ERP

Course Objective:

Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-
to-day business activities such as accounting, procurement, project management, risk management
and compliance, and supply chain operations.

UNIT- I: Introduction to ERP: Overview of ERP – Introduction and Evaluation –advanced ERP-SCM and
CRM systems and related technologies – ERP life cycle ERP implementation Life cycle- SDLC and ERP
life cycle.

UNIT-II: ERP Implementation: reasons for ERP failure. pre – implementation Tasks – Implementation
methodologies – Process definition - Dealing with employee resistance Training and Education –
Project management and monitoring Success and failure factors of an ERP implementation.

UNIT-III: Post ERP implementation: Change Management – post implementation review, support,
maintenance and security of ERP. Different business modules of an ERP package. ERP market place
and market place dynamics.

UNIT-IV: ERP System Options and Selection Methods: Optimal Means of Developing an ERP,
Measurement of Project Impact, IT Selection and Project Approval, ERP proposal Evaluation, Project
Evaluation Techniques, Testing.

UNIT--V: ERP present and future: Turbo charge the ERP system- EAI – ERP. Internet and WWW- Future
Directions and trends in ERP – Future Directions in ERP: New Markets, New Technologies, Faster
Implementation Methodologies, New Business Segments, Trends in Security. Relevant cases have to
be discussed in each unit and in examination case is compulsory from any unit.

Books:

1. Singla: ―Enterprise Resource Planning‖, Cengage Learning, New Delhi, 2013.

2. Alexleon: ―Enterprise Resource Planning‖, TMH, New Delhi, 2011.

3. Mahadeo Jaiswal, Ganesh Vanapalli: ―Enterprise Resource Planning‖, MacMillon, New Delhi, 2013

References:

4. N.Venkateswaran: ―Enterprise Resource Planning‖, SCITECH Publiscation, New Delhi, 2009.

5. S.Kesharwani, SBodduluri, M Ashok Kumar: ―Enterprise Resource Planning‖, Paramount

Publishing House, New Delhi, 2012.
 CO-1: Introduction to Enterprise Resource
Planning (ERP)
1. Overview and Evaluation of ERP Systems
Explanation: Enterprise Resource Planning (ERP) is a comprehensive
software solution that integrates and manages an organization's core
business processes across various departments, such as finance, human
resources, manufacturing, supply chain, and sales, into a single, unified
system. The primary goal of ERP is to streamline operations, improve
efficiency, enhance data accuracy, and provide a holistic view of the
business to facilitate better decision-making.
Key Characteristics:
 Integration: Connects different functional areas, breaking down data
silos.
 Centralized Database: A single source of truth for all business data.
 Real-time Information: Provides up-to-date data for immediate
insights.
 Modular Structure: Composed of various modules (e.g., Finance, HR,
Manufacturing) that can be implemented together or incrementally.
 Automation: Automates routine tasks, reducing manual effort and
errors.
Benefits of ERP:
 Improved Efficiency and Productivity: Automates processes, reduces
manual tasks.
 Enhanced Data Accuracy and Consistency: Single source of truth
eliminates discrepancies.
 Better Decision-Making: Real-time data and integrated reporting.
 Reduced Operational Costs: Streamlined processes and optimized
resource utilization.
 Increased Agility and Scalability: Adapts to changes and supports
business growth.
 Improved Customer Service: Better access to customer and order
information.
 Regulatory Compliance: Helps ensure adherence to industry
regulations.
Evaluation Considerations: When evaluating an ERP system, businesses
consider:
 Fit with Business Needs: Does it meet specific functional
requirements?
 Industry-Specific Functionality: Is it tailored for the company's
industry?
 Deployment Model: On-premise, cloud-based, or hybrid?
 Scalability: Can it grow with the business?
 Total Cost of Ownership (TCO): Includes licensing, implementation,
training, and maintenance.
 Vendor Reputation and Support: Reliability and future support.
 Integration Capabilities: How well it integrates with other existing
systems.
 User-Friendliness (UX): Ease of use for employees.
Chart: Core ERP Modules (Simplified)
ERP System and Its Key Modules
An ERP system is like the central brain of a business — it connects all
departments so they can share information and work together smoothly.

🔄 Main ERP Modules and How They Work Together

🔹 ERP System Connects To:
1. Finance & Accounting – Manages money, payments, and reports.
2. Human Resources (HR) – Manages employees, salaries, leaves, etc.
3. Manufacturing – Handles production of goods.
4. Supply Chain Management (SCM) – Manages product flow from
suppliers to customers.
5. Sales & Marketing – Deals with selling products and promotions.
6. Procurement – Manages purchasing of raw materials and supplies.

Easy Explanation of Flow

 Finance sends salary or budget info to HR.
 HR sends worker info to Manufacturing (e.g., shift planning).
 Manufacturing updates SCM with products ready.
  SCM shares stock info with Sales to sell available goods.
 Sales gives demand details to Procurement to buy raw materials.
 Procurement updates Finance about purchases made.
🧩 This cycle helps all departments stay updated in real time.

Example: A manufacturing company uses an ERP system to manage its

entire production process. When a customer places an order (Sales), the
system automatically checks inventory (SCM), schedules production
(Manufacturing), orders raw materials if needed (Procurement), tracks
costs (Finance), and manages employee shifts (HR). All this information is
updated in real-time in a central database, giving management a clear
view of order status, production efficiency, and profitability.

2. Advanced ERP Systems

Explanation: Advanced ERP systems extend beyond the core
functionalities to incorporate more sophisticated capabilities and leverage
emerging technologies. These systems often offer enhanced analytics,
predictive capabilities, and deeper integration with external systems,
providing a more intelligent and comprehensive business management
platform. They are typically cloud-based, highly scalable, and designed for
businesses seeking a competitive edge through technology.
Characteristics of Advanced ERP Systems:
 Embedded AI & Machine Learning (ML): For predictive analytics,
intelligent automation, and enhanced decision-making.
 IoT Integration: Real-time data from sensors and devices for better
operational visibility (e.g., equipment performance, inventory
tracking).
 Big Data Analytics: Ability to process and derive insights from large
volumes of data.
 Cloud-Native Architecture: Offers flexibility, scalability, and
accessibility.
 Mobile Accessibility: Enables access to ERP functionalities on
smartphones and tablets.
 Blockchain Integration: For enhanced transparency and security,
especially in supply chains.
 Robotic Process Automation (RPA): Automating repetitive, rule-based
tasks within the ERP.
  Industry-Specific Solutions: Tailored functionalities for particular
sectors (e.g., healthcare, retail, manufacturing).
Examples of Advanced ERP Systems/Features:
 SAP S/4HANA: Leverages in-memory computing for real-time
analytics and intelligent automation.
 Oracle Cloud ERP: Integrates AI, ML, and analytics across financial,
supply chain, and HR modules.
 Microsoft Dynamics 365: Combines ERP and CRM functionalities with
AI insights and cloud scalability.
 Tiered ERP: A strategy where a large enterprise uses a robust "Tier
1" ERP at headquarters and lighter, often cloud-based "Tier 2" ERPs
for subsidiaries or specific business units.
Chart: Evolution of ERP
Evolution of ERP Systems – Step by Step
1️⃣ MRP (Material Requirements Planning)
 📌 Focus: Planning for materials needed in production.
 🏭 Helps manufacturers make sure they have the right parts at the
right time.
2️⃣ MRP II (Manufacturing Resource Planning)
 📌 Focus: Adds finance and HR to material planning.
 🧮 Includes planning for machines, workers, and costs.
3️⃣ ERP (Enterprise Resource Planning)
 📌 Focus: Covers all internal business functions like:
o Finance
o HR
o Manufacturing
o Procurement
 🧩 Everything works together in one system.
4️⃣ ERP II (Extended ERP / Collaborative ERP)
 📌 Focus: Connects with external partners like:
o Suppliers (SCM)
o Customers (CRM)
 o Business Intelligence tools (BI)
 🤝 Enables collaboration across the whole supply chain.
5️⃣ Cloud ERP / Intelligent ERP (iERP)
 📌 Focus: Uses modern technologies:
o ☁️Cloud computing
o 🤖 Artificial Intelligence (AI)
o 📊 Real-time analytics
o 🌐 Internet of Things (IoT)
 ⚡ Enables faster, smarter, and remote business operations.
 And here’s what each one focuses on:

Stage Main Focus

MRP Production Planning
MRP II Manufacturing + HR + Finance
ERP All Internal Business Processes
ERP II Internal + External (SCM, CRM, BI)
Cloud + AI + IoT + Real-Time
iERP
Analytics

Code Example: A large logistics company uses an advanced cloud ERP. IoT
sensors on their delivery trucks provide real-time data on vehicle location,
fuel consumption, and engine health, which feeds directly into the ERP's
SCM module for optimized route planning and predictive maintenance. AI
algorithms within the ERP analyze historical delivery data to forecast
demand fluctuations, allowing the company to proactively adjust staffing
and inventory levels.

3. SCM and CRM Systems (Integration with ERP)

Explanation: While ERP focuses on internal business processes, Supply
Chain Management (SCM) and Customer Relationship Management (CRM)
are specialized systems that manage external interactions. SCM deals
with the flow of goods and services from raw materials to the end
consumer, while CRM focuses on managing and analyzing customer
interactions and data. Integrating these systems with ERP creates a highly
efficient and customer-centric enterprise, enabling seamless data flow and
enhanced visibility across the entire value chain.
Supply Chain Management (SCM):
 Purpose: To optimize the flow of goods, services, and information
from suppliers to customers.
 Key Functions: Procurement, inventory management, production
planning, logistics, demand forecasting.
 Benefits of SCM Integration with ERP:
o Improved inventory accuracy and reduced holding costs.
o Enhanced supplier relationships and procurement efficiency.
o Better demand forecasting and production scheduling.
o Optimized logistics and faster delivery times.
o Increased visibility across the entire supply chain.
Customer Relationship Management (CRM):
 Purpose: To manage and analyze customer interactions and data
throughout the customer lifecycle.
 Key Functions: Sales automation, marketing automation, customer
service, lead management, contact management.
 Benefits of CRM Integration with ERP:
o Unified customer view: Sales, service, and finance teams
access the same customer data.
o Improved order fulfillment and billing processes.
o Personalized customer experiences.
o Enhanced sales forecasting and marketing campaigns.
o Better customer service and support.
Chart: ERP, SCM, and CRM Integration
What are ERP, SCM, and CRM?

Syste
Full Form Main Purpose
m

Manages internal business operations like

Enterprise Resource
ERP finance, HR, manufacturing, and
Planning
procurement.

SCM Supply Chain Manages the flow of materials and products

Syste
Full Form Main Purpose
m

Management from suppliers to customers.

Customer
Manages customer-related processes like
CRM Relationship
sales, marketing, and customer service.
Management

🔄 How They Work Together (Integration Explanation)

🏢 ERP – The Core of the Business
 Handles things like:
o 💰 Finance
o 👩‍💼 Human Resources (HR)
o 🏭 Manufacturing
o 🛒 Procurement (Buying materials)
🚛 SCM – The Supply Side
 Works with:
o 🏗 Suppliers (who give materials)
o 🚚 Logistics (moving goods)
o 📦 Inventory (stock in warehouse)
🤝 CRM – The Customer Side
 Focuses on:
o 💼 Sales
o 📣 Marketing
o 🎧 Customer Service

 ERP is the center – connects both SCM (Supply) and CRM

(Customer).
 Everything is linked and shares data to make the business run
smoothly.
o Example: When Sales confirms an order (CRM), it notifies
Finance (ERP) and Procurement (ERP), which then tells
Suppliers (SCM).
Example: A retail company integrates its ERP, SCM, and CRM. When a
customer browses products on the e-commerce site (CRM data), the
system checks real-time inventory levels (ERP/SCM data). If an item is low,
the ERP automatically triggers a reorder from the supplier (SCM). Once the
customer places an order (CRM), the ERP handles payment and shipping
details, while the SCM module optimizes delivery. Customer service (CRM)
can then access the full order history and shipping status from the
integrated system.

4. Related Technologies
Explanation: Modern ERP systems are increasingly leveraging a variety of
advanced technologies to enhance their capabilities, improve efficiency,
and provide deeper insights. These technologies transform traditional ERP
into intelligent, interconnected platforms.
 Cloud Computing:
o Explanation: Delivery of computing services—including
servers, storage, databases, networking, software, analytics,
and intelligence—over the Internet ("the cloud").
o Impact on ERP: Allows for more flexible, scalable, and cost-
effective deployment. Reduces need for on-premise hardware
and IT staff. Enables remote access and faster updates.
o Examples: SAP S/4HANA Cloud, Oracle Cloud ERP, Microsoft
Dynamics 365.
 Artificial Intelligence (AI) and Machine Learning (ML):
o Explanation: AI enables systems to simulate human
intelligence, while ML allows systems to learn from data
without explicit programming.
o Impact on ERP: Predictive analytics (e.g., demand forecasting,
equipment failure), intelligent automation (e.g., invoice
processing, expense categorization), personalized
recommendations, enhanced fraud detection, chatbots for
customer support.
o Examples: AI-powered dashboards for financial anomaly
detection, ML algorithms optimizing warehouse picking routes.
 Internet of Things (IoT):
o Explanation: A network of physical objects ("things")
embedded with sensors, software, and other technologies for
the purpose of connecting and exchanging data with other
devices and systems over the internet.
 o Impact on ERP: Real-time data collection from machinery,
vehicles, and inventory for improved operational visibility,
predictive maintenance, asset tracking, and supply chain
optimization.
o Examples: Sensors on manufacturing equipment feeding
performance data to ERP for preventative maintenance
scheduling; smart shelves in warehouses updating inventory
counts automatically.
 Big Data Analytics:
o Explanation: The process of examining large and varied
datasets to uncover hidden patterns, unknown correlations,
market trends, customer preferences, and other useful
information.
o Impact on ERP: Enables deeper insights from transactional
data, customer behavior, and market trends, supporting
strategic decision-making and business intelligence.
o Examples: Analyzing vast amounts of sales data to identify
buying patterns, using external market data to refine demand
forecasts.
 Blockchain:
o Explanation: A decentralized, distributed ledger technology
that records transactions across many computers so that the
record cannot be altered retroactively without the alteration of
all subsequent blocks and the consensus of the network.
o Impact on ERP: Enhances transparency and traceability in
supply chains, secure transaction tracking, immutable record-
keeping, and improved trust among partners.
o Examples: Tracking the origin and movement of products in a
supply chain to ensure authenticity and ethical sourcing;
secure sharing of transaction data with partners.
 Robotic Process Automation (RPA):
o Explanation: Software robots (bots) that automate repetitive,
rule-based digital tasks, often mimicking human interaction
with systems.
o Impact on ERP: Automates data entry, invoice processing,
report generation, and other routine administrative tasks,
freeing up human resources for higher-value activities.
o Examples: RPA bots automatically entering vendor invoices
into the ERP system, or generating daily sales reports.
Chart: Related Technologies Enhancing ERP
An ERP system becomes smarter and more powerful when connected with
advanced digital technologies.
Let’s break it down step by step:

🧠 Technologies That Connect to ERP

Technology What It Brings to ERP

Makes ERP available anytime, anywhere; easy

☁️Cloud Computing
to scale.

Adds smart automation and predicts trends (like

🤖 AI & Machine Learning
sales or demand).

Connects machines and devices to ERP for real-

📶 Internet of Things (IoT)
time data (like sensors in factories).

Helps analyze large data sets to get deep

📊 Big Data Analytics
insights and forecasts.

Adds transparency and security to things like

🔒 Blockchain
supply chain or payments.

🤖 RPA (Robotic Process Automates repetitive tasks like invoice entry or

Automation) report generation.

The ERP system becomes:

 Faster with Cloud
 Smarter with AI
 More connected with IoT
 More informed with Analytics
 More secure with Blockchain
 More efficient with RPA

 Example: A food manufacturer implements an ERP system with

integrated IoT, AI, and blockchain. IoT sensors on production lines
monitor temperature and humidity, sending real-time data to the
ERP. AI algorithms analyze this data to predict equipment
maintenance needs, preventing costly downtime. Blockchain
 technology is used to record every step of the food's journey from
farm to fork, ensuring transparency and enabling rapid recalls if a
contamination issue arises.

5. ERP Life Cycle

Explanation: The ERP Life Cycle refers to the various stages involved in
implementing and managing an ERP system within an organization, from
the initial decision to its ongoing maintenance and evolution. Unlike
traditional software development, ERP implementation heavily involves
business process re-engineering and significant organizational change
management.
Typical Phases of the ERP Life Cycle:
1. Planning and Selection:
o Explanation: This initial phase involves understanding the
organization's current pain points, defining business
requirements, setting clear objectives for the ERP project, and
evaluating potential ERP vendors and solutions. It's crucial to
select a package that aligns with the company's strategic
goals and operational needs.
o Activities: Needs analysis, feasibility study, budget allocation,
vendor research, RFP (Request for Proposal) creation, vendor
demonstrations, package selection.
2. Project Preparation/Blueprint:
o Explanation: Once an ERP solution is selected, this phase
focuses on detailed project planning. This includes defining
the project scope, timelines, resource allocation, establishing
the project team, and conducting a thorough "gap analysis"
between current business processes and the ERP system's
best practices. Business Process Re-engineering (BPR) often
occurs here to align processes with the new system.
o Activities: Project charter creation, team formation, detailed
requirement gathering, gap analysis, business process re-
engineering, system design (blueprint).
3. Implementation/Configuration & Development:
o Explanation: This is where the actual ERP system is built and
configured. The selected ERP software is installed, configured
to meet the identified business requirements, and any
necessary customizations or integrations with other systems
 are developed. Data migration from legacy systems is also a
critical part of this phase.
o Activities: System installation, module configuration,
customization (if needed), data migration, interface
development, unit testing.
4. Testing and Training:
o Explanation: Before the system goes live, extensive testing is
performed to identify and resolve any bugs or issues. Various
types of testing (e.g., unit, integration, user acceptance
testing) are conducted. Simultaneously, end-users receive
comprehensive training on how to use the new ERP system,
which is vital for user adoption and project success.
o Activities: System testing, integration testing, user acceptance
testing (UAT), training material development, end-user
training.
5. Go-Live and Deployment:
o Explanation: This is the phase where the new ERP system is
officially launched and replaces the old system. This can be
done using various strategies (e.g., "Big Bang" where all
modules go live simultaneously, or "Phased Rollout" where
modules are implemented incrementally). Post-go-live support
is crucial during this period.
o Activities: Final data migration, system switch-over,
immediate post-go-live support.
6. Post-Implementation/Maintenance & Optimization:
o Explanation: After go-live, the focus shifts to ongoing system
maintenance, performance monitoring, and continuous
improvement. This includes addressing user issues, applying
updates, optimizing system performance, and potentially
implementing additional modules or functionalities as the
business evolves.
o Activities: Ongoing support, system monitoring, performance
tuning, upgrades, new module implementation, user feedback
collection, continuous improvement.
Chart: ERP Life Cycle Phases

Step What Happens

1. Planning & Selection Decide what ERP system to use and why.

2. Project Preparation / Plan how the system will work for your
Step What Happens

Blueprint company.

Set up and configure the ERP system based on

3. Implementation
your needs.

Try the system and teach employees how to

4. Testing & Training
use it.

5. Go-Live &
Start using the ERP system officially.
Deployment

Fix issues, improve performance, and make

6. Post-Implementation
changes as needed.

Continuous Regularly review and improve the ERP system

Improvement to keep it up to date.

Example: A company decides to implement a new ERP system.

o Planning: They identify that their current disparate systems
are causing data inconsistencies and inefficient order
processing. They decide to invest in an ERP.
o Preparation: They choose SAP, analyze their current order-to-
cash process, and redesign it to fit SAP's best practices.
o Implementation: SAP modules are configured, and historical
customer data is migrated.
o Testing: Employees test the new order process, identifying a
bug in the discount calculation.
o Go-Live: The new system is launched, and sales staff begin
entering orders directly into SAP.
o Maintenance: The IT team monitors system performance and
provides ongoing user support, while the business
continuously looks for ways to optimize their processes further
using the ERP.

6. SDLC and ERP Life Cycle (Comparison)

Explanation: The Systems Development Life Cycle (SDLC) is a traditional
framework for developing information systems from scratch. The ERP Life
Cycle, while sharing some similarities, is distinct because ERP involves
implementing a pre-built commercial software package rather than
developing a custom one. This fundamental difference leads to significant
variations in their methodologies, focus, and challenges.
Systems Development Life Cycle (SDLC):
 Focus: Building a custom software application from the ground up
based on detailed user requirements.
 Phases (Traditional Waterfall Model):
1. Requirement Analysis: Detailed gathering of user needs.
2. Design: Creating architectural and functional designs for the
system.
3. Implementation/Coding: Writing the actual software code.
4. Testing: Verifying the developed system against requirements.
5. Deployment: Releasing the system to users.
6. Maintenance: Ongoing support and enhancements.
 Key Characteristic: User requirements drive the software
development. The system is built to fit the organization's existing
processes.
 Role of Consultants: Primarily technical (IT hardware, software,
programming).
ERP Life Cycle:
 Focus: Implementing and configuring an existing commercial ERP
software package, often requiring the organization to adapt its
business processes to the software's best practices.
 Phases (as described above): Planning & Selection, Project
Preparation/Blueprint (including Gap Analysis & BPR),
Implementation/Configuration & Development, Testing & Training,
Go-Live & Deployment, Post-Implementation/Maintenance &
Optimization.
 Key Characteristic: The ERP software's "best practices" often
influence or dictate changes in the organization's business
processes. Software selection happens very early.
 Role of Consultants: Strategic and broad (software selection,
business process re-engineering, change management, installation,
training).
 Example:
o SDLC: A company needs a very specific, unique algorithm for
its scientific research. They would use SDLC to design and
code this algorithm into a custom software application that
precisely meets their unique requirements.
 o ERP Life Cycle: A company wants to streamline its financial
and HR processes. Instead of building a custom system, they
decide to implement SAP. This means they will likely have to
adjust their existing financial reporting methods or HR
onboarding procedures to align with how SAP's modules are
designed to work, rather than building SAP to mimic their old,
inefficient ways. The focus is on adopting best practices
embedded in the ERP.

SDLC vs. ERP Life Cycle: Key Differences

SDLC (Custom
ERP Life Cycle (Package
Aspect Software
Implementation)
Development)

Starts with user Starts with available software

Starting Point
requirements package

System Builds software from Configures an existing ERP

Creation scratch system

Focuses on business process

Focuses on technical
Main Focus improvement and change
development
management

Process Processes are adjusted Software is chosen that defines or

Alignment to fit the software influences the processes

Involves mostly
Type of Involves strategic and business
technical/IT
Consultants consultants
consultants

When
Software is selected Software is selected early in the
Software is
later in the project project
Chosen

 SDLC is like building a house from scratch based on your exact

design.
 ERP Life Cycle is like buying a ready-made apartment and adjusting
your lifestyle to fit it.
 CO - 2
ERP Implementation: A Comprehensive Overview
Enterprise Resource Planning (ERP) systems integrate various business
functions into a single, unified system. While offering significant benefits,
ERP implementations are complex and prone to failure if not managed
meticulously.
Reasons for ERP Failure:
 Lack of Top Management Support: Without strong commitment
and visible involvement from leadership, projects often lose
momentum and resources.
 Poor Change Management: Inadequate planning for and
communication about the changes, leading to employee resistance
and low adoption.
 Unrealistic Expectations: Believing ERP will solve all business
problems overnight, or underestimating the effort, time, and cost
involved.
 Inadequate Business Process Reengineering (BPR): Simply
automating inefficient processes will lead to "garbage in, garbage
out." Processes must be optimized before implementation.
 Insufficient Training and Education: Users are not adequately
prepared to use the new system, leading to errors, frustration, and
low productivity.
 Data Migration Issues: Poor data quality, incomplete data, or
errors during migration can cripple the new system.
 Scope Creep: Uncontrolled expansion of project requirements
beyond the initial agreed-upon scope, leading to delays and budget
overruns.
 Poor Vendor Selection: Choosing a vendor that doesn't
understand the business's specific needs, or a system that isn't a
good fit.
 Lack of User Involvement: Not involving key users from different
departments in the design and testing phases, leading to a system
that doesn't meet their needs.
 Technical Issues: Software bugs, integration problems with
existing systems, or infrastructure limitations.
 Budget Overruns: Going significantly over budget due to poor
planning, scope creep, or unforeseen issues.
Pre-Implementation Tasks:
These foundational steps are crucial for setting the stage for a successful
implementation:
 Define Clear Business Objectives: What problems are we trying
to solve? What are the measurable goals for the ERP?
 Assemble a Dedicated Project Team: Include representatives
from all relevant departments, with clear roles and responsibilities.
 Conduct Thorough Needs Assessment: Analyze current
processes, identify pain points, and define requirements for the new
system.
 Develop a Detailed Project Plan: Outline scope, timelines,
budget, resources, risks, and communication strategy.
 Select the Right ERP System and Vendor: This involves
extensive research, demonstrations, reference checks, and
negotiation.
 Secure Executive Sponsorship: Obtain firm commitment and
active support from top management.
 Data Cleansing and Preparation: Start cleaning, validating, and
standardizing existing data early.
 Establish Change Management Strategy: Plan how to
communicate changes, address concerns, and gain buy-in.
Implementation Methodologies:
Common approaches to deploying ERP systems:
 Big Bang (or "Rip and Replace"): All modules go live
simultaneously across all departments.
o Pros: Fastest implementation, immediate benefits (if
successful).
o Cons: High risk, intense pressure, potential for major
disruption if something goes wrong.
 Phased Rollout: Modules are implemented in stages, or by
department/location.
o Pros: Lower risk, allows for lessons learned, less disruption.
o Cons: Slower to realize full benefits, requires temporary
interfaces between old and new systems.
 Pilot Rollout: The system is first implemented in a small, non-
critical department or location to test and refine.
 o Pros: Very low risk, provides valuable insights before full
deployment.
o Cons: Delays full benefits, requires extra effort for the pilot.
 Parallel Adoption: Old and new systems run simultaneously for a
period.
o Pros: Safest approach, allows for comparison and verification.
o Cons: Resource-intensive, double data entry, confusion for
users.
Process Definition:
This is a critical step, often preceding or running concurrently with ERP
selection.
 Current State Analysis ("As-Is"): Documenting existing business
processes, identifying inefficiencies, bottlenecks, and manual
workarounds.
 Future State Design ("To-Be"): Redesigning processes to
leverage the capabilities of the new ERP system, aiming for
standardization, automation, and efficiency. This often involves
Business Process Reengineering (BPR).
 Gap Analysis: Identifying the differences between the "As-Is" and
"To-Be" processes, and between the "To-Be" processes and the ERP
system's standard functionalities. This helps determine
customization needs.
Dealing with Employee Resistance:
Resistance is inevitable; effective strategies are key:
 Open and Transparent Communication: Explain the "why,"
"what," and "how" of the ERP project.
 Early and Continuous Involvement: Involve key users in design,
testing, and training.
 Emphasize Benefits: Highlight how the new system will make their
jobs easier or more efficient.
 Address Concerns and Fears: Listen actively to feedback and
provide clear answers.
 Training and Education: Equip employees with the skills and
knowledge to use the new system confidently.
 Champion Network: Identify and empower "super users" or
champions within departments to support their colleagues.
  Management Support: Ensure managers are visibly supportive
and model desired behavior.
 Fairness and Equity: Ensure the implementation process is
perceived as fair.
Training and Education:
Crucial for user adoption and system success:
 Tailored Training: Develop different training modules for various
user groups based on their roles and system interactions.
 Hands-on Practice: Provide opportunities for users to practice in a
test environment.
 Multiple Training Methods: Combine classroom sessions, e-
learning, webinars, and one-on-one support.
 Reference Materials: Develop user manuals, quick guides, FAQs,
and online help resources.
 Post-Go-Live Support: Provide immediate support channels (help
desk, super users) after the system goes live.
 Refresher Training: Offer ongoing training as needed, especially
after updates or new module rollouts.
Project Management and Monitoring:
Essential for keeping the project on track:
 Dedicated Project Manager: A skilled individual responsible for
overall project success.
 Clear Governance Structure: Defined roles, responsibilities, and
decision-making processes.
 Regular Progress Tracking: Monitor milestones, deadlines,
budget, and resource utilization.
 Risk Management: Proactively identify, assess, and mitigate
potential risks.
 Communication Plan: Establish regular communication channels
with stakeholders, team members, and end-users.
 Quality Assurance: Conduct thorough testing of system
functionalities, integrations, and data.
 Change Control: Manage scope changes through a formal process
to prevent scope creep.
 Post-Implementation Review: Evaluate project performance,
identify lessons learned, and measure ROI.
Success and Failure Factors of an ERP Implementation:
Success Factors:
 Strong Executive Sponsorship: Consistent and visible support
from top management.
 Clear Project Scope and Objectives: Well-defined goals and
boundaries for the project.
 Effective Change Management: Proactive strategies to manage
resistance and promote adoption.
 Dedicated and Competent Project Team: Skilled and committed
individuals from various departments.
 Thorough Business Process Reengineering: Optimization of
processes before system implementation.
 Comprehensive Training and User Adoption: Users are well-
prepared and willing to embrace the new system.
 Realistic Expectations: Understanding the challenges and
commitment required.
 Accurate Data Migration: Clean and accurate data in the new
system.
 Effective Project Management: Well-planned, executed, and
monitored project.
 Strong Vendor Partnership: A collaborative relationship with the
ERP vendor.
Failure Factors:
 Lack of Executive Buy-in: Insufficient support from leadership.
 Poor Planning and Unrealistic Timelines: Underestimation of
complexity and duration.
 Inadequate Change Management: Failure to address employee
resistance.
 Scope Creep: Uncontrolled expansion of project requirements.
 Insufficient Training: Users not adequately prepared to use the
system.
 Poor Data Quality: Migration of incorrect or incomplete data.
 Underestimation of Costs: Going significantly over budget.
 Resistance to Change: Employees unwilling to adopt new
processes or systems.
 Lack of Communication: Poor information flow among
stakeholders.
 Technical Glitches and Integration Issues: Problems with the
software or connecting it to other systems