ENTERPRISE RESOURCE

PLANNING- Module 2
Faculty:
Prof. Gayathri Ranjit
 Contents
ERP Tools and Software
ERP Selection Methods and Criteria
ERP Selection Process
ERP Vendor Selection
ERP Implementation Lifecycle
Pros and cons of ERP implementation
Factors for the Success of an ERP
implementation
 Contents (Ctd)
ERP Vendors, Consultants, and
Employees-
Vendors- Role of the Vendor;
Consultants: Role of a Consultant,
Employees; Role of employees;
Resistance by employees; Dealing with
employee resistance,
Role of Top Management,
Role of Implementation Partner
 Contents (Ctd)
ERP Vendors, SAP-AG: Products and
technology R/3 overview; SAP advantage,
Baan Company ,
Oracle Corporation: Products and
technology; Oracle Application; Vertical
solutions,
Microsoft Corporation,
Ramco Systems,
Systems Software Associates Inc. (SSA),
QAD.
 ERP Tools and Software
In the past, companies used paper-based
processes or separate software packages to
manage multiple functions of their business,
such as Accounting, HR, Quality, Customer
Service, Order Entry, and so on.
ERP, on the other hand, integrates all functions
of a company into a single software package.
There are dozens of ERP software providers in
the market.
They range from globally reputed vendors to
small, industry-specific vendors.
Some of the well-known providers include SAP,
Oracle, Microsoft, Infor and Epicor.
 Reasons for shift from fragmented
systems to integrated ERP
Easier and faster to train employees on a single
ERP software package than on multiple systems.
Provides business executives with more
transparency of their business operations since
all business information is stored at one location.
Enables managers perform business functions
and processes in a standard way.
Much of the software that is used with ERP is
multi-module and can assist companies
integrate various processes.
The most important areas for ERP applications
are Finance, Human Resources, and
Manufacturing.
 ERP Tools and Software
Deploying a comprehensive ERP system
across an organisation leads to
performance increase,
workflow synchronization,
standardised information exchange within
departments,
complete overview of the enterprise
functioning,
speed enhancement and so on.
There are two types of ERP software
packages - Open Source ERP software
and Commercial ERP software
 Commercial Open Source ERP
ERP

Expensive Free of cost

Always backed by Usually not backed by well
well known brands known brands
Assured training and Training and after sales support
after sales support is not guaranteed
Suitable only for Suitable for small companies
bigger corporations and bigger corporations
Non flexible Can be modified as licenses
are available along with the
source code
Deployment is Companies can do the
costly and necessary modifications in
inconvenient code rather than changing
 Commercial Open Source ERP
ERP
Companies might have Does not interfere with the
to change their regular schedule of the
business process to company during
adapt to this ERP implementation
Enhancements in the Enhancements in the
product is intimated to product is not known
its customers
Consumes a lot of time Implementation time is
during implementation very less
Lots of training is Procedures for training
required for the employees are very easy
employees. It calls for does not require much
lots of investments in training as source code is
terms of time and more than a training
 Open Source softwares
There are several open source software in
the market including Compiere, ERP5, and
Fisterra.
Compiere is suitable for small and medium
sized ERP enterprises, especially in the
business and service sector.
The hallmark of this software is that the
customer companies, and even their
production personnel, can modify the
information structure at any given point of
time.
This software also provides multiple views
 Commercial ERP Softwares
Microsoft Dynamics AX from Microsoft
Business
Its primary strengths are ease of use,
customisation, internationalisation, and cutting
edge technology.
Microsoft Dynamics NAV is an ERP
computer program from Microsoft
Corporation.
It is intended to assist with Finance,
Manufacturing, Customer Relationship
Management (CRM), Supply Chains, Analytics,
and Electronic Commerce in Small and
Medium-sized Enterprises.

TOOL NAME COMPANY

NAME / ERP
VENDOR
SAP R/3 SAP
Oracle e-Business Suite Oracle
Corporation
JD Edwards EnterpriseOne & Oracle
JD Edwards World Corporation
PeopleSoft Oracle
Corporation
MicroSoft Dynamics MicroSoft
Corporation
Sage MAS 500 Sage Group
NetERP NetSuite
Visual Enterprise Infor Global
 ERP Software Selection
Criteria
For product functionality
Does this package meet the overall
requirements listing?
Is the menu structure easy to follow and
understand?
Are the help files easily assessable and easy
for users to understand?
Can you customise help to meet the needs
of the organisation?
Is the product too complex?
Are there standard reports available, and
are they useful?
 ERP Software Selection
Criteria
For product cost
Are the license costs justified given the
functionality offering?
Is the required database affordable?
Are annual maintenance charges reasonable
and in line with the industry average?
Are payments for annual maintenance
charges in line with industry norms?
What is the true implementation services-to-
software ratio for implementations with
comparably-sized companies?
How quickly can payback be received?
 ERP Software Selection
Criteria
For corporate vision
What major organisational changes has the
supplier made in recent years?
What major product changes have occurred
in recent years?
What major product changes does the
company foresee or have planned in the
coming years?
What level of involvement does the executive
staff have in the companys daily operations?
Is the executive staff knowledgeable of
industry trends and developing technology?
 ERP Software Selection
Criteria
For service and support
Was the team comfortable with the sales process
and representative?
Were the teams questions answered in an open
and honest forum?
What type of training is available?
What is the average technical support persons
experience level and tenure with the company?
How quickly are the non-critical software bugs
fixed?
Is 24/7 support available?
Does the supplier offer business process re-
engineering as part of the implementation process?
 ERP Software Selection
Criteria
For technology and system architecture
Is the technology robust enough to handle
current and future transactions load? Is it
scalable?
Is the systems speed acceptable for daily
usage?
Is source code provided for customisations or
modifications without hefty charges?
Do customisations hamper upgrading to future
software releases?
Does the software support multi-company,
multi-division, and multi-currency
environments?
 ERP Software Selection
Criteria
For Supplier longevity
How many years has the company been actively
engaged in this software industry?
When was the products first release? What is
the current release version being quoted?
Has the company been consistently profitable?
Has there been recent turnover in the
management staff?
Has the supplier increased or reduced overall
headcount over the last year?
Are customer references available? Can you
visit a customer reference site prior to contract
signing?
Reasons for Improper ERP system
selection
Incomplete set of requirements

Reliance on vendor demos

Over-emphasis on system cost

Selection bias

Failure to use objective professional

services
Proper ERP system selection methodology
Structured approach
All stakeholders to understand the method of gathering
requirements, invitation to tender, how potential
vendors are selected, the format of demonstrations,
and the process for selecting the vendor.
Focused demonstrations
Objective decision process
First, the criteria and the scoring system must be
agreed prior to viewing any potential systems.
Secondly, in no circumstance should people with
affiliations to one or more systems be allowed to advise
in this regard.
Full involvement by all personnel
Stakeholders to be involved in project initiation,
requirements gathering, attend vendor demos, and
participate in shortlisting and final selection of vendor
 ERP Selection Process
1. Selecting and empowering a cross-
functional Evaluation Team that includes
the best and the brightest individuals from
each functional area of the company.
They need to understand the importance of
information sharing and integration, and
champion positive change.
The individual representing a functional unit
can fairly and accurately represent and
communicate the needs of his functional unit
regarding the need of a new enterprise
system.
 ERP Selection Process

2. The members of the team need to

learn the business reasons and
conditions that exist within the
company.
. Additionally, each member of the
team needs to educate other
members about the functional area
of the company he/she represents.
 ERP Selection Process
3. The companys resources need to be
identified and assessed.

Personnel
Technology
Workflow
Performance Measurements
 ERP Selection Process
4. The elements required to meet the
companys goals have to be defined. The
steps involved in this process include:
Identifying the limitations with the current
business approach
Identifying the organisations core
competencies
Identifying the requirements for a solutions
partner regarding implementation, features,
functionality, service, tools, ongoing
customer care and support.
 ERP Selection Process
5. Some of the additional questions that need
to be pondered over when evaluating
potential ERP solutions are:
Is the vendors product scalable to accommodate rapid
or unexpected growth?
Are the solutions that are under consideration
configurable to meet existing specific needs and
business processes as well as new ones that may arise
in future?
Is the solution flexible enough to operate on a variety of
IT platforms?
Are the product functions and features available now? If
not, when will they be available and how important is it
to have that function?
 ERP Vendor Selection
Vendors are of 3 types: Generic/Horizontal,
Vertical, Custom
Horizontal
Typically have more customers and more resellers
that imply more access to support.
Vertical
Additional functionality for the specific industry and
more knowledge of best practices for that specific
industry.
Custom
Start with a base product and build exactly what you
want.
More risks with vertical and custom vendors but
benefits outweigh the risks
 Steps in ERP Vendor
Selection
1. Get the list of potential vendors
2. Find a good reseller
3. Issue a request for proposal
4. Attend demonstrations
5. Call references
6. Know the total cost of ownership
(TCO)
7. Carry out a boardroom pilot
Different Phase of ERP implementation
Pre-Evaluation Screening
Package Evaluation
Project Planning Phase
Gap Analysis
Reengineering
Configuration
Implementation Team
Training
Testing
End-User Training
Going Live
Post Implementation Phase
 Company Go ahead
Pre-Evaluation Screening ERP Vendors
Management

Package Evaluation

Project Planning

Gap Analysis Reengineering Configuration

Implementation Team Testing End-User Training

Training

Going Live

Post Implementation Phase

ERP implementation Lifecycle

1. Pre-Evaluation Screening

Pre-Evaluation Screening is the phase which

starts when company decides to go for a ERP
System, the search for perfect solution starts.
It is very time consuming process to select few
where all claims be the best, it is just superficial
study of package.
Not all packages are same each has its own
weakness and strength.
While making the analysis it is good to
investigate the origins of the different packages.
Some packages can be good in some areas while
in other sectors they may not.
Once few packages are screened detailed
evaluation process starts.
 2. Package Evaluation
Package Evaluation process is one of the
most imp phase of the ERP
implementation , because the package you
select will decide failure or success of
project.
There is little room for error in this as ERP
packages are so expensive once purchased
can not switch to another.
While making the analysis the imp point is
nothing is perfect , imp here is whether it is
a perfect fit or good fit.
It is impossible to get a system which will
perform exactly as the company does
Few points to remember while evaluating
software includes the following:
Flexibility & Scalability.
Complexity
User Friendliness
Technology
Quick Implementation
Amt of Customization Required
Ability to support multi site planning &
control.
Local support infrastructure .
Total cost i.e license , training,
customization etc.
 3. Project Planning Phase
This is the phase which plans that designs
the implementation process.
In this phase details of how to go about
implementation , schedules and deadlines
etc are decided.
Roles and responsibilities are identified and
assigned.
This is phase which will decide when to
begin, how to do it and when the project is
supposed to be completed and what to do in
contingencies.
Their is a committee for this and which is
 a. Project schedule

This is the phase that designs the implementation

process.
In this phase the details of how to go about the
implementation are decided.
Time schedules, deadlines, etc for the projects are
arrived at & the project plan is developed.
Roles are identified & responsibilities are assigned.
The resources that will be used for implementation
efforts are decided & the people who are going to
be in-charge of implementation are identified.
Team members are selected & task is allocated.
This phase decides when to begin the project, how
to do it & when is it suppose to be completed.
Planning is done by the committee constituted by
team leaders.
b. Decision of the phase

This phase plans what to do in case

of contingencies, how to monitor the
progress of the implementation.
This phase also decides what control
measures should be installed & what
corrective measures or actions
should be taken when things get out
of control.
c. Team leader

The project planning is usually done

by a committee constituted by the
team leaders of each implementation
group.
The committee will be headed by the
ERP in-charge (i.e. the CIO or COO).
The committee will meet periodically
to review the progress & chart the
future course of action.
4. GAP ANALYSIS

Gap analysis is a phase in the ERP

implementation, where the organization
tries to find out the gaps between the
companys existing business practices &
those supported by the ERP package.

This is the process through which

companies create a complete model of
where they are now & where they want
to head in the future.
 Main objective
The main objective is to design a model,
which both anticipates & covers any
function gap.

It has been estimated that even the best

ERP package meets only 80% of the
companys functional gaps.
 Different ways of finding gaps
a. One of the most affordable, but most
difficult, solutions entails altering the
business to fit the ERP package.
b. Another solution is that the company can
simply agree to live without a particular
function.
c. Other solutions include:
Pinning your hopes on an upgrade or updating of
software.
Identifying a third-party product that might fill
the gap.
Designing a custom program.
Altering the ERP source code.
 5. RE-ENGINEERING:

1. It is in this phase that the human factors are

taken into account.
2. Two different connotations
3. 1st one is the controversial one, involving the
use of ERP to aid in downsizing efforts.
4. There have been occasions where high level
executives have invoked the reengineering
slogan & purchased an ERP package with the
aim of reducing number of employees.
5. While every implementation is going to involve
some change in job responsibilities, so it is the
best to treat ERP as an investment as well as
cost-cutting measure, rather than a downsizing
tool.
6. The 2nd use of the word re-engineering in the
6. CONFIGURATION
This is the main functional area of the ERP
implementation.
Business processes have to be understood &
mapped in such a way that the arrived solution
matches with the overall goals of the company.
Configuring a companys system reveals not
only the strengths of a companys business
process but also its weakness.
It is vital to the health of the company & to the
success of the ERP implementation that those
configuring the system are able to explain
what wont fit into the package & where the
gaps in functionality occur.
 6. CONFIGURATION
THE PROTOTYPE

a. A prototype- a simulation of the actual

business processes of the company-
will be used.
b. The prototype allows for thorough
testing of the to be model in a
controlled environment.
c. As the ERP consultants configure &
test the prototype they attempt to
solve any logistical problems inherited
in the BPR before the actual go-live
7. IMPLEMENTATION TEAM TRAINING

When the configuration is taking place the

implementation team is being trained not how to
use the system, but how to implement it.
This is the phase where the company trains its
employees to implement & later run the system.
The ERP vendors & the hired consultants will leave
after the implementation is over.
Good in-house team
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.
Thus, it is very vital that the company recognizes
the importance of this phase & selects those
employees who have the right attitude- people who
are willing to change, learn new things & are not
afraid of technology- & good functional knowledge.
8. TESTING:

This is the phase where you try to break the

system.
Here we reach a point where we are testing
real case scenarios.
The system is configured & now must come
up with extreme case scenarios- system
overloads, multiple users logging on at the
same time with the same query, users
entering invalid data, hackers trying to
access restricted areas & so on.
The test case must be designed specifically
to find the weak links in the system & these
9. GOING LIVE
On the technical side, the work is almost
complete- data conversions is done,
databases are up & running, & on the
functional side, the prototype is fully
configured & tested & ready to go
operational.
The system is officially proclaimed
operational, even though the
implementation team must have been
testing it & running successfully for some
time.
10. END USER TRAINING:
Success & failure
The success or failure of an ERP system depends
on how the actual users use the system.
The most successful implemented ERP packages
fail due to lack of end user training.
People are divided into groups
ERP system changes the job descriptions of the
people, so it is important to identify the people
who are going to use the system. The current
skills of the people are identified & they are
divided into groups.
Every group is provided training on the new
system.
Training sections
The training section gives the overall view of the
system & how the individual actions will be
 End user Training
Every employee is also provided with
the training of the job profile which
he is going to perform.
The training section should address
about the new technologies & how
people will be successful in making
the change over.
The end user training is important
because the success of an ERP
system depends upon it & this phase
is equally difficult.
 11. POST IMPLEMENTATION (MAINTENANCE MODE):
Important factors
Post implementation phase is very critical.
Once the implementation is over the vendors & the hired
consultants will go.
Necessary enhancements & upgrades
There should be people within the company who have the technical
processes to make the necessary enhancements to the system as
& when required.
The system must be upgraded as & when new versions or
technologies are introduced.
Training is needed
Everyone who uses these systems needs to be trained on how they
work, how they relate to the business process & how a transaction
ripples through the entire company whenever they press a key.
The training will never end; it is an ongoing process; new people
will always be coming in & new functionality will always be
entering the organization.
Maximum value for these input
Living with ERP system will be totally different from installing them.
However, an organization can only get the maximum value of
these inputs if it successfully adopts & effectively uses the system.
Pros and Cons of ERP implementation

PROS CONS
Access to High initial
information investment
Decision making System can be
difficult to use
Reduced No immediate
expenditures results
Enhanced business Vendor lock in
performance
Secure and better Additional
organised data expenditures
Factors for the success of ERP
Implementations
Training
Comprehensive training of customer
resources
Succession planning from resources
Strict adherence to the Project schedules
Right technical infra-structure

Strong Monitoring
Quality Control at each phase of the project.
Using monitoring tools for evaluation of
quality of work and project progress.
 Factors for the success of ERP
Implementations
Commitment of Top Management
Drive also come from top for ERP
implementation
Dedicated Project Team
Motivation and incentive for employees based
on performance.
Quick decision making.
Capabilities of the software development vendor
Scope & Expectations finalization towards
meeting the ERP concepts
 Few factors for success of an ERP
implementation
Focus on business processes and
requirements
Focus on achieving ERP ROI
Strong project management and
resource commitment
Commitment from company
executives
Adequate training and change
management
Understand why you are
 Critical Success Factors in ERP
implementation projects
Top management support and involvement
Clear goals, objectives and scope
Project team competence and organization
User training and education
Business process reengineering
Change management
Effective communication
User involvement
Data analysis and conversion
Consultants
Project management
Project champion
Architecture choice (package selection)
Minimal customization
 Vendors

Vendors are the people to develop

the ERP packages
They spent a huge amount of time &
effort in research & development to
create the package solution that is
flexible, efficient and easy to use
The ERP vendors spent a large
amount of money so that they can
become experts, to develop a
flexible, efficient & easy to use ERP
package
 Vendors

With evolution of new technologies

the vendors have to continuously
upgrade their product to use the best
and latest advancement in
technology.

So it is better to leave the ERP

package development to the vendor.
 Role of Vendors
The vendor should supply the product &
its documentation as soon as the
contract is signed.
The vendor is responsible to fix the
errors during the implementation
process, and he should be in touch with
the implementation team.
The vendor also has to provide the
training to the companys user & the
people who are involved in the
implementation process of the s/w.
The vendors training should explain
how the package works, what are major
 Role of Vendors
The vendor gives the project support
function & also takes care of the
quality control factor
The vendors participate in all the
phases of an implementation in
which he gives advices, answers to
technical questions about the
product & technology.
In case, there is gap between the
package & the actual business
process then it is the job of a vendor
to customize the s/w & make
necessary modifications.
 Consultants
Business consultants are professional
people who develop the different
methods & techniques to deal with
the implementation process & with
the various problems that will crop
up during implementation.
They are experts in the area of the
administration, management &
control activities.
They have experience of
implementation & various methods
that ensures successful
 Consultants
The only limitation with consultant is
they are very expensive.
They consultants have to make the ERP
implementation for an organization as
their own business.
They have to make a plan to carry the
activities in the right direction during
the implementation process.
Since they are expensive the company
should formulate a plan regarding best
optimum utilization of the money spent
on consultants.
 Role of consultants
The consultants are involved in the
implementation process of the organization.
They consultant should guarantee the success of
the project and should be able to show the
results such as reduction in cycle time, increased
response time, improved productivity, etc to the
satisfaction of the customer.
They are responsible for the administration of all
the phases of the implementation so that the
activities occur at the scheduled time and at the
desired level of quality with effective
participation with all those who must participate.
They add value to the project as they provide
knowledge about the packages & the
implementation process which gives the
employees the practical experience.
 Role of Consultants
They also analyze & provide the suggestion
where customization needs to take place.
They should be able to balance their loyalty to
the client & the project.
They should have a clear cut context & scope
of the work so that they can provide the
management with the decision that are to be
taken for the implementation process.
The consultants should create a knowledge
base & train the people so that the knowledge
stays in the organization when the consultants
leave the project.
 End users/Employees

They are the people who use the ERP system once
it has been developed.

End users are the people who will be doing the

functions which are automated by the ERP system.
The end user should be given the training as to
how use the various functions that are automated
in the s/w.
The fear among the employees of unemployment
is taken out with the training sections.
The end users are provided with the skills set &
more opportunities to work in a challenging
environment using the modern technologies.
 Resistance by employees

Some of the reasons for

employee resistance are:

Fear of being redundant

Fear of failure
Fear of the future
 Dealing with employee
resistance
Training and education
Creating ERP champions
Pilot projects
Involve employee in ERP process
Address issues of fear, uncertainty
and self esteem
Manage expectations
 Role of top management
Senior management must be
completely in-tuned with the
development, implementation, and
testing processes.

Often times, implementations can go

over-budget or time but it is
managements job to stay
committed to developing a thorough
and efficient ERP system rather than
 Role of top management
They need to understand where the
direction of the ERP and how this
impacts the culture of the firm.
There should be clear
communication channels between
management, vendor, and any
project management teams
Management has to show
commitment and optimism to
vendors and employees on the
success and implementation of the
Role of implementation partner
Vendor/consultant in a new or modified ERP
project needs to become a temporary partner in
your business.
They should involve in almost all the details of
accounting, operations and production systems
Willingness to accept and accommodate
change and be flexible
Only an ERP solution provider with a strong
combination of technology expertise and
business management knowledge will be a true
ERP implementation partner.
Role of implementation partner
Provide full transparency and guidance
through effective communication and display
professionalism
An ERP partner should map the business
processes to ensure the most effective
deployment of ERP solution
Deliver ongoing training and support resources
Provide clear and extensive answers to
employees and clients questions
Should be dedicated to a long-term
relationship
At the end of the ERP
implementation process,
the working relationship
fostered at the beginning
pays off for both the
client and vendor. Here,
Tim LaSpina, president of
LaSpina Tool & Die in
Stow, Ohio, shows that he
and ERP vendor, Billie
Henning, are still on good
terms.
Its critical that the
vendor/consultant
delves deeply into
the business of the
shop that is looking
to automate its ERP
system.
All areas of a company
from the front office to
the shipping dock
must be analyzed and
understood by the
software vendor. It
takes full cooperation
from all of the
business operational
areas to make this
possible.