementation Purpose is to deliver an implementation on-time. Vendors have their own methodologies Consulting companies also have their own methodologies A few vendor-specific methodologies o Accelerated SAP(ASAP) o Total Solutions Ernst & Young LLP o Fast Track Workplan Deliotte & Touche

Accelerated SAP(ASAP) The ASAP roadmap is a detailed project plan. The five phases are 1. Project preparation: Full agreement that all company decision-makers are behind the project Clear project objectives An efficient decision-making process A Company culture that is willing to accept change 2. Business Blueprint : The broad scope of mySAP is narrowed to fit the industry-specific process A comprehensive blueprint of the business ids prepared It allows the project team to clearly define the scope and only focus on the mySAP processes needed to run the business 3. Realization: A 2-way process First baseline system is configured System is fine-tuned to meet all of the business requirements 4. Final Preparation

10 Necessary adjustments are made in order to prepare the system and the business for production start-up 5. Go-live and support Procedures and measurements are developed to review the benefits os the mySAP investment on an ongoing basis. The Total Solutions It is a system of reengineering approach with five components 1. The Value Proposition Is the technology investment justified? Does it match the companys objectives What is the framework for making decisions? Is value being delivered throughout the process? What milestone will measure the projects progress? 2. Reality check This component assess an organizations change Ids the organization ready for change? Are there any hidden agendas? Is everybody on board with the nature, scope and pace to change? What are the managements expectations? 3. Aligned approach Here the expectations regarding short-term and long-term value are set. Evaluate alternatives to a comprehensive reengineering project Craft a best-fit approach. Communicate expected results to management 4. Success Dimension The right blend of people, skill, methods and management is important for the projects success 5. Delivering Value Measuring result and celebrating the success. The fast track work plan The five phases are 1. 2. 3. 4. 5. Scoping and planning : project planning is initiated Visioning and targeting : vision and target are identified Re-design : software design and development are started Configuration : integration is planned Testing and delivery : system ids delivered

It also identifies 5 areas as an individual thread to be oven

11

1. Project management project organization, risk management, planning, monitoring, communication, budgeting, staffing and quality assurance. 2. Information technology architecture - hardware and network selection, procurement, installation, operation, software and network selection, installation, operations, software design, development and installation 3. Process and system integrity security and audit control 4. Change leadership organization design, policies and procedures and performance measurements. 5. Training and documentation training design and delivery for project team. Management, end-user, operations and helpdesk.

ERP Implementation The Hidden Costs:The following areas are most likely to result in budget overruns (i) Training (ii) Customization (iii) Integration and Testing (iv)Data Conversion (v) Data Analysis (vi)ERP Consultants (vii)Brain Drain (viii)Continuing amitenance (i) Training Training expenses are high because workers have to learn a new set of processes Example :- A clerk who accepts shipments of raw materials is trained in such a manner that he becomes an accountant working in SAP environment ERP forces to do a huge amount of change management. This change reflects in the budget on the training line Training is the first item that gets cut when budgets have to be squeezed. But this is not correct. A successful training occupies only 10-15% of the total project budget Training cannot be avoided. We can keep it in a control. ie, Train an initial batch of employees who can then, train their colleagues. Adv:- (i) huge training bill is reduced (ii)People are more ready to accept the new system since they are trained by their colleagues. Customization Happens when ERP does not support one or more business process The big chunk of costs of professional services is customization This can easily outrun the cost of packaged EWRP software

(ii)

12

(iii)

Integration and Testing The three main areas that needs integration is 1. Various functional modules 2. Other eBussiness software solutions 3. Legacy systems Since ERP packages are very complex, interfacing is not an easy task. Testing the links between ERP packages & other corporate software links is costly. Fitting the ERP package into the companys system is costly Dont modify the ERP products core code. If it is modified, the cost of integrating & testing becomes high. Instead of testing with dummy data, test the system with a real purchase order from order entry through shipping. Data Conversion It costs money to move corporate information from older system to new system Corporate information includes customer records, supplier records, product design data and so on. Data Analysis Data from ERP system must be combined with data from external systems for analysis purposes. Heavy analysis requires the cost of a data warehouse in the ERP budget. ERP Consultants Consulting fees will overshoot the budget. Companies should identify objectives and consulting partners must use it when training internal staff Include performance metrics and time schedules for the consultants.

(iv)

(v)

(vi)

(vii)Brain Drain (Employee Turnover) ERP success depends on staffing the project with the best and brightest from the business and IS A Company should be prepared to replace many of those peoples when the project is over Create new HR policies Hire best people (viii)Continuing Maintenance After the ERP implementation is over, the team should not be sent back to their previous job , because they are valuable They now more about the ERP System as they have worked with the ERP vendors and consultants.

13

Organizing the Implementation:Introduction Explains how to organize the internal resources of the company for ERP implementation. Everyone should participate in the project since ERP system is an integrated package. All business functions must be represented in the project team from top level to the lowest level. Managers & operational staff should understand how the new information environment would work. A group of representatives from various departments will need to involve themselves at several levels. Effective participation of the in-house personnel is not possible without the full commitment of the top management. Composition of the Implementation Team: Company should depute its best and most efficient employees to the implementation team Opportunities should be given for them to excel within the company Implementation Team people are running the business. These people should be initiative, dedication, enthusiasm, team skills, no communication problem People with high grasping power, open mind to new technology, who love challenges are required Ability to think quickly, improvise effortlessly, innovate fast, act without hesitation is critical for project success. Organization of the Implementation Team:It contains the following 5 teams

14

(i) (ii)

Executive Committee Top of the chart is the Executive Committee headed by CIO or COO. It consists of companys top management and is headed by a person who is in charge for the ERP project implementation. This person is the leader in whom the company places its highest confidence This committee includes a liaison officer designated by the consulting firm A person from package vendor should be part of the committee This committee is responsible for monitoring and evaluating project to know its progress. Approves budgets and takes corrective actions when things when things go wrong . Monitoring mechanisms should alert the committee about disasters & delays in advance so that corrective & preventive measures can be taken. The committee should meet at least once a week for holding emergency meetings if required.

Project Management Team Comprised of technical leader and executive committee head. Has a senior representative from the vendors team. These people are responsible for conducting the scheduled work, administering the project, communicating with in-house team, reporting to the executive committee The executive committee head should monitor the implementation teams progress the contribution of the team members issues with the consulting teams head that people work in full cooperation that consultants transfer their knowledge to the in-house team

15 documentation is done properly even after the consultants leave, the system should be able to run smoothly.

(iii) Work Team Composed of people who perform the tasks in the project plan Tasks range from extracting information about the current system & monitoring the start-up of new system These people should dedicate their entire time & attention to the ERP project. Team spirit, cooperative attitude, good communication skills, patience, persistence and self confidence is required. The in-house team is the people with the knowledge of how the company works. The in-house team members are the first people to receive training on how to operate the software. Work Team will do the testing of the system The Work Team gives training to the end-users of the system. (iv) Technical Support Team Creates an environment that is suitable for software implementation. This team takes care of data migration, data back-up & recovery, hardware infrastructure, performance tuning of the database They are responsible that the machines run, network is functional and hardware infrastructure is in good shape. They should interact with the consultants & package vendors to arrange for hardware / maintenance ,back-up and recovery procedures (v) Administrative Support Team They make the life of all others in the implementation team easier. They are responsible for making available workspace, tables, conference rooms, telephones, stationery, filing cabinets and other resources for project team. They arrange meetings, conferences, inform to people, taking photocopies of documents, circulating them

16

. CHAPTER 28 Vendors and Consultants In-house Implementation Pros and Cons: Trial and-error method of ERP implementation cannot be done due to huge amount of investments involved It puts the organization out of business ERP implementation has to be completed within a reasonable period of time The in-house people designated to do the job should possess knowledge and skill Company should have people who are familiar with ERP package and technical issues A good professional needs at least 1 year to become reasonably good in an ERP system It is not possible to become an expert by reading product brochures and on-line help files Developing a good software package & successfully implementing it are 2 different propositions A good package need not be good at implementing its own product. If the same party is performing multiple roles, it can create problems The people who are to implement ERP system should possess the following skills Knowledge of how to organize and run a project of this magnitude Enough experience in handling problems and issues that arise during the implementation Good people skills Good Leadership skills Excellent training skills

17 If a company is planning to do ERP implementation in-house, it must hire experts and have them on the companys role. During ERP implementation, the company is wasting a lot of its resources and a lot of money on training. By getting the employees trained during the implementation, the company can save a lot of money. VENDORS Vendors are the people who have developed the ERP packages They have invested huge amounts of time and effort in R&D to create the packaged solutions The ERP vendors spent billions of rupees in research to come up with innovations With the evolution of new technologies, the vendors have to constantly upgrade their product. Vendors and vendor management Most ERP implementation teams include vendor representatives Vendor should supply the product and its documentation as soon as the contract is signed Vendor will guide the project manager and his team The vendor potentially has upper hand I n client-vendor relationship Vendor will appoint a point of contact , the vendors project manager He supports the project manager and manages client account and coordinates vendor provided resources Vendors project manager will be the first point of contact for resolution of problems All communications should be backed-up in writing to avoid misunderstanding Vendor is responsible for fixing any problem that the implementation team encounters Role of the Vendor The vendor should supply the product and its documentation as soon as the contract is signed The vendor is responsible for fixing any problems in the software that the implementation team encounters He should provide the initial training for the companys key users, people who play role in implementation The objective of vendor training is to show how the system works, not to show how it should be implemented The employees who are participating in the vendor training should try to understand the characteristics of the package and the impact of the system. The vendor also plays an important project support function and quality control Vendor makes valuable suggestions and improvements that could improve the performance of the system

18 Vendor participates in all the phases of the implementation It is the vendors duty to customize the software to suit the companys needs. This is because only the vendor knows the product well enough to make necessary changes. Customization means altering the product so that it is suited for the companys purposes. CONSULTANTS These are professionals who develop techniques for dealing with implementation and problems during implementation. They are experts in the administration, management and control of project types They have many years of implementation experience They are very expensive Big firms have invested a lot of money in developing consulting services and have assigned many professionals They understand the tricks & techniques of the trade and find out the mistakes that should be avoided. They have invested huge amount of money & manpower for business Consultants will be expensive. So company should spent best utilization of the money spent on consultants. Most expensive part of implementation is the Consultation charges Finding the right consultants is very important. They provide three categories of services- management application and technical Management consultant provide high-level direction for overall implementation and use of ERP system Application consultants process of communicating, teaching, demonstration and configuring software Technical consultant database conversion, source code modification, communication protocols, software installation. Role of Consultants Consultants should guarantee the success of the project They should show results to the satisfaction of the management. They are responsible to perform the activities at the scheduled time. Project plan has to be finalized They should add value to the project. By eliminating trial-and-error method, the consultants help in saving huge amounts of money, time, effort They should strive to improve the companys business processes They should decide the level of customization Consultants should balance their loyalty to the client and the project. Consultants should understand the total context and scope of the work They should maintain technical documentation on the project

19 Consultants should create a knowledge base and train people so that their work is continued. End-Users These people use the ERP system once it is in place They do the functions automated by the ERP system Due to the replacement of the old system by a new one, employees will experience a change in existing job, responsibility etc. Due to automation of business processes, monotonous clerical work is stopped & high valued individuals are obtained.

CHAPTER 30 Contracts with Vendors, Consultants and Employees Introduction Contract is an agreement between 2 or more people to do something If the contracts are not proper or if they have loopholes, there is an opportunity for the project participants (vendors, consultants, employees) to leave the company. The company should sign a contract with the parties like package vendors, hardware & peripheral vendors, networking people, consultants, employees who are part of the implementation team. Contract with the Package Vendor Most software vendors will have standard contracts, drafted by their legal department. The contract should be signed only if the terms & conditions are agreeable. Lawyers from both sides have to sit together before the contract. Any abuse or misuse of the package by the contracting company will be a violation of the copyright.

20 Package vendor doesnt allow modification or customization to the source code since it is their intellectual property. Any required change can be performed by the Vendor since they have complete knowledge about the source code. The vendor should be a partner in the companys future plans The vendor will be upgrading its product as technology changes. The company should get the benefit of these upgrades. The contract with the vendor should address the following Value of the software and conditions of payment List of deliverables( software, documents etc) Copyright and ownership issues Third-party software compatibility, integration or interfacing Conditions and concessions for acquiring complementary modules in the future or for increasing the number of end-users Cost of implementation training Cost of end-user training Annual maintenance fee Warranty or guarantee terms Terms and conditions for the receipt of new versions, upgrades etc Details of technical support onsite, telephonic Terms and conditions for customization Profile of the vendors team who will be assisting the company in implementation Other specific responsibilities assigned to the vendor. Things to watch out : Payment profile License fee based on named users or number of concurrent users What is the process for controlling software modifications? Who owns software customization rights? Who has the responsibility for sourcing new hardware? Cost of transferring software from old to new hardware and who will bear them? Restriction on who can use the software. Contract with the Consultants Consultants play a vital role in ERP implementation project. Company expects that Consultants make the project a success by implementing the project within time. Consultants will train a group of people so that there will be company people who can carry on the work. Company & Consultants agree the completion date, implementation budget and improvements.

21 The following should be included in the contract Profile of the consultants team with resume of each member Consulting fee and payment conditions The time schedule and the implementation budget The projected improvements in quantifiable terms and time required for showing results Implementation Methodology Terms & conditions of knowledge transfer & employee training List of deliverables Reporting mechanisms to the company management Project Monitoring and status reporting systems Contract with the Employees The employees of the implementation team are trained at the companys expense Their market value improves exponentially. It is natural for these people to find a better job offer. The companys performance suffers if these people leave without any warning or alternate arrangement. So it is best for the company to sign a contract with the employees before giving training If they want to leave, they should give notice or train another person who can handle the duties of the person leaving. The contract can stipulate that no employee can leave the company in the middle of the implementation project. The company should retain the employees by offering competitive salaries, challenging work environment, stock options etc. CHAPTER 33 Project Management and Monitoring An ERP implementation Project is complex in nature, involves a lot of people, requires the coordinated effort of a number of groups, involves a lot of money and has a long completion period (typically 10-18 months). People and technology are the two sides of ERP management. It is difficult to get a clear vision of the technology portion of implementation because of the vast combinations of hardware and software. IMPORTANCE OF ERP IMPLEMENTATION PROJECT MANAGER Project Manager has the maximum responsibility in ERP implementation So the manager should be chosen properly A good project manager always stresses

22 o Team work o Excellent technical expertise o Foresees the future o Accept blames o Listen to subordinates o Develop harmony o Lead by knowledge o Does not place blame o Excellent organization knowledge A poor project manager o Lacks communication o Poor listener o Rejects creative thoughts and inputs o Unable to translate vision o Does not have much technical expertise o Does not have ability to win the trust and respect of people o React without thought o Not people oriented o Places blames on others Project implementation is different from most managerial projects DECISION MAKING Project manager is the key decision maker If the project managers decision is to be overridden, it must be done within a steering committee meeting Project managers should be capable of making, defending and standin by every decisions Project manager derives power from commitment of corporate management to project Finish project according to the plan If projects are long, break the project and approve each section periodically ERP PROJECT MANAGEMENT Certain areas of traditional project management require a greater emphasis while others can be discarded Nine knowledge areas on which project management is based are 1. Project integration management: o ERP projects generally lack awareness of what is involved in their ranks. o Set up a full-time team, having members on special training workshops so they can understand what is expected from the team members. o Preparedness is crucial but is often missing

23 2. Scope management: 90% of ERP implementation ends up over time and over budget due to among other factors, changes in project scope. A lack of understanding of the scope of the system may result in conflict between logic of the system and the logic of the business. Key to ERP scope management is to identify the areas requiring workarounds and to understand their implication for the long-term activity of the firm. 3. Time Management: o The length of implementation time is greatly affected by the scope of the project, i.e. more activity regarding modules, sites and functions means a longer process. o Large portion of implementation time is consumed by customization o Try reducing number of packages that require customization o Consultants too recommend a zero modification approach what has now a days become a de facto standard 4. Cost Management: o Total cost of implementing ERP system includes cost of licensing , training, implementation, maintenance , customization, and hardware requirements, cost of migrating data, network infrastructure etc. o Like most software ERPs are priced on the functionality of the system and number of users who will access it o 10-20% of total project cost is spent on training. o This cost can be reduced by selecting a small group of people for training and make them train the other employee. 5. Quality management: o Ensure that the package is implemented in a manner which ensures the quality of the final system. o The system should be implemented in an efficient way and the objectives are met 6. Human Resource Management: o Requires the management to assemble the best possible team to plan, execute and control the project. o Top management must be visible in their commitment to the project. o Team morale is vital component for the success of the project 7. Communication management: o Organizations find it very difficult to communicate internally each department viewing its information as its own and being reluctant to share it. o The higher the levels of communication and interaction in the implementation team, higher is performance of the team o The members of the team must be able to communicate between themselves, with client, suppliers and all other stakeholders 8. Risk management: o ERP systems are complex and they require reliance on many different types of expertise

24 o To succeed the organization should have a risk mitigation plan 9. Procurement Management: o When selecting the package, it is critical to get vendors to state the extent to which their products will meet each requirement. o Package selection process requires many legal matters that are involved in ERP implementation GOLDEN RULES FOR SUCCESSFUL PROJECT MANAGEMENT In order to avoid failure the organization should: Have a clear, simple corporate vision and objective before you start Have a group dedicated to business process improvements. Also rely on experienced project managers Have successful project managers who are capable of anticipating what can go wrong. Organizations can avoid potential risks by incorporating the following into the company culture: Do not do things for the wrong reason. Identify the benefits that will result from your project. Involve key stakeholders as early as possible. All stakeholders- managers, implementation team, consultants, and employees should own the project. They will be credited for its success or blamed for its failure Failure is not an option. No one should believe that the project will be terminated. ERP implementation is do it right the first time. You either implement the system successfully or you will go out of business. Create a financial analyst position or team to track and analyze project costs Warn off the disbelievers Cast implementation details in concrete. Set realistic & achievable dates and milestones & do not change them. Keep the project under control Designate a single leader. Shared leadership is divided leadership. When choosing a new vendor, put a premium on vertical industry expertise Do not fight with your vendor. Keep functional managers accountable and responsible. An ERP implementation is not the sole responsibility of the ERP project manager and implementation team. The functional managers have a vital role to play. Make business objectives the primary drivers of the project. Do not let technology and jargon (language) frighten the end-users. Avoid customization or demand that such requests meet exact criteria. Make sure that data cleansing (refining) is addressed as part of the project. To keep the project in hand, periodically re-assess with regard to potential problems. Remember the 2 important and mutually dependent goals- success and not failing.

25 PROJECT MONITORING: The executive committee should check and verify that the work is being done satisfactory Reports must be given by project managers whether everything is going according to the schedule. The consultants should lead the process of the work plan preparation because they have previous experience. The in-house team should point out the issues that are specific to the company. The work plan or project plan is the basis for project tracking or monitoring The project plan is built using project management package like MS project that permits one to focus on planned activities from various perspectives. The plan can be updated on a regular basis and the planned vs actual reports can be produced. All persons working in the project should be in agreement with the contents of the plan. The executive committee should meet once in a week or twice in a week. During the final stage of the project, the committee should meet frequently. The project management team must report to the executive committee and present facts & figures.