Chapter 2

ERP Implementation:
Life Cycle, Methodologies
and Strategy
 ERP LIFE CYCLE
• Sequence of activities, some are parallel
• Project Preparation
• Business Blueprinting
• Realization
• Final Preparation and Go Live
• Support Services
• Added one more, Pre-implementation phase, Evaluation:
Ascendant
• ERP life cycle =
ERP implementation life cycle + ERP support life cycle
 Pre-implementation Phase
• Planning activities are undertaken before actual implementation
• Start years before actual implementation
• Planning complexity depends on size of the organization
• Description of Activities
1. Having a Team in Place:
• Lead during first few steps, not implementation core team
• Manage:
• necessary budget approval
• selecting the consulting partner,
• identifying the business requirements for the company at high level
• selecting the core team for implementation
• IT Head or senior IT specialist
• Might be hired
2. Feasibility study/ROI Analysis/Business Case
• Approximating cost
• Projecting benefits
• Convince top management
• Need of business
3. Getting Budget
• Budget approval from senior management
• May be a longer process
4. High Level Requirement Definition, Prioritization of Requirements
• List of requirements and expectation from ERP
• Internal team, most preferable to hire external expert team
• What the company is actually looking for, instead of being confused about
available functionality
• Granularity of Requirement Level
5. High Level Scope Definition
• Where to implement the ERP and where not to
• Which processes should be taken and which should not be
• which modules are relevant and which are no
6. RFP for Selection of Implementation Partner and Evaluation and Selection
of Consulting Partner
• Request For Proposal (RFP) for selection of implementation partners
• Evaluation and selection of consulting partner
• Contract with the consulting partner.
• RFPs are released to different consulting companies to
• The responses are evaluated on different criteria
7. RFP for Evaluation and Selection of ERP Package
• RFPs to different ERP vendors to submit quotation giving a list of business
requirements.
• The responses are evaluated on different criteria and finally the package is selected.
• The company enters into a contract with the ERP package vendor.
• Pre-implementation Phase—Critical Deliverables
• Business case
• High level scope document
• High level requirement document
• RFP for consulting partner selection (optional)
• RFP for ERP package vendor selection (optional)
• Contract with consulting partner
• Contract with ERP package vendor
• Pre-Implementation Phase Mile Stones:
• Acceptance of business case by the senior management of company
• Sanctioning of budget for the project
• Identification of high level scope and requirements;
• Release of RFP for consulting partner and ERP vendor;
• Completion of contract procedures for consulting partner and ERP vendor
 Project Preparation Phase
1. Project Team Selection (Core Team and Consultants)
• Selection of company’s own people for the core team
• Selection of consultants from the consulting partner company
• Having the project organization structure in place
2. Detailed Project Scoping
• Identification of detailed project scope around different levers: location,
business, process, application, interface, reports, data migration, user
technology.
3. Project Vision/Mission Statement Creation:
• Long term vision and mission statement being the basic driving
factors for the project need to be articulated
4. Deciding Implementation Strategy,
• Implementation strategy to adopt: Big Bang, Phased rollout strategy.
• Like vendor’s implementation methodology (Example: SAP’s ASAP)
• Consulting company’s methodology
5. Finalizing Project Methods, Standards and Governance
• Processes need to be established
• Templates need to be frozen so that they could be
• Used by all project team members during the entire project period.
6. Technical Preparation:
• Preparing application landscape strategy, developing solution architecture, hardware
sizing, etc.
7. Project Planning, Resource Planning, and Training Planning:
• Planning for the entire project, sequence and duration of activities, start and end dates
• Resource plan
• A high level training plan.
8. Project Charter Preparation:
• Project charter is a document that details project mission and vision, scope, business case,
project plan, project team details and project assumptions and constraints.
9. Conducting Project Kick off Meeting:
• Formal meeting to launch the project where the project charter is presented and the team is
introduced.
• Project Preparation Phase—Critical Deliverables:
• Detailed project scope document
• Project vision and mission statement
• Technical architecture document
• IT, Hardware landscape strategy document
• Project plan, Resource plan, Training plan
• Project charter
• Project Preparation Phase—Major Milestones Major milestones:
• Signing off the detailed project scope
• Staffing the project team to support the Business Blueprint Phase;
• Completing project strategies and getting them signed off by the project sponsors;
• Holding the project kick-off meeting
• Putting the steering committee and project team in place.
 Business Blueprinting Phase
• High Level Process Modelling of AS IS Process
• Modelling current processes of the company at high level.
• To understand the process at high level
• Developing Detailed Requirement Definition
• list of requirements and expectations from the ERP system.
• Understanding current pain points and improvement areas of current process
• Business process workshops.
• Business Process Reengineering (BPR):
• Design a better process based on BPR principles like reducing non-value adding steps, reducing
handoffs etc.
• The process should take care of user’s future expectations and should be based on his current pain
points.
• Detailed Process Modelling of TO BE Process:
• Detailing the TO BE processes
• Detailed process definition document that enumerates new process models, process steps and
input-output relationships.
• Gap Identification and Analysis, and Strategy to Bridge the Gap:
• Always gaps among TO BE process models, customer expectations and what standard
ERP can offer.
• Gaps need to be documented, and analyzed. The strategy to bridge these gaps also
needs to be developed.
• Complimentary solutions, customization or enhancements in the solution,
developments,
• User Authorization, Roles and Security Planning:
• Which users will use the system
• the kind of authorization profile they will have
• the roles they will have to play, etc.
• Blueprint Audit by External Team:
• Blueprint is reviewed by a set of experienced consultants.
• Review could done by the product vendor or another independent consultant
• Business blueprint audits/quality reviews can suggest:
• Whether some development requests can be addressed by standard ERP solution
• Some of the process designs can be made better to meet business objectives.
• Getting Blueprint Signed Off
• Process owners signed off the blue print from the company side.
• Freeze the requirements
• Change request could be generated to deal the desired changes in coming phase
• ERP Configuration Training to the Core Team:
• Project core team is trained to understand the system needs
• Training grooms them for the next phase of the project i.e. Realization phase.
• Training can be imparted either by the ERP vendor or by the consulting company
• Business Blueprinting Phase—Critical Deliverables
• AS IS Model (High level)
• Detailed requirement document
• TO BE process definition document
• Gap document
• Authorization plan
• Detailed business Blueprint document covering TO BE processes, gap areas, enhancements, interfaces, roles,
authorizations, etc.
• Business Blueprinting Phase—Major Milestones:
• Signing off the business blueprint document
• Freezing the business requirements;
• Completion of the authorization plan;
• Completion of blueprint audit.
 Realization Phase
• Designing, building and testing the solution
• Building the system through configuration
• Development to the specifications of the business and process requirements
documented
• Verify the system is complete, stable and ready
• Configuration/ Customization
• Configuration or customization is an important activity in the realization
• Configuration can be divided into baseline configuration and final configuration.
• Unit and Integration Testing:
• The system need to be thoroughly tested before handing over to the users.
• Unit testing is done to ensure a particular transaction or a particular functionality
• Integration testing ensures proper working of a complete end to end scenario.
• End user Training Plan:
• This involves planning for preparation of training modules, location of trainers,
arrangement of training logistics, fixing of training schedule and venue for trainings.
• Integration Test Sign Off:
• Integration test is completed as per the satisfaction of the company
• Test all the scenarios are working as expected.
• Milestone for the project and typically associated with a payment schedule for the
consulting partner.
• Realization Phase—Critical Deliverables
• Test strategy and test plan
• Unit test scripts
• Functional and technical specifications for developments
• Data migration strategy document
• End user training materials
• Integration test sign off scripts
• Realization Phase—Major Milestones:
• Completion of all configurations;
• Completion of all developments;
• Completion of all Unit and Integration testing;
• Signing off integration test by the business;
• Completion of end user training content development.
 Final Preparation and Go Live Phase
• Stress and Volume Testing:
• To ensure that the system can handle the real life transaction volumes without affecting
system performance
• User Acceptance Testing and user Sign Off:
• End user acceptance testing to authenticate that the system is performing as expected
• Conducting End user Training
• Training of all the end users in new processes, new system transactions, new way of
working and how they need to carry on their daily activities in the system once the
system goes live.
• Handled by the core team
• Data Migration—Migrating Open Items:
• Migrating all master data and open items from the legacy application to the new ERP.
• Data is more heavy, automation is needed
• Cut over Planning—Preparing Go Live Checklist
• Transactions need to be stopped in the old application for a brief period
and moved to new.
• “Go Live” date.
• A detailed checklist before “Go Live”
• Help Desk Support Finalizations:
• To address the users difficulties/problems that need speedy resolution.
• Pre Go Live Audit by External Team:
• A set of external experienced consultants review as to whether the
company is really ready for the ERP application.
• Going Live
• The company moves from the legacy application to the new system.
• From this day all transactions are made in the new system.
• Final Preparation and Go Live Phase—Critical Deliverables
• End user acceptance testing document
• Stress and volume test result
• Cut over plan
• Go live checklist
• Help desk support plan
• Technical operation manual for end users for running the system
• Go live audit report
• Final Preparation and Go Live Phase—Major Milestones
• Satisfactory stress and volume testing results
• Completion of data migration
• Completion of cut over planning
• Putting the go live checklist in place and completion of all activities as per the
checklist
• Submission of satisfactory go live audit report
• Going live with the new system.
 Support Phase
• Knowledge Transfer to Support Team
• Transition: knowledge of business processes configured in the system, gets
transferred from the implementation team to support team
• May be spanned to months

• Transition of Project Documents and Open Issues

• Regular Support, Monitoring Service Level Agreements (SLAs)
• Issues may rise during regular support phase, Support team forward the issues
to ERP vender for solutions
• Depending on the criticality of the issue, service level agreements (SLAs) need
to be finalized
• SLAs need to be monitored on a regular basis
• SLA performance need to be reported to top management.
• Measuring Performance Improvement
• Measuring business benefits from ERP implementation.
• Starts when the system becomes steady, say after 3-6 months of
implementation.
• Upgrading to Next Version of ERP
• Particular version of ERP is operational for 24-36 months, the company may
evaluate the option of upgrading the ERP
• This becomes a new project and needs separate business justification for going
for it.
• Leading ERP vendors also force companies to upgrade their system after
regular duration
• No longer support very old versions of ERP or support it at a very high annual
maintenance cost.
• Support Phase—Critical Deliverables
• Transition checklist
• Transition KT
• Service level agreement (SLA) contracts
• SLA performance reports
• Support Phase—Major Milestones
• Successful completion of transition;
• Initiation of SLA monitoring.
Different ERP implementation Strategies
1. Big Bang
• Implementing all ERP modules in a single go in all locations
• For small companies
• Demands time and effort
• Reduces the total implementation time and related cost
• High risk of failure
• Not recommended for larger projects
2. Rollout
• Goes for ERP implementation in one representative location
• Place where the company builds their global template
• Rolled out to several locations, location specific enhancement
• low risk, low pressure in term of time and cost,
• Time Taking
3. Big Bang and Modular
• The company to go live for all locations
• Only selected modules
• Company select the modules to implement ERP
• Financial, materials management and sales modules may be implemented first
• Plant maintenance, production management, human resource may be at later
stages
4. Rollout and Modular
• Basic requirements are implemented in one location and then rolled out to
other locations
• Upgrades the template with more advanced functionality and then again starts
rolling out.
• A lot of time
• Safest