Critical decisions for ERP integration Small business issues

Critical decisions for ERP integration: Small business issues International Journal of Information Management(2009) Management Information System 指導教授林娟娟教授資碩專一 98756011 李怡夢 98756003 顏臺良

Outline Abstract ERP B 2 BI Small Business SB VS ERP Methodology ERP framework Conclusions

Abstract Motivation SME significant challenges ERP Expensive and risky Recommend Six critical decisions Finding Enhanced success of ERP implementation

ERP introduction Enterprise Resource planning Integrate all information and processes Unified database IT infrastructure ERP implements affects Suppliers and customers Expensive cost ERP implements evaluate difficulty necessary organizational changes predicting the return on investment

ERP cost

ERP contributes Standardization Transparency Globalization Automating and integrating corporate cross-functions

B 2 Bi ERP next phase : B 2 Bi Electronic document exchange in small businesses vertical or horizontal Vertical Standard : Rosetta. Net Horizontal Standard : eb. XML

Small Business SB introduction Backbone of the economy Independently owned and operated Not dominant in its field Majority of personnel perform multiple job functions

SB VS ERP Small Business limited resources Financial Technical personnel Technology Lack of alignment of implementation practices Risk and cost

Methodology Research methodology Academic databases ABI Inform Academic Source Complete Emerald IEEE Key terms ERP implementation Small business

Methodology (cont. ) Selection of the six critical decisions Interviewee Manufacturing sector Had recently completed ERP implementations

ERP framework (Critical decisions for implementation) Six critical decisions Assumptions Keep any customization to a minimum Ensure that the business processes directly supported by the software package Have an ERP package with an intuitive and easy-to-use interface to minimize training and user support costs

The cost of implementation

Deﬁnition of critical decisions 作小組的組成(Program team structure) 實施的策略(Implementation strategy) 選擇過渡技術(Selection of transition technique) 資料庫轉換策略(Database conversion strategy) 風險管理策略 (Risk management strategy) 變更管理策略(Change management strategy)

Program team structure The team structure can be broken down into four categories Isolated Function, A-Team, and Lightweight Require fixed personnel on each function , financial and technical resources to maintain Heavyweight Flat management hierarchy The highest chance

Alternative team structures Method Description Advantages Disadvantages Isolated function Participants from each functional area are responsible for their own implementation and use of the software. 1. Resources of the organization are focused on the implementation 2. They have the most knowledge about their business processes and will be very knowledgeable endusers later 1. insufficient communication between functional groups 2. workflows that span multiple functional modules may be incorrectly implemented, or may not be implemented Lightweight The project team consists 1. Functional managers 2. Lead persons 3. A lightweight project manager Improved crossfunctional communication through regular project team meetings Conflicts are common and it takes a long time to resolve issues as several participants have to reach an agreement.

Alternative team structures Method Description Advantages Disadvantages *Heavyweight A senior manager has direct authority and control over the ERP project Straight forward communication gives a clear sense of direction. Strategy turns increasingly difficult to use as the size and complexity of the ERP implementation increases. A-Team This team structure is similar to heavyweight structure 1. A senior manages the project team. 2. all the functional managers are full time members of the ERP team The complete authority to make most of the decisions at all levels lies within the team. As decisions can be made by the core team without the need to communicate with other team members there may be limited buy-in for these decisions

Implementation strategy Seven generally deployed strategies Breakneck Star Turnkey, Low Risk, and In-House Not have the luxury of full time human resources to an ERP implementation Budget Partner

Implementation strategies Method Description Advantages Disadvantages Breakneck Implement an ERP solution on a low budget very rapidly The company has a quick solution if strategy works A very high risk approach which rarely works Star Do the right way with a senior manager in charge and dedicated team members The implementation usually results faster and cheaper Full time resources are needed Turnkey Subcontract to ERP system integrators and providers all ERP implementation activities. 1. The implementation is done by experienced people. 2. No internal resources are needed 1. The configured product does not match business needs. 2. Outsiders cannot fully understand the functional specifications In-house Use only internal The strategy generates resources to implement cost savings coupled the ERP system with internal ownership 1. An inexperienced team requires a long time for implementation 2. this turns out expensive

Implementation strategies(cont. ) Method Description Advantages Disadvantages Budget Focus costs cutting by There is a perception limiting the scope of the that this approach is ERP project and cheaper eliminating consultants A general lack of support from senior management produces lack of interest on the project by the users Partner Use both internal and external resources. Split the responsibility of the ERP project Partners complement the strength of the internal team and have partial ownership of the project The implementation usually takes longer due to conflicts between the supply chain partner Low risk Commit a high level of resources with low complexity and relax milestones to minimize High probability of success Implementation takes a long time

Selection of transition technique Four basic transition techniques Big bang entails substantial risk Phased Process lines Usually lack multiple process lines Parallel limited resources for small business.

ERP transition techniques Method Description Advantages Disadvantages Big Bang new system go live at the same time the legacy system is taken offline Costs are reduced since no interface programs are required high failure rates are common Phased One functional module at a time is transitioned in sequential order 1. Companies feel comfortable implementing one module at a time 2. the resources needed at any given time are low The transition takes a long time. Parallel Both the legacy and the new ERP systems operate in parallel Good recovery options are available if any thing goes wrong with the new system Considerable more resources Process line 1. in big bang fashion 2. only one process line at a time The experience gained from adds complexity doing one process line at the time benefits the next implementation

Database conversion strategy Two basic data conversion methods Electronic Writing custom programs Process is rapid Verifiable Data is difficult Manual Judgments necessary during the conversion Familiar with the new ERP system and develop a sense

Risk management strategy Three Risks Small business location Realities of small business Company’s niche and company’s management

Risk management strategy Minimize internal politics and resistance to change Appointment of a heavyweight project manager Adopting a partner implementation strategy to allow the internal team to focus on strategic tasks

Change management strategy The project manager, or champion, should accept and deal with the internal politics and resistance to change rather than go into denial Effective communications must be a priority Management should lay out the vision of the company and explain the expected benefits

Conclusions Decision to install an ERP Assigning a heavyweight project manager Partnering with an external organization with the requisite experience Implementing the ERP package in a phased manner Adopting a predominantly manual database conversion strategy Proactively managing project risk and internal change

Transition technique Team structure Risk management Critical decisions Number Isolated function 0 Big Bang 0 Initial ERP cost 6 Lightweight 1 Phased 4 4 Heavyweight 4 Parallel 2 A-Team 1 Process line 0 Compatibility with business niche Project scope 3 Implementation strategy Database conversion Change management Critical decisions Number Critical decisions Breakneck 0 Manual 5 Star 2 Electronic 1 Employee 2 awareness of ERP Turnkey 0 In-house 1 Budget 0 Partner 3 Low-Risk 0 Number Communication by Project Manager 4 Communication by Executive Management 3 Articulation of ERP vision 2

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