TRY & TRY U WILL BE SUCCESS

ERP SORT QUESTION

SANJAY HIRANI

Semester: 1st

Branch:MCA

Chapter 2 – ERP Implementation: Life Cycle, Methodologies and Strategy

ERP LIFE CYCLE

There are six phases of ERP life cycle:

  1. Pre-implementation Phase

Brief Description of Activities:

  1. Having a Team in Place
  2. Feasibility study/ROI Analysis/Business Case
  3. Getting Budget
  4. High Level Requirement Definition, Prioritisation of Requirements
  5. High Level Scope Definition
  6. RFP for Selection of Implementation Partner and Evaluation and Selection of Consulting Partner
  7. RFP for Evaluation and Selection of ERP Package
  8. Number of Activities and their Sequence can Change Depending on the Type of Project
  1. Project Preparation Phase

Brief Description of Activities:

  1. Project Team Selection (Core Team and Consultants)
  2. Detailed Project Scoping
  3. Project Vision/Mission Statement Creation
  4. Deciding Implementation Strategy, Methodology to Follow
  5. Finalizing Project Methods, Standards and Governance
  6. Technical Preparation
  7. Project Planning, Resource Planning, and Training Planning
  8. Project Charter Preparation
  9. Conducting Project Kick off Meeting
  10. ERP Overview Training to Senior Management, ERP Process Training to Core Team
  1. Business Blueprinting Phase

Brief Description of Activities:

  1. High Level Process Modelling of AS IS Process
  2. Developing Detailed Requirement Definition
  3. Business Process Reengineering
  4. Detailed Process Modelling of TO BE Process, Design Process Steps
  5. Gap Identification and Analysis, and Strategy to Bridge the Gap
  6. User Authorisation, Roles and Security Planning
  7. Blueprint Audit by External Team
  8. Getting Blueprint Signed Off
  9. ERP Configuration Training to the Core Team
  1. Realisation Phase

Brief Description of Activities:

  1. Configuration/Customisation
  2. Unit and Integration Testing
  3. Developments for Gaps
  4. End user Training Plan
  5. Integration Test Sign Off
  1. Final Preparation and Go Live Phase

Brief Description of Activities:

  1. Stress and Volume Testing
  2. User Acceptance Testing and User Sign Off
  3. Conducting End user Training
  4. Data Migration – Migrating Open Items
  5. Cut over Planning – Preparing Go Live Checklist
  6. Help Desk Support Finalisation
  7. Closing Open Project Issues
  8. Pre Go Live Audit by External Team
  9. Going Live
  1. Support Phase

Brief Description of Activities:

  1. Knowledge Transfer to Support Team
  2. Transition of Project Documents and Open Issues
  3. Regular Supoort, Monitoring Service Level Agreements (SLAs)
  4. Measuring Performance Improvement
  5. Upgrading to Next Version of ERP

METHODOLOGY FOR IMPLEMENTATION

One Example of Methodology from ERP Vendor: ASAP from SAP

Objectives of ASAP:

  • Implement SAP solutions in a quick and cost effective manner.
  • Maximise the utilisation of resources.
  • Incorporate a process-oriented approach to implementation.
  • Involve the user community.
  • Use it as a repeatable “model” with other implementations of SAP.

Phases in ASAP:

  1. Project Preparation
  2. Business Blueprint
  3. Realisation
  4. Final Preparation
  5. Go Live and Support

Tools in ASAP:

  1. Implementation Assistant
  • Roadmaps – Steps to complete project
  • Knowledge corner – Comprehensive library of reference material that helps implementation
  1. Q&A Database: This helps in
  • Setting the project scope
  • Document business requirement in detail
  • Helps in creating the business blueprint
  1. Project IMG – Helps in quick customising of the application
  2. Transports – Helps in moving the configurations from one landscape to another (Say, development to quality).
  3. BC sets – Helps in recording configurations so that these can be reused in other implementation (say, another business division of the company).

One Example of Methodology from Consulting Company: Ascendant from PWC IBM

It focuses on six key areas (domains):

  • Project management
  • Business
  • Organisation
  • Application
  • Architecture
  • Operations

Phases in Ascendant:

  1. Evaluation
  2. Project Preparation
  3. Business Blueprint
  4. Realisation
  5. Final Preparation
  6. Go Live
  7. Sustain

Different types of ERP Projects

  1. ERP implementation projects
  2. ERP upgrade projects
  3. ERP global rollout projects
  4. ERP migration projects
  5. ERP harmonisation/consolidation projects

ERP Implementation Methodology for Small and Medium Business:

The implementation approach that works fine for large companies may not be suitable for small organisations for reasons like:

  • Small companies may not afford the implementation approach that spans across 24-36 months and costs a few hundred million dollars.
  • These companies have fairly few senior management officials whom they cannot send as project core team members for a long duration.
  • In many cases, their business requirements as as complex as large companies.
  • Like large organisations they cannot spend money on a BPR project prior to implementation.

Keeping in view the above shoetcomings, both ERP package vendors and implementation consultancy companies have come up with the solutions like:

  1. Pre-configured Template
  2. Separate Solutions for SMB Segment
  3. Fast Forward Implementation Methodologies

Different ERP Implementation Strategies:

  1. Big bang (All locations, all modules)
  2. Rollout (Selected locations, all modules)
  3. Big bang and Modular (All locations, selected modules)
  4. Rollout and Modular (Selected locations, selected modules)

Chapter 5 – ERP Package Selection

ERP SELECTION – A TWO-STEP PROCESS

A company can look at a set of criteria for ERP package screening i.e. for selecting 3-5 packages from hundreds of ERP packages available in the market.

Criteria for Initial Package Screening:

  1. Product Strategy, Vision and Investment in Innovation
  2. Financial Viability of the Application Vendor
  3. Installed Base and Local Presence
  4. Partnerships
  • Implementation partnerships with consulting companies
  • Application partnership with other third party applications
  1. Technology Maturity
  2. Vendor’s Customer Services
  3. Cost of the Software

Initial Package Shortlisting:

Based on the above criteria, packages are given different weightage (as mentioned in Table below). Packeges (top two or three packages) scoring highest in this method are shortlisted.

Weightage and Criteria for Shortlisting Packages

Key to weightage:

  • 5 – Very good
  • 4 – Good
  • 3 – Average
  • 2 – Bad
  • 1 – Very Bad

Packages 1, 2 and 4 are taken for the next level of evaluation, based on the total weightage given to packages.

Final Package Selection:

  • Top three packages shortlisted through the earlier exercise are taken up in this round for detailed functionality evaluation against the business requirements of the company.
  • There can be hundreds of such requirements which can be assesses as follows:
  • FM: The application meets the business requirement directly (fully).
  • PM: The application partially meets the requirement.
  • NM: The application does not meet the business requirement.
  • In the following example, the company has 300 such requirements, out of which only five are evaluated.

How the business requirements are met, based on that individual vendor is given a point against a particular functionality and the point distribution is as follows:

Now based on this, different package vendors are evaluated:

in this example, both Package 1 and Package 2 come pretty close in terms of functionality. Choices between the two will be mostly driven by cost and service quality.

This is an example of how scientifically packages can be evaluated and selection can be made in favour of one.

Deviations in Package Selection Process:

  • A company tells its main supplier to implement a particular ERP so that both can be on the same platform and interaction between them would be easier.
  • A group company wants to implement the same ERP what the mother company has.
  • For a small company, the ERP decision can be driven a lot by the ERP price.
  • For certain industries one ERP may be very popular as it offers lot of industry-specific functionalities. Retek for Retail industry, Mincom for Mining industry, AspenTech for Oil and Gas industry are examples of such ERPs.

RFP Process for ERP Package Selection:

A typical RFP document can have different sections detailing with:

  • Details on the date and time by which the bid needs to be submitted, bid security amount to be deposited, bid validity period, etc.
  • Overview of company’s business, current operations, locations from where it operates, etc.
  • Current IT systems the company is using and which of them need interface with ERP systems
  • High level scope of the project
  • Benefits the company is expecting from the implementation
  • Detailed scope of the work
  • The details of payment schedule

RFP document can specify in detail on what date what is expected out of the ERP package vendor. Table below is an abstract from a government RFP for ERP package selection:

Package Selection Calendar (RFP based)

Finalising the Contract with ERP Package Vendor:

Contract is a legal obligation for both the parties. Generally, for the package vendor there will be standard contract clauses covering the following things:

  • Payment term
  • Intellectual property or copyright clauses
  • List of deliverables along with software
  • How training for the software will be handled
  • How the software manitenance will be handled
  • How future upgrades for the software wil be provided and at what cost
  • Software installation help to be provided
  • Prerequisite to install the software – the hardware specification, OS needed, database needed etc.
  • Any audir or review by the package vendor during package implementation
  • Licence cancellation costs

Chapter 9 – Business Process Reengineering

PROS AND CONS OF BPR:

Pros:

  1. Enterprise integration
  2. Empowered employee
  3. No handoff
  4. Simplified process
  5. Less coordination, reconciliation
  6. Reduce NVA (No Value Added), eliminata waste
  7. Case manager as SPOC (Single Point Of Contact)
  8. Effective use of IT

Cons:

  1. High failure rate
  2. Can take long time
  3. Can consume lot of organisational resource (cost, executive time)
  4. Can make existing jobs reduntant
  5. High resistance to change

BPR/PROCESS REDESIGN - REASONS FOR FAILURE AND KEYS TO SUCCESS

Reasons for Failure:

  1. No focus on processes
  2. Spending a lot of time for analysing the current situation – It does not make sense as anyway you are going to throw it out
  3. Proceeding without strong executive leadership
  4. Going directly from conceptual design to implementation and avoiding prototyping
  5. Ignoring the concerns of people
  6. Poor scoping – 100% improvement to a 1% value-adding process is only 2% value addition
  7. Looking for recipes
  8. Fading top management commitment
  9. Tweaking the process instead of radically redesigning it
  10. Assigning less-than-best people to reengineering

Keys to Success:

  1. Commited leadership and top management commitment in the project
  2. Prototyping every process before large-scale implementation
  3. Showing early success within first three to six months. Even if the success is a small one, this interests everyone in the organisation in the project
  4. Communicating effectively. This helps in managing change. If people are not aware of what the project is all about, this can result in fear or issues related to acceptance of the project.

REENGINEERING PHASES:

  1. Have the reengineering team in place
  2. Selection of process to be redesigned
  3. Process diagnosis/Understanding the existing processes
  4. Process redesign
  5. Prototyping – Design and build a prototype of the new process
  6. Full-scale implementation

Reengineering or Redesign principles:

  1. Maximise value adding (VA) steps, minimize non-value adding (NVA) steps and eliminate waste
  2. Parallelise work
  3. Try to simplify process
  4. Multiple versions of the same process
  5. Enable workers to make decisions
  6. Reduce audits, checks and controls
  7. Provide single point of contact for the process
  8. Combine several jobs into one
  9. Organise around processes (exit departments, enter process teams)
  10. Enabling bosses – “coaches”
  11. Adopt customer perspective
  12. Automate appropriately
  13. Organisational structure should support business process

Levers of Process Redesign:

  1. Roles and responsibilities
  2. Measurement and incentives
  3. Organisational structure
  4. Information Technology
  5. Skills

Difference between Process Improvement and Process Redesign Approaches:

Parameter / Process Improvement/TQM / Process Redesign/BPR
Level of change / Incremental / Radical
Starting point / Existing process / Clean slate
Frequency of change / Continuous / One-time
Time required / Short term / Long term
Participation / Bottom up / Top bottom
Typical scope / Narrow / Broad
Risk / Moderate / High
Primary enabler / Statistical control / IT
Type of change / Cultural / Cultural/structural

Types of Benchmarking:

  1. Process benchmarking
  2. Financial benchmarking
  3. Performance benchmarking
  4. Product benchmarking
  5. Functional benchmarking

Steps of Benchmarking:

  1. Identify problem areas
  2. Identify targets (leaders in the similar industry or other industries that have similar processes)
  3. Identify measures and best practices in the target company
  4. Implement new and improved business practices

Chapter 13 – Managing ERP Security

TYPES OF ERP SECURITY ISSUES

  1. Network security
  2. System access security – Role and Authorisation
  3. Data security

SYSTEM ACCESS SECURITY – AUTHORISATIONS

  1. Activity-Based Authorisations:

Steps for Activity-Based Authorisations:

  1. Identify the activities that a particular process may involve
  2. Prepare a ‘set’ of transaction codes for each identified activity
  3. Prepare an authorisation role for each set of transactions
  4. Assign the user the specific authorisation role
  1. Role-Based Authorisations:

Steps for Role-Based Authorisations:

  1. Identify the transaction codes that each role in the organisation require
  2. Prepare an authorisation role for the list of transactions identified
  3. Assign the user the specific authorisation role

DATA MASKING:

Benefits of data masking:

  1. It meets regulatory compliance requirements such as HIPAA.
  2. It enhances data security for outsourcing application and development.

Data Masking Algorithms:

  1. Shuffling/Reorder
  2. Random value
  3. Hashing
  4. Date aging
  5. Value changes in increments or decrements/Numeric alternation
  6. Custom
  7. Substitution with a random value

Chapter 18 – Success or Failure of ERP Implementation

REASONS FOR FAILURE OF AN ERP IMPLEMENTATION

  1. Poor ERP Package Selection
  2. Inadequate Requirement Definition and Unrealistic Expectations, Scope
  3. Investment without ROI Justification
  4. Not Able to Support Changing Business Needs
  5. Top Management Support Lacking
  6. ERP Core Team do not have Right Resource
  7. User Acceptance Issues
  8. Employees Resist ERP Implementation
  9. Training Issues for the Team
  10. Poor Communication
  11. Project Viewed as an IT Project
  12. Customising the Software too Much
  13. Too Tight Project Schedule, Miscalculation of Time and Effort
  14. High Turnover Rate of Project Team Members

REASONS FOR SUCCESS OF AN ERP IMPLEMENTATION

  1. How You Define A Success – Define Measures
  2. Managing Project Scope
  3. Requirements Prioritisation
  4. Have Early Success and Pilots
  5. Have Good Relationship with ERP Vendor and Consulting Partner
  6. Good Project Management
  7. Having Clean Data in the System
  8. Quick Decisions
  9. Test the Solution Thoroughly
  10. Ensure that Project has Sufficient Budget till the End
  11. Efficient Risk Management
  12. Process Owner’s Involvement
  13. Who Owns Business Benefits

Chapter 20 – Human Capital Management

HUMAN RESOURCE MANAGEMENT MODULES:

  1. Recriutment Management Module
  2. Time, Attendance and Leave Management Module
  3. Workforce Scheduling Module
  4. Compensation Management Module
  5. Benefits and Payroll Module
  6. Talent Management/Performance Management Module
  7. Learning Management Module
  8. Personnel Management Module
  9. Employee Relationship Management and Employee Self-service
  10. Human Capital Management Analytics

STEPS IN RECRUITMENT CYCLE OR ACTIVITIES IN RECRUITMENT MANAGEMENT PROCESS:

  1. Labour forecasting and workforce planning
  2. Position management/creating requisitions for new positions
  3. Candidate sourcing
  4. Screening and application tracking
  5. Interviewing
  6. Selection
  7. Job offer
  8. On boarding/Orientation

CAPABILITIES OF WORKFORCE SCHEDULING MODULE:

  1. Generating optimised scheduling and shift planning
  2. Employee assignment to schedules
  3. Labour tracking
  4. Dynamic rescheduling

CAPABILITIES OF COMPENSATION MANAGEMENT MODULE:

  1. Compensation planning and analysis
  2. Compensation structures
  3. Compensation workflow and approvals
  4. Incentive and reward pay
  5. Commission-based pay
  6. Pay for performance
  7. Compliance

CAPABILITIES OF BENEFITS AND PAYROLL MODULE:

  1. Payroll administration
  2. Payroll processing
  3. Supporting multi-country localisation and taxes

CAPABILITIES OF TALENT/PERFORMANCE MANAGEMENT MODULE:

  1. Performance management
  2. Competency management
  3. Career development planning
  4. Succession planning
  5. Goal alignment of organisation and individual

CAPABILITIES (DIFFERENT AREAS) OF LEARNING MANAGEMENT MODULE:

  1. Registration
  2. Course catalogue
  3. Scheduling instructor-led training (ILT) courses
  4. Supporting training financials
  5. Tracking
  6. Content management
  7. Learner assessment
  8. Collaboration
  9. Reports

CAPABILITIES OF PERSONNEL MANAGEMENT MODULE:

  1. Labour relations
  2. Non-employee administration
  3. Maintaining detailed employee records

CAPABILITIES OF EMPLOYEE RELATIONSHIP MANAGEMENT (ERM) AND EMPLOYEE SELF-SERVICE MODULE:

  1. Employee portal
  2. Employee self-service

STRATEGIC/CORE HR PROCESSES:

  1. Performance management process design
  2. Compensation and reward planning
  3. Planning job roles
  4. Recruitment process design
  5. Workforce planning
  6. Learning management
  7. Employee satisfaction measurement, designing employee motivation schemes

OPERATIONAL HR PROCESSES:

  1. Employee record management
  2. Leave and absence management
  3. Time and labour management
  4. Tax and compliance services
  5. Payroll
  6. Background checking and reference check before recruiting
  7. Health and welfare benefits administration
  8. Retirement benefits (Like managing Provident fund, Gratuity, etc.)

EMPLOYEE HEALTH AND SAFETY

SAP has two EHS modules to support employee health and safety concerns:

  1. Industrial Hygiene and Safety
  2. Occupational Health

Chapter 21 – Financial Management

ERP FINANCIAL APPLICATION

ERP financial applications broadly have offerings as mentioned below:

  • Accounts Payable
  • Accounts Receivable/Collection Management
  • Accounting
  • Costing and Profitability
  • Reporting different expenses
  • Budgeting
  • Consolidation
  • Financial reporting
  • Internal control and audits
  • Tax planning
  • Treasury and cash management

FINANCIAL MODULES IN DETAIL

Traditional ERP financial applications can be broadly classified in four categories as follows:

  1. Financial Accounting

This helps in managing following processes:

  • General Ledger (GL)
  • Accounts Receivable (AR)
  • Accounts Payable (AP)
  • Assets Accounting
  • Contract Accounting
  • Bank Accounting
  • Cash Journal Accounting
  • Inventory Accounting
  • Tax Accounting
  • Creation of different Financial Statements
  1. Management Accounting

Management Accounting helps in all type of cost and valuation related accounting such as:

  • Profit Centre Accounting
  • Cost Centre Accounting and Budgeting
  • Project Accounting and Budgeting
  • Product Cost Accounting
  • Transfer Pricing
  1. Financial Supply Chain Management

This helps in following processes: