UNIT IV POST IMPLEMENTATION

Maintenance of ERP- Organizational and Industrial impact; Success and Failure factors of and ERP
Implementation

Operation Of the ERP System

The O&M phase has to be carefully planned. During the O&M phase, the ERP sponsor should
monitor the progress of the ERP system with the assistance of the ERP project manager. The ERP
project manager is the most logical person to be entrusted the task of looking after the ERP system
during the O&M phase. He has the experience, the knowledge and the contacts with the tool
vendors and external consultants, and he has worked closely with the ‘ERP champions’ in the
organization. There should be ERP teams (not end-users) who will assist the ERP postimplementation
in-charge in the discharge of his duties. These people will do the various activities of the O&M phase
like re-training, training of new employees, installing software upgrades, and so on.

Interdepartmental Coordination

As mentioned earlier, for the ERP system to function smoothly, the co-operation of all the
departments is necessary. These departments might have conflicting interests. The marketing
department might want the maximum number of features and release of the product at the earliest.
The production team may not be able to incorporate all the features and complete the development
as per the time schedule of the marketing team. The financial department might not want to give
additional resources to a project, as there will be cost overruns. Managing these conflicting
requirements is a very difficult task. The ERP project manager can act as a liaison between these
departments and the company management and arrive at solutions that are satisfactory to all. For
example, if the marketing team wants an early release of the product then some of the features
could be assigned to the next release.

SWOT Analysis

The project manager (O&M phase) and the ERP team can assess the strengths, weaknesses,
opportunities, and threats (SWOT) to the ERP system. The strengths should be reinforced so that
they become ingrained into the organizational culture. The weaknesses should be rectified through
appropriate corrective actions, so that the organization can be competitive. The opportunities and
threats are identified at the strategic level by the management. But these should be converted into
operational level tasks and be performed by the various departments in the organization.

For example, the technical service department of an organization is finding it difficult to provide
timely and quality service to the customers. This is a threat to the organization as customers will
become dissatisfied and will move to another vendor. If the ERP team can create a help-desk of all
the problems that have occurred in the past and how they were fixed, then the technical support
team will be able to answer the customer queries quickly, if the help-desk has a previous instance of
such a problem. If the help-desk is kept up-to-date by adding new problems and their solutions, over
a period of time the efficiency of the technical support team will increase dramatically.

Documentation
During the ERP system design stage, the ERP plan is prepared and the ERP system is designed. During
the course of the implementation, the plan will be revised and updated to reflect the changes that
occurred during implementation. The ERP plan is the fundamental document for performing the ERP
activities. It is the job of the O&M project manager to ensure that all the ERP team members and the
members of the organization have access to the latest copy of the ERP plan.

During the training phase, the vendors and the external consultants will prepare user manuals,
procedures, and best practices documents for training and reference. These documents and their
latest versions also should be accessible to all users of the system. The access to these documents
could be restricted or controlled using user names and passwords.

The procedures and work instructions include process descriptions, roles and responsibilities,
process flow, etc. The process of producing this documentation commences during the ERP system
design stage and develops through the implementation phase, at the end of which it is finalized.
These procedures are actually part of the documentation control and should be revised following
the appropriate change management procedures. Only the latest copy should be available for
viewing.

Training

Training is a never-ending activity. One of the main tasks of the project manager or the ERP team is
the training of new employees on the ERP concepts, tool usages, procedures, and best working
practices and retraining the existing team at regular intervals. Once the new employees are given the
ERP training and told how ERP is practiced in the organization, they will do things the ‘right way’
from the beginning.

Continuous Monitoring

The ERP system automates most of the business functions of the organization and there are many
points where manual processes are retained and manual data entry is done. The ERP team should
constantly monitor these activities to ensure that these activities—both manual and automatic—are
performed correctly. The ERP plan and the ERP system should also be reviewed, audited, and
updated periodically.

The O&M in-charge should find qualified auditors and reviewers so that the ERP system can be
reviewed during the implementation and O&M stages. The procedures and checklists for these
reviews and audits should be developed and made available to the reviewers and auditors. The ERP
database should be updated with the information regarding these reviews and audits.

ERP Database Management

The project manager or the ERP team should also ensure that the data migration has been done
without any problems and the ERP database is up-to-date and not corrupted so that business
functions can be executed flawlessly and decision-making features can be performed accurately. If
the integrity of the data in the ERP database is compromised, the information produced will be
outdated, wrong, and useless. The status and business intelligent sub-systems are the eyes and ears
of the organization and they depend heavily on the data in the ERP database. Therefore, the ERP
team should make it their priority to ensure that the right information is provided to the right person
at the right time. This will improve the quality of the decisions and make the organization more
effective and efficient.

Customer Care
The real value of a good ERP system is realized during the O&M phase. The ERP system has all the
information about that is happening in the organization like number of unprocessed orders, number
of delayed shipments, number of customers who purchase more than twice a month, and so on.
The ERP database together with the help-desks, provide an environment where the customer care
executives can answer customer queries quickly and resolve issues without delay.

Help-desks and Technical Support

Help-desks are repositories of the organizational knowledge that can be used by the maintenance
and support team. The help-desk contains correct operating practices, problems with the software,
how to solve them, details of problem reports and resolution, etc.

When encountered with problem reports from customers, the maintenance team and support
personnel can query the help-desk to see if a problem that is similar to or same as the current
problem has occurred in the past. If there are past occurrences of similar or same problems, then the
problem resolution will be quick. In order to get the maximum benefit from the help-desks they
should be designed properly. They should contain all the details arranged and stored properly, so
that it can be retrieved easily and intuitively.

Many companies post frequently asked questions (FAQs) and their answers on their support
websites and encourage users to first check the FAQ before calling the technical support. A well-
organized and categorized FAQ can substantially reduce the workload of the technical support
personnel. As new problems and their solutions get added to the help-desk, they will simultaneously
get updated on the website too.

ERP Maintenance Phase

The ERP system needs regular maintenance in order to function properly. The ERP plan needs
revision and updating as per the changing situations in the organization. We have already seen that
the ERP system should be reviewed regularly. The review, comments, and suggestions should be
incorporated into the system.

the ERP system needs fine-tuning as the employees become familiar with it. Once the ERP system
has reached a stable state, necessary actions should be taken to improve the performance. The ERP
metrics could give an indication of whether the ERP system is functioning properly or not.

The ERP tools that are implemented are another area that needs maintenance. The project manager
should be in regular contact with the vendors to see whether any upgrades or updates are available.
All patches and upgrades should be installed to ensure that the tools are working at their maximum
efficiency. Employees should be given refresher courses on the new functionality that gets added
with each new upgrade. The training documentation should also be updated so that it is in sync with
the procedures and processes.

According to Eric Kimberling, President and Founder of Panorama Consulting, the five ways to
reduce ERP maintenance and support costs are:

• Negotiate lower software license fees. Annual maintenance fees are usually a percentage of
the software costs. Thus, negotiating for a lower price for the ERP software is a means to
reduce the maintenance cost. This will also reduce the initial ERP investment.
• Limit software customization during ERP system implementation. Customizations are costly
—to implement maintain, and upgrade. Thus, the best way to reduce costs is to minimize
customization. However, this is not as easy as it sounds. You can reduce customization by
 choosing an ERP package that best matches your business practices. The practices that are
different have to be changed or the package has to be customized. As far as possible, avoid
drastic customizations as they can prove very costly a few years down the road and after a
couple of software upgrades.
• Explore third-party support and maintenance options. One of the main revenue streams of
the ERP vendors is the annual maintenance fees which we have seen can be anywhere from
20 to 33% of the initial implementation costs. However, there are many thirdparty
companies that offer maintenance and support at much lower costs.
• Negotiate lower ongoing professional service rates. Try to bring as much of the tasks and
costs including travel and professional fees inside the scope of the AMC. Most vendors
charge addition hourly rates and travel expenses for the professionals who come to attend
the service calls and for upgrading the software. If you cannot make them part of the AMC,
then negotiate for lower rates or consider third-part options.
• Quantify your total direct and indirect maintenance and support costs. Keep track of your
ERP maintenance and support expenses and make sure that they are well within the budget.
If there are any extra expenses that can stretch the budget or exceed it, then those expenses
should be investigated and necessary corrective actions should be taken.

Success Factors
1. Make sure you understand why you are implementing ERP—It is easy to see that many big
companies are running SAP or Oracle and maybe you should too, but it is harder to consider
that maybe you do not need an ERP system at all. Perhaps process improvement,
organizational redesign, or targeted best-of-breed technology will meet your business
objectives at a lower cost. By clearly understanding your business objectives and what you
are trying to accomplish with an ERP system, you will be able to make a more appropriate
decision on which route to take, and that may or may not involve ERP.
2. Project Planning—ERP implementation starts with project planning—setting project goals,
identifying high-level business requirements, establishing project teams, and estimating the
project costs. Project planning offers the opportunity to re-evaluate the project in great
detail. If the ERP project is not justified at the planning phase, organizations should not
hesitate to cancel the project. For every successful ERP project there are projects that are
cancelled before implementation.
3. Plan upfront—An ERP vendor’s motive is to close a deal as soon as possible. Your
responsibility should be to make sure it gets done right. Too often, companies jump right in
to a project without validating the software vendor’s understanding of business
requirements or its project plan. The more time you spend ensuring that these things are
done right at the beginning of the project, the less time you will spend fixing problems later
on.
4. Focus first on business processes and requirements—Too often, companies get tied up in
the technical capabilities or platforms that a particular software application supports. What
does matter is how you want your business operations to run and what your key business
requirements are. Once you have this defined, you can more easily choose the software that
fits your unique business needs.
5. Data requirements—Unlike in-house e-business applications, much of the packaged ERP
implementation involves the integration of ERP systems with existing e-business software
(CRM, SCM, and SFA) and legacy information systems. Appropriate level of data
requirements is critical for an ERP to interact with other applications. Data requirements
usually reflect details of business requirements. It costs ten times to correct a mistake at
 later phase of ERP implementation than the effort to correctly define requirements at
analysis and design phase.
6. Data conversion—Second generation ERP systems use relational database management
systems (RDBMS) to store enterprise data. If large amounts of data are stored in other
database systems or in different data formats, data conversion is a daunting task, which is
often underestimated in ERP implementations. A two-hour data conversion task could be
turned into a two-month effort as a result of the DBA group’s lack of technical experience
and the management’s incompetence or ignorance.
7. Strong project management and resource commitment—At the end of the day, your
company owns the success or failure of a large ERP project, so you should manage it
accordingly. This includes ensuring that you have a strong project manager and top players
from the business to support and participate in the project.
8. Make the best use of the external consultants and experts—These people are paid huge
amounts of money for helping you in implementing the ERP system. Thus, you must make
the best use of their knowledge and skills and ensure that the knowledge transfer is
complete before they leave the project.
9. Put the very best people on the implementation team—The natural tendency is to source
projects with employees who are the most available. These people may not have the skills or
process knowledge required to get the job done. An ERP project will require the best talent
that you have. And if you assign only part-time talent, then work gets prolonged and the
project is at risk.
10. Phased approach—It is important to break an ERP project down to manageable pieces by
setting up pilot programs and short-term milestones. Depending on the IT experience, some
organizations choose the easiest piece as the pilot project, while others may implement a
mission-critical application first. The pilot project can both demonstrate the benefits of ERP
and help gain hands-on ERP implementation experience.
11. Define metrics and manage them—Successful companies set targets, establish budgets, and
make it happen—especially after going live. On the other hand, after seeing head counts fall
and inventory shrink to more efficient levels, less successful companies can see these gains
reversed if they do not continue to define metrics and stick to them.
12. Create a partnership between your software vendor (and implementation partners) and
your stakeholders—While this concept may seem obvious, it has been found that the
vendor–client relationship is often contentious and sometimes outright hostile. This fact is
particularly true if the organization is severely divided regarding the choice of vendor
software. As problems arise during implementation, and they will arise, the blame game
often begins. Before long, the project evolves into a standoff with neither vendor nor client
willing to admit fault. A third-party project director or manager is often the best solution for
this dilemma. This person can usually serve as an objective mediator to bring the parties
together, finding solutions, rather than allowing the project to slow down to a crawl.
13. Implementation review—This review must be performed after users are competent with the
system. The goal is to ask the software vendor to suggest better ways to use the system.
14. Focus on achieving a healthy ERP ROI (return on investment), including post-implementation
performance measurement—This requires doing more than just developing a high-level
business case to get approval from top management or your board of directors. It also entails
establishing key performance measures, setting baselines and targets for those measures,
and tracking performance after go-live. This is the only way to truly realize the benefit
potential of ERP.
Failure Factors
1. ERP implementation is, at its core, a people project—The biggest challenge before and after
implementation is not the technology; are related to people. At every stage, companies must
work harder to manage change, secure buy-in, communicate better, and educate their
employees. Top human resources issues are related to change management, training, and
internal staff adequacy.
2. Employee resistance—If the employees are not educated and informed about the benefits
of the ERP system and assured about the security of their jobs by the top management, they
will start believing in the rumours that float around and will either resist or sabotage the ERP
implementation.
3. Lack of top management commitment—The top management should pledge and
demonstrate that the ERP implementation has its full support. They should assure the
employees about their jobs, clear any doubts and explain why the ERP system is a necessity
for the organization. The CEO or some senior level manager should sponsor the ERP project
in order to demonstrate the management commitment.
4. Inadequate requirements definition—If the requirements of the new system or what is
expected from a new system are not adequately defined, then the implementation team will
find it very difficult to plan the project. Only if the requirements are specified correctly, can
the ERP package that is best suited be selected.
5. Inadequate resources—ERP implementation is a complex, costly, and lengthy project. The
initial budgets are very often exceeded and there are still many hidden costs in an ERP
implementation. Therefore, while preparing the budget and allocating resources for the ERP
implementation care should be taken to consider all the factors that could affect the costs,
manpower requirements, infrastructure needs, and then reserve a reasonable amount of
buffer for any contingencies that might occur during implementation.
6. Inadequate training and education—All users of the ERP system should be trained properly
in using the system to its fullest. Different groups of people in the company will have
different training needs. Managers need more focus on the decision-making and analysis
features of the system while the clerical staff need more focus on how to perform their jobs.
When the employees do not understand what the new system is and what it is supposed to
do and how to operate it, they will not use it or use it incorrectly. This can lead to failure of
the system. Train process owners (department managers) in how to use the system. Have
them train the users.
7. Poor ERP package selection—If the right package—the one that is best suited for the
company—is not selected, it will create a lot of problems for the implementation and
customization teams as well as the end-users and will result in failure. Choosing an ERP
package that is not suited for the company or one that will require huge amounts of
customization is one of the major factors that contribute to the failure of the ERP project.
8. Extensive customization—Be prepared for people to argue that they need to customize a
report or tell you that your new software does not accommodate the way your company
pays invoices. Most companies can live with standard business processes. When you over-
customize an ERP installation, you not only add time and costs, you also make installing the
next release of the ERP software increasingly difficult and costly.
9. User acceptance—The users of ERP systems are employees of the organizations at all levels.
ERP projects usually modify the company’s business processes, which create extra workload
for employees who use them initially. They may not think that the workflows embedded in
the software are better than the ones they currently use. Ongoing end-user involvement and
 training may ease the difficulty in the organization’s adaptation of new systems and new
processes.
10. Going live is not the end of the ERP journey—ERP implementation and operation is a
continuous learning process and needs constant review and course corrections. The
organization should realize that the benefits of ERP go far beyond cost reduction, touching
virtually every aspect of the integrated enterprise. With a growing body of experience and
best practices to draw on, organizations already past the go-live stage can still harvest the full
benefits of their ERP investment.
11. Companies should anticipate a temporary dip in performance after going live— It takes
time and focus to realize the full benefits of an ERP implementation. Managing the dip
begins with a plan that addresses the organization’s unique circumstances—starting with
training and change initiatives for those who use the system. On a broader level, what the
dip really shows is an organization stabilizing after doing something new. In that sense, the
dip is a sure sign of growth and new capabilities—a bounce that then raises to new
performance levels.