Implementation Methodology - in - Erp - Chapter04 PDF

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CHAPTER 4
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Dunaway – ERP Implementation Methodologies and Strategies

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Chapter 4 : ERP Implementation Methodologies and Strategies
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Mary M. Dunaway (University of Arkansas)
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Introduction
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This chapter provides an overview of the various ERP imple- vendor has worked out most issues irrespective of the industry,
mentation approaches, trends across industry, and their impact and can provide a well-suited implementation. The ERP vendor
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typically has templates, tools, procedures, and knowledge
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on organizations. Astoundingly, 65% of executives believe that
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ERP systems have at least a moderate chance of hurting their experts readily available to jump start an ERP implementation.
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businesses due to the potential for implementation problems st ERP implementation encompasses the processes, activities, and
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(Dey, Clegg, & Bennett, 2010). This major concern and increas-
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tasks to implement an ERP system. The elements, variables, and
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ing number of ERP implementations has brought about greater

actions are controlled during the execution of an ERP system
appreciation and attention to the challenges involved in imple-
implementation. An ERP deployment refers to the distribution
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menting these complex technologies. ERP implementations are

of the ERP system to determined recipients. There is a distinc-
not just COTS (commercial off the shelf applications), but are
tion between these two terms where implementation is the
radical changes to a company’s business process, IT infrastruc-
building of the necessary structures to distribute, and deploy-
ture, and strategic and tactical goals. The ERP methodology and
ment encompasses ERP system distribution based on company
strategy becomes critical to a company adapting new technol-
business criteria. Once the ERP system has been deployed, the
ogy and bears substantial influence to how the organization
practical term Sunset specificies when the legacy system is no
manages the adoption and change process of the ERP technol-
longer in use. ERP consultants and contractors are expert ERP
ogy solution.
knowledge workers hired for a specific project or service. These
individuals are usually trained professionals who chooses to
4.1 Basic Concepts and Definitions perform important ERP functions for a client. The ERP contract-
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or operates under the auspices of a working agreement with

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There are several key definitions and concepts that are important
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the company, and is available for a specified period of time in

to help understand ERP implementation strategy and method-
exchange for the completion of specific tasks. An emerging
ology. The ERP Implementation strategy is how an organization
innovation used for ERP implementations is cloud computing,
goes about planning and directing the deployment of an ERP
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which is a type of Internet-based technology whereby shared

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application. Implementation strategies address mapping the

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servers provide resources, software, and data to computers and

company’s business processes to a system in an organized and
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other devices on demand.

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defined manner. ERP strategies are mainly driven by industry

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best practices and can be tailored to fit an organization’s needs.

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4.2 ERP Implementation Strategy

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ERP implementation methodology is where the company declares

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their strategic decisions regarding how to conduct the imple- The ERP implementation strategy is a major decision for
mentation, and selects a focused path for ERP deployment. company executives and stakeholders to make. The implemen-
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Company driven implementation strategy is when a company tation strategy describes the plan for change that ensures align-
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drives the leadership and direction for how the ERP system ment with overall corporate objectives and goals (Al-Mashari &
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is implemented. Often, in order to support this type strat- Zairi, 2000). The strategy defines the organizational principles
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egy a company has an established corporate implementation and approach to executing the ERP implementation. Figure 1
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methodology that dictates how to approach their software shows key aspects to be addressed in order to sustain strategic
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implementations. A company’s software development depart- focus for the ERP implementation project.
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ment generally has the expertise to accomplish this type effort.

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Vendor led implementation strategies are usually proprietary in

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nature and are a well-defined, structured approach to the ERP

implementation. ERP vendors have turnkey implementation
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approaches based on best practices and lessons learned from

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each successive implementations performed. Usually, the ERP

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Readings on Enterprise Resource Planning

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Preliminary Version - send comments to pml@hec.ca

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Figure 1 - Key Aspects of an ERP Implementation Strategy
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Project • Diagnostic view of why the ERP system is being implemented
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Drivers • Cognizant of organizational demands

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Project • Project schedules
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Project st
• Internal key subject matter experts
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• External consultants
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ERP Functional • Business proceses fit

Modules • Integration
Existing
Platforms, • Legacy systems
Systems, • Interfaces, data conversion and configuration
and Data
Cost • Budget
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4.2.1 Project Drivers prepares the project team for the structure and control needed
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to keep the project on track. The role of project management in

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Project drivers are important, and many times are lost in the
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implementation is critical. Many times, competing projects and

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implementation effort. The reasons why the ERP system is

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unexpected issues arise that can derail the project implemen-

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being implemented and the expected benefits can shift due

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tation. Project management provides the process to monitor,

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to other company priorities and demands. For project success,

derive solutions, and stay on track with the implementation.
it is important that strategic goals include clear reasons for the
implementation, and are kept at the forefront of the strategy. It
4.2.3 Project Resources
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is crucial that management executives and project stakehold-

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Project resources are integral for successfully carrying out the

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broad business requirements are fleshed out, and project work designated by the ERP implementation methodology.
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objectives are developed. Implementation methodologies Acquiring appropriate resources is one of many key decisions
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in the implementation process. Whether individuals are inter-

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that include project management processes are an essential

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nal key subject matter experts or external resources such as

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mechanism to sustain and accomplish the ERP implementation

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process. consultants or contractors, the right skills and experience are

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required to meet project objectives. Not having the right resour-

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4.2.2 Project Management ces working on the implementation project can be a disaster.
The project resources contribute to assessing risks that could
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Project management includes the planning, organizing, timing,

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impede or delay implementation.

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resourcing, and scheduling that define the beginning and end of

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the implementation. The establishment of project management

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4.2.4 ERP Functional Modules 4.3 ERP Implementation Methodologies
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A company selects the ERP functional modules to implement
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It is important for companies to analyze the ERP implementa-
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based on their business process requirements. The aim is to tion method, since the risk of failure in ERP implementation is
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implement an ERP solution that will provide a strategic advan- substantial and can be a highly expensive ordeal. Typically,
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tage for the company. The ERP functional modules should fit companies will follow a specific methodology framework to
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the business processes and be transparent across organizations. deploy an ERP system. A methodology is used to structure, plan,
Integration of the business processes and functions, real-time and control the process of implementing the ERP system. The
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data, and information flow should appear seamless. Integration
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methodology may include tools, templates, specific deliver-
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capability is the most recognized reason that companies choose ables and artifacts created and completed by the ERP project
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an ERP system for implementation. team. A methodology can be thought of as the roadmap where
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the real work for the implementation begins.
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4.2.5 Existing Platforms, Systems, and Data

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The most common implementation methodologies may be joint

A company’s existing platforms, systems, and data are the life ventures with respect to industry, company driven, ERP vendor
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line of the ERP implementation. The implementation strategy led, or a combination of company driven and ERP vendor led. An
should address how the legacy system environment will be implementation methodology can be company driven utilizing
handled respective of the new ERP system. Data may need to internal software practices, or ERP vendor led where a designed
be converted for use in the ERP system, interfaces will possibly methodology for the implementation is used. Company driven
need to be developed to bridge data from the legacy system, implementation methodologies generally govern all software
and configuration rules established for operational transaction implementations, irrespective of the type of project. The
processing. Transition from legacy systems can be one of the methodology is generally flexible and can be adjusted to suit
most difficult challenges in the ERP implementation. Great the needs of a particular type of software project. ERP vendors
detail, major planning, and careful execution are needed to have their own proven methodology that is used repeatedly for
ensure smooth changeover and to “sunset” systems. customer ERP implementations. The vendor led ERP methodol-
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4.2.6 Cost Allocation

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a company’s implementation requirements.

ERP systems are one of the most costly technology initiatives
that an organization can implement. The total cost of ERP 4.3.1 Joint Venture
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ownership includes the packaged ERP software, hardware,

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Joint ventures are collaborative implementation strat-

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professional services (consulting, on-going maintenance, egies among similar companies across a particular industry.
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upgrades, and optimization), and internal costs. Therefore, it is

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Companies typically participate in consortiums with other

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similar companies to work in partnership to address econom-

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for implementing the ERP solution. The duration of the project

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ic concerns, performance impacts, technology, outsourcing,

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and payback periods is important to determine the expected value creation, operations, and many other topics to enhance
return on investment (ROI). According to the 2011 Panorama company performance. The consortiums are a source for bench-
report, the majority of implementations will “pay back” in less marking and best practices that can assist with creating the
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strategic advantage, and enable better support for clients by

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tation project cost can range from $1.1 million to $5.0 million,
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aligning with key industry stakeholders. Moreover, the inter-

depending on the type of ERP solution and vendor. action exchange facilitates the sharing of technology imple-
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Funding sources should be well-developed to avoid major mentation strategies useful for ERP system implementations.
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financial challenges along the way. A contingency or fall-back

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The Supply Chain consortium is a premier example of joint

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plan to address shortcomings or budget overruns should be

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venture collaboration. The consortium provides a broad range

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in place to minimize project schedules and logistics. Budget

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of tools, events, and processes to members in order to drive

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overruns are certainly more of a reality than an exception. Most

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world class performance. A key focus of the consortium is to

budget overruns are due to unanticipated or underestimated help companies deliver necessary business processes that have
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fees, staffing, or technical issues. Evaluating and developing

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proven superior results in real world implementations.

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The consortium is led by executives from such Fortune 500 tation methodology. They recommended that Nike “follow
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companies as Kraft Foods, Target, The Coca-Cola Company, their guidelines for implementation” using their proprietary
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Hallmark, and Miller Coors. Their collaboration efforts focus templates and roadmaps. Despite the vendors’ proven success
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across many initiatives, industry segments, and topics. For with 1,000 companies, the project failed.
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example, this consortium has a data collection of over 11,000
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4.3.4 Combined Company Driven and ERP
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benchmark and best practice data points, key information
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about near term priorities in technology, and a PeerNet where Vendor Led
members can share functional expertise that fosters direct
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Considerable ERP success can be gained when both the
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exchange of technology best practices.
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company driven and ERP vendor led are combined for an imple-
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Most companies have a department that performs develop- best suited for a company. If a vendor led or a hybrid of vendor
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ment, support, and maintenance of its software applications. led and company driven methodology is used, considerations
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Typically, companies have a process in place to govern how should be addressed to determine the specific resource roles
software applications are developed, maintained, and deployed. and how they will be used. Establishing where the resources are
The methodology is based on company established objectives obtained, their roles, and responsibilities is important for ERP
and requirements. An ERP implementation is a type of project implementation success. Company driven and ERP vendor led
most likely included and governed by these processes. Usually, combine the best-suited components of each methodology to
a company has standard processes that are well understood and fit the project goals. This combination will formulate a method-
can be relied on. Nevertheless, it is always possible to deviate ology that captures the strengths in areas where weakness may
from the standard process when necessary. exist.
4.3.3 ERP Vendor Led Project management is a key area where companies like to use
their own methodology and practices. For their ERP implemen-
Many ERP vendors have developed their own propriety tation, large telecom company Omantel, chose to capitalize
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implementation methodology. ERP implementation method-

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on their strong matrix project structure, and assigned project

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ology includes extensive templates, roadmaps, blueprints, management responsibility to its in-house project management
and tools. ERP vendors such as Oracle, SAP and Microsoft have office (Maguire, Ojiako, & Said, 2009). This gave the Omantel team
established methodologies that are used for their ERP imple- leaders full responsibility for the overall project and supporting
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by SAP provides an Implementation Assistant which allows a The implementation efforts appeared to be working in parallel.
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company to choose from several roadmap types and varieties The situation created conflict and was remedied by reorganiz-
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to meet implementation needs. Oracle combines its implemen-

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tation methodology and strategy into an approach known as

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Application Implementation Methodology (AIM). The method-

ology is a basic framework which includes a vast number of
4.4 ERP Deployment Strategies
templates to support the tasks performed during ERP imple- Companies typically choose the best approach to carry out
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mentation. Their methodology can be tailored and applied to the implementation, utilizing several well-known and popular
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most any specific situation. Microsoft has developed Sure Step, implementation strategies which include big bang, phased-
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a structured approach for implementing its ERP solution. The rollout, parallel adoption, and a combination of phased-rollout
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Sure Step methodology provides detailed guidance about the and parallel adoption. Deciding which strategy to deploy is
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roles required to perform activities and proven best practices. typically based on a company’s business objectives, budget
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It covers the complete implementation in addition to phases for constraints, available resources, and time sensitivity. Each imple-
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optimization and upgrade. mentation strategy has its strengths and weaknesses which are
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Nike, Inc. partnered with i2 Technologies, Inc., a software

integration vendor for its supply chain implementation. The
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implementation did not turn out as planned. The responsibil-

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Figure 2 - ERP deployment decisions meet important business requirements. The most common criti-
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cism of the big bang implementation method is the risk factor.
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The risk is significant due to the number of things that could
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implementation can potentially be quick and less costly than a
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objectives resources long, drawn-out phased approach.
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4.4.2 Mini Big-Bang
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time A variation of the Big Bang approach is to combine it with a
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constraints sensitivity
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phased implementation approach (discussed later). This entails
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a series of “mini-bangs” that affect logical functions of the
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business. One example uses the mini-bang methodology to
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deploy the ERP system division-by-division, where each division

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of a company uses a Big Bang to migrate to the new ERP system

4.4.1 Big-Bang
for manufacturing plant operations. A second example might
Just as the name implies, big bang can be described as a strat- use a functional approach ; where appropriately interfacing both
egy to implement all enterprise functionality and ERP modules systems running their parts of the company, i.e. finance goes first
in a single instance as a major event (Mabert et al., 2003). All with the new system across all divisions at one time, followed by
users move to the new system at a determined date, and are manufacturing and human capital management. Typically this
implemented across the entire organization at once during a type of strategy encompasses one to three modules at a time
planned go-live event. This can be a large implementation across for the deployment.
multiple countries, multiple business divisions or product lines,
Below is a list of pros and cons applicable to the mini and big
and generally affects the entire organization. After implementa-
bang implementation strategy :
tion activities have been successfully executed, and “lights out”
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on the old system is achieved ; the new ERP system is launched.

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Reverting back to the legacy environment becomes quite • Implementation pain points and challenges are more
challenging if at all possible. It is necessary to have documented pronounced post go-live
fall-back plans just in case the initial changeover to the new ERP
• Implementation time is shorter
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system is a failure.
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• Cost can be much lower than a longer drawn-out imple-

The appeal of the big bang implementation strategy is that it
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focuses the organization for an intense and relatively shorter

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period of time than if the project were phased. This often helps • All training is completed for users before the initial roll-
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to address long-term resource shortages, condenses the imple-

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mentation project into a defined period of time, but the pain • ERP system go-live happens on a planned date
and challenge of the ERP project are more noticeable using this
approach.
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Enterprise visibility capabilities are more salient, therefore

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• Details may be overlooked in the rush to change

identify integration functionally issues early on with the use of
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the new system. • Employees are constrained to learn the new system for
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The downside of the big bang implementation approach is that

at
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• Fall-back to legacy system may be more difficult than

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40
to business processes may not be the best ones for the organ-
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ization. The big bang strategy’s significant “pain points” are due • A failure in one area of the system could affect others
le m
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to its hectic nature. More often than not, projects that imple- • Pronounced dip in performance after the implementation
io l
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ment an overly aggressive big bang approach are more risky,

n
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and can result in less satisfaction with the system’s abilities to

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Phased-Rollout Phased Rollout by Module
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Another strategy which focuses on phasing in modules a few The phased rollout by module is the most common phased
DB raw ns.
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at a time for a slower implementation approach is the phased- rollout strategy. The structure of the ERP system is modular in
DB
ge y
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rollout (Mabert et al., 2003). The phased-rollout strategy encom- nature, where each application module automates the process-
ch en
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de io
pr
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passes implementation of the ERP system that occurs in small es within certain functions of the business. Common ERP appli-
od
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increments over phases for longer periods of time. Users move cation modules include accounts payable, purchasing, student
onto the new systems in a series of planned steps. The idea is enrollment, general ledger, inventory, and benefits administra-
1
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that project teams are allowed to take their time in the planning, tion to name a few. Phased rollout by module is by far the most
41
3
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41
business process mapping, customization, and testing of the popular technique where ERP modules are strategically imple-
ts
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system while continuing with day-to-day job responsibilities. mented one at a time. Core ERP modules are generally integrat-
m
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pr Con O15
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ed first, followed by other modules where business processes
y
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The downsides are that these types of phased projects often
de N
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are highly integrated. This technique helps the company ensure

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lack the intense urgency and focus of a big bang project. It can
that modules are working as per department needs.
also lead to “change fatigue,” which can cause employees to
Cr
become burned out on new initiatives over a sustained period This type of roll-out may delay the whole process and bring
of time (Garside, 2004). Instead of completing the project within about complexities during implementation. Generally, inter-
a shorter period of time, projects involve constant change face programs are required to bridge the gap between legacy
over longer periods, which can be draining to employees. Of systems and the new ERP system until the new ERP system
course there are several options, including many variations and becomes fully functional. Typically, business process functions
combinations of these implementation techniques. Just like big required for tactical operations are considered first, followed
bang, a phased-rollout strategy has advantages and disadvanta- by adding each module and functionality with each phase.
ges. A few of the common opinions are listed below : Many implementation experts recommend the General Ledger
module, or perhaps less mission-critical modules to begin the
Pros implementation process.
• Lessons learned can be utilized for successive phased
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rollouts PROS
Ex M
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• Ample time for adjustments to planned deployment • Provides the ability to meet the needs of departments
• More time for user to adapt to new system • Step by step approach to implementation
de se
• Less risk
or cha
• Increased project team members implementation skills

5
r
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for continued rollouts • Change management impact potentially less than with a
en t
m en
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ire nd
big bang implementation strategy

qu e
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Cons
In
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ce o
Po M
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• Less urgency as a big bang rollout

CONS
• Continous change over a longer period of time • Longer implementation timeline
• Fallback to legacy system becomes more difficult if
tp
• Delayed integration of whole business processes

ei
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required
sr
40
od
• May generate more integration complexities

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• Temporary solutions to legacy issues are created to

• Large number of technical resources to create interface
/IR
support phased-rollout
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Phased Rollout by Business Priority

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Within a phased-rollout implementation ERP systems can be

40
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This approach is similar to the modular approach, the differ-

re es
structured using a few different techniques such as by ERP

nu
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sa Do
module, company business unit, company business priority or ence being that the main consideration of the business prior-
ity phased rollout is the need for urgency. The business priority
io l
geographical location. Each of these techniques is based on a

pt ria
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t p F-53
um ate
may turn out to be a modular implementation strategy once

ns m
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company’s strategic business goals, timeline, and resources.

ay
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business priority is established.

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Several reasons can create this type of implementation require- Cons
uc d
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ment. For instance, a company has certain time-sensitive legal
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• Longer implementation timeline
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requirements, planned product or service launch timelines,
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company acquisition commitments, or all of the above. Once • May generate more integration complexities
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ch en
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the strategy is defined, one or more critical business processes
pr
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• Limits the scope of the implementation

In
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that involve key business units are selected and the implemen-
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tation will eventually grow into a full-blown ERP system imple- For example, the ERP system implementation can begin with
mentation. This ERP implementation strategy is generally used
1
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subsidiary organizations, specific business products or service
41
3
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by small to mid-sized organizations. This type strategy leans
41
functions, or joint business operations. Some companies put
ts
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heavily on the business’ operational aspects to dictate how
en
together a team that travels between each business unit and
m
priority for the rollout will occur. This approach is unique and st
CR
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location to complete the implementation. As the team gains
ve
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specific to each company’s business environment and plans for
tio
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more experience with each implementation, subsequent

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ERP implementation. rollouts become more efficient. This method has better employ-
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Pros ee acceptance, and despite a longer process time, the risk is

lower.
• Closely aligns to unique company’s business goals
• Potential for greater control by company Phased- Rollout by Geographical Location
• Greater focus on business process re-engineering objec- For organizations with multiple locations, a phased-rollout by
tives geography is a frequently utilized approach. As firms are more
global in today’s environment, certain geographical aspects
are unique to how business process functions, which makes
Cons
this type of phased roll-out required. This is very common for
• May lack the sufficient planning if used a reactive strategy
large organizations whose business is multi-national, region-
• Increased integration complexities ally distributed, and has independent locations. This strategy
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is primarily used to standardize a company business operation

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• Increased risk
ec D
Ex M
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e
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by use of the ERP system to bridge organization, political, and

Phased Rollout by Business Unit cultural aspects of doing business.
Under this technique, the phased rollout happens for one or Geographical global ERP implementations carry far more risk
de se
or cha
and challenge than domestic or single-site implementations,

5
r
more business units or departments at a time within a company.

r
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40
This is also a method commonly deployed by large multi-nation- and need a simultaneous deployment of robust change manage-
en t
m en
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ire nd
al companies. The business unit is representative of a legal ment processes. Moreover, global rollouts also need to cater to
qu e
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local country or geographical specific reporting and statutory

In
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entity reporting structure within a company. Since business

s IG
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requirements, adding another dimension to the complexity of

ts
units often have a fair amount of autonomy, they can be quite

successful. They have the funds, the authority to staff resources the implementation rollouts.
across the business unit, and have a direct responsibility to their This type of implementation strategy needs a lot of time and
tp
stakeholders.
ei
commitment from the organization, but proves to be the safest

ec
6
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od
and most successful approach for companies with complex

Go
PROS
business processes. Figure 3 is a graphical representation of a
/IR
• Ability to leverage lessons learned from prior implemen- phased roll-out by geographical location.
GR
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tation rollouts
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• Focus more on business entity integration

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• Greater employee acceptance

40
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• Less risk
sa Do
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um ate
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Figure 3 - Phased Roll-Out by Geographical Location
uc d
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ERP Deployment
l
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Geographical Locations ERP Implementation

ch en
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Africa
Pr
North America
Africa Legacy
Legacy
Applications
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Applications
41
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integrated common
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Real-time
41
processes Access databAse
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north ERP united
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United Kingdom america Application kingdom
Germany Legacy st
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Legacy
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Applications
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Applications
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germany
(Dunaway, 2011)
Due to the intensive effort required to double key information

PROS
in two systems, mistakes are inevitable, causing all kinds of
• Meets the requirements of global and multi-national variance in the data. From a cost perspective, if extra costs are
companies less than those incurred after a backfired big bang adoption,
• Greater standardization of business processes then it is a reasonable plan. However, parallel adoption has
RP
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se t to
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become decreasingly popular due to the perceived high cost.

e
or
M
• Greater success for companies with complex business

processes While potentially costly, the risk for this approach is moderate.
PROS
de se
or cha
• Eliminates much of the data integrity and migration issues

5
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Cons
r
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40
• Risk is moderate
en t
• Requires significant planning and coordination

m en
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• Most often a longer implementation timeline

In
re t go O
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s IG
ce o
Cons
Po M
• Greater risk
ts
• Double keying of data is very labor intensive

Parallel -Rollout • Greater risk for mistakes
tp
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• Increased potential for higher cost

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A parallel adoption encompasses both the legacy and new ERP

sr
40
od
Go
system executing at the same time. Users learn the new system
while working on the old legacy system. Many ERP vendors Combination Rollout
/IR
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prefer this method since the issues of data integrity and migra- The combination of a phased rollout and parallel adoption
ice
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tion are, for the most part, avoided (Xu, Nord, Brown, & Nord, encompasses a hybrid of each method. While one strategy
at
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2002) . This method attempts to defy the old myth of “Garbage may work for a majority of companies, it may not be the best
CR
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40
In, Garbage Out”. This approach is not the most efficient, since strategy for a company’s organization. Circumstances dictate
DB
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re es
nu
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each transaction must be entered into both the legacy and new the appropriateness of the implementation strategy. In some
sa Do
system. cases, a phased rollout may be the most efficient and effective
io l
pt ria
en
n
t p F-53
implementation, in other cases it may not. Nevertheless, the

um ate
m
ns m
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ay
Pa
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implementation can be tailored to fit the scope and goals of the

R
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Ac
Po
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ERP implementation.
od an
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s
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53
In
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Pros Important viewpoints emerging from the SaaS ERP implemen-
uc d
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tation technique :
uc e a 7
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• Greater control of the ERP implementation
CR
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• Moderate risk DB PROS
ge y
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ch en
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• Accessible with an internet connection
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Cons • Free up staff to concentrate on more strategic, value-
Pr
• Costly to implement adding processes
1
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• Pay per use or subscription fee
41
• Time intensive
3
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• Rapid scalability and reliability
ts
• The full intergration picture is compromised
DB
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st • Implementation with little or no intervention
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Pilot Rollout
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• Lower implementation cost

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In the pilot implementation, a particular functional area is imple-

mented first. The concept is to prioritize the functional areas,
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CONS
and implement them in the order that provides the greatest
• Increased security risk for financial and operational data
benefit first. The approach requires more intense planning and
administration to deal with interfaces and flow of data between • Total cost of ownership encompasses “hidden cost”
the legacy and new module(s) implemented. It is one of the • SaaS expertise not yet reached a level of maturity
lowest risk alternatives, however takes the most time to rollout.
• Potentialy limits some integration capabilities
Pros
As with any implementation methodology, companies should
• Greater control over ERP implementation
evaluate and prioritize their requirements, strategic goals, and
• Low risk timeline to determine the most effective implementation strat-
• Lower cost egy for their ERP deployment.
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While SaaS appears to provide a promising robust solution,

Cons careful consideration should be exercised. In general, SaaS
• Time intensive is simpler to deploy from a technical perspective due to the
hardware and software hosted by the vendor service provider.
de se
• Unable to fully gauge post implementation resource

or cha
5
r
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On the other hand, the high level of technical ease may create
Pu
40
needs
additional business complexities that you may not otherwise
en t
m en
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ire nd
Software as a Service Rollout experience with other ERP implementation methods.

qu e
re dep
In
re t go O
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s IG
Software as a Service (SaaS), sometimes referred to as “software Some software customization flexibility may be lost due to the
ce o
Po M
ts
on demand”, is the newest implementation methodology vendor hosted ERP application. In a traditional ERP implementa-
attracting small and medium size companies. The ERP software tion, the software application is installed on the company servers
is deployed over the internet to run behind a firewall on a local where it is actually owned. Companies have the right to modify,
tp
ei
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area network, personal computer, or both. With SaaS, an ERP customize, or both as needed. SaaS is generally less flexible than
6
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40
od
vendor provides ERP application licenses to customers either as the traditional ERP in that you cannot completely customize or
Go
an on-demand service through a subscription, in a “pay-as-you- rewrite the software. Conversely, since SaaS cannot be custom-
/IR
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go” model, or scalable fee structure. ized, it reduces some of the technical difficulties associated with
ice
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changing the software.

vo
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This approach to ERP implementations is part of the “cloud

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computing” utility model where all of the technology is accessed Companies tend to find that they do not have the control over
Ra
40
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over the Internet as a service. Due to the complexity of ERP appli- SaaS software they would like, relative to traditional ERP. This is
es
re es
nu
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cations, SaaS offerings are currently available for administrative especially true of mid-size or large companies with well-defined
sa Do
and operational functions typically confined to one domain, business processes unable to be changed to fit the software.
io l
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um ate
such as payroll, customer relationship management (CRM), or Small to medium size companies generally have an easier time
m
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one business process (Wailgum, 2008). adapting their business processes to the software than a larger
R
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organization.
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R
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Accessibility can potentially be an issue when the internet is not Neal (2010) survey results found that 89% of organizations
uc d
DB
od he
available, since SaaS is entirely accessed through the web. If for choose “big bang”, “phased rollout” or a combination of the two
uc e a 7
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DB raw ns.
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CR
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some reason the internet goes down, then a company’s business strategies. The number was split nearly evenly between phased
CR
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is constrained. Alternatively, a traditional ERP implementation rollout and big bang users ; parallel adoption trailed far behind
ge y
DB an tor
ch en
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does not require internet reliability, provided users are access- with only four users ; other was used least. The chart shows that
pr
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ing the software from inside the company’s network. For any the number of phased rollout users compared to big bang users
Pr
company this could be a technical nightmare and operational was split nearly evenly ; parallel adoption trailed far behind four
disaster. users represented ; “other” came in last.
1
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41
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Generally the SaaS implementation can be deployed at much
ts
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smaller initial costs, which can be attractive to small and
m
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medium sized businesses. Although the initial costs are much
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lower, companies have to be aware of the unexpected “hidden

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costs” to support change management, ongoing software

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maintenance, and data storage. These may substantially affect

the total cost of ownership for the SaaS implementation. Much
like leasing versus buying a car, the payment never goes away as
long as the software is used, and can become costly as you grow
and add employees to the system.
Figure 4
Adapted from Neal (2010)
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References
at
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uc e a 7
t
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pr nis
DB raw ns.
tio se
CR
Fi
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C o
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l
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Further Readings on the Topic

Listed are readings that you may find useful as you continue to gain knowledge about ERP Implementation Strategies.
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se t to
Muscatello, J., and Chen, I. 2008. “Enterprise Resource Planning (ERP) Implementations: Theory and Practice,” International Journal
M
de
pu Co E5
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Ex M
ha er
e
or
M
of Enterprise Information Systems (4:1), January-March, pp. 63-77.

Shanks, G., Seddon, P. B., and Willcocks, L. 2003. Second-Wave Enterprise Resource Planning Systems: Implementing for Effectiveness,
Cambridge, U.K: Cambridge University Press.
de se
or cha
5
r
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Pu
40
Glenn, G. 2008. ERP 100 Success Secrets: Enterprise Resource Planning 100 Success Secrets - 100 Most Asked Questions: The Missing ERP
en t
Software, Systems, Solutions Applications and Implementations Guide, Emereo Pty, Brisbane: Emereo Publishing.
m en
t
ire nd
qu e
re dep
Gunasekaran, A. 2009. Global Implications of Modern Enterprise Information Systems Technologies and Applications, Information
In
re t go O
ip ds
s IG
ce o
Science Reference, Hershey, PA: Information Science Reference.

Po M
ts
Marnewick, C., and Labuschagne, L. 2005. “A Conceptual Model for Enterprise Resource Planning (ERP),” Information Management
& Computer Security (13:2), pp. 144-155.
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n t

Dunaway – ERP Implementation Methodologies and Strategies

typically has templates, tools, procedures, and knowledge

ing number of ERP implementations has brought about greater

menting these complex technologies. ERP implementations are

or operates under the auspices of a working agreement with

the company, and is available for a specified period of time in

which is a type of Internet-based technology whereby shared

application. Implementation strategies address mapping the

servers provide resources, software, and data to computers and

other devices on demand.

defined manner. ERP strategies are mainly driven by industry

best practices and can be tailored to fit an organization’s needs.

4.2 ERP Implementation Strategy

ERP implementation methodology is where the company declares

ment generally has the expertise to accomplish this type effort.

Vendor led implementation strategies are usually proprietary in

nature and are a well-defined, structured approach to the ERP

approaches based on best practices and lessons learned from

each successive implementations performed. Usually, the ERP

Readings on Enterprise Resource Planning

Preliminary Version - send comments to pml@hec.ca

Dunaway – ERP Implementation Methodologies and Strategies

Drivers • Cognizant of organizational demands

ERP Functional • Business proceses fit

to keep the project on track. The role of project management in

implementation is critical. Many times, competing projects and

implementation effort. The reasons why the ERP system is

unexpected issues arise that can derail the project implemen-

being implemented and the expected benefits can shift due

tation. Project management provides the process to monitor,

to other company priorities and demands. For project success,

is crucial that management executives and project stakehold-

Project resources are integral for successfully carrying out the

ers establish expectations for the project. Their role is to ensure

in the implementation process. Whether individuals are inter-

that include project management processes are an essential

nal key subject matter experts or external resources such as

mechanism to sustain and accomplish the ERP implementation

process. consultants or contractors, the right skills and experience are

required to meet project objectives. Not having the right resour-

Project management includes the planning, organizing, timing,

impede or delay implementation.

resourcing, and scheduling that define the beginning and end of

the implementation. The establishment of project management

Readings on Enterprise Resource Planning

Preliminary Version - send comments to pml@hec.ca

Dunaway – ERP Implementation Methodologies and Strategies

4.2.5 Existing Platforms, Systems, and Data

The most common implementation methodologies may be joint

ogy may also require minor changes or to be tweaked to satisfy

4.2.6 Cost Allocation

a company’s implementation requirements.

ownership includes the packaged ERP software, hardware,

Joint ventures are collaborative implementation strat-

upgrades, and optimization), and internal costs. Therefore, it is

Companies typically participate in consortiums with other

crucial to define the appropriate budget and funding sources

similar companies to work in partnership to address econom-

for implementing the ERP solution. The duration of the project

ic concerns, performance impacts, technology, outsourcing,

strategic advantage, and enable better support for clients by

aligning with key industry stakeholders. Moreover, the inter-