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Generic program preparation & continuous process improvement

Generic program preparation &

Continuous process improvement

Objectives:
After the completion of the chapter, students should be able to:
1. Identify the steps in the Preparation of a program
2. Perform necessary adjustment in the program created

V. Generic program preparation & continuous process improvement

This chapter will discuss the systems development process as it applies to ERP
applications. As you saw in the opening case, organizations The ERP implementation’s
success depends significantly on redesigning processes rather than customizing the
technology to fit that process. Customization is expensive. Overall, it increases the
support fees paid for upgrades and prevents organizations from taking advantage of rapid
implementations.
In general, there are various technical and organizational challenges in implementing
ERP depending on the organization, scope of implementation, business processes, and
skill level of the people using these applications. The purpose of this chapter is to make
you knowledgeable about the ERP life cycle process and to alert you to the
implementation challenges by looking at the experiences of other organizations. The
chapter begins with a brief overview of the system development life cycle (SDLC). SDLC
provides useful guidelines to the ERP implementation process. Next, it discusses the key
phases of the ERP life cycle with emphasis on roadblocks in each phase and solutions
available to overcome these roadblocks, surveys the different life cycle methodologies
and accelerators for ERP implementation, and discusses the key differences between
SDLC and ERP life cycles. Throughout the discussions, the chapter provides hints on
what roles you should play as an end user and discusses the implications for managers.

SYSTEMS DEVELOPMENT LIFE CYCLE

The process of
developing new information
systems is often called the
system development life
cycle. It basically includes a
systematic process of
planning, designing, and
creating an information
system for organizations.
Even though the process of
developing a system for
individual or personal use can be simple, the task can become very complex when
the system has to support thousands of business processes for several hundred
users both inside and outside an organization. For complex systems development
projects (e.g., ERP), it is often better to have a structured methodology to avoid
mishaps and coordinate the design and development tasks properly among the
members of a large systems development team.
SDLC uses a systems approach for problem solving that basically states that
complex problems need to be broken up into smaller manageable problems using a
systems’ hierarchy, and then developing a solution for each problem within the
hierarchy. It provides a structured top-down problem identification and bottom-up
solution process for managing complex problems. The structured or phased
approach is designed to catch problems at an early stage before they become a
major risk to the system implementation process.

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The SDLC process requires both technical and nontechnical problem-solving

skills; therefore, the development team must understand technology, as well as the
organization’s business processes, culture, and people (or potential end users of this
system). For example, a component of an HR system must capture organizational
policy on health care benefits and retirement and the process of deducting the
premiums from the payroll checks. Every organization will have some variations that
need to be accurately captured and processed by the new system. Capturing these
processes and then implementing them in a new system can be difficult for a person
with an IT background only; therefore, the development team must be composed of
people with a wide variety of IT and business skills for the project to be successful.

Traditional SDLC
In the early days of systems development, very few of these projects were
successful in the first attempt. There were many reasons for the early failures, chief
among them being lack of experience. This led to the systems approach, which we
described earlier, and a structured SDLC methodology. The SDLC consists of tasks
that are divided into phases or stages as shown in Figure 4-1. Please read systems
analysis and design books for complete details on SDLC.

Figure 4-2 provides a summary of the traditional SDLC methodology. The SDLC
process begins when someone in the organization identifies a need, or investigation phase,
for a new system and ends the implementation phase where the new system is installed and
running in the organization.

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ERP IMPLEMENTATION LIFE CYCLE

ERP applications are prepackaged software developed by commercial

software vendors and custom installed for organizations to automate and integrate
the various business processes. Although an ERP is packaged software, it is very
different from PC-based software packages (e.g., Microsoft Office or other software)

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that you may have purchased for personal use as shown in Table 4-1. These are
complex

software packages costing millions of dollars to develop and maintain that automate
hundreds of business processes in an organization. Furthermore, these applications
are mission critical (i.e., if they fail or break down, the organization will stop
functioning). For example, without these systems a bank would not be able to service
its customers for withdrawals or deposits, and a manufacturing company would not
be able to assemble and ship their products. Hershey, Corp., experienced this
problem in real life when they implemented SAP/R3 in the late 1990s when their
supply-chain distribution was disrupted, causing a big dent in their holiday sales. Any
breakdown of an ERP application can therefore be very disruptive and cost millions
of dollars to the organization. A rigorous ERP life cycle process, though expensive
and time consuming, is therefore recommended to ensure success. ERP systems
can be deployed in a big bang or phased approach, either of which initiates the
stages of a system development life cycle. According to the staged system
implementation model,1 the life cycle consists of four phases—adaptation,
acceptance, routinization, and infusion. Adaptation is similar to system investigation,
whereas acceptance is similar to system analysis where user requirements are
analyzed and accepted by the team before proceeding to design and implementation.
Additionally, routinization is where the ERP system is either customized or business
processes are changed to assimilate the system in the organization. Once
operational, the infusion or maintenance and evaluation phase gets started where
recurring problems are fixed and new features are sought for next implementation life
cycle.

ERP Implementation Plan

An ERP implementation plan is used to create a roadmap or blueprint to meet
cost, scope, and time constraints of an implementation. There are many different
ERP implementation methodologies promoted by different vendors and consultants.
The appropriateness of the plan depends, in part, on the project, the company, and
the reasons for the implementation.
Following are three major implementation plan choices:
1. Comprehensive. A comprehensive ERP integration plan is the most
expensive, lengthy, and costly approach. It involves implementation of the
full functionality of the ERP software in addition to industry-specific
modules. Implementing the full functionality requires a high level of
business process reengineering (BPR) with major changes in the
business processes and customization of legacy systems.

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2. Middle of the Road. A middle-of-the-road ERP implementation plan

involves some changes in the core ERP modules and a significant
amount of BPR. The middle-of-the-road approach is not as expensive as
the comprehensive approach or as straightforward as the vanilla
approach.
3. Vanilla. A vanilla ERP implementation plan utilizes core ERP functionality
and exploits the best practice business processes built into the software.
A company following a vanilla implementation will have to simply align
their business processes to the ERP system, rather than modify the
software. By eliminating or minimizing the required BPR, the project’s
costs and time required for the implementation are minimized.

Traditional ERP Life Cycle

Like the traditional SDLC, which we discussed earlier, the traditional ERP life
cycle approach has a deliverable at the end of each stage (e.g., a report with
supporting documents) that is reviewed by management and upon which a decision
is made either to continue with the project or not. End-user or people involvement is
critical in both SDLC and ERPLC; however, there are other variations to the
traditional SDLC process. The emphasis in ERP implementation is on customizing
the software as well as on changing the organization’s business processes, rather
than determining the user requirements for developing new applications (as in the
traditional SDLC). This may seem like a small deviation, but it requires a major
change in the thinking process as well as team composition and skill level of people
involved in the development process. Furthermore, the ERP life cycle, as shown in
Figure 4-5, iterates at a much faster pace than in the traditional SDLC.

The traditional ERP life cycle includes the following major stages:
Stage 1. Scope and commitment stage.
This is similar to the investigation stage in SDLC discussed earlier. In addition
to conducting the feasibility study, however, one of the first steps is to develop a
scope of ERP implementation within the resource and time requirement. A number of
task parameters or characteristics of the ERP implementation need to be defined at
the planning stage. How large will the ERP system scope be in terms of departmental
or functional coverage? Develop a long-term vision for the new system and a short-
term implementation plan and top management’s commitment for both the vision and
implementation plan. The composition and the structure of the implementation team,
the role of external consultants both in terms of time and scope, and the role of
internal employees, including the subject matter experts (SMEs) who will provide the
knowledge to embed business rules and input for interface and report design, are
other key factors to be considered at this stage. Vendor selection is another key
activity toward the end of this stage. Although no decisions should be made on the
ERP software, vendor information must be reviewed and choices could be narrowed
by testing alternative software and developing a business case for the project. A
number of items need to be assessed and established to create the boundaries and
scope. Table 4-2 lists the key decisions to be made for each type of scope.

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Stage 2. Analysis and design stage.

In addition to analysis of user requirements, the ERP team has first to make a
decision on the software and decide on consultants and SMEs. Another key activity
is to map the differences between the current business process and the embedded
process in the ERP software or gap analysis and to develop a long-term plan on
whether to change the business processes of the organization or to customize the
ERP software to support existing processes. Using the gap analysis, the team must
develop a design that among other things includes a change management plan, a list
of embedded processes, user interface screens, and reports in the ERP software that
will need customization, design of these changes, and a process of involving subject
matter experts in the design. Other activities include creating plans for data
conversion, system conversion, and training. For a system to be successful, the team
must develop a detailed change management strategy and plan for the release of the
new system. By the end of this stage, the team usually has a sandbox or prototype of
the ERP software installed that is accessible to the entire implementation team,
consultants, and SMEs.

Stage 3. Acquisition and development stage.

This stage is similar to the acquisition and testing stage of traditional SDLC.
The organization has to purchase the license for the production version of the
software and build the production version of the system, which is eventually to be
made available to the end users. The entire production platform must be configured
and built with the necessary hardware, network, security, software, database, and
real production data. The tasks identified in the gap analysis are executed at this
stage. These include customization of embedded software rules, data in the
database tables, input screens, and reports that come with the ERP system. While

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the technical team is working on the installation, the change management team
works with end users on implementing the changes in business processes and
preliminary training with the sandbox version of the software. The data team similarly
works on migrating data from the old system to the new system. This can be an
extremely difficult task when the old system is a legacy application using a
nonrelational database. Data mapping, missing data, and data dictionary design are
the major tasks for data conversion. Finally, the ERP system needs to be configured
with proper security, implement the authentication and authorization policy for
accessing the system, and contain other modifications as recommended by the
design plan.

Stage 4. Implementation stage.

The focus for this stage is on installing and releasing the system to the end
users (i.e., “Go-Live”) and on monitoring the system release to the end users. This
production platform is a mirror of the development version of the system. Errors
found in the production version have to go through the help desk or support staff. Any
changes made to the development version are then retested and migrated to the
production system as regularly scheduled updates. System conversion is a major
activity for the new system and needs to be managed carefully.
There are four basic conversion approaches, which are visually represented
in Figure 4-6.
The first approach, phased, is a gradual movement of the company from the
existing legacy system(s) to the ERP implementation. This approach can take a
significant amount of time, but can also be the least disruptive to the company.
The second approach, pilot, implements a small version of the final system.
This pilot system is used to ensure that the final system is appropriate. It is the
equivalent of a test drive in that the system is used, but only by select areas, and its
impact can be managed more closely.
The third approach, parallel, has the most up-front cost because the ERP
system is implemented and used in conjunction with the legacy system. This
approach is best used when risk of ERP failure is of significant concern.
The final approach, direct cutover or big bang, is the highest-risk approach
but the most straightforward and clean. The company moves from the legacy system
directly and immediately to ease the ERP system. This approach has the least
amount of up-front costs because systems are not duplicated or run concurrently for
any length of time. Training end users on how to use the new system is another
important activity. Training is generally part of the change management strategy
designed to ease the transition to the post-implementation environment. Feedback
received from system usage needs to be funneled to the post-implementation team

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for ongoing system support, including upgrades and patches, as well as to make
adjustments to the change management strategy.

Stage 5. Operation stage.

This is often managed by the operation team with assistance from the
implementation team. Knowledge transfer is the major activity as support for the new
system is migrated to the help desk and support staff. Some implementation team
members are very often hired as support staff. The other major activities are ongoing
training of new users to the system as ERP modules are released, as well as to take
a fresh look at the change management strategy. The team has to monitor user
feedback from training and actual system usage carefully and make the necessary
adjustments to the change management approach. Another key activity is
management of new releases of the software, installation of patches and upgrades to
the system, and managing the software contract with the ERP vendor.

ERP Life Cycle Vs. SDLC

Because of their prepackaged nature, ERP applications generally do not require the
traditional SDLC process; however, that does not mean they can be bought from the vendor,
installed (i.e., a PC-based software package), and used as is immediately.
ERP packages are complex with embedded business processes in all major functional
areas of business. In addition, they represent best practices by industry or area of business.
These processes and functional activities are generic in nature and must therefore be
adapted for the specific requirements of the company. This is not an easy course of action. It
requires a thorough understanding of the business process of the company, data
requirements, informational flows, system access and security, integration with existing
software applications, and compatibility with current hardware systems of the company.
The ERP life cycle is often therefore as rigorous as is the traditional SDLC life cycle
however, there are also differences due to the prepackaged nature of the software as shown
in Table 4-3.

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Exercises
1. Search the Internet for any new (2006 and beyond) ERP implementation
methodologies. Provide the overview of the consulting firm, the details of the
methodology, and case studies of the use of this methodology. Provide URLs,
references, and an e-copy of the articles used for this project.
2. Locate a company that you know (or work at) and contact the ERP team
project manager and some members.
a) Find out what ERP life cycle approach they used in their ERP project.
b) Find out what were the benefits and drawbacks of this approach.
c) Would they recommend their ERP implementation approach to others?
Write a one-page summary and include diagrams/ figures of the
methodology in the appendix.

Review Questions
1. What is the role of the systems approach in the SDLC?
2. Briefly discuss the key phases of the SDLC methodology.
3. Discuss the alternate approaches of SDLC and the benefits of these alternatives.
4. Compare and contrast the three major ERP implementation categories.
5. What is ERP implementation methodology? Give examples.
6. List the major tasks in the scope and commitment phase of the ERP life cycle.
7. List the major tasks in the analysis and design phase of the ERP life cycle.
8. List the major tasks in the acquisition and development phase of the ERP life cycle.
9. What is the role of change management in the ERP life cycle?
10. List the major differences between the ERP life cycle and SDLC

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