Its a known fact, and human nature to resist any changes that are made to the existing norms. People dont prefer changes, unless they are made to understand the importance of the change and how the change would help them to be more effective and efficient. This is what Change Management [ CM ] tries to do and thats what was discussed in todays class.
CM is nothing but a process of facilitating change. Any new implemenatation like a ERP implementation brings about a number of changes in the way the organization and the process works. Based on research , it is shown that one of the topmost obstacle for failure in ERP implementation is Resisitance to change, about 60%. This is mainly because of the stress and fear syndrome created by any change, wherein people fear that they would loose their jobs.
Some of the main reasons companies change is due to the fact that change would help them grow, reach thier vision, increase productivity, and improve overall. However, a lot of employees resist this change because of the fear of layoffs, loss of comfort, lack of information about the change and "fear of unknown". The best way to overcome this resistance is to provide more information, eduacate people about this importance and the necessity for the change and empower them by sharing information, listeninfg to employees.
There are three phases in Change management
1. Preparing for change [ Unfreeze the situation ] : this is nothing but creating a foundation for change, creating CM strategy guidelines, create a CM team ....
2.. Managing Change [ Change ] : This basically involves creating a project plan for implementing CM activities, creating a sponsor roadmap, coaching and communication plan...
3. Reinforcing Change [ Freeze ] : Basically this is to commit to all the changes by assesing all the CM activities, identifying and overcoming obstacles...
CHANGE IS REQUIRED>>> IT IS CONSTANT, NECESSARY and UNPREDICTABLE ... but running away from it will not improve the situation...
Thursday, November 09, 2006
Wednesday, November 08, 2006
Star Date .... October 26 - ERP Implementation
The fifth component of the ERP Life cycle is the Transition phase, which mainly deals with the implementation of ERP.
For a successful implementation of ERP, the major back bones are PEOPLE,PROCESS, TECHNOLOGY. All the three need to be aligned for a successful implementation. The component People involves upper management, employees, consultants and the project team. All these people need to work in sync for a successful implementation... The process component, basically entials that all the processes should be well defined, easy to understand and the ERP implemetation should be aligned with these BP .The TECHNOLOGY component entails understanding clearly the technology plan which includes Database, Internet and OS.
The four ways of implementing ERP
1. Incremental : Narrow Scope , less Functions
2. Process Phasing : Broad Scope, Less Functions
3. Geographical/Business Unit Phasing : Narrow Scope , More Functions
4. Big Bang : Broad Scope, More Functions
In the incremental approach, one Module at one Business Unit is implemented at a time. It is very time consuming as it requires detailed understanding of every process.
The Phase approach is applicable when limited resouces are available for implementation, and it also has reduced risk as it is implemented in phases and gives the possibility to fall back on the legacy system, if implementation fails.
The Big bang Approch, is implemeting the ERP suite across the board as quickly as possible. This leads to Lower Cost and does not require interfacing with the legacy system, as phased approach does. However there is a lot of risk involved in this method as there are cases of companies getting liquidated due to this approach. It also requires the upper management support for successful implementation and a lot of resources.
Inspite of all this there is a 60% -80% chance of failure and therefore it is important to keep track of all warning signs and ensure they are controlled and corrected immediately.
The final stage is STABILIZATION, which involves correcting the implemented procedures once ERP goes Live...Most of the issues are related to people and process rather than on technology. One way to overcome this is continious training in order to help the employees to get used to the new system.
For a successful implementation of ERP, the major back bones are PEOPLE,PROCESS, TECHNOLOGY. All the three need to be aligned for a successful implementation. The component People involves upper management, employees, consultants and the project team. All these people need to work in sync for a successful implementation... The process component, basically entials that all the processes should be well defined, easy to understand and the ERP implemetation should be aligned with these BP .The TECHNOLOGY component entails understanding clearly the technology plan which includes Database, Internet and OS.
The four ways of implementing ERP
1. Incremental : Narrow Scope , less Functions
2. Process Phasing : Broad Scope, Less Functions
3. Geographical/Business Unit Phasing : Narrow Scope , More Functions
4. Big Bang : Broad Scope, More Functions
In the incremental approach, one Module at one Business Unit is implemented at a time. It is very time consuming as it requires detailed understanding of every process.
The Phase approach is applicable when limited resouces are available for implementation, and it also has reduced risk as it is implemented in phases and gives the possibility to fall back on the legacy system, if implementation fails.
The Big bang Approch, is implemeting the ERP suite across the board as quickly as possible. This leads to Lower Cost and does not require interfacing with the legacy system, as phased approach does. However there is a lot of risk involved in this method as there are cases of companies getting liquidated due to this approach. It also requires the upper management support for successful implementation and a lot of resources.
Inspite of all this there is a 60% -80% chance of failure and therefore it is important to keep track of all warning signs and ensure they are controlled and corrected immediately.
The final stage is STABILIZATION, which involves correcting the implemented procedures once ERP goes Live...Most of the issues are related to people and process rather than on technology. One way to overcome this is continious training in order to help the employees to get used to the new system.
Thursday, November 02, 2006
Star Date .... October 12 - ERP Project Evaluation
Any Implementation finally boils down to the question, is the implementation live up to its standards and did it achieve its goals... Basicall the question that is asked is what is the Return on the investment.
ROI is nothing but the ratio of the project’s benefit to the value of project’s cost. However the problem with calculating ROI is that we cannot account for the intangible benefits and costs. For
So the alternative method choosen by some companies to see the value of the implemention is the Net Present Value (NPV), and Internal Rate of Return (IRR).
It is difficult to calculate the returns from an ERP implementation because the company perceives of profit in different way. However some of the beneifits of switching to an ERP system is the savings the company enjoys in operations, the improvements in the management of inventory, the real time data availability, better customer visibility .
The other intangible benefits enjoyed are improvement in the processes, efficient and effective work environment, reduced cycle time, increased accurancy etc.
As per Peerstone Survey 63% companies achieved some form of benefit. 39% of these companies achieved ROI. Successful implementation have shown to have their ROI target before launch of the ERP project. Companies that use ROI have shown more success than others..
ROI is nothing but the ratio of the project’s benefit to the value of project’s cost. However the problem with calculating ROI is that we cannot account for the intangible benefits and costs. For
So the alternative method choosen by some companies to see the value of the implemention is the Net Present Value (NPV), and Internal Rate of Return (IRR).
It is difficult to calculate the returns from an ERP implementation because the company perceives of profit in different way. However some of the beneifits of switching to an ERP system is the savings the company enjoys in operations, the improvements in the management of inventory, the real time data availability, better customer visibility .
The other intangible benefits enjoyed are improvement in the processes, efficient and effective work environment, reduced cycle time, increased accurancy etc.
As per Peerstone Survey 63% companies achieved some form of benefit. 39% of these companies achieved ROI. Successful implementation have shown to have their ROI target before launch of the ERP project. Companies that use ROI have shown more success than others..
Star Date .... October 5 - ERP Life Cycle
An ERP life cycle has six steps:
Initiation: Basically in this step, the business case is forumalted which will help in identifying the costs, the need, the justification for the ERP system. Basically there are four rationales used for creating a business case , they are Technology, Business process, Strategy, Competition.
Planning: Consists of formulating the team, its goals, and objectives. It also involves determining the staffing requirements and establishing metrics for the implementation project. The team should consist of techincal people, business process owners, consultants to make is a successful team.
Analysis and Design : Analysis is done on the basis of “As Is”, “To Be” and “Gap” methods. The AS IS tries to identify the current funcationalites of the sytem and the TO BE tries to identify where the company needs to be. GAP Method identities the gap between where the business is right now and where it wants to be. this would help in taking the right steps to close the gap. “To Be” model is Technology/ERP Driven.
Realization—The realization phase entails acquiring resources, installing a base system, customizing it to the organization, extending it if necessary, and testing the implementation.
Transition—This is usually a relatively short phase during which the organization’s former information systems are replaced with the enterprise system.
Operation—The operation phase involves ongoing efforts to monitor system performance and tune the system as appropriate. It also involves the continuing process of training employees on the enterprise system
There are various tools available for project management.
1) Critical Path method: it provides a framework for planning and control and at the same time makes assumption about the time estimated and predecessor relationships.
2) Gantt chart: Bar chart used to show project schedule. It identifies the time constraints of the project very neatly.
Initiation: Basically in this step, the business case is forumalted which will help in identifying the costs, the need, the justification for the ERP system. Basically there are four rationales used for creating a business case , they are Technology, Business process, Strategy, Competition.
Planning: Consists of formulating the team, its goals, and objectives. It also involves determining the staffing requirements and establishing metrics for the implementation project. The team should consist of techincal people, business process owners, consultants to make is a successful team.
Analysis and Design : Analysis is done on the basis of “As Is”, “To Be” and “Gap” methods. The AS IS tries to identify the current funcationalites of the sytem and the TO BE tries to identify where the company needs to be. GAP Method identities the gap between where the business is right now and where it wants to be. this would help in taking the right steps to close the gap. “To Be” model is Technology/ERP Driven.
Realization—The realization phase entails acquiring resources, installing a base system, customizing it to the organization, extending it if necessary, and testing the implementation.
Transition—This is usually a relatively short phase during which the organization’s former information systems are replaced with the enterprise system.
Operation—The operation phase involves ongoing efforts to monitor system performance and tune the system as appropriate. It also involves the continuing process of training employees on the enterprise system
There are various tools available for project management.
1) Critical Path method: it provides a framework for planning and control and at the same time makes assumption about the time estimated and predecessor relationships.
2) Gantt chart: Bar chart used to show project schedule. It identifies the time constraints of the project very neatly.
Star Date .... October 5 - Enterprise System Infrastructure
For any information system to work properly, the infrastructure needed to make into a system is very important... Infrastructure is nothing but the the phyiscal components that are required to make up the system. Once the infrastructure is decided upon, the architecture needs to be decided upon, whether it would be a open[interact with systems of other systems] or a closed system [ act as a standalone or have difficultites in connecting to other systems] . However an important thing to remember is an OPEN SOURCE is not the same as OPEN SYSTEM.
The main reasons for creating a ES infrastructure is to integrate all the exisiting process and for streamlining them. It also reduces cycle time and manage inventory better. Basically it will help in improving the efficiency of the overall business.
Some of the important characteristic of ES system is its modular construction. the system can be installed in modules. this provides the flexibility to the business to install only those modules which the business requires. Further it provides a central DB, wherin all information is available at one single location. Further the ES system , gives the flexibility to configure the system or customize it as required by the company. SAP offers more than 8000 confguration tables [ Source: Dr Vijay notes]... It also follows a three-tier Client-Server architecture where all the processing is done on the server side and the input/output is done on the client side. The clients have come a long way from being just dead terminals to smart terminals. They have certain powers to process the data themselves. It also provides variable interface, wherein different interfaces can be configured as per different requirements.
The important technologies required for a ES system implementation is Hardware, OPerationg System, the required middleware/Bolt Ons , the required network infrastructure and if need be the web services to integrate the interent capability.
The main reasons for creating a ES infrastructure is to integrate all the exisiting process and for streamlining them. It also reduces cycle time and manage inventory better. Basically it will help in improving the efficiency of the overall business.
Some of the important characteristic of ES system is its modular construction. the system can be installed in modules. this provides the flexibility to the business to install only those modules which the business requires. Further it provides a central DB, wherin all information is available at one single location. Further the ES system , gives the flexibility to configure the system or customize it as required by the company. SAP offers more than 8000 confguration tables [ Source: Dr Vijay notes]... It also follows a three-tier Client-Server architecture where all the processing is done on the server side and the input/output is done on the client side. The clients have come a long way from being just dead terminals to smart terminals. They have certain powers to process the data themselves. It also provides variable interface, wherein different interfaces can be configured as per different requirements.
The important technologies required for a ES system implementation is Hardware, OPerationg System, the required middleware/Bolt Ons , the required network infrastructure and if need be the web services to integrate the interent capability.
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