Critical decisions for ERP integration: Small business issues

資碩專一98756011 李怡夢98756003 顏臺良

International Journal of Information Management(2009)

Management Information System指導教授 林娟娟教授

Outline

AbstractERPB2BISmall BusinessSB VS ERPMethodologyERP framework Conclusions

Abstract

Motivation SME significant challengesERP Expensive and risky

RecommendSix critical decisions

Finding Enhanced success of ERP implementation

ERP

ERP introductionEnterprise Resource planningIntegrate all information and processes

Unified databaseIT infrastructure

ERP implements affects Suppliers and customers Expensive cost

ERP implements evaluate difficulty necessary organizational changes predicting the return on investment

ERP cost

ERP

ERP contributes Standardization Transparency Globalization Automating and integrating corporate cross-functions

B2Bi

ERP next phase :B2BiElectronic document exchange in small businesses vertical or horizontal

VerticalStandard : RosettaNet

HorizontalStandard : ebXML

Small Business

SB introduction Backbone of the economy Independently owned and operated Not dominant in its field Majority of personnel perform multiple job functions

SB VS ERP

Small Business limited resources FinancialTechnical personnelTechnology

Lack of alignment of implementation practicesRisk and cost

MethodologyResearch methodology

Academic databases ABI InformAcademic Source Complete Emerald IEEE

Key termsERP implementation Small business

Methodology (cont.)

Selection of the six critical decisions Interviewee

Manufacturing sector Had recently completed ERP implementations

ERP framework (Critical decisions for implementation)

Six critical decisionsAssumptions

Keep any customization to a minimumEnsure that the business processes directly supported by the software packageHave an ERP package with an intuitive and easy-to-use interface to minimize training and user support costs

The cost of implementation

Definition of critical decisions

工作小組的組成 (Program team structure)

實施的策略 (Implementation strategy)

選擇過渡技術 (Selection of transition technique)

資料庫轉換策略 (Database conversion strategy)

風險管理策略 (Risk management strategy)

變更管理策略 (Change management strategy)

Program team structure

The team structure can be broken down into four categories

Isolated Function, A-Team, and Lightweight

Require fixed personnel on each function , financial and technical resources to maintain

HeavyweightFlat management hierarchyThe highest chance

Alternative team structuresMethod Description Advantages Disadvantages

Isolated function

Participants from each functional area are responsible for their own implementation and use of the software.

1. Resources of the organization are focused on the implementation2. They have the most knowledge about their business processes and will be very knowledgeable end-users later

1.insufficient communication between functional groups2.workflows that span multiple functional modules may be incorrectly implemented, or may not be implemented

Lightweight The project team consists 1.Functional managers 2.Lead persons3.A lightweight project manager

Improved cross-functional communication through regular project team meetings

Conflicts are common and it takes a long time to resolve issues as several participants have to reach an agreement.

Alternative team structuresMethod Description Advantages Disadvantages

*Heavyweight A senior manager has direct authority and control over the ERP project

Straight forward communication gives a clear sense of direction.

Strategy turns increasingly difficult to use as the size and complexity of the ERP implementation increases.

A-Team This team structure is similar to heavyweight structure1.A senior manager manages the project team. 2.all the functional managers are full time members of the ERP team

The complete authority to make most of the decisions at all levels lies within the team.

As decisions can be made by the core team without the need to communicate with other team members there may be limited buy-in for these decisions

Implementation strategy

Seven generally deployed strategiesBreakneckStarTurnkey, Low Risk, and In-House

Not have the luxury of full time human resources to an ERP implementation

BudgetPartner

Implementation strategiesMethod Description Advantages Disadvantages

Breakneck Implement an ERP solution on a low budget very rapidly

The company has a quick solution if strategy works

A very high risk approach which rarely works

Star Do the right way with a senior manager in charge and dedicated team members

The implementation usually results faster and cheaper

Full time resources are needed

Turnkey Subcontract to ERP system integrators and providers all ERP implementation activities.

1.The implementation is done by experienced people. 2.No internal resources are needed

1.The configured product does not match business needs. 2.Outsiders cannot fully understand the functional specifications

In-house Use only internal resources to implement the ERP system

The strategy generates cost savings coupled with internal ownership

1.An inexperienced team requires a long time for implementation2.this turns out expensive

Implementation strategies(cont.)Method Description Advantages Disadvantages

Budget Focus costs cutting by limiting the scope of the ERP project and eliminating consultants

There is a perception that this approach is cheaper

A general lack of support from senior management produces lack of interest on the project by the users

Partner Use both internal and external resources. Split the responsibility of the ERP project

Partners complement the strength of the internal team and have partial ownership of the project

The implementation usually takes longer due to conflicts between the supply chain partner

Low risk Commit a high level of resources with low complexity and relax milestones to minimize

High probability of success

Implementation takes a long time

Selection of transition technique

Four basic transition techniquesBig bang

entails substantial riskPhasedProcess lines

Usually lack multiple process linesParallel

limited resources for small business.

ERP transition techniquesMethod Description Advantages Disadvantages

Big Bang new system go live at the same time the legacy system is taken offline

Costs are reduced since no interface programs are required

high failure rates are common

Phased One functional module at a time is transitioned in sequential order

1.Companies feel comfortable implementing one module at a time2.the resources needed at any given time are low

The transition takes a long time.

Parallel Both the legacy and the new ERP systems operate in parallel

Good recovery options are available if any thing goes wrong with the new system

Considerable more resources

Process line

1.in big bang fashion 2.only one process line at a time

The experience gained from doing one process line at the time benefits the next implementation

adds complexity

Database conversion strategyTwo basic data conversion methods

ElectronicWriting custom programsProcess is rapidVerifiable Data is difficult

ManualJudgments necessary during the conversionFamiliar with the new ERP system and develop a sense

Risk management strategyThree Risks

Small business locationRealities of small businessCompany’s niche and company’s management

Risk management strategyMinimize internal politics and resistance to change

Appointment of a heavyweight project managerAdopting a partner implementation strategy to allow the internal team to focus on strategic tasks

Change management strategyThe project manager, or champion, should accept and deal with the internal politics and resistance to change rather than go into denialEffective communications must be a priorityManagement should lay out the vision of the company and explain the expected benefits

ConclusionsDecision to install an ERP

Assigning a heavyweight project manager Partnering with an external organization with the requisite experience Implementing the ERP package in a phased manner Adopting a predominantly manual database conversion strategy Proactively managing project risk and internal change

Team structure

Critical decisions Number

Isolated function 0

Lightweight 1

Heavyweight 4

A-Team 1

Implementation strategy

Critical decisions Number

Breakneck 0

Star 2

Turnkey 0

In-house 1

Budget 0

Partner 3

Low-Risk 0

Transition technique

Critical decisions Number

Big Bang 0

Phased 4

Parallel 2

Process line 0

Database conversion

Critical decisions Number

Manual 5

Electronic 1

Change management

Critical decisions Number

Employee awareness of ERP

2

Communication by Project Manager

4

Communication by Executive Management

3

Articulation of ERP vision

2

Risk management

Critical decisions Number

Initial ERP cost 6

Compatibility with business niche

4

Project scope 3

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