Why an ERP could be the magic dust organisations need to

succeed.

Naeem Arif

26th February 2009Arif Intelligence Ltd

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

Agenda

Agenda

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

What is an ERP

• ERP = Enterprise Resource Planning (Gartner 1990)• A system for the entire organisation• Move from the best of breed to a single software, sharing

a common database and common design• Covering more than 1 business function, including;

– Financials– Human Resources– Manufacturing– Supply Chain– Warehouse Managements– Customer Relationship Management

Before ERP

• Departments build and support their own “best of breed” systems.

• Work on the different databases• Various views of the truth, different tools for planning and

management of the organisation• Multiple support contracts, reliance of interfaces and luck

After ERP

• Departments work on the same database• Single View of the truth • Single view of customer• Reduced support costs, less Interfaces

Benefits & Purpose of an ERP

• Improve efficiencies• Knowledge is Power• Single version of the truth• Supports the business process• Reduce time delays in processing information• Hold large volumes of data to support decision making• Provides an integrated solution to an organisations

“computer system” needs.

What Is Integration?

• Integration is the seamless interaction of technology, processes, and thinking– Process integration

• Business process alignment– Technical integration

• Interfaces, third-party products• Avoid bad/non-integrated solutions

– Process breakdown– Passing of bad information within your system

landscape

MY ORGANIZATIONSuppliers Customers

Managers

Shareholders

A good ERP satisfies a number of people

People

Process & Technology

Examples of ERP Software

• JD Edwards Enterprise One & JD Edwards World from Oracle

• Microsoft Dynamics GP (formerly Great Plains) from Microsoft

• Paradigm from Consona Corporation

• PeopleSoft from Oracle

• SAGE ERP X3 from The Sage Group

• SAP R/3 from SAP

Agenda

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

Where do Projects come from?

• Formal strategy to gain the tools• System replacement• Emergent projects just happen

Intended strategy Realised strategyDeliberate strategy

Unrealisedstrategy

Emergent

strategy

(Mintzberg & Waters, 1985)

Definitions of strategy

“…the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals.”

(Chandler, 1962)

Management of Technology … Why are you here?

• Technology Management has been described as the “key to success for companies anywhere in the world in the coming years”

(Morita, 1987, p246)

• “Failure to exploit technological innovation leads to a loss of competitiveness which in turn has an impact on general economic development”

(Durham, 1986)

TM and the organisation

• TM is concerned with systems that transform inputs into outputs

• A Tech system includes software, people, processes etc• TM systems can be categorised in terms of input, output,

transformation, administrative, control• aim of TM is make use of Tech to obtain CA• TM needs to be aligned to the near and far environments

So ERP can provide a Control Mechanism

Na

rro

w ta

rge

tB

road

targ

et

Source of Competitive Advantage

Co

mp

eti

tive

Sco

pe

Lower cost Differentiation

Cost leadership Broad differentiation

Cost focus Differentiation focus

(Porter, 1985)

The ERP can do only do so much ….

Resources and capabilities

Resources comprise the tangible and intangible assets of the firm.

Capabilities are the processes through which resources are combined and co-ordinated.

Linking resources and capabilities

Resources & Capabilities

(Grant, 2002)

Resources

Tangible Intangible Human- Financial - Technology - Skills/know-how- Physical - Reputation - Capacity for communication

- Culture and collaboration- Motivation

Industry key success factors

StrategyCompetitive advantage

Organisational capabilities

Key Success Factor for your ERP

Prerequisites for success

What do customers want? How does the firm survive competition?

Analysis of demand: • Who are our customers? • What do they want?

Analysis of competition:•What drives competition?•What are the main dimensions of competition?•How intense is competition?•How can we obtain a superior competitive position?

Key success factors

(Grant, 2005)

Agenda

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

How to Implement

• Numerous ERP implementation strategies• Built on the basic principles of

– Design– Build– Test– Go-live– Support (what happens after we go live?)

• Prince2, PMBOK, GDPM• SAP has its own version

Project Managers Body of Knowledge (PMBOK)

Plan Do Check Act Shewart-Deming

1. Initiating process group – start of the project phase2. Planning process group – planning objectives3. Executing process group - delivery4. Monitoring and Controlling process group – management team5. Closing process group – PMI

Characteristics of Projects

(1) Temporary

(2) Unique (different from a Steady State)

(3) Progressive elaboration, which is the evolution of the original scope, process, requirements etc. This is different to scope creep, this is more to do with process and methodology.

Project Characteristics

• Participant mix (internal, external, mixed)• Degree of standardisation• Project visibility• Business need• Size & complexity• Industry

(Gardiner)

Symptoms of Poor Project Mgt

• Project staff not seeing how their project fits in within the ‘bigger picture’

• Project staff being ambivalent about their projects• Decision-making processes being unclear or slow• Senior management unsupportive when problems with

project occur• Staff equipped with inappropriate skills being recruited

into projects• Working on projects and programmes being seen as a

poor career path(Williams and Parr, 2004)

Benefits Management

• Identify expected benefits that will be delivered by a programme

• Establish a benefits management structure defining processes, relationships, communications, roles and responsibilities

• Develop models to structure the programme benefits, including immediate and final outcomes

• Asses how the benefits are interrelated• Develop a realisation plan• Define accountability

(Williams and Parr)

Agenda

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

BPR

• Business Process Re-Engineering• Reviewing and re-creating the business process• Driven by issues or need to become more efficient• Process driven or System driven?

• Business Transformation is Process Driven• Technology projects are System Driven

• BPR doesn’t need a system project

Sharpbenders

Companies achieving a sharp and sustained improvement in performance by means of:

• Major changes in management• Stronger financial controls• New product-market focus• Improved marketing• Significant reductions in production costs• Improved quality and service

(Grinyer, Mayes and McKiernan, 1988)

Agenda

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

Project Failures

• Beware of “ambitions for a better society” – people want what they want.

• New technology produces new trajectories and new horizons – but people still want to be in control (e.g. pilots still want to control the plane, even thought the information is there).

• New technology may replace old, but not always for the good? Sometimes old needs to sit with new (e.g. Paperless office not possible, but we have certainly reduced the need for paper records).

• New technologies may have other side effects – e.g. online shopping (change of employment profile, delivery van still needed to deliver your products)

• You can’t replace everything – e.g. people may still want to go into town and have a

wonder around the shops

• Sometimes the innovation does not meet all that was specified at the outset – you maybe let down by it.

Geels and Smit (2000)

Why manage Change

• Implementing a change to a system or a process requires a review of associated Change

• Its basic common sense, if you changing the colour of the curtains – check with your wife first

• User Acceptance• Reduce delays to getting the benefit• Use the system for what was designed

Knowledge Acquisition

• Experience Accumulation – e.g. learning by doing lots of something

• Knowledge Articulation – after the project, running a review of the project, appraisal etc.

• Knowledge Codification – project experience in converted in documentation/procedures etc.

(Prencipe & Tell)

• Why Implement an ERP• When to Implement an ERP• How to Implement an ERP• Other sources of CA• Associated Issues and Risks, including the aspect of

Change Management

Agenda

Why an ERP could be the magic dust organisations need to

succeed.

Naeem Arif

26th February 2009Arif Intelligence Ltd